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EXHIBIT 10.20
THIS AGREEMENT IS SUBJECT TO ARBITRATION AS PROVIDED BY SECTION 13 HEREOF.
EMPLOYMENT AGREEMENT
Agreement dated as of January 1, 1997, between Xxxxxxx X. Xxx, an
individual residing at 000 Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000 ("Executive"), and
Sky Chefs, Inc., a Delaware corporation, having principal offices in Arlington,
Texas ("Corporation").
Corporation hereby employs Executive, and Executive accepts employment by
Corporation, upon the terms and subject to the conditions of this Agreement and,
accordingly, Executive and Corporation agree as follows:
1. Definitions. In this Agreement (including this Section) the following
terms shall have the following meanings:
A. "Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly, controls or is controlled by that Person,
or is under common control with that Person. For purposes of this
definition "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by
contract or otherwise;
B. "Basic Salary" shall mean a salary at the annual rate of
$600,000, provided that such amount shall be reviewed and be subject to
increase at the discretion of the Board of Directors of Corporation
annually having regard to job performance, cost-of-living considerations
and other factors;
C. "Employment Year" shall mean a twelve-month period commencing on
the 1st day of January and ending on the 31st day of December next
following; provided that if Executive's employment is terminated prior to
the end of a calendar year, the last Employment Year shall be the period
commencing on January 1st of such year and concluding on the date of
termination;
D. "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, association,
unincorporated organization or other entity; and
E. "Subsidiary" shall mean, with respect to any Person ("Owner"),
any Person of which securities or other interests having the power to
elect a majority of that Person's Board of Directors or similar governing
body (other than securities or interests
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having that power only upon the happening of a contingency that has not
occurred) or otherwise direct the management of such Person are held by
Owner or one or more of its Subsidiaries.
2. Duties of Executive. Executive shall, during the term of his employment
under this Agreement, serve Corporation in the capacity of President and Chief
Executive Officer, with such duties as may from time to time be assigned to him
by the Board of Directors; however, Executive shall not be required to perform
duties (i) other than those which are customarily and ordinarily performed by
executives in similar capacities of corporations similar to Corporation or (ii)
which are materially different in nature or scope from those previously
performed by Executive for Corporation prior to the execution hereof. It is
intended that Executive will be elected and serve as a member of the Board of
Directors of Corporation while he is employed hereunder. Executive shall, during
the term of his employment under this Agreement, serve in such positions with
Subsidiaries and Affiliates of Corporation as the Board of Directors of
Corporation may from time to time reasonably request. It is the intention of the
parties hereto to use and employ the abilities of Executive in the most mutually
advantageous fashion.
3. Term. The term of Executive's employment under this Agreement shall
commence on January 1, 1997 and expire on December 31, 2001, unless earlier
terminated pursuant to the provisions of this Section or Section 9, 10 or 12
hereof. The parties hereto agree that no later than January 2, 2001 they will
begin good faith discussions concerning the possible renewal or extension on
mutually agreeable terms of the employment of Executive by Corporation; provided
that neither party hereto shall be under any obligation to actually agree to a
renewal or extension hereof. If mutually acceptable terms for renewal are not
agreed upon by 5:00 P.M., Dallas, Texas, time on June 30, 2001, this Agreement
and the parties' obligations hereunder shall terminate (except Executive's
obligations pursuant to this Section and Sections 8 and 11 hereof), and
Executive shall be entitled to receive for a period beginning on July 1, 2001,
and ending June 30, 2002, (a) payment of the then Basic Salary in accordance
with Section 5 hereof (with no increase for 2002), (b) payment of an amount
equal to the average annual incentive bonus received by Executive pursuant to
Section 6(A) hereof for the preceding two full Employment Years (payable on or
before April 30, 2002) and (c) all other benefits in effect for senior
management employees at the time of such termination, including executive
medical plan and annual physical; provided, however, that all such benefits and
payments shall be reduced by any salary or other compensation for services
actually earned by Executive from any source during such period (excluding
income from passive investments). It is understood, however, that Executive
shall have no obligation to seek other employment during such period. This
severance payment shall be in lieu of, and not in addition to, severance
payments to which senior management employees of Corporation may be entitled
pursuant to policies of Corporation applicable to such employees or to employees
generally. In the event of any violation of Section 8 or Section 11 hereof,
Executive shall cease to be entitled to any payments pursuant to this Section 3
(no limitation on any other remedies available to Corporation being intended).
4. Time Required to Devote to Duties and Place of Employment. Executive
shall devote his full working time, attention and ability to the business of
Corporation, including, if
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applicable, its Subsidiaries and/or Affiliates to which Executive may have been
assigned under Section 2 hereof. Executive shall well and faithfully serve
Corporation, including such applicable Subsidiaries and/or Affiliates during the
continuance of his employment hereunder and use his best efforts to promote the
interests and welfare thereof. Notwithstanding the foregoing, Executive may
participate in community affairs and passive investment activities not involving
any measurable portion of Executive's business time, so long as such activities
do not interfere with the due performance of his duties hereunder. Executive's
place of employment shall be the Dallas/Fort Worth, Texas, area or such other
area in which the Board of Directors of Corporation may determine to locate the
principal executive offices of Corporation.
5. Remuneration.
A. In consideration of the services to be provided by him hereunder,
Executive shall, during the term of his employment hereunder, be paid the
Basic Salary in respect of each Employment Year or portion thereof in
equal semi-monthly installments in arrears.
B. Should Executive's employment hereunder be terminated on a day
other than a day when a semi-monthly installment of salary is payable to
Executive, the amount payable to Executive on the date of termination
shall be the remainder of the semi-monthly installment that would
otherwise be payable to him in accordance with the terms of this Section 5
as if his employment hereunder had been continued through the whole of
such semi-monthly employment period, together with any other monies
payable pursuant to this Agreement.
6. Additional Matters. During the term of his employment hereunder,
Executive shall be entitled to:
A. A bonus calculated in accordance with Corporation's incentive
bonus plan in effect from time to time.
B. All benefits and coverages provided by hospital, medical, dental,
group life, short and long-term disability coverage and retirement plan
benefits and coverages currently and from time to time made available to
employees and executives of Corporation under its executive employees'
benefit program; provided, however, that in no event shall any of such
benefits or coverages be modified so as to provide reduced levels of
benefits or coverages or otherwise be less advantageous to Executive than
were afforded to executive employees of Corporation in January 1996,
unless the Board of Directors of Corporation determines in its discretion
that it is in the best interests of Corporation to reduce such benefits or
coverages for senior executives of Corporation generally.
C. All vacation sick leave and other benefits in accordance with
Corporation's policies currently and from time to time in effect for its
executive
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employees (including without limitation split-dollar life insurance);
provided, however, that such benefits or programs shall not be less
advantageous than those afforded or provided by Corporation to its
executive employees in January 1996, unless the Board of Directors of
Corporation determines in its discretion that it is in the best interests
of Corporation to reduce such benefits or programs for senior executives
of Corporation generally.
D. A perquisites allowance at the annual rate of $30,000 to cover
such items as an automobile allowance, country club membership, etc. Such
amount may be adjusted from time to time by the Board of Directors.
E. Receive advances, or be reimbursed on a timely basis, for all
travel, entertainment and other out-of-pocket expenses, actually and
reasonably incurred by him in connection with the performance of his
duties hereunder and for which reasonable supporting documentation is
furnished to Corporation.
F. If Corporation has in effect, as of the date hereof or thereafter
during the term hereof, a plan or program for the deferral of sums payable
to Executive hereunder, an opportunity to participate therein.
G. All benefits of a Participant in Corporation's Supplemental
Executive Retirement Plan and any and all successor plans (the "SERP").
H. In the event that Executive becomes disabled during the term of
this Agreement (or any extension or renewal hereof) the Corporation shall
continue to pay Executive his full Basic Salary until the earliest to
occur of (i) the cessation of such disability; (ii) Executive's becoming
entitled to an unreduced Normal Retirement Pension under Corporation's
Defined Benefit Pension Plan, (iii) the Executive's death; provided,
however, that if disability benefits would otherwise cease under the
foregoing clause (ii) or (iii), such benefits shall continue until a date
which is at least one year from the date of disability, or most recent
disability, if that date is later. The amount payable to the Executive
shall be offset on a prospective basis by (i) the amount of any proceeds
received by Executive from any disability income program (whether or not
insured) maintained by Corporation or any Affiliate, (ii) the amount of
any disability payment under the U.S. Social Security Disability Insurance
Program; (iii) any amounts payable on account of disability under any
retirement program sponsored by Corporation or any Affiliate, including
any amounts payable under the SERP, exclusive however, of any benefits
resulting from a salary deferral or similar arrangement; and (iv) any
amount of remuneration received by Executive from gainful employment,
other than employment approved by Executive's physician for therapy or
rehabilitation. For purposes of this paragraph H, Executive shall be
deemed disabled if he suffers a physical, mental or emotional injury,
illness or disorder which renders him unable to perform substantially all
of his usual and customary duties for Corporation with the degree of
decorum and dignity normally associated with employment in a similar
capacity. In the event that there is a
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disagreement between Corporation and Executive concerning the existence of
a disability, such disagreement shall be resolved by the majority opinion
of three physicians, one of whom shall be appointed by Corporation, one of
whom shall be appointed by the Executive, and one of whom shall be
appointed by each of the two foregoing physicians. Executive's Basic
Salary shall be continued until such time as a determination is made on
the issue of disability, but not after the date on which such payments
would terminate pursuant to the first sentence of this Section 6(H).
7. Equity Participation. In connection with Executive's employment
pursuant hereto, Executive has purchased shares of the common stock of Onex Food
Services, Inc., an Affiliate of Corporation. Executive acknowledges and agrees
that (i) his purchase of those shares shall not entitle him to continued
employment by Corporation or affect Corporation's rights to terminate his
employment and (ii) his investment in those shares shall not be taken into
account in determining the damages, if any, which he would be entitled to
recover upon Corporation's termination of his employment in contravention of or
upon any other breach of, this Agreement.
8. Confidential Information. Executive acknowledges that, in the course of
performing and fulfilling his duties hereunder he may have access to and may be
entrusted with confidential information concerning the present and contemplated
activities of, the techniques and modes of business operations evolved and used
or to be evolved and used by Corporation, its Subsidiaries and Affiliates and
their respective customers and clients, which information is not generally known
in the industry in which Corporation does business, the disclosure of any of
which confidential information to competitors of Corporation, its Subsidiaries
or Affiliates or to other Persons would be highly detrimental to the interests
of Corporation, its Subsidiaries and Affiliates. Executive further acknowledges
and agrees that the right to maintain confidential such information constitutes
a proprietary right which Corporation, its Subsidiaries and Affiliates are
entitled to protect. Accordingly, Executive covenants and agrees with
Corporation and with each Subsidiary and Affiliate of Corporation that (i) he
will not during the continuance of his employment under this Agreement disclose
any of such confidential information to any Person, nor shall he use the same,
except as required in the normal course of his employment hereunder, and (ii)
after the termination or expiration of his employment under this Agreement, he
will not disclose or make any use of any of such information without the consent
of Corporation; provided, however, that Corporation acknowledges and agrees that
Executive shall not be prohibited by this Section from using the personal skills
and know-how developed by Executive prior to the execution of this Agreement and
during the term hereof and acknowledges and agrees that subject to the
provisions of Section 11 hereof, Executive may pursue a career and earn his
livelihood through the use of such skills and know-how he has obtained (but not
any confidential information, systems or techniques of Corporation) before and
during his employment hereunder after the termination or expiration of this
Agreement without the express consent of, or any liability to, Corporation.
Executive acknowledges and agrees that in the event of any actual or threatened
violation of the provisions of this Section 8 or of Section 11 hereof,
Corporation and/or any Subsidiary or Affiliate may commence proceedings in any
court of competent jurisdiction for, and shall be entitled to obtain,
preliminary and permanent injunctive relief or other appropriate equitable
remedies (without any bond or other security being required) and an
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accounting of all profits and benefits arising out of such violation, which
rights and remedies shall be in addition to any other rights or remedies to
which such Person may be entitled at law.
9. Termination of Agreement by Corporation for Cause. This Agreement shall
not be terminable by Corporation prior to the expiration of the term hereof
except for good cause or as contemplated by Section 12 hereof. As used herein,
"good cause" shall be limited to the following:
A. Executive's repeated unavailability or refusal to devote the time
required for the performance of his duties as described in Section 2
hereof;
B. Executive's intentional and repeated refusal to follow
instructions of the Board of Directors of Corporation (provided such
instructions are made in good faith, are not arbitrary or capricious and
do not require Executive to subject himself to criminal liability or
material civil liability against which he is not indemnified by
Corporation) (Corporation acknowledges that "intentional and repeated"
connotes reasonable notice to Executive after one or more instances of
refusal and prior to any further instances which, together with earlier
ones, are relied on by Corporation for termination under this paragraph
9B);
C. Intentional misrepresentation or unlawful conduct by Executive in
the discharge of his responsibilities;
D. Executive's intentional disclosure to third parties of any
material confidential business information (as described in Section 8
hereof) without Corporation's consent; or
E. Theft of or fraud by Executive involving property of Corporation
or any of its Subsidiaries or Affiliates, conviction of Executive of a
felony, criminal offense or other action by Executive involving moral
turpitude which brings the Corporation into public disrepute.
Corporation recognizes that one of the principal benefits to it of the
employment of Executive hereunder will be the benefit of Executive's best
independent judgment in connection with his area of responsibility. Accordingly,
notwithstanding anything to the contrary herein, good cause for termination of
Executive hereunder shall not include Executive's exercising his right to
articulate to the Board of Directors of Corporation his views as to
Corporation's plans or policies, so long as he carries out the instructions of
the Board of Directors of Corporation.
Prior to terminating Executive's employment pursuant to paragraph 9A
hereof, Corporation shall advise Executive in writing of the non-performance
that permits such termination and Executive shall have a period of 30 days after
such notice is given within which to cure such claimed non-performance and
Corporation may not terminate his employment hereunder pursuant to paragraph 9A
hereof unless such non-performance is not cured during that
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period. However, if the procedure contemplated by the preceding sentence is
followed twice during the term of this Agreement, the preceding sentence shall
not apply thereafter.
10. Death of Executive. This Agreement shall terminate upon the death of
Executive.
11. Covenant Not to Compete. Executive covenants and agrees with
Corporation that he will not (without the prior written consent of Corporation)
at any time
A. during the term of his engagement hereunder,
B. during the period with respect to which he is actually receiving
payments pursuant to Section 12 hereof (or could have been so entitled but
for the last sentence of Section 12 hereof) or Section 3 hereof (or could
have been so entitled but for the last sentence of Section 3 hereof),
C. during the two-year period following the termination of
Executive's employment (x) by Corporation for good cause or (y) by
Executive other than as permitted by the second sentence of Section 12
hereof, or until June 30, 2004, whichever occurs first, or
D. until June 30, 2004, provided that during the renewal discussions
required by Section 3, Corporation has offered to extend Executive's
employment through at least December 31, 2003, at compensation no less
than he is then receiving, either individually or in partnership or in
conjunction with any Person or Persons, as principal, agent, shareholder,
guarantor, creditor, employee or in any other manner whatsoever, carry on
or be engaged in or advise, lend money to, guarantee the debts or
obligations of, or permit his name or any part thereof to be used by any
Person engaged in or concerned with or interested in any business carried
on, within the United States or any country anywhere in the world in which
Corporation or any of its Subsidiaries or Affiliates (or LSG Lufthansa
Service GmbH) carries on business (whether directly or through a joint
venture or similar arrangement), which competes with the products
manufactured and sold or services provided by Corporation or any of its
Subsidiaries or Affiliates (or LSG Lufthansa Service GmbH).
12. Rights and Remedies of Executive. Should Corporation violate or fail
to perform any material provision hereof, Executive shall have the right and
option, upon written notice to Corporation, to terminate his employment under
this Agreement. In the event of (i) a termination of Executive's employment by
Corporation other than for good cause or (ii) a termination of Executive's
employment by Executive by reason of a material violation or failure of
Corporation to perform any material provision hereof, Executive shall be
entitled to receive, as the exclusive remedy for such termination, violation or
failure, (a) payment of the then Basic Salary in accordance with Section 5
hereof, (b) payment of an amount equal to the average annual incentive bonus
received by Executive pursuant to Section 6(A) hereof for the preceding two
years (payable when and as such payments would have become due in accordance
with such
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Section) and (c) all other benefits in effect for senior management employees at
the time of such termination including the annual benefit amount described in
6D, executive medical plan and annual physical, for each year for the period
beginning on the date of termination and ending on December 31, 2002, reduced by
any salary or other compensation for services actually earned by Executive from
any source during such period (excluding income from passive investments). It is
understood, however, that Executive shall have no obligation to seek other
employment during such period. If as of the date of termination of Executive's
employment he had received only one annual incentive bonus, the bonus increment
of the Severance Amount shall be equal to such prior incentive bonus. If as of
the date of termination of Executive's employment he had not received an
incentive bonus, there shall be no bonus increment for the Severance Amount,
unless in the sole discretion of Corporation, Corporation shall elect to include
such an increment. This Severance Payment shall be in lieu of, and not in
addition to, severance payments to which senior management employees of
Corporation may be entitled pursuant to policies of Corporation applicable to
such employees or to employees generally. In the event of any violation of
Section 8 or Section 11 hereof, Executive shall cease to be entitled to any
payments pursuant to this Section 12 (no limitation on any other remedies
available to Corporation being intended).
13. Arbitration. Except as contemplated by the last sentence of Section 8
hereof, any dispute between the parties hereto, whether arising during the
period of this Agreement or at any time thereafter which relates to the
validity, construction, meaning, performance or effect of this Agreement or the
rights and obligations of the parties hereto shall be determined pursuant to the
commercial arbitration rules of the American Arbitration Association in Dallas,
Texas. The decision of the arbitrators pursuant to such procedures shall be
final and binding upon the parties and shall not be subject to appeal. The
decision of the arbitrators with respect to a disputed claim that this Agreement
was terminated for good cause shall be binding upon the parties hereto (and, by
its signature hereto, on Onex Food Services, Inc.) for the purposes of
determining whether the Executive was terminated "with cause" within the meaning
of Section 2.3 of the Management Shareholders Agreement dated May 29, 1986 to
which Onex Food Services, Inc. and Executive are parties, but shall not be
binding with respect to, and shall have no effect on the determination of, any
dispute under any other agreement between the parties.
14. Assignment. Neither this Agreement nor the parties' obligations
hereunder are assignable; provided, however, that in the event that all or
substantially all of the assets and liabilities of Corporation are transferred
to another Person at any time during the term of this Agreement, this Agreement
shall be assigned to such Person, and Executive shall continue to be bound by
the provisions hereof provided that such assignee shall assume and agree to
perform all obligations of Corporation expressed herein. No such assignment
shall release Corporation from its obligations to Executive under this
Agreement, and Corporation shall remain liable hereunder notwithstanding such
assignment.
15. Notices. All notices which may or are required to be given pursuant to
this Agreement shall be in writing and shall be served properly if personally
delivered or mailed by registered mail, postage prepaid, addressed as follows:
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Corporation:
c/o SC International Services, Inc.
000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx 00000
Attention: Chief Financial and Administrative Officer
with a copy to:
c/o Kaye, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Executive:
Xxxxxxx X. Xxx
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
or to such other address or addresses as any such party may from time to time
designate by notice in writing to the others. The date of receipt of any such
notice shall be the date of delivery, if the notice is personally served or, if
mailed, on the third business day next following the date of mailing.
16. Entire Agreement. This Agreement (together with all benefit or plan
documents referred to herein) constitutes the entire understanding between the
parties (and Onex Food Services, Inc., with respect to the subject matter
hereof, superseding all negotiations, prior discussions and agreements, written
or oral. This Agreement may not be amended except in writing executed by the
parties hereto.
17. Indemnification. The certificate of incorporation or by-laws of
Corporation shall provide for indemnification of Executive to the full extent
provided by Section 145 of the Delaware General Corporation Law.
18. Further Assurance. Each of the parties hereto shall do or cause to be
made, done and executed, all such further and other things, acts, deeds,
documents, conveyances and assurances as may be necessary or reasonably required
to carry out the intended purpose of this Agreement fully and effectually.
19. Construction. Where the singular or masculine are used in this
Agreement, the same shall be construed as being the plural or feminine or neuter
and vice versa, where the context so requires or permits.
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20. Headings. The headings of the Sections of this Agreement are inserted
for purposes of convenience of reference only and shall not affect the
construction or meaning of any provision of this Agreement.
21. Severability. If any covenant or provision herein is determined to be
void or unenforceable, in whole or in part, it shall not be deemed to affect or
impair the validity of any other covenant or provision or the remaining part or
parts thereof.
22. Good Faith. The parties agree to conduct themselves in good faith and
deal fairly with each other in the employment relationship created by this
Agreement and to refrain from action which injures either party's right to
receive the benefits hereof.
23. Governing Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXXX X. XXX SKY CHEFS, INC.
/s/ Xxxxxxx X. Xxx By /s/ Xxxxxxx X. Xxxxxxx
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FOR THE PURPOSES STATED IN
SECTION 13.
ONEX FOOD SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxxx
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