Document:

BOARD OBSERVER AGREEMENT

 

Exhibit 4.9

	 	 	 
	 

	 	December 10, 2003

Blackstone Capital Partners II Merchant Banking Fund

c/o Blackstone Management Associates II L.L.C.

345 Park Avenue

New York, New York 10154

Attention: Howard A. Lipson

To Whom It May Concern:

          Reference is made to the Prospectus dated December 4, 2003 (the
“Prospectus”), pursuant to which Volume Services America Holdings, Inc. (the
“Company”) is offering to the public, pursuant to an effective registration
statement, the opportunity to purchase certain Income Deposit Securities (the
“IDSs”). As of the date hereof, Blackstone Capital Partners II Merchant
Banking Fund and certain of its affiliates (collectively, the “Investor”),
beneficially own 4,310,822 shares of the common stock of the Company (“Stock”).

          The Company hereby agrees that at all times on and after the date hereof,
so long as the Investor continues to hold any shares of Stock (or other
securities of the Company into which such shares of Stock may be converted or
for which such shares of Stock may be exchanged, including any IDSs), the
Company shall, without limitation or prejudice to any of the rights provided to
purchasers under the Prospectus in their capacity as stockholders of the
Company or any of the rights of existing stockholders of the Company:

	•	 	Provide the Investor or its designated representative, to the extent not
prohibited by applicable law or any applicable rules or regulations
(including, without limitation, of any securities exchange on which
securities of the Company are registered) (such law, rules and
regulations, “Applicable Law”), with:

     (i) the right to visit and inspect any of the offices and properties
of the Company and its subsidiaries and inspect and copy the books and
records of the Company and its subsidiaries, at such times as the
Investor shall reasonably request;

     (ii) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the
Company, consolidated balance sheets of the Company and its subsidiaries
as of the end of such period, and consolidated statements of income and
cash flows of the Company and its subsidiaries for the period then ended
prepared in conformity with generally accepted accounting principles in
the United States applied on a consistent basis, except as otherwise
noted therein, and subject to the absence of footnotes and to year-end
adjustments;

     (iii) as soon as available and in any event within 120 days after
the end of each fiscal year of the Company, a consolidated balance sheet
of the Company and its subsidiaries as of the end of such year, and
consolidated statements of income and cash flows of the Company and its
subsidiaries for the year then ended prepared in conformity with
generally accepted accounting principles in the United States applied on
a consistent

 

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basis, except as otherwise noted therein, together with an auditor’s
report thereon of a firm of established national reputation;

     (iv) to the extent the Company is required by Applicable Law or
pursuant to the terms of any outstanding indebtedness of the Company to
prepare quarterly reports and other periodic reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, any such reports
actually prepared by the Company as soon as available; and

     (v) copies of all materials provided to the Company’s board of
directors (the “Board”).

	•	 	Make appropriate officers and/or directors of the Company available
periodically and at such times as reasonably requested by the Investor
for consultation with the Investor or its designated representative
(to the extent not prohibited by Applicable Law) with respect to
matters relating to the business and affairs of the Company and its
subsidiaries, including, without limitation, significant changes in
management personnel and compensation of employees, introduction of
new products or new lines of business, important acquisitions or
dispositions of plants and equipment, significant research and
development programs, the purchasing or selling of important
trademarks, licenses or concessions or the proposed commencement or
compromise of significant litigation;
	 
	•	 	Inform the Investor or its designated representative (to the extent
not prohibited by Applicable Law) in advance with respect to any
significant corporate actions, including, without limitation,
extraordinary dividends, mergers, acquisitions or dispositions of
assets, issuances of significant amounts of debt or equity and
material amendments to the certificate of incorporation or by laws of
the Company;
	 
	•	 	Provide the Investor or its designated representative with the right
to consult with the Company with respect to such actions;
	 
	•	 	Provide the Investor or its designated representative (to the extent
not prohibited by Applicable Law) with such other rights of
consultation as may reasonably be determined by the Investor to be
necessary to qualify the Investor’s investment in the Company as a
“venture capital investment” for purposes of the United States
Department of Labor Regulation published at 29 C.F.R. Section
2510.3-101(d)(3)(i) (the “Plan Asset Regulation”);
	 
	•	 	Grant the Investor the right to designate one non-voting board
observer who will be entitled to attend all meetings of the Board,
participate in all deliberations of the Board and receive copies of
all materials provided to the Board, provided that such observer shall
have no voting rights with respect to actions taken or elected not to
be taken by the Board; and provided, further, that such observer (i)
is deemed acceptable to the Board acting reasonably and in good faith
and (ii) executes, prior to his or her attendance at the first of such
meetings, a standard non-disclosure and market stand-off agreement
with the Company in the form attached hereto as Exhibit A; and
	 
	•	 	Consider, in good faith, the recommendations of the Investor or its
designated representative in connection with the matters on which it
is consulted as described above,

 

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	 	 	recognizing that the Company shall retain the ultimate discretion with
respect to all such matters.

          In the event the Investor transfers all or any portion of its investment
in the Company to an affiliated entity that is intended to qualify as a
“venture capital operating company” under the Plan Asset Regulation, such
transferee shall be afforded the same rights with respect to the Company
afforded to the Investor hereunder and shall be treated, for such purposes, as
a third party beneficiary hereunder.

          This letter agreement and the rights and the duties of the parties hereto
shall be governed by, and construed in accordance with, the laws of the State
of New York and may be executed in counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.

[SIGNATURE PAGE FOLLOWS]

 

	 	 	 	 	 	 	 
	 	 	VOLUME SERVICES AMERICA HOLDINGS, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	 /s/ Lawrence E. Honig

	

	 	 	 	Name:
	 	Lawrence E. Honig
	

	 	 	 	Title:
	 	Chief Executive Officer and

Chairman of the Board of Directors

Agreed and acknowledged as of the date first above written:

	 	 	 	 	 	 	 
	BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND
	

	 	 	 	 	 	 
	By:	 	Blackstone Management Associates II L.L.C.,

its general partner	 	 
	

	 	 	 	 	 	 
	By:	 	 /s/ Howard A. Lipson

	 	 
	

	 	Name:
	 	Howard A. Lipson	 	 
	

	 	Title:
	 	Managing Member	 	 

 

EXHIBIT A

________ __, 2003

Re: Confidential Information Obtained as VSAH Board Observer

[Name of board observer]

[Address]

Dear [    ]:

     In connection with your designation as a non-voting observer (“Observer”),
who will be entitled to attend all meetings of the board of directors (the
“Board”) of Volume Services America Holdings, Inc. (the “Company”) and
participate in all deliberations of the Board, the Company is prepared to make
available to you certain information concerning the business and properties of
the Company, including copies of all materials provided to all members of the
Board.

     1. By your execution of this letter agreement, you agree to treat any
non-public information (whether oral or written, or electronic media)
concerning the financial data, strategic business plans, and other non-public,
proprietary and confidential information concerning the Company and its
subsidiaries, which has been or will be furnished to you by or on behalf of the
Company (herein collectively referred to as “Confidential Information”) in
accordance with the provisions of this letter agreement, and to take or refrain
from taking certain actions hereinafter set forth.

     2. You also hereby agree that you shall safeguard the Confidential
Information and use the Confidential Information solely within the scope of
your role as an Observer, that the Confidential Information will be kept
confidential by you, and that you will not disclose any of the Confidential
Information in any manner whatsoever; provided, however, that you may make any
disclosure of such information without being deemed to be in breach of this
letter agreement (a) to which the Company (either by a majority of the Board
or by any one of the named executive officers of the Company) gives its prior
written consent, (b) to Blackstone Management Associates II L.L.C. and its
affiliates, agents and representatives (including, without limitation,
attorneys, accountants, and financial advisors), provided they are aware of
this agreement and are bound by its terms, and (c) in the event and to the
extent required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order you to divulge, disclose or make
accessible such information, subject to paragraph 3 below.

     3. If you are requested or required by law, regulation or legal process
(including requests for information, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, you will promptly
provide the Company with written notice of any such request or requirement so
that the Company may seek an appropriate protective order or consider waiving
your compliance with the confidentiality provisions of this letter agreement.
If, failing the entry of a protective order or the receipt of a waiver
hereunder, you are, in the

 

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opinion of your counsel, legally required to disclose Confidential
Information, you may disclose only that portion of such information as is
legally required; provided, that you agree to use your reasonable efforts to
obtain assurances that confidential treatment will be accorded such
information.

     4. You hereby acknowledge that you are aware that the United States
securities laws prohibit any person who has received from an issuer material,
non-public information concerning the matters which are the subject of this
letter from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell
such securities.

     5. At any time upon the request of the Company, you will promptly deliver
to the Company or destroy any and all Confidential Information that has been
previously provided to you, except that one copy of any such Confidential
Information may be retained by you for your records. Notwithstanding any such
return, destruction or retention of the Confidential Information, you will
continue to be bound by your obligations of confidentiality and other
obligations hereunder for the term specified herein.

     In case any provision of this letter agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

     It is further understood and agreed that any breach of this letter
agreement by you would result in irreparable harm to the Company, that money
damages would not be a sufficient remedy for any such breach of this letter
agreement and that the Company shall be entitled to equitable relief,
including injunction and specific performance, as a remedy for any such
breach. Such remedies shall not be deemed to be the exclusive remedies for a
breach of this letter agreement but shall be in addition to all other remedies
available at law or equity to the Company.

     This letter agreement shall terminate and be of no further force and
effect two (2) years from the date your designation as an Observer is
terminated. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York and each party hereto agrees
to submit to the jurisdiction and venue of the federal or state courts located
in the City of New York. This letter agreement may not be amended except
pursuant to a written agreement duly executed by you and the Company.

 

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     Please confirm your agreement with the foregoing by signing and returning
to the undersigned an executed copy of this letter agreement.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	VOLUME SERVICES AMERICA HOLDINGS, INC.
	 
	 	 	 	 
	

	 	By:
	 	 

	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	 
	 	 	 	 
	Accepted and agreed as of the date
first above written:
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Name:LONG-TERM INCENTIVE PLAN

 

Exhibit 10.10

 

VOLUME SERVICES AMERICA HOLDINGS, INC.

 

LONG TERM INCENTIVE PLAN

 

 

VOLUME SERVICES AMERICA HOLDINGS, INC.

LONG TERM INCENTIVE PLAN

Purpose of Long Term Incentive Plan

     The purpose of the Volume Services America Holdings, Inc. Long Term
Incentive Plan (the “Plan”) is to enable Volume Services America Holdings, Inc.
(the “Corporation”) to strengthen the mutuality of interests between employees
of the Corporation and its Subsidiaries and the Corporation’s Unitholders, by
providing long term performance-based compensation incentives.

	1.	 	Defined Terms

	 	1.1	 	In this Plan, the following terms have the following meanings:

          “Account” has the meaning given to such term in Section 4.1.

          “Account Balance” has the meaning given to such term in Section 4.1.

          “Actual Distribution Per Unit” means, for the applicable Fiscal
Year, the quotient of (x) the Aggregate Distribution Amount in respect of
such Fiscal Year, divided by (y) the average number of Units outstanding
in such Fiscal Year (calculated by adding the number of Units issued and
outstanding at the end of each calendar month ending in such Fiscal Year
and dividing such sum by the number of calendar months ending in such
Fiscal Year).

          “Affiliate” means, with respect to any Person, any other Person that
directly, or through one or more intermediaries, controls or is
controlled by or is under common control with such Person.

          “Aggregate Distribution Amount” in respect of any given Fiscal Year
means the aggregate amount of the Distributions.

          AMEX” means the American Stock Exchange, or any other principal U.S.
exchange or market upon which the Units are listed or posted for trading.

          “Annual Allocation Amount” has the meaning given to such term in
Section 4.1.

          “Applicable Laws” means all applicable provisions of law, domestic
or foreign, including, without limitation, the United States Securities
Act of 1933, as amended (the “US Securities Act”), the United States
Securities Exchange Act of 1934, as amended (the “US Exchange Act”), and
the Securities Act (Ontario) as amended (the “Ontario Securities Act”),
together with all regulations, rules, policy statements, rulings,
notices, orders or other instruments promulgated thereunder and Stock
Exchange Rules.

 

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          “Base Distribution Per Unit” means, for the Fiscal Year 2004, an
Actual Distribution Per Unit equal to $1.20; and the Committee shall set
the Base Distribution Per Unit in respect of each Fiscal Year thereafter.

          “Beneficiary” means any person designated by a Participant by
written instrument filed with the Corporation to receive any amount,
securities or property payable under the Plan in the event of a
Participant’s death or, failing any such effective designation, the
Participant’s estate as provided in Section 5.3.

          “BNY” means the Bank of New York, in its capacity as depositary of
Units pursuant to the Prospectus, and any successor thererto.

          “Board” means the board of directors of the Corporation or any
committee thereof designated by the full board of directors of the
Corporation, in each case as constituted from time to time.

          “Cause” means (i) if the applicable Participant is party to an
effective employment agreement with the Corporation or any of its
Subsidiaries, “Cause” shall have the same meaning as such term is defined
therein; (ii) if the applicable Participant is not a party to an
effective employment agreement but is a party to an effective equity
award agreement pursuant to any stock incentive plan of the Corporation,
“Cause” shall have the same meaning as such term is defined therein; and
(iii) if the applicable Participant is not a party to any such effective
agreements, “Cause” shall be defined in the good faith determination of
the Committee, and shall include notice to the Participant of such
determination and an opportunity for the Participant to cure such event
(if the Committee determines such event is reasonably curable).

          “Code” means the United States Internal Revenue Code of 1986, as
amended from time to time.

          “Committee” means the compensation committee of the Board, as such
committee is from time to time constituted and which, for purposes of
meeting certain requirements of Section 162(m) of Code and any
regulations promulgated thereunder, which may be deemed to be any
subcommittee of the Committee, to which the Committee has delegated its
duties and authority under this Plan, consisting solely of at least two
“outside directors,” as defined under Section 162(m) of the Code and the
regulations promulgated thereunder.

          “Corporation” means Volume Services America Holdings, Inc. and its
successors.

          “Distributions” means all distributions of cash (including interest
and dividends), securities and other property made in respect of
outstanding Units made to Unitholders of the Corporation, pursuant to the
terms of the Prospectus and other Offering documents.

          “Effective Date” means the closing date of the Offering.

 

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          “Eligible Person” means an executive officer or other senior
employee of the Corporation or one of its Subsidiaries.

          “Excess” for a given Fiscal Year means the amount determined when
the Excess Per Unit for such Fiscal Year is multiplied by the average
number of Units issued and outstanding during such Fiscal Year
(calculated by adding the number of Units issued and outstanding at the
end of each calendar month ending in such Fiscal Year and dividing such
sum by the number of calendar months ending in such Fiscal Year).

          “Excess Per Unit” in a Fiscal Year means the amount by which the
Actual Distribution Per Unit in that Fiscal Year exceeds the Base
Distribution Per Unit in respect of such Fiscal Year.

          “Fiscal Year” means any fiscal year of the Corporation and its
Subsidiaries, as in existence from time to time and reported in the
Corporation’s annual reports filed with the AMEX and/or the TSX, as
applicable.

          “Initial Performance Period” means the period beginning on January
1, 2004 and ending on the last day of the Fiscal Year 2006.

          “Offering” means the initial public offering of the Units as
described in the Prospectus.

          “Participant” means an Eligible Person to whom a Right has been
granted by the Committee.

          “Performance Period” means any period during which a Participant may
become vested in his or her Rights, as may be established by the
Committee.

          “Performance Targets” means, collectively, the Base Distribution Per
Unit and the Target Distribution Per Unit, all as may be established by
the Committee for any given Performance Period not later than 90 days
after the commencement of any such Performance Period.

          “Person” means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the US Exchange Act).

          “Plan” means this Volume Services America Holdings, Inc. Long Term
Incentive Plan, as an “employee benefit plan” (within the meanings of the
US Exchange Act and the Ontario Securities Act), as amended from time to
time.

          “Prescribed Portion” means, for the Fiscal Year 2004, 20% of the
Excess; and for each subsequent Fiscal Year means such percentage or
percentages of the Excess as the Committee may establish for that Fiscal
Year.

          “Prospectus” means the (final) Prospectus filed as the Corporation’s
Form S-1 Registration Statement under the US Securities Act providing for
the Offering, and includes any amendment or amendments thereof.

 

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          “Right” means the right of a Participant to vest in and otherwise
receive payment of all Annual Allocation Amounts credited to his or her
Account upon the Corporation’s achievement of the established Performance
Targets in respect of the applicable Performance Period, subject to and
in accordance with the terms and conditions of the Plan.

          “Stock Exchange Rules” means the applicable rules of the AMEX and
the TSX, or any other principal stock exchange or market upon which the
Units are listed or posted for trading.

          “Subsidiary” means any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation if each
of the corporations (other than the last corporation in the unbroken
chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the
chain.

          “Target Distribution Per Unit” means, for Fiscal Year 2004, an
Actual Distribution Per Unit equal to $1.275; and the Committee will set
the annual Target Distribution Per Unit in respect of each Fiscal Year
thereafter in respect of the applicable Performance Period.

          “TSX” means the Toronto Stock Exchange, or any other principal
Canadian exchange or market upon which the Units are listed or posted for
trading.

          “Units” means the Income Depository Receipts (“IDRs”) offered to the
public pursuant to the Prospectus (or such other securities as the IDRs
may convert into or be exchanged for).

          “Unit Value” means, per Unit, on the last day of the applicable
Performance Period in respect of which Account Balances are to be paid to
a Participant (or, if the Account Balances are payable upon a termination
of employment, on the Participant’s termination date), (i) the closing
trading price of the Units as reported on the AMEX (or, if the Units are
not traded on AMEX, as reported on the TSX) on such day or (ii) if the
closing trading price is not available for the Units on such date, then
the next preceding practicable date for which such closing trading price
is available.

	2.	 	Administration of the Plan

     2.1 The Committee shall administer the Plan in accordance with its
provisions. The Committee may, from time to time, establish administrative
rules and regulations and prescribe forms or documents relating to the
operation of the Plan as it may deem necessary to implement or further the
purpose of the Plan and amend or repeal such rules and regulations or forms or
documents.

     2.2 The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision of
the Committee in the interpretation and administration of the Plan, as
described herein, shall lie within its sole and absolute discretion and shall
be final, conclusive and binding on all parties concerned. No member of the

 

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Committee and no officer of the Company shall be liable for anything done
or omitted to be done by him or her, by any other member of the Committee or by
any officer of the Company in connection with the performance of duties under
the Plan.

	3.	 	Grant and Vesting of Rights by the Corporation

     3.1 From time to time, the Committee may grant Rights to a Participant in
accordance with the Plan. In granting such Rights, the Committee shall have the
power to determine:

	 	(a)	 	the Eligible Persons who will be a Participant;
	 
	 	(b)	 	subject to Section 3.2, the Rights of each Participant;
	 
	 	(c)	 	the Base Distribution Per Unit and Target Distribution Per Unit;
	 
	 	(d)	 	subject to Section 3.4, the Performance Period; and
	 
	 	(e)	 	such other terms or conditions that the Committee
may, in its sole discretion, determine.

     3.2 In making its determinations pursuant to Section 3.1(a), the Committee
may take into account the Participant’s level of responsibility, rate of
compensation, individual performance and contribution, and such other criteria
as it deems appropriate in assessing the value of the Participant’s service.
Notwithstanding the foregoing, the maximum amount (in cash or Unit Value
payable in Units) that any one Participant is entitled to receive in any
three-year period may not exceed $2,000,000 (USD).

     3.3 The Committee is not obligated to grant any Rights to any specific
individual, to grant any Rights at all, or to continue granting Rights to any
Eligible Person once such grants have commenced. Neither the designation of an
individual as a Participant nor the grant of any Rights to any Participant
entitles any Participant to the grant, or any additional grants, as the case
may be, of any Rights under the Plan.

     3.4 Subject to the provisions of Section 7, Rights granted to Participants
in respect of the Initial Performance Period shall vest on the last day of the
Initial Performance Period.

     3.5 No certificates shall be issued with respect to any Rights granted
hereunder.

	4.	 	Accounts

     4.1 Creation and Crediting of Accounts. The Corporation shall establish
and maintain a separate notional account for each Participant (each, an
“Account”) to which the percentage, if any, of the Prescribed Portion that the
Participant is allocated by the Committee in respect of any given Fiscal Year
during an applicable Performance Period, upon the achievement of applicable
Performance Targets (the “Annual Allocation Amounts”) are to be credited. The
Corporation shall credit all Annual Allocation Amounts, if any, to each
Participant’s Account, by no later than the last day of the first fiscal
quarter following the end of the applicable Fiscal Year in respect of which the
Annual Allocation Amounts are determined.

 

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All Annual Allocation Amounts credited to a Participant’s account,
collectively, are hereinafter referred to as the “Account Balance.”

     4.2 Payment of Accounts; Form of Payment. Unless otherwise agreed in
writing, the Corporation shall make payment to each Participant of his or her
Account Balance following the end of the applicable Performance Period, but in
no event later than the last day of the first fiscal quarter following the end
of the applicable Performance Period; provided, however, that in the event that
a Participant’s Account Balance is to be paid pursuant to the provisions of
Section 7, such payment shall be required to be made no later than thirty (30)
business days after the date the Participant ceases to be an Eligible Person.
Account Balances will be paid in the form of Units (including Units purchased
by the Corporation in the open market (either on the AMEX or the TSX, as the
Committee deems appropriate, consistent with Applicable Laws)) and/or cash, in
the discretion of the Committee; provided, that if the Account Balances are
paid in the form of Units, the number of Units that will be paid out to the
Participant will be equal to the quotient of (x) the Participant’s Account
Balance divided by (y) the Unit Value on the last day of the applicable
Performance Period (or, if the Account Balance is being paid pursuant to
Section 7, the Unit Value on the date the Participant ceases to be an Eligible
Person).

	5.	 	Operation of the Plan

     5.1 As a condition of participating in the Plan, each Participant agrees
to comply with all such Applicable Laws and agrees to furnish to the
Corporation all information and undertakings as may be required to permit
compliance with such Applicable Laws.

     5.2 In the event that a Participant’s Account Balance is to be paid in
Units, the Corporation shall immediately transfer such Units to such
Participant through the book-entry system maintained by BNY. Payment (whether
in cash or other property) of the Participant’s Account Balance shall be
immediately transferred by the Corporation to the Participant or as the
Participant otherwise direct.

     5.3 Each Participant agrees to notify in writing the Corporation, as soon
as practicable after receipt of notification of such Participant’s
participation in this Plan, of the name of the Participant’s nominee or
Beneficiary, as applicable to which the Account Balance is to be transferred,
and any other account details necessary to effect the transfer. The
Participant shall promptly notify the Corporation in writing of any changes to
the Participant’s nominee and/or Beneficiary.

     5.4 The Corporation may withhold from the payment of each Participant’s
Account Balance all taxes and other assessments, if any, required by Applicable
Law to be withheld.

	6.	 	Fundamental Changes and Adjustments

     6.1 If (a) the Corporation merges into any other entity and more than 50%
of its voting power is acquired by a Person or group of Persons acting in
concert; (ii) the Corporation shall sell the whole or substantially the whole
of its assets or business for cash or securities of another corporation or
entity (other than to an Affiliate of the Corporation); or (iii) upon any other
form of business combination involving the Corporation wherein more than 50% of
the voting power of the Corporation is acquired by a Person or Group of Persons
acting in concert: then (i) the then current Fiscal Year shall be deemed to end
on the last day of the month prior to

 

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the effective date of the merger, business combination or sale; (ii) the
Base Distribution Per Unit and Actual Distribution Per Unit shall be pro rated
for the number of months in such shortened Fiscal Year; and (iii) the Committee
shall determine whether there is any Excess, and, if so, the Participants shall
vest, immediately prior to the effective date of such merger, business
combination or sale, in any unvested Account Balances.

     6.2 To the extent applicable (in connection with Section 6.1 or
otherwise), the Committee shall give effect to adjustments in the number of
Units if any, payable hereunder resulting from subdivisions, consolidations or
reclassifications of the Units, or other relevant changes, to the Units or
capital structure of the Corporation. The appropriate adjustment in any
particular circumstance shall be conclusively determined by the Committee in
its sole discretion, subject to acceptance by the AMEX and/or TSX, if
applicable. If any such adjustment would entitle a Participant to a fractional
Unit, the Participant will have the right to acquire only an adjusted number of
full Units, rounded downward to the next whole Unit, and no payment or other
adjustment will be made with respect to the disregarded fractional Units.

	7.	 	Termination of Employment

     7.1 If a Participant ceases to be an Eligible Person as a result of (i)
the resignation of such Participant or (ii) the termination of such Participant
with Cause by the Corporation or its Subsidiaries, then in each case all
outstanding Rights held by such Participant shall immediately expire.

     7.2 If a Participant ceases to be an Eligible Person as a result of the
death or disability (as defined in the Corporation’s long-term disability plan
as in effect from time to time) of such Participant, then such Participant
shall immediately vest in his or her Account, and the Corporation shall pay the
Participant’s Account Balances to the Participant (or, in the event termination
was as a result of death, to the Participant’s Beneficiary) in accordance with
Section 4.2.

     7.3 If a Participant ceases to be an Eligible Person as a result of the
termination without Cause (other than due to disability) by the Corporation or
its Subsidiaries, then such Participant shall immediately vest in a pro-rata
portion of the Participant’s Account, and the Corporation shall pay such
pro-rata amount of the Participant’s Account Balance to the Participant in
accordance with Section 4.2. For purposes of this Section 7.3, the pro-rata
portion of the Participant’s Account shall be determined by multiplying the
Participant’s Account Balance by a fraction, the numerator of which shall be
the number of days during the applicable Performance Period that the
Participant was employed by the Corporation (or its Subsidiary) and the
denominator of which shall be the number of days in the applicable Performance
Period.

     7.4 The Corporation may enter in agreements with Participants to provide
rights upon a termination of employment that differ from the provisions set
forth in Sections 7.1, 7.2 and/or 7.3.

	8.	 	Amendment or Termination of Plan

     8.1 Subject to Section 8.2, the Committee may amend, suspend or
discontinue the Plan at any time, subject to the receipt of any required
regulatory approvals and, where required

 

9

by Applicable Law (whether pursuant to Stock Exchange Rules or in order to
cause the Account Balances payable under this Plan to be fully deductible by
the Corporation and its Subsidiaries pursuant to Section 162(m) of the Code),
subject to approval by the equityholders of the Corporation.

     8.2 No amendment, suspension or discontinuance of the Plan may contravene
the requirements of the TSX, AMEX or any Applicable Laws to which the Plan or
the Corporation is now or may hereafter be subject.

	9.	 	Rights of Participants

     9.1 Nothing contained herein shall be deemed to create a trust of any kind
or any fiduciary relationship between the Corporation and any Participant. To
the extent that any Participant acquires a right to receive payments from the
Corporation under the Plan, such right shall be no greater than the right of
any unsecured general creditor of the Company, and the holder of a Right in
respect of an unvested Account shall not have any rights to any claim thereon
until such holder is vested in his or her Account.

     9.2 The interest of any Participant under the Plan or in any Right shall
not be transferable or alienable by him or her either by pledge, assignment or
in any other manner, and after his or her lifetime shall enure to the benefit
of and be binding upon the Participant’s Beneficiary.

     9.3 The transfer of a Participant’s employment from (a) the Corporation to
an Affiliate or the Corporation, (b) an Affiliate of the Corporation to the
Corporation, or (c) an Affiliate of the Corporation to another Affiliate of the
Corporation, in any such case shall not be considered a termination of
employment for the purposes of the Plan, nor shall it be considered a
termination of employment if a Participant is placed on such other leave of
absence which is considered by the Committee as continuing intact the
employment relationship; in such a case, the employment relationship shall be
continued until the later of the date when the leave equals ninety days or the
date when a Participant’s right to re-employment shall no longer be guaranteed
by contract, if applicable, except that in the event active employment is not
renewed at the end of the leave of absence, the employment relationship shall
be deemed to have ceased at the beginning of the leave of absence.

	10.	 	Miscellaneous

     10.1 Any payment, notice, statement, certificate or other instrument
required or permitted to be given to a Participant or any person claiming or
deriving any rights through him or her shall be given by:

	 	(a)	 	delivering it personally to the Participant or
the person claiming or deriving rights through him or her, as
the case may be; or
	 
	 	(b)	 	mailing it, postage prepaid (provided that the
postal service is then in operation) or delivering it to the
address, which is maintained for the Participant in the
records of the Corporation.

 

10

     10.2 Any notice, statement, certificate or instrument required or
permitted to be given to the Corporation shall be given by mailing it, postage
prepaid (provided that the postal service is then in operation) or delivering
it to the Corporation at the following address:

	 	 	 	Volume Services America Holdings, Inc.

201 East Broad Street

Spartanburg, South Carolina 29306

Attention: General Counsel

	 
	 	 	 	or to such other person or in such other manner as is notified to
a Participant.

     10.3 Any payment, notice, statement, certificate or instrument referred to
in Section 10.1 or 10.2, if delivered, shall be deemed to have been given or
delivered, on the date on which it was delivered or, if mailed (provided that
the postal service is then in operation), shall be deemed to have been given or
delivered on the second business day following the date on which it was mailed.

     10.4 No member of the Board (including any member of the Board in his or
her capacity as a member of the Committee) shall be liable for any action or
determination made in good faith in connection with the Plan and all members of
the Board shall be entitled to indemnification and reimbursement from the
Corporation in respect of any claim relating thereto.

     10.5 If any provision of this Plan is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part, if any,
of such provision and all other provisions hereof shall continue in full force
and effect.

     10.6 The holding of a Right does not affect the right of the Corporation
or any Subsidiary thereof to terminate, at any time, the employment of, or
their relationship with, the Participant. Neither any period of notice, nor any
payment in lieu thereof, upon termination of employment shall be considered as
extending the period of employment for the purposes of the Plan.

     10.7 This Plan shall be construed and interpreted in accordance with the
laws of the State of Delaware.

	11.	 	Effective Date of Plan and Term of Plan

     11.1 The Plan shall take effect on the Effective Date, subject to approval
of this Plan by the Corporation’s shareholders.

     11.2 The Plan shall expire, unless earlier terminated pursuant to Section
8, on the fifth anniversary of the Effective Date.

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