Employment Agreement - Volume Services America Holdings Inc. and Lawrence E. Honig
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated April 15, 2002 by and
between Volume Services America Holdings, Inc., a Delaware corporation (the
"Company") and Lawrence E. Honig (the "Executive").
The Company desires to employ Executive and to enter into an agreement
embodying the terms of such employment;
Executive desires to accept such employment and enter into such an
agreement;
In consideration of the premises and mutual covenants herein and for
other good and valuable consideration, the parties agree as follows:
1. Term of Employment. Subject to the provisions of Section 8 of this
Agreement, Executive shall be employed by the Company for a term commencing on
April 15, 2002 (the "Commencement Date") and ending on April 14, 2004 (the
"Employment Term") on the terms and subject to the conditions set forth in this
Agreement. Unless sooner terminated under the provisions of Section 8 of this
Agreement, the Employment Term will automatically be extended for additional
one-year terms at the conclusion of the initial two-year term ("Initial Term")
and each succeeding one-year extension ("Extension Term").
2. Position.
(a) During the Employment Term, Executive shall serve as the
Company's Chief Executive Officer. In such position, Executive shall
have such duties and authority as shall be determined from time to time
by the Board of Directors of the Company (the "Board"). Executive will
be nominated and, when elected, serve as a member of, the Board.
(b) During the Employment Term, Executive will devote
Executive's full business time and best efforts to the performance of
Executive's duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would
conflict or interfere with the rendition of such services either
directly or indirectly, without the prior written consent of the Board;
provided that nothing herein shall preclude Executive, subject to the
prior approval of the Board, from accepting appointment to or continue
to serve on any board of directors or trustees of any business
corporation or any charitable organization; provided in each case, and
in the aggregate, that such activities do not conflict or interfere
with the performance of Executive's duties hereunder or conflict with
Section 9. Executive shall perform his duties in the Company's office
in Spartanburg, South Carolina.
3. Base Salary. During the Employment Term, the Company shall pay
Executive a base salary at the annual rate of $450,000, payable in regular
installments in accordance with the Company's usual payment practices. Executive
shall be entitled to such increases in Executive's base salary, if any, as may
be determined from time to time in the sole discretion of the Board. Executive's
annual base salary, as in effect from time to time, is hereinafter referred to
as the "Base Salary."
4. Bonus. Executive shall be eligible to earn an annual bonus award (an
"Annual Bonus") each fiscal year during the Employment Term, payable as provided
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in the Company's annual bonus plan. The Annual Bonus will be targeted to at
least fifty percent (50%) of Executive's Base Salary (the "Target") based upon
the achievement of budgeted performance goals of the Company established by the
Board (the "Company's Budget") and incorporated into the existing executive
bonus plan that the Board has established for the senior executives of the
Company.
5. Options. (a) As soon as practicable (but in no event later than 180
days) following the Commencement Date, Executive shall be granted options (the
"Options"), pursuant to a stock option plan to be adopted by the Company (the
"Plan"), to purchase that number of shares (the "Shares") of the Company which
is equal to three percent (3%) of the entire number of shares of the Company
issued and outstanding on the date of the grant (the "Grant Date"). The exercise
price per share (the "Exercise Price") shall be equal to the "Established Share
Value" of a share of stock of the Company. The Established Share Value of a
share of stock in the Company shall be calculated by dividing the total value of
the Company which is established by the Company's Board of Directors for
purposes of restructuring management's equity in the Company (the "Company
Valuation") by the total number of shares of stock issued and outstanding on the
date that the restructuring is effective.
(b) The Options shall vest with respect to twenty percent (20%) of the
Shares on the first anniversary of the Grant Date and shall vest with respect to
twenty percent (20%) of the Shares on each anniversary thereafter, until all the
Shares subject to the Options are 100% vested; provided, however, that (i) if
Executive's employment is terminated (A) by the Company without Cause or (B) due
to the Executive's resignation with Good Reason, or (ii) in the event of a sale
of all or substantially all of the stock and/or assets of the Company (a
"Sale"), the Options shall immediately vest with respect to one hundred percent
(100%) of the Shares. In the case of any vesting in connection with a Sale, such
vesting shall occur such that the Options may be exercised and converted to
Shares in time to permit Executive to receive consideration for the Shares in
connection with the Sale.
(c) In the event that the Company consummates a Sale prior to the
second anniversary of the Commencement Date, and the "Excess Value" (as
calculated below), multiplied by the total number of the Shares as to which
Executive has Options (the "Aggregate Excess Value") is less than One Million
($1,000,000.00) Dollars, the Executive shall be paid the difference between the
Aggregate Excess Value and One Million ($1,000,000.00) Dollars simultaneously
with the consummation of the Sale. The Excess Value shall be calculated as
follows: (a) if the Sale is a sale of substantially all of the shares of the
Company, the Excess Value shall be the amount, if any, by which the amount
received by the shareholders for a share of the Company's stock (the "Stock
Purchase Price") exceeds the Exercise Price; and (b) if the Sale is a sale of
substantially all of the Company's assets, the Excess Value shall be the amount,
if any, by which (i) the total amount distributable to shareholders of the
Company in connection with such Sale (whether upon consummation of the Sale or
otherwise, and whether or not contingent) divided by the number of shares issued
and outstanding on the date of the Sale (the "Asset Purchase Price"), exceeds
(ii) the Exercise Price. In the event that any additional options for the
Company's stock ("Additional Options") are granted to the Executive prior to the
second anniversary of the Commencement Date, which Additional Options by their
terms are exercisable in connection with a Sale, the calculation of Excess Value
shall include the amount, if any, by which the Stock Purchase Price or Asset
Purchase Price, as the case may be, exceeds the exercise price per share for the
Additional Options (such amount to be referred to as the "Additional Options
Excess"), and the Aggregate Excess Value shall include the Additional Options
Excess multiplied by
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the number of shares as to which Executive has Additional Options.
(d) Following the termination of Executive's employment for any reason,
the unvested portion of the Options shall immediately expire (except as provided
in paragraph (b) above) and the vested portion of the Options shall expire on
the first anniversary of Executive's termination of employment; provided,
however, that if Executive is terminated by the Company for Cause, the vested
portion of the Options shall expire immediately.
(e) The Options shall be equitably adjusted, as determined by the Board
of Directors of the Company in its discretion, in the event of a stock split,
stock dividend, spin-off, reorganization, recapitalization, rights offering,
share exchange, merger, consolidation or other similar transaction, and the
Board's determination as to any such adjustment shall be conclusive.
(f) The Options shall be granted on the terms and conditions of, and
shall be subject to all the limitations set forth in, the Plan, and to all the
terms and conditions of the standard stock option agreement adopted by the
Company in connection with the Plan, including, without limitation, any voting
trusts or shareholders agreements. The Executive shall have no rights as a
shareholder of the Company, including, without limitation, voting and dividend
rights, in respect of the Shares unless and until the Shares have been issued to
Executive. If not sooner terminated pursuant to the terms of this Section 5, all
of the Options shall terminate ten (10) years from the Grant Date. The Options
may not be transferred otherwise than by will or the laws of dissent and
distribution, and the Options may be exercised, during the lifetime of the
Executive, only by the Executive. The Company shall have the right to require
the payment (through withholding from the Executive's salary or otherwise, as
the Company may, in its sole discretion, determine) of any federal, state, local
or foreign taxes which it believes are or may be required to be withheld in
connection with the transfer of Shares upon the exercise of any of the Options.
6. Employee Benefits.
(a) During the Employment Term, the Executive shall be
entitled to the coverage or benefits under any and all employee benefit
plans maintained by the Company (including, without limitation, medical
insurance, life insurance, long-term disability insurance and pension
plans, if any) (collectively, "Employee Benefits") to the extent
permissible under the terms of the plans and to all fringe benefits for
which his status and level of employment qualify him in accordance with
the Company's benefit policies governing senior executives; provided,
however, that the Executive's Employee Benefits shall not include the
split dollar life insurance program which is no longer being offered by
the Company to new employees.
(b) The Executive shall be entitled to paid vacations in
accordance with the Company's standard vacation policies governing
senior executives, but in no event less than four weeks each calendar
year during the Employment Term.
7. Business Expenses. During the Employment Term, reasonable business
expenses incurred by Executive in the performance of Executive's duties
hereunder shall be reimbursed by the Company in accordance with Company
policies.
8. Termination. The Employment Term and Executive's employment
hereunder
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may be terminated by either party at any time and for any reason; provided that
Executive will be required to give the Company at least 60 days advance written
notice of any resignation of Executive's employment. Notwithstanding any other
provision of this Agreement, the provisions of this Section 8 shall exclusively
govern Executive's rights upon termination of employment with the Company and
its affiliates.
(a) By the Company For Cause or By Executive Resignation
Without Good Reason.
(i) The Employment Term and Executive's employment
hereunder may be terminated by the Company for Cause (as
defined below) and shall terminate automatically upon
Executive's resignation without Good Reason (as defined in
Section 8(c)).
(ii) For purposes of this Agreement, "Cause" shall
mean termination by action of at least a majority of the
members of the Board (excluding the Executive) upon (i) the
Executive's breach of Section 9 or 10 of this Agreement; (ii)
the Executive's material breach of any other provision of this
Agreement if the Executive has been given written notice and a
reasonable opportunity to cure such breach; (iii) the
Executive's willful failure to adhere to any written Company
policy if the Executive has been given written notice and a
reasonable opportunity to comply with such policy or cure his
failure to comply; (iv) serious willful misconduct by the
Executive in connection with his employment; or (v) the
commission of a felony or the equivalent thereof or a
misdemeanor including moral turpitude. Such action shall take
place at a meeting duly called and held upon at least 15 days'
prior written notice to the Executive specifying the
particulars of the action or inaction alleged to constitute
"Cause" (and at which meeting the Executive and his counsel
are entitled to be present and given reasonable opportunity to
be heard). Action or inaction by the Executive shall not
include failure to act by reason of total or partial
incapacity due to physical or mental illness.
(iii) If Executive's employment is terminated by the
Company for Cause, or if Executive resigns without Good
Reason, Executive shall be entitled to receive:
(A) the Base Salary through the date of
termination;
(B) any Annual Bonus earned but unpaid as of
the date of termination for any previously completed
fiscal year;
(C) reimbursement for any unreimbursed
business expenses properly incurred by Executive in
accordance with Company policy prior to the date of
Executive's termination; and
(D) such Employee Benefits, if any, to which
Executive may be entitled in his status as a
terminated employee under the employee benefit plans
of the Company (the amounts described in clauses (A)
through (D) hereof being referred to as the "Accrued
Rights").
Following such termination of Executive's employment
by the Company for Cause or resignation by Executive without
Good Reason, except as set forth in this Section 8(a)(iii),
Executive shall have no further rights to any compensation or
any other benefits under this
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Agreement.
(b) Disability or Death.
(i) The Employment Term and Executive's employment hereunder
shall terminate upon Executive's death and may be terminated
by the Company if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of 120
consecutive days or 180 days during any 12 consecutive month
period to perform Executive's duties (such incapacity is
hereinafter referred to as "Disability"). Any question as to
the existence of the Disability of Executive as to which
Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually
acceptable to Executive and the Company. If Executive and the
Company cannot agree as to a qualified independent physician,
each shall appoint such a physician and those two physicians
shall select a third who shall make such determination in
writing. The determination of Disability made in writing to
the Company and Executive shall be final and conclusive for
all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for
either Disability or death, Executive or Executive's estate
(as the case may be) shall be entitled to receive the Accrued
Rights.
Following Executive's termination of employment due to death or
Disability, except as set forth in this Section 8(b)(ii), Executive shall have
no further rights to any compensation or any other benefits under this
Agreement.
(c) By the Company Without Cause or Resignation by
Executive for Good Reason.
(i) The Employment Term and Executive's employment
hereunder may be terminated by the Company without
Cause or by Executive's resignation for Good Reason.
(ii) For purposes of this Agreement, "Good Reason"
shall mean (A) the Company's material breach of this
Agreement; (B) the assignment of the Executive,
without his consent, to a position, responsibilities
or duties of a materially lesser status or degree of
responsibility than his position, responsibilities or
duties as of the date hereof; or (C) the failure to
elect the Executive to serve as a member of the
Board; provided that the events described in this
Section 8(c)(ii) shall constitute Good Reason only if
the Company fails to cure such event within 30 days
after receipt from Executive of written notice of the
event which constitutes Good Reason; provided,
further, that "Good Reason" shall cease to exist for
an event on the 60th day following the later of its
occurrence or Executive's knowledge thereof, unless
Executive has given the Company written notice
thereof prior to such date.
(iii) If Executive's employment is terminated by the
Company without Cause (other than by reason of death
or Disability) or if Executive resigns for Good
Reason, Executive shall be entitled to receive:
(A) the Accrued Rights;
(B) subject to Executive's continued
compliance with the provisions of Sections 9
and 10, continued payment of the Base Salary
until the later of (i) one year following
such
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termination of employment and (ii) the expiration of
the Initial Term determined as if such termination
had not occurred; provided that the aggregate amount
described in this clause (B) shall be reduced by the
present value of any other cash severance or
termination benefits payable to Executive under any
other plans, programs or arrangements of the Company
or its affiliates; and
(C) continued Employee Benefits (to the extent
permissible under the terms of the plans providing
such Employee Benefits) for Executive and Executive's
spouse and minor children until the later of (i) one
year following such termination of employment; and
(ii) the expiration of the Initial Term determined as
if such termination had not occurred, provided that
such Employee Benefits shall cease on the date the
Executive becomes eligible for comparable coverage
from a subsequent employer.
Following Executive's termination of employment by the Company without
Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this Section
8(c)(iii), Executive shall have no further rights to any compensation or any
other benefits under this Agreement.
(d) Continued Employment Beyond Employment Term.
Unless the parties otherwise agree in writing,
continuation of Executive's employment with the
Company beyond the Employment Term shall be deemed an
employment at-will and shall not be deemed to extend
any of the provisions of this Agreement and
Executive's employment may thereafter be terminated
at will by either Executive or the Company; provided
that the provisions of Sections 9 and 10 of this
Agreement shall survive any termination of this
Agreement or Executive's termination of employment
hereunder.
(e) Notice of Termination. Any purported termination
of employment by the Company or by Executive (other
than due to Executive's death) shall be communicated
by written Notice of Termination to the other party
hereto in accordance with Section 12(g) hereof. For
purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for
termination of employment under the provision so
indicated.
(f) Board/Committee Resignation. Upon termination of
Executive's employment for any reason, Executive
shall be deemed to have resigned, as of the date of
such termination, and to the extent applicable, from
the Board (and any committees thereof) and the Board
of Directors (and any committees thereof) of any of
the Company's affiliates, and Executive shall execute
such documents as may be necessary to reflect such
resignations.
9. Non-Competition.
(a) Executive acknowledges and recognizes the highly competitive nature
of the businesses of the Company and its affiliates and accordingly
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agrees as follows:
(i) During the Employment Term and for a period of
two years following the termination of Executive's
employment for any or no reason, Executive agrees
that, without the prior written consent of the
Company, (A) Executive will not, directly or
indirectly, either as principal, manager, agent,
consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry
on, be engaged in or have any financial interest in,
any business which is in competition with the
business of the Company or any of its affiliates and
(B) Executive shall not, on his own behalf or on
behalf of any person, firm or company, directly or
indirectly, solicit or offer employment to any
person, who has been employed by the Company or any
of its affiliates at any time during the 12 months
immediately preceding such solicitation.
(ii) For purposes of this Section 9, a business shall
be deemed to be in competition with the business of
the Company and its affiliates if it is involved in
the sale or provision of catering, concession or
other food services or venue management services at
stadiums, ballparks, convention centers, concert
halls, theaters, seaports, golf courses, arenas, race
tracks, parks, bandstands, or other recreational
venues.
(iii) Nothing in this Section 9 shall prohibit the
Executive from acquiring or holding not more than one
percent (1%) of any class of publicly traded
securities of any business.
(b) It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this
Section 9 to be reasonable, if a final judicial determination is made
by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is an unenforceable
restriction against Executive, the provisions of this Agreement shall
not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if
any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not
affect the enforceability of any of the other restrictions contained
herein.
10. Confidentiality. The Executive acknowledges that Executive has
acquired and will acquire information respecting the business and affairs of the
Company, its subsidiaries and affiliates, including, but not limited to,
business and strategic plans, forecasts and projections, profits, information
regarding the identity, address and key contacts of Company customers, prospects
and suppliers, their needs, preferences and any pricing or bidding constraints,
customer and supplier agreements and the terms thereof, policy and procedure
manuals, recipes, menus and accounting forms and procedures ("Confidential
Information"). Accordingly, the Executive shall keep confidential and not
disclose to any person or use (except as required in the conduct of the business
of the Company in the ordinary course and consistent with past practice) all
such Confidential Information, except as required by law (provided prior written
notice thereof is given by the Executive to the Company) or with the Company's
written consent, unless such information is known generally to the public or the
trade (through sources other than the Executive's unauthorized disclosure). Upon
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termination of his employment for any reason, the Executive shall deliver to the
Company all Confidential Information (in any form, including, but not limited
to, electronic media) in his possession or subject to his control that belongs
to the Company.
11. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 9 or Section 10 would be inadequate and the Company would
suffer irreparable damages as a result of such breach or threatened breach. In
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to cease making any payments or providing
any benefit otherwise required by this Agreement and obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to
conflicts of laws principles thereof.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties
with respect to the subject matter herein other than those expressly
set forth herein. This Agreement may not be altered, modified, or
amended except by written instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a
waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other
term of this Agreement. A waiver or consent shall only be effective if
in writing and signed by the party against whom the waiver or consent
is to be enforced.
(d) Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive.
This Agreement may be assigned by the Company to a person or entity
which is an affiliate or a successor in interest to substantially all
of the business operations of the Company, whether in connection with a
Sale, or otherwise. Upon such assignment, the rights and obligations of
the Company hereunder shall become the rights and obligations of such
affiliate or successor person or entity.
(f) Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributees, devises,
legatees and permitted assigns.
(g) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand or
overnight courier or three (3) days after it has been mailed by United
States
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registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth below, or to such other address
as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
If to the Company:
Volume Services America Holdings, Inc.
201 East Broad Street
Spartanburg, SC 29306
Attention: General Counsel
If to Executive:
Lawrence E. Honig
515 Guildhall Place
Alpharetta, GA 30022-8535
(h) Indemnification. The Executive shall be entitled to be indemnified
for acting as an officer and director in accordance with the Company's
Certificate of Incorporation and By-Laws. The Company agrees
specifically that it shall maintain provisions in its Certificate of
Incorporation and By-Laws relating to exculpation or indemnification of
officers and directors thereof (unless prohibited by law) such that the
Executive shall continue to be entitled to such exculpation and
indemnification as was in effect immediately prior to the date hereof
under the Certificate of Incorporation and By-Laws of the Company (or
any equally favorable arrangement) to the fullest extent permitted
under the laws of the applicable jurisdiction of incorporation. The
Company also shall maintain directors and officers liability insurance
coverage for the Executive.
(i) Arbitration. Any and all disputes or controversies arising out of
or relating to this Agreement, other than claims brought pursuant to
Section 9 or 10, shall be resolved by arbitration at the American
Arbitration Association (the "AAA") at its New York City offices before
a panel of three arbitrators under the then existing rules of the AAA.
The parties agree that in any such arbitration, the arbitrators shall
not have the power to reform or modify this Agreement in any way and to
that extent their powers are so limited. The determination of the
arbitrators shall be final and binding on the parties and judgment on
it may be entered in any court of competent jurisdiction. The
prevailing party in arbitration in connection with the enforcement of
this Agreement shall be entitled to recover from the other party all
reasonable out-of-pocket costs and disbursements (including, without
limitation, counsel fees and expenses) and any and all charges that may
be made in the cost of the arbitration and the fees of the arbitrators
or any other enforcement thereof. THE PARTIES HERETO HEREBY WAIVE A
JURY TRIAL IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT.
(j) Executive Representation. Executive hereby represents to the
Company that the execution and delivery of this Agreement by Executive
and the Company and the performance by Executive of Executive's duties
hereunder shall not constitute a breach of, or otherwise contravene,
the terms of any employment agreement or other agreement or policy to
which Executive is a party or otherwise bound.
(k) Cooperation. Executive shall provide his reasonable cooperation in
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connection with any action or proceeding (or any appeal from any action
or proceeding) which relates to events occurring during Executive's
employment hereunder. This provision shall survive any termination of
this Agreement.
(l) Withholding Taxes. The Company may withhold from any amounts
payable under this Agreement such Federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or
regulation.
(m) Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
VOLUME SERVICES AMERICA
HOLDINGS, INC.
/s/ Janet L. Steinmayer /s/ Lawrence E. Honig
_________________________ __________________________
By: Lawrence E. Honig
Title:
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