EXHIBIT 10.24
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this October 4, 2002, by and between LS
Management, Inc. (the "Company"), a Delaware corporation and Xxxxx X. Xxxxxxx
("Participant").
WHEREAS, the Participant has been issued stock options under the
1992 Incentive and Nonqualified Stock Option Plan of Lone Star Steakhouse &
Saloon, Inc., as amended;
WHEREAS, Participant intends to exercise these options on or before
their respective expiration dates;
WHEREAS, compensation earned with respect to certain of
Participant's options may fail to qualify as "performance-based" compensation
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, the Company has implemented the Lone Star Steakhouse &
Saloon, Inc. Stock Option Deferred Compensation Plan (the "Plan"), which terms
and conditions are hereby incorporated by reference herein and made a part
hereof, in order that compensation paid to the Participant will be deductible
under Section 162 of the Code;
WHEREAS, the Participant has agreed, at the request of the Company,
to defer receipt of the income that would otherwise be recognized upon the
exercise of certain of his options, and has further agreed that such deferral
shall be subject to the terms and conditions of the Plan;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained and as an inducement to Participant to
continue as an employee of the Company, the parties hereto hereby agree as
follows:
1. DEFERRAL OF COMPENSATION. The Participant has been granted a stock
option to purchase 300,000 shares of Lone Star Steakhouse and
Saloon, Inc. ("Lone Star") stock that will expire on 2/3/03.
Participant intends to exercise the option on or before the
expiration date by tendering shares of Lone Star stock previously
acquired by him in satisfaction of the exercise price, and hereby
irrevocably elects to defer the receipt of shares resulting from the
exercise of the stock option in excess of the number of shares used
to exercise the option (the "excess shares"). Upon exercise, a
number of shares equal to the number of shares used to exercise the
option to the Participant in a transaction intended to qualify under
section 1036 of the Code shall be returned to the Participant.
The Company shall accept the deferral of the excess shares and will
cause Lone Star to transfer such shares to the Trustee of a
so-called "rabbi trust" of which Lone Star shall be deemed to be the
Grantor, substantially in the form of trust agreement set forth as
Exhibit A hereto for the benefit of the Participant. The Trustee, at
the request of Participant, may sell or dispose of the shares, but
only in a manner which minimizes the potential negative impact on
the marketability or price of Lone Star stock. The Trustee will
maintain an account balance for the Participant reflecting the
amount deferred (initially, the fair market value of the excess
shares) as adjusted for any income, gains or losses from Trust
investments, which adjusted account balance will be distributed to
Participant pursuant to the terms of this Agreement. Participant
shall have the right to determine the investment policy of the
Trust, but the Compensation Committee of the Lone Star Board may
change such investment policy where the Compensation Committee
reasonably determines that such change is in the best interests of
the Company.
2. DEFERRAL PERIOD. The deferral period will be from the above date of
option exercise until the date that is 30 days after the
Participant's termination of service with the Company, or Lone Star
or any of its Affiliates (the "Lone Star Group") for any reason. The
Company, or its delegate, will provide the Participant periodic
statements of the Participant's Deferral Account Balance including
any income, gains or losses.
3. REPORTING. The Company, or its delegate, will provide the
Participant periodic statements of the Participant's Deferral
Account Balance including any income, gains or losses.
4. PAYMENT OF DEFERRED COMPENSATION. Neither the Company nor any member
of the Lone Star Group shall have any obligation or liability to
deliver any Shares under the Plan unless such delivery would comply
with all applicable laws and all applicable requirements of any
securities exchange or similar entity.
5. ASSIGNMENT. The Participant's rights under this Agreement may not be
assigned, sold, transferred, or otherwise conveyed by him nor is
anyone other than him entitled to receive payments under this
Agreement.
6. ENTIRE AGREEMENT. This Deferred Compensation Agreement and the Plan,
incorporated herein by reference, contain the entire understanding
between the Participant and the Company regarding the deferral of
compensation by the Participant and the payment of deferred
compensation to the Participant by the Company.
7. NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this
agreement and the Plan shall not be deemed to constitute a contract
of employment between the Company or any member of the Lone Star
Group and the Participant, and the Participant (or Participant's
Beneficiary) shall have no rights against the Company or any member
of the Lone Star Group except as may otherwise be specifically
provided herein. Moreover, nothing in this agreement or Plan shall
be deemed to give a Participant the right (i) to be retained in the
employ or other service of the Company (or any member of the Lone
Star Group) for any specific length of time; (ii) to interfere with
the right of the Company (or any member of the Lone Star Group) to
discipline or discharge the Participant at any time; (iii) to hold
any particular position or responsibility with the Company (or any
member of the Lone Star Group); or (iv) to receive any particular
compensation from the Company (or any member of the Lone Star
Group).
8. INTERPRETATIONS. This Agreement is subject in all respects to the
terms of the Plan. In the event that any provision of this Agreement
is inconsistent with the terms of the Plan, the terms of the Plan
shall govern. Any question of administration or interpretation
arising under this Agreement shall be determined by the Compensation
Committee of the Board of Directors of Lone Star or their delegates,
and such determination shall be final and conclusive upon all
parties in interest.
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9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, except to the
extent superceded by federal law.
10. CAPITALIZED TERMS. Capitalized terms used in this Deferred
Compensation Agreement will, unless otherwise indicated, have the
meaning given them in the Plan.
IN WITNESS WHEREOF, the undersigned have signed this Deferred
Compensation Agreement on the day and year first above written.
LS Management, Inc. Xxxxx X. Xxxxxxx
By /s/ Xxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxx
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Title: President
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