VOLUME SERVICES AMERICA
John T Dee
Chairman
Chief Executive Officer
January 5, 2001
Ms. Janet L. Stemmayer
7 Nawthorne Road
Old Greenwich, Connecticut 06870
Re: Enhanced Severance Benefits
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Dear Ms. Steinmayer:
As you know, the shareholders of Volume Services America Holdings, Inc. are
exploring the possible sale of all or substantially all of the business of
Holdings and its subsidiaries (the "Company") to a person or entity unaffiliated
with Blackstone Capital Partners II Merchant Banking Fund L.P. (the
"Purchaser"), by means of a disposition of stock, assets or otherwise (the
"Disposition").
It is not yet certain that any transaction will occur. However, the Company
recognizes that the uncertainties surrounding this event may result in the loss
or distraction of a limited number of key employees, including you, to the
detriment of the Company.
Therefore, the Company has decided to enhance the benefits that you will
receive under your Employment Agreement dated as of September 29, 1998 (the
"Employment Agreement"), in the event that the following two conditions are
satisfied: (a) the Disposition closes on or before December 31, 2001 and (b)
your employment terminates in connection with, or within the twelve (12) month
period following, the closing of the Disposition because the Company or the
Purchaser terminates your employment for any reason other than Cause, as defined
in your Employment Agreement, permanent disability or death, or you terminate
your employment for Good Reason, as defined in your Employment Agreement. The
two conditions described in this paragraph are referred to as the "Enhanced
Severance Conditions." (Please note that the termination of your employment
under any other circumstances will be governed by your Employment Agreement.)
Ms. Janet L. Steinmayer
January 5, 2001
Page 2
Enhanced Severance Benefits
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In the event the Enhanced Severance Conditions occur, you shall be entitled
to receive, from the Company or, if applicable, the Purchaser, in lieu of any
and all other, payments, and benefits to which you would otherwise be entitled
upon termination, under your Employment Agreement or otherwise, the following:
(1) a lump sum payment equal to three times (3x) your compensation under Section
3 (a) of your Employment Agreement over the one (1) year period prior to the
date of termination (annualized in the case of any termination prior to the end
of the first year), less withholdings for taxes, but up to a maximum payment
equal to two and ninety-nine one hundredths times (2.99x) your average W-2
compensation for the five (5) calendar years preceding the Disposition; (2)
payment for the accrued but unused part of your vacation in the year the
termination of your employment occurs; (3) notwithstanding anything to the
contrary in any bonus plan, payment for any accrued, but unpaid, bonus at the
time of termination or a pro-rated amount of your bonus in the event the
termination occurs prior to the end of the Company's fiscal year, but in either
case payable at the end of the second month following the end of the fiscal year
to which the bonus applies; (4) reimbursement of expenses incurred through the
date of termination; and (5) your present Company automobile (and title
thereto), free and clear of any lease or other obligations; and (6)
reimbursement for the Company subsidy portion of your payments for COBRA
coverage, if you elect such coverage, until you obtain comparable coverage under
another employer's insurance plan, but no longer than eighteen (18) months.
Payment of these Enhanced Severance Benefits shall be conditioned upon your
execution of a full release of all claims against the Company and/or the
Purchaser (other than claims with respect to vested retirement benefits,
deferred compensation, stock options and limited partnership interests and other
than with respect to workers compensation claims) in a form acceptable to the
Company or, if applicable, the Purchaser.
This correspondence contains the entire agreement concerning its subject
matter and replaces any other compensation plan, promise or arrangement you may
have or may be eligible for concerning its subject matter except that it shall
only amend and replace your Employment Agreement to the extent of enhancing the
severance available under the Enhanced Severance Conditions as described herein.
Your Employment Agreement shall otherwise remain in full force and effect. These
Enhanced Severance Benefits shall expire if the closing of the Disposition of
the Company has not occurred by December 31, 2001.
Sincerely,
VOLUME SERVICES AMERICA, INC.
/s/ John T. Dee
John T. Dee
Chairman and Chief Executive Officer