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EXHIBIT 10.19
THIS AGREEMENT IS SUBJECT TO ARBITRATION AS PROVIDED IN SECTIONS 6(H) AND 13
HEREOF
EMPLOYMENT AGREEMENT
Agreement dated as of January 1, 1997, between X.X. X'Xxxxx, an individual
residing at 0000 Xxxxxxxx, Xxxxxx, Xxxxx ("Executive"), and Onex Food Services,
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
$250,000;
C. "Director's Fee" shall mean an annual payment of $60,000;
D. "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;
E. "Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, association,
unincorporated organization or other entity; and
F. "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 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.
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2. Duties of Executive. Executive shall, during the term of his employment
under this Agreement, serve Corporation in the capacity of Chairman or Chief
Executive Officer with such duties as may from time to time be assigned to him
by the Board of Directors of Corporation; 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 January 31, 1999, unless earlier
terminated pursuant to the provisions of Section 9, 10 or 12 hereof.
4. Time Required to Devote to Duties and Place of Employment. Executive
shall devote reasonable and substantial efforts, although not full business
time, to the performance of the Executive's duties and the advancement of the
business and affairs of Corporation, including, if 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, 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, with his
concurrence, such other area in which the Board of Directors of Corporation may
determine to locate the principal executive offices of Corporation. Executive
shall not be required to relocate or establish a place of employment outside of
the areas contemplated by the preceding sentence.
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
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such semi-monthly employment period, together with any other monies
payable pursuant to this Agreement.
C. Director's Fee payable immediately following the first meeting of
the Board of Directors of Corporation in each year other than 1999.
6. Additional Matters. During the term of his employment hereunder,
Executive shall be entitled to:
A. 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.
B. All vacation sick leave and other benefits in accordance with
Corporation's policies currently and from time to time in effect for its
executive 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.
C. A perquisites allowance at the annual rate of $30,000 to cover
such items as an automobile allowance, country club membership, etc.
D. 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.
E. 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.
F. All benefits of a Participant in Corporation's Supplemental
Executive Retirement Plan and any and all successor plans (the "SERP").
Corporation agrees to
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purchase annuities as a means of further securing and paying benefits
pursuant to the SERP.
G. In the event that Executive becomes disabled during the term of
this Agreement (or any extension or renewal hereof) 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; or (iv) January
31, 1999; provided, however, that if disability benefits would otherwise
cease under the foregoing clauses (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
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(G).
7. Equity Participation. In connection with Executive's employment
pursuant hereto, Executive has purchased shares of the common stock 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
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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 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);
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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 Corporation's Board of Directors 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 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),
C. during the two-year period following the termination of
Executive's employment (i) by Corporation for good cause or (ii) by
Executive other than as permitted by the second sentence of Section 12
hereof, or
D. until 18 months after the expiration of the term contemplated by
Section 3 hereof
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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, payment of the then Basic Salary in accordance with Section 5 hereof
(payable when and as such payments would have become due in accordance with such
Section) for a period beginning on the date of termination and ending on January
31, 1999, 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. 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 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 Corporation 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 deemed assigned to such Person, and Executive shall
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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:
Corporation:
c/o SC International Services, Inc.
000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx 00000
Attention: Chief Financial and Administrative Officer
with a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Executive:
X. X. X'Xxxxx
0000 Xxxxxxxx
Xxxxxx, Xxxxx 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 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. In the event of an
inconsistency between the provisions of this Agreement and any benefit or plan
document referred to herein, the provision conferring the greater benefit upon
Executive shall control.
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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.
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.
24. Attorneys' Fees and Disbursements. Corporation agrees to pay
reasonable attorneys' fees (and disbursements) incurred by Executive in
connection with the preparation and execution of this Agreement, in an amount
not exceeding $750.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
/s/ X. X. X'Xxxxx
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X. X. X'Xxxxx
ONEX FOOD SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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