Exhibit 10.4
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement"), dated as of August
24, 1998, by and between VSI Acquisition II Corporation, a Delaware corporation
(the "Company"), and Xxxx X. Xxx (the "Executive").
The Company and the Executive wish to provide for the terms of
his employment as a senior executive of the Company.
It is therefore agreed as follows:
1. Term. The employment of the Executive under this Agreement
shall commence as of August 24, 1998 (the "Effective Date") and shall continue
through the fifth anniversary of the Effective Date (the "Term"), subject to
earlier termination as provided for in Section 4.
2. Duties; Place of Employment.
(a) During the Term, the Executive shall serve as Chief
Executive Officer of the Company, in which capacity he shall devote all of his
business time, effort and energies to the business of the Company. In addition,
during the Term, the Executive shall be nominated and, when elected, serve as a
member and Chairman of the Board of Directors of the Company (the "Board"). The
Executive shall have such authority and responsibility, and shall serve in such
capacities with the Company's majority-owned subsidiaries and affiliates, as are
consistent with the duties of a senior executive as may from time to time be
assigned to him by the Board.
(b) The principal place of employment of the Executive shall
be within 25 miles of Stamford, Connecticut and shall not be changed without the
Executive's prior written consent; provided, however, the Executive may be
required to travel to South Carolina on a regular basis.
3. Compensation and Benefits.
(a) Base Salary. During the Term, the Company shall pay the
Executive an annual salary of $465,000, payable in accordance with the Company's
salary payment policies governing senior executives.
(b) Bonuses. In the sole discretion of the Board, the
Executive also shall receive such bonus compensation, if any, determined by the
Board, and shall be entitled to participate in any executive bonus plan that the
Board shall establish for the senior executives of the Company.
(c) Expense Reimbursement. The Company shall reimburse the
Executive for ordinary and necessary business expenses incurred by him in the
performance of his duties as an employee of the Company in accordance with the
Company's policies governing reimbursement
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of expenses of senior executives; provided that the Executive accounts to the
Company for such expenses in the manner customarily prescribed by the Company
for its senior executives.
(d) Benefit Plans, Fringe Benefits and Vacation.
(i) During the 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, split dollar life insurance, long-term
disability insurance and pension plans, if any) 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 benefits policies governing senior executives.
(ii) The Executive shall be entitled to paid
vacations (taken consecutively or in segments), in accordance with the
Company standard vacation policies governing senior executives, but in
no event less than four weeks each calendar year during the Term. Such
vacations shall be taken at times consistent with the effective
discharge of the Executive's duties.
(iii) It is recognized that the services of the
Executive hereunder will require the use of a suitable automobile and
the Company agrees to supply and maintain the same at its expense in
accordance with the Company's policies with respect thereto for senior
executives. The Executive shall be entitled to continue the use of his
current business automobile or to be provided with at least an
equivalent new vehicle at such intervals as apply to other senior
executives of the Company.
(iv) The Executive shall be reimbursed for up to
$10,000 for the fees and expenses related to membership in two clubs
designated by the Executive and such other organizations consistent
with the Company's policies pertaining thereto governing senior
executives.
4. Termination.
(a) Death and Disability. The Executive's employment under
this Agreement shall terminate upon his death. The Company may terminate the
Executive's employment under this Agreement by written notice to the Executive
or his representative if the Executive has a Disability. For purposes of this
agreement, the Executive shall be deemed to have a "Disability" if, for physical
or mental reasons, the Executive is unable to perform the essential functions of
the Executive's duties hereunder in accordance with this Agreement, for 120
consecutive days, or 180 days during any twelve month period, as determined in
accordance herewith. The Disability of the Executive shall be determined by a
medical doctor selected by agreement of the Company and the Executive and upon
the request of either party by notice to the other. If the Company and the
Executive cannot agree on the selection of a medical doctor, each of them will
select a medical doctor and the two medical doctors will select a third medical
doctor who shall determine whether the Executive has a Disability. The
determination of such medical doctor shall be binding on both parties. The
Executive shall submit to a reasonable number of examinations by the medical
doctor making the determination of Disability. If the Executive is
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not legally competent, the Executive's legal guardian or duly authorized
attorney-in-fact shall act in the Executive's stead for the purposes of
submitting the Executive to the examinations and for all other purposes
hereunder.
(b) Termination by the Company for Cause. The Company may
terminate the Executive's employment under this Agreement for Cause by written
notice to the Executive. "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 6 of this Agreement; (ii) the Executive's material
breach of any other provision of this Agreement; (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 wilful 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 were entitled to be present and given reasonable opportunity to be
heard). Action or inaction by that Executive shall not be considered "willful"
unless done or omitted by him intentionally and not in good faith and without
his reasonable belief that his action or inaction was in the best interests of
the Company, and shall not include failure to act by reason of total or partial
incapacity due to physical or mental illness.
(c) Termination by the Company Without Cause. The Company may
terminate the Executive's employment under this Agreement at any time by written
notice to the Executive, whether or not in accordance with Section 4(a) or 4(b).
(d) Termination by the Executive for Good Reason. The
Executive may terminate his employment under this Agreement for "Good Reason" by
written notice to the Company within a reasonable period following the event
giving rise to such Good Reason; provided, however, that the Company shall have
the right to cure the action that constitutes "Good Reason" within five business
days of the date of such notice. For purposes of this Agreement, "Good Reason"
shall mean: (i) the Company's material breach of this Agreement; (ii) 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 at the Effective
Date; provided, that the Executive has agreed to relinquish the title of Chief
Executive Officer of the Company on January 1, 2001; (iii) the Company's breach
of Section 3(b); or (iv) the failure to elect the Executive to serve as a member
and Chairman of the Board.
5. Consequences of Termination.
(a) Cause or Absence of Good Reason. If the Executive's
employment under this Agreement is terminated (i) by the Company pursuant to
Section 4(b) or (ii) by the Executive other than pursuant to Section 4(d), the
Executive shall not thereafter be entitled to receive any salary, bonus or other
payments or benefits under this Agreement, other than the payments
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pursuant to Section 3(a) of salary earned, accrued vacation and the
reimbursement pursuant to Section 3(c) of expenses incurred, in each case,
through the date of termination.
(b) Death or Disability. If the Executive's employment under
this Agreement is terminated pursuant to Section 4(a) due to his death or
Disability, the Executive shall not thereafter be entitled to receive any
salary, bonus or other payments or benefits under this Agreement, other than the
following: (a) payments pursuant to Section 3(a) of salary earned, accrued
vacation and the reimbursement pursuant to Section 3(c) of expenses incurred, in
each case, through the date of termination and (b) an amount equal to the
Executive's one year's base salary at the annual rate in effect on the date of
his death or Disability. In addition, if the Executive's employment is
terminated due to his death, the Company shall continue to provide, for a period
of one year from the date of the Executive's death, the Executive's spouse and
minor children with medical, hospitalization and dental insurance comparable to
that provided by the Company prior to such termination.
(c) Other Terminations. If the Executive's employment under
this Agreement is terminated (i) by the Company pursuant to Section 4(c) or (ii)
by the Executive pursuant to Section 4(d), the Executive shall not thereafter be
entitled to receive any salary, bonus or other payments or benefits under this
Agreement, other than the following: (a) payments pursuant to Section 3(a) of
salary for the balance of the Term at the annual rate in effect immediately
prior to such termination; (b) reimbursement pursuant to Section 3(c) of
expenses incurred through the date of termination; (c) benefits pursuant to
Section 3(d)(i) for the earlier of the balance of the Term and the date the
Executive receives comparable coverage from a subsequent employer to the extent
permissible under the terms of the plans providing such benefits; (d) accrued
vacation; and (e) assignment of title to any life insurance policy covering the
life of the Executive after which time the Executive shall be fully responsible
for all costs of such policy due and payable after the Term (and provided that,
in the event such policy is a "split dollar" policy or otherwise evidences an
ownership interest by the Company, the Company shall be entitled to recover its
interest therein before any such assignment is effective).
(d) Mitigation. The Executive shall have no duty or obligation
to seek or accept other employment under this Agreement and shall not be
required to mitigate the amount of any cash payments or benefits provided for by
this Agreement by seeking or accepting employment.
6. Certain Restrictions.
(a) Confidentiality. The Executive acknowledges that he has
acquired and will acquire information respecting the business and affairs of the
Company, its subsidiaries and affiliates that is non-public, confidential and/or
proprietary in nature ("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 termination of his
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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.
(b) Competitive Activity.
(i) During the period of his employment hereunder and
for two years thereafter, Executive agrees that, without the prior
written consent of the Company, (A) he 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) he 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 6(b), a business
shall be deemed to be in competition with the Company and its
affiliates if it is involved in the sale or provision of dining
services or vending services at stadiums, ballparks, convention
centers, concert halls, theaters, seaports, golf courses, arenas, race
tracks, parks, bandstands, or other recreational venues.
(iii) Executive and the Company agree that this
covenant not to compete is a reasonable covenant under the
circumstances, and further agree that if in the opinion of any court of
competent jurisdiction such restraint is not reasonable in any respect,
such court shall have the right, power and authority to excise or
modify such provision or provisions of this covenant as to the court
shall appear not reasonable and to enforce the remainder of the
covenant contained in this Section 6(b) would irreparably injure the
Company. Accordingly, Executive agrees that the Company may, in
addition to pursuing any other remedies it may have in law or in
equity, cease making any payments otherwise required by this Agreement
and obtain an injunction against Executive from any court having
jurisdiction over the matter restraining any further violation of this
Agreement by Executive.
(iv) Nothing in this Section 6(b) shall prohibit the
Executive from acquiring or holding not more than five percent (5%) of
any class of publicly traded securities of any business.
7. Miscellaneous.
(a) Notices. Any notice or other communication made or given
in connection with this Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person, sent by nationally recognized
overnight courier service or mailed by registered mail, return receipt
requested, to a party at his or its address set forth below or at such other
address as a party may specify by notice to the other in accordance herewith:
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To the Executive:
Xxxx X. Xxx
00 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
To the Company:
VSI Acquisition II Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
Notices on behalf of a party may be signed and sent by an attorney for that
party.
(b) Entire Agreement; Amendment. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and is
intended (with the documents referred to herein) as a complete and exclusive
statement of the terms of the agreement between the parties with respect thereto
and cannot be changed or terminated orally.
(c) 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 or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.
(d) 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 required 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 Service America Corporation (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 which coverage shall be on terms and in
amounts at least as favorable to such Executive as they were under insurance
maintained by Service America Corporation immediately prior to the date herein.
(e) Assignment. Except as otherwise provided in this
paragraph, this Agreement shall inure to the benefit of, and be binding upon,
the parties hereto and their respective heirs, representatives, successors and
permitted assigns.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original, but all of
which together shall constitute the same instrument.
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(g) Captions. The captions in this Agreement are for
convenience of reference only and shall not be given any effect in the
interpretation of this Agreement.
(h) Governing Law. This Agreement shall, in accordance with
Section 51 1401 of the General Obligation Law of the State of New York, be
governed by the laws of the State of New York, without regard to any conflicts
of laws principles thereof that would call for the application of the laws of
any other jurisdiction.
(i) Arbitration. Any and all disputes or controversies arising
out of or relating to this Agreement, other than claims brought pursuant to
Section 6, 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 and any and all charges that may be made
in the cost of the arbitration and the fees of the arbitrator or any other
enforcement thereof.
(j) Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE A
JURY TRIAL IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
VSI ACQUISITION II CORPORATION
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxx
Title: Director
____________________________
Xxxx X. Xxx
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
VSI ACQUISITION II CORPORATION
By:__________________________
Name:
Title:
/s/ Xxxx X. Xxx
--------------------------
Xxxx X. Xxx
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