EMPLOYMENT AGREEMENT
This
Employment Agreement (“Agreement”), between Xxxx’x, Inc., a Delaware corporation
(“Luby’s” or the “Company”), and Xxxxxxxxxxx X. Xxxxxx, a resident of
Houston, Texas, (“Executive”) is executed this 9th day of November, 2005 to be
effective as of the 1st day of September, 2005 (“Effective Date”). For purposes
of this Agreement, “Luby’s” or the “Company” shall include the subsidiaries of
Luby’s. Luby’s and Executive are sometimes referred to herein individually as a
“Party,” and collectively as the “Parties.” The Parties hereby agree as follows:
1. Definitions.
As used
in this Agreement, and unless the context requires a different meaning, the
following terms have the meanings indicated:
“Affiliate”
means,
with respect to any Person, any other Person directly, or indirectly through
one
or more intermediaries, controlling, controlled by or under common control
with
such Person. For purposes of this definition and this Agreement, the term
“control” (and correlative terms “controlling,” “controlled by” and “under
common control with”) means possession of the power, whether by contract, equity
ownership or otherwise, to direct the policies or management of a
Person.
“Associate”
has the
meaning ascribed to such term in Rule 12b-2 under the Exchange Act.
“Beneficially
Own” or “Beneficial Ownership”
is
defined in Rules 13d-3 and 13d-5 of the Exchange Act, but without taking into
account any contractual restrictions or limitations on voting or other
rights.
“Board”
or “Board of Directors”
means
the Board of Directors of the Company.
“Business
Combination” means
(i) any consolidation, merger, share exchange or similar business
combination transaction involving the Company with any Person or (ii) the
sale, assignment, conveyance, transfer, lease or other disposition by the
Company of all or substantially all of its assets.
“Change
of Control” shall
mean the occurrence of any of the events described in subsections (i) through
(iv) below:
(i) The
Rights Agreement shall have been determined to be invalid or is otherwise
abrogated by a court of competent jurisdiction in a final and non-appealable
judgment rendered in connection with a contest for control of the Company and
a
substitute defense mechanism having the effectiveness of the Rights Agreement
is
not promptly adopted or, if adopted, is determined to be invalid or is otherwise
abrogated, and either (y) the Company has received a report on Schedule 13D,
or
an amendment to such a report, filed with the SEC pursuant to Section 13(d)
of
the Exchange Act disclosing that any Person or 13d Group other than Xxxxxxxxxxx
X. Xxxxxx or Xxxxxx X. Xxxxxx, individually or together with their
Affiliates and Associates and any 13d Group of which they are a part,
Beneficially Owns, directly or indirectly, twenty percent or more of the
combined voting power of the outstanding Common Stock, or (z) the Board of
Directors has actual knowledge of facts on the basis of which any Person or
13d
Group other than Xxxxxxxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxx, individually or
together with their Affiliates and Associates and any 13d Group of which they
are a part, is required to file such a report on Schedule 13D, or to make an
amendment to such a report, with the SEC (or would be required to file such
a
report or amendment upon the lapse of the applicable period of time specified
in
Section 13(d) of the Securities Act) disclosing that such Person or 13d Group
other than Xxxxxxxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxx, individually or
together with their Affiliates and Associates and any 13d Group of which they
are a part, Beneficially Owns, directly or indirectly, twenty percent or more
of
the combined voting power of the outstanding Common Stock.
(ii) Either
(y) the purchase by any Person, other than the Company or a wholly-owned
subsidiary of the Company or Xxxxxxxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxx,
individually or together with their Affiliates and Associates and any 13d Group
of which they are a part, of shares of Common Stock pursuant to a tender or
exchange offer to acquire any Common Stock (or securities convertible into
Common Stock) for cash, securities or any other consideration or (z) any Person,
other than the Company or a wholly-owned subsidiary of the Company or
Xxxxxxxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxx or any of their Affiliates, Associates
or members of any 13d Group of which they are a part, individually or together,
shall make any such offer to acquire any Common Stock pursuant to a tender
or
exchange offer for cash, securities or any other consideration and either (1)
the Company shall have recommended that stockholders accept such offer or (2)
within 10 business days (as such term is used in Rule 14e-2 under the Exchange
Act), the Company shall have made no recommendation that stockholders reject
such offer or (3) the Company shall have recommended that stockholders reject
such offer and the Rights Agreement shall have been determined to be invalid
or
is otherwise abrogated by a court of competent jurisdiction in a final and
non-appealable judgment rendered in connection with a contest for control of
the
Company and a substitute defense mechanism having the effectiveness of the
Rights Agreement is not promptly adopted or, if adopted, is determined to be
invalid or is otherwise abrogated, provided that, after consummation of any
such
offer, such Person Beneficially Owns, or would Beneficially Own, directly or
indirectly, twenty percent or more of the combined voting power of the
outstanding Common Stock (calculated as provided in paragraph (d) of Rule 13d-3
under the Exchange Act in the case of rights to acquire stock).
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(iii) The
Company shall, after approval by its Board of Directors or an authorized
committee thereof, enter into any agreement contemplating a transaction
described below, other than any such transaction with Xxxxxxxxxxx X. Xxxxxx
or Xxxxxx X. Xxxxxx, individually or together with their Affiliates and
Associates and any 13d Group of which they are a part: (v) a
transaction pursuant to which the Company agrees to issue or sell, regardless
of
the consideration therefor, a number of its shares of Common Stock that would
result in any Person acquiring Beneficial Ownership, directly or indirectly,
of
twenty percent or more of the combined voting power of the outstanding Common
Stock, calculated as in clause (ii) above; (w) any consolidation, merger or
similar transaction involving the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common Stock
would be converted into cash, securities or other property, other than a
consolidation, merger or similar transaction involving the Company in which
holders of its Common Stock immediately prior to the consolidation or merger
or
similar transaction own at least a majority of the combined voting power of
the
outstanding capital stock of the surviving corporation immediately after the
consolidation, merger or similar transaction (or at least a majority of the
combined voting power of the outstanding capital stock of a corporation which
owns directly or indirectly all of the voting stock of the surviving
corporation); (x) any consolidation, merger or similar transaction involving
the
Company in which the Company is the continuing or surviving corporation but
in
which the stockholders of the Company immediately prior to the consolidation,
merger or similar transaction do not hold at least a majority of the combined
voting power of the outstanding Common Stock of the continuing or surviving
corporation (except where such holders of Common Stock hold at least a majority
of the combined voting power of the outstanding capital stock of the corporation
which owns directly or indirectly all of the voting stock of the Company);
(y)
any sale, lease, exchange or other transfer (in one transaction or a series
of
related transactions) of all or substantially all the assets of the Company
(except such a transfer to a corporation which is wholly owned, directly or
indirectly, by the Company), or any complete liquidation of the Company; or
(z)
any consolidation, merger or similar transaction involving the Company where,
after the consolidation, merger or similar transaction, one Person owns 100%
of
the shares of Common Stock (except where the holders of the Company’s voting
stock immediately prior to such consolidation, merger or similar transaction
own
at least a majority of the combined voting power of the outstanding capital
stock of such Person immediately after such consolidation, merger or similar
transaction).
(iv) A
change
in the majority of the members of the board of directors of the Company within
a
24-month period unless the election or nomination for election by the
shareholders of each new director was approved by the vote of at least
two-thirds of the directors then still in office who were in office at the
beginning of the 24-month period.
For
purposes of this Agreement, the “effective date of a Change of Control” is the
date that an event described in subsection (i), (ii), (iii) or (iv) occurs
or
the date upon which all the events necessary to constitute the Change of Control
shall have occurred.
“Common
Stock”
means
the Company’s common stock, par value $.32 per share, and any capital stock for
or into which such Common Stock hereafter is exchanged, converted, reclassified
or recapitalized by the Company or pursuant to an agreement or Business
Combination to which the Company is a party.
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“Covenant
Period”
means:
(i) twenty-four
(24) months if Employee is terminated by the Company for Cause or if Executive
terminates his employment without Good Reason; or (ii) if Executive’s
employment is terminated for any other reason;
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(x)
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twelve
(12) months for the activities prohibited by clauses (ii) and (iv) of
Section 11(b); and
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(y)
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twenty-four
(24) months for the activities prohibited by any other provision
of
Section 11.
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“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended from time to time, and the
rules
and regulations of the SEC promulgated thereunder.
“Person”
means an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, limited liability company, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity
of
any kind.
“Rights
Agreement”
means
the Rights Agreement dated April 16, 1991 between the Company and Ameritrust
Company, N.A. as Agent, as amended from time to time.
“SEC” means
the
Securities and Exchange Commission.
“13d
Group”
means a
group within the meaning of Section 13(d)(3) of the Exchange Act.
2. Employment.
Luby’s
hereby employs Executive, and Executive hereby accepts employment with Luby’s,
subject to the terms and conditions set forth in this Agreement.
3. Term.
Subject
to the provisions for termination of employment as provided in Section 8(a),
Executive’s employment under this Agreement shall be for a period beginning on
the Effective Date and ending on August 31, 2008 (“Term”).
4. Compensation.
Executive’s compensation during his employment under the terms of this Agreement
shall be as follows:
(a) Base
Salary.
Luby’s
shall pay to Executive a fixed annual base salary (the “Base Salary”) of Four
Hundred Thousand Dollars ($400,000) for each year of the Term. The Base Salary
shall be payable in equal, semi-monthly installments on the 15th day and last
day of each month or at such other times and in such installments as may be
agreed between Luby’s and Executive. All payments shall be subject to the
deduction of payroll taxes, income tax withholdings, and similar deductions
and
withholdings as required by law.
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(b) Bonus.
During
each year of the Term, in addition to the Base Salary, Executive shall be
eligible, but not entitled, to receive bonus compensation as the Board of
Directors of Luby’s or an authorized committee thereof shall from time to time
determine in its sole discretion.
5. Expenses
and Benefits.
(a) During
his employment hereunder, Executive is authorized to incur reasonable and
appropriate expenses related to the business of Luby’s, including expenses for
entertainment, travel, and similar matters. Luby’s will reimburse Executive for
such expenses upon presentation by Executive of such accounts and records as
Luby’s may from time to time reasonably require.
(b) Luby’s
also agrees to provide Executive with the following benefits during his
employment hereunder:
(i)
Employee
Benefit Plans.
Executive and, to the extent applicable, Executive’s spouse, dependents, and
beneficiaries, shall be allowed to participate on the same terms in all
benefits, plans, and programs, including improvements or modifications of the
same, which are now, or may hereafter be, available to other executive employees
of Luby’s; provided that Executive shall not be permitted without the express
consent of the Board of Directors of Luby’s to participate in any bonus,
incentive, profit-sharing, or similar cash payment plan. Such benefits, plans,
and programs may include, without limitation, stock option or thrift plans,
health insurance or health care plans, life insurance, disability insurance,
supplemental retirement plans, vacation, and sick leave. Luby’s shall not,
however, by reason of this paragraph be obligated to institute, maintain, or
refrain from changing, amending, or discontinuing any such benefit plan or
program, so long as such changes are similarly applicable to executive employees
generally.
(ii)
Vacations.
Executive shall be entitled (in addition to the usual Luby’s holidays) to paid
vacation time for periods in each calendar year not exceeding four (4)
weeks.
(iii) Working
Facilities.
Executive shall be furnished by Luby’s with an office at the Company’s principal
office in Houston, Texas, secretarial help and other facilities and services,
including but not limited to, full use of Luby’s mail and communication
facilities and services reasonably suitable to his position and reasonably
necessary for the performance of his duties under this Agreement.
6. Positions
and Duties.
Executive is employed hereunder as Chief Executive Officer of Luby’s or in such
other positions as the Parties may mutually agree. In addition, if requested
to
do so, Executive shall serve as the chief executive officer or other officer
or
as a member of the Board of Directors, or both, of any subsidiary or affiliate
of Luby’s. Executive agrees to serve in the position referred to above and to
perform diligently and to the best of his abilities the duties and services
appertaining to such office, as well as such additional duties and services
appropriate to such offices which the Parties mutually may agree upon from
time
to time. Executive’s employment shall also be subject to the policies maintained
and established by Luby’s that are of general applicability to Luby’s executive
employees, as such policies may be amended from time to time. Executive’s duties
shall be performed principally at Luby’s principal place of business in Houston,
Texas and at the locations of its operations. Executive acknowledges and agrees
that Executive owes a fiduciary duty of loyalty to act at all times in the
best
interests of Luby’s. In keeping with such duty, Executive represents that he
owes no duty to any other entity or person regarding, and shall make full
disclosure to Luby’s of, all business opportunities pertaining to Company’s
business which have not been previously renounced by the Board of Directors,
as
contemplated by Section 11 hereof, and shall not appropriate for Executive’s own
benefit any such business opportunities.
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7. Extent
of Service.
Executive shall, during the term of this Agreement, devote his primary working
time, attention, energies and business efforts to his duties as an employee
of
Luby’s and to the business and affairs of Luby’s generally, and shall not,
during the term of this Agreement, engage, directly or indirectly, in any other
business activity whatsoever, whether or not such business activity is pursued
for gain, profit or other pecuniary advantage, except with the consent of the
Board of Directors of Luby’s; however, this Section 7 shall not be construed to
prevent Executive from, nor require board consent with respect to,
(i) continuing executive’s senior level management of non-cafeteria style
restaurant businesses operated by executive’s privately-held family company
(“Executive’s Family Company”), (ii) serving as a member of the board of
directors or board of trustees of Executive’s Family Company or other companies
or not-for-profit entities, or (iii) from investing his personal, private
assets as a passive investor in such form or manner as will not require any
active services on the part of Executive in the management or operation of
the
affairs of the companies, partnerships, or other business entities in which
any
such passive investments are made; provided in case of clause (i), (ii),
or (iii) such activities do not conflict with the business and affairs of
Luby’s or interfere with Executive’s ability to perform the services and
discharge the duties required of him hereunder.
8. Termination.
(a) Termination
of Employment.
Notwithstanding the provisions of Section 2, the employment of the
Executive pursuant to this Agreement shall terminate prior to the expiration
of
the Term, upon the occurrence of any of the following events:
(i)
the
death
of the Executive;
(ii)
the
termination of the Executive’s employment by Luby’s due to the Executive’s
Disability (as defined in Section 8(b));
(iii) the
termination of the Executive’s employment by the Executive for “Good Reason” (as
defined in Section 8(d));
(iv) the
termination of the Executive’s employment by Luby’s for “Cause” (as defined in
Section 8(c)); or
(v)
for
any
reason whatsoever in the discretion of the Executive or Luby’s.
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(b) Disability.
For the
purposes of this Agreement, the term “Disability” shall mean Executive becoming
incapacitated by accident, sickness, or other circumstance that renders him
physically or mentally unable to carry out the duties and services required
of
him hereunder on a full-time basis for more than one hundred twenty (120) days
in any one hundred eighty (180) day period. If a dispute arises between the
Executive and the Company concerning the Executive’s physical or mental ability
to continue or return to the performance of his duties as aforesaid, the
Executive shall submit to examination by a competent physician mutually
agreeable to both parties or, if the parties are unable to agree, by a physician
appointed by the president of the Xxxxxx County Medical Association, and such
physician’s opinion shall be final and binding.
(c) Cause.
For
purposes of this Agreement, the term “Cause” shall mean:
(i)
Executive’s
conviction of a crime constituting a felony, or a misdemeanor involving moral
turpitude;
(ii)
The
commission by Executive, or participation in, an illegal act or acts that were
intended to defraud Luby’s;
(iii) the
willful refusal by Executive to fulfill the duties and responsibilities as
Chief
Executive Officer;
(iv) the
breach by Executive of material provisions of this Agreement, a policy of
Luby’s, or the code of conduct of Luby’s in each case after written notice from
the Board of Directors and, if correctible, the failure to correct such breach
within 30 days from the date such notice is given;
(v)
gross
negligence or willful misconduct by Executive in the performance of his duties
and obligations to Luby’s;
(vi) willful
engagement by Executive in conduct known (or which should have been known)
to be
materially injurious to Luby’s.
(d) Good
Reason.
For
purposes of this Agreement, “Good Reason” shall mean the occurrence of any of
the following circumstances, without the consent of the Executive, unless such
circumstances are remedied in all material respects by Luby’s 30 days after
Luby’s receipt of written notice thereof given by the Executive:
(i) the
material diminution in the nature, scope, or duties of the Executive or
assignment of duties inconsistent with those of the Chief Executive Officer
or a
change in the location of the principal business office of the Company in which
his services are to be carried out, to a place outside of Texas;
(ii) any
breach of a material provision of this Agreement by Luby’s after written notice
from Employee and, if correctible, the failure to correct such breach within
30
days from the date such notice is given;
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(iii) within
two years after sale by Luby’s of all or substantially all of its assets or the
merger, share exchange, or other reorganization of Luby’s into or with another
corporation or entity (with respect to which Luby’s does not survive), a
diminution in employee benefits (including but not limited to medical, dental,
life insurance, and long-term disability plans) and perquisites applicable
to
Executive from the greater of (A) the employee benefits and perquisites provided
by Luby’s to executives with comparable duties or (B) the employee benefits and
perquisites to which Executive was entitled immediately prior to the date on
which a change in control occurs.
(e) Notice
of Termination.
If
Luby’s or Executive desires to terminate Executive’s employment hereunder at any
time prior to expiration of the Term, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive’s
employment hereunder and stating the proposed effective date and reason for
such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder.
9. Consequences
of Termination.
(a) By
Expiration.
If
Executive’s employment hereunder shall terminate upon expiration of the Term,
then all compensation for periods subsequent to termination and all benefits
to
Executive hereunder, other than (i) the nonqualified stock option to purchase
1,120,000 shares of Common Stock of Luby’s, with an exercise price per share
equal to five dollars ($5.00) per share dated March 9, 2001 and (ii) any other
equity based compensation awards granted to Executive by Luby’s (collectively,
the “Awards”), each of which is governed by its own terms in such circumstances,
shall terminate contemporaneously with termination of his
employment.
(b) Death
or Disability.
If the
Executive’s employment is terminated during the Term by reason of the
Executive’s death or Disability, all Compensation and benefits to Executive
under this Agreement, other than the Awards, each of which is governed by its
own terms in such circumstances, shall terminate contemporaneously with the
termination of employment and without further obligation to the Executive or
the
Executive’s legal representatives under the Agreement (other than payment of the
Executive’s Base Salary in respect of the period through his date of death or
termination for Disability).
(c) Termination
by the Executive without Good Reason or by the Company For Cause.
If the
Executive’s employment is terminated by the Executive without Good Reason, or by
the Company for Cause, all compensation and benefits to Executive under this
Agreement, other than the Awards, each of which is governed by its own terms
in
such circumstances, shall terminate contemporaneously with such termination
of
employment and without further obligation to Executive or Executive’s legal
representatives under this Agreement (other than payment of Executive’s Base
Salary in respect of the period through his date of
termination).
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(d) Termination
by the Executive for Good Reason or by the Company without Cause.
(i) If
the
Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Company shall be obligated to pay to, or make
available to, the Executive Executive’s monthly Base Salary and benefits in
effect on the date of termination for the remainder of the Term. The Executive
shall have no obligation to seek other employment during any time period for
which he may receive payment pursuant to this subsection (d), and in the
event the Executive obtains other employment during such period, the Company’s
obligations to make payments pursuant to this subsection (d) shall not be
reduced. In the event that continued participation in any Luby’s benefit plan
contemplated by Section 5(b)(i) hereof is for whatever reason impermissible
during the remainder of the Term, Company shall arrange upon comparable terms
benefits substantially equivalent to those that may not be so provided under
the
plan maintained by Luby’s. The parties agree that the payments provided for
herein constitute part of the consideration provided by the Company for the
Executive’s agreements contained in Section 6 hereof.
(ii) Notwithstanding
clause (i) of this subsection (d), if, at any time during which the
Executive would otherwise be entitled to receive any payment pursuant to clause
(i) of subsection (d), the Executive engages in any activity or takes any action
which would be prohibited under Sections 10 and 11 hereof, then the Executive
shall be deemed to have irrevocably forfeited any right to receive any further
payments pursuant to this Agreement, provided such forfeiture shall not limit
Luby’s rights to seek to enforce such provision or to seek damages; provided,
however, that the Awards and the benefits thereof shall not be in any way
affected by this clause (d)(ii) of this Section 9.
10. Disclosure
of Confidential Information.
Executive acknowledges that Luby’s will disclose to Executive, or place
Executive in a position to have access to or develop, trade secrets or
Confidential Information of Luby’s or its affiliates, and shall entrust
Executive with business opportunities of Luby’s or its affiliates, and shall
place Executive in a position to develop business goodwill on behalf of Luby’s
or its affiliates. Except to the extent required in the performance of his
duties and obligations to Luby’s as expressly authorized herein, or by prior
written consent of a duly authorized officer or director of Luby’s, Executive
will not, directly or indirectly, at any time during his employment with Luby’s,
or for 18 months subsequent to the termination thereof, for any reason
whatsoever, with or without cause, breach the confidence reposed in him by
Luby’s by using, disseminating, disclosing, divulging, or in any manner
whatsoever disclosing or permitting to be divulged or disclosed in any manner
Confidential Information to any person, firm, corporation, association, or
other
business entity. As used herein, the term “Confidential Information” means any
and all information concerning ideas, concepts, products, processes, and
services related to the business of Luby’s, including information relating to
research, development, inventions, manufacture, purchasing, accounting,
engineering, marketing, merchandising, or the selling of any product or products
to any customers of Luby’s, disclosed to Executive or known by Executive as a
consequence of or through his employment by Luby’s (or any parent, subsidiary or
affiliated corporations of Luby’s) including, but not necessarily limited to,
any person, firm, corporation, association, or other business entity with which
Luby’s has any type of agency agreement, or any shareholders, directors, or
officers of any such person, firm, corporation, association, or other business
entity; provided, however, that Confidential Information shall not include
information generally known in any industry in which Luby’s is or may become
engaged during the term of this Agreement, information disclosed publicly by
Luby’s or any information, ideas, products, processes, services, and concepts
existing and known to Executive prior to his employment by Luby’s. On
termination of employment with Luby’s, all documents, records, notebooks,
e-mails, or similar repositories of or containing Confidential Information,
including all copies of any documents, records, notebooks, e-mail, or similar
repositories of or containing Confidential Information, then in Executive’s
possession or in the possession of any third party under the control of
Executive or pursuant to any agreement with Executive, whether prepared by
Executive or any other person, firm, corporation, association, or other business
entity, will be delivered to Luby’s by Executive.
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11. Noncompetition;
Standstill.
(a) Executive
recognizes and understands that in performing the responsibilities of his
employment, he will occupy a position of fiduciary trust and confidence,
pursuant to which he will develop and acquire experience and knowledge with
respect to Luby’s business. It is the expressed intent and agreement of
Executive and Luby’s that such knowledge and experience shall be used
exclusively in the furtherance of the interests of Luby’s and not in any manner
which would be detrimental to Luby’s interests. In consideration of the benefits
herein, Executive therefore agrees that so long as he is employed by Luby’s and
for the Covenant Period after termination of Executive’s employment, Executive
will not directly or indirectly:
(i) engage
in
any other “cafeteria-style” restaurant business (as defined in the resolution of
the Board of Directors of the Company dated March 7, 2001 adopted in connection
with Executive's initial employment by the Company) or own any interests whether
as an owner, shareholder, joint venturer, partner or otherwise, in any other
association or entity that engages, directly or indirectly, in any
“cafeteria-style” restaurant business in each case in any state where Luby’s or
any of its affiliates are conducting business on the date of this Agreement
or
in any contiguous state; provided, however,
that
nothing herein shall prohibit Executive from holding or making passive
investments in limited partnerships or corporations whose securities are traded
in a generally recognized market provided that Executive’s interest, together
with those of his affiliates and family do not exceed 1% of the outstanding
shares or interests in such corporation or partnership; or
(ii) render
advice or services to, or otherwise assist, any other person, association,
or
entity engaged, directly or indirectly, in any “cafeteria-style” restaurant
business in any state where Luby’s or its affiliates conduct business on the
date of this Agreement or in any contiguous state; or
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(iii) contact
or solicit any employee of Luby’s or any of its affiliates to induce them to
terminate his or her employment with Luby’s or such affiliates.
(b) Executive
agrees that for so long as he is employed by Luby’s and for the Covenant Period
he will not without the prior written consent of the Company:
(i) knowingly, after due inquiry, sell any shares of Common Stock, or right
to acquire Common Stock, to any person or group (as defined in Section 13(d)(3)
of the Exchange Act , as amended, and the regulations promulgated thereunder)
that would subsequent to such sale Beneficially Own in excess of 10% of the
Company’s issued and outstanding Common Stock (1% in the case of industry
competitors), (ii) solicit, or participate in a solicitation of proxies or
votes
or consents to vote any voting securities of the Company or grant (except to
the
Company or its representatives or representatives of the Executive) any proxies
to vote such securities or subject their shares in the Company to any voting
trust or other voting arrangement or agreement, (iii) form, join, or in any
way
participate in, any group (as defined in Section 13(d)(3) of the Exchange Act,
as amended, and the regulations promulgated thereunder) with respect to voting
securities of the Company, or (iv) seek, propose, or make any public statement
regarding any merger, tender or exchange offer or other business combination
involving the Company or any sale, assignment, transfer, lease or other
disposition by the Company of all or substantially all of its assets; provided,
however, the covenants contained in this subsection (b) shall terminate and
shall be of no further force or effect upon the occurrence of a Change of
Control.
12. Enforcement
and Remedies.
Executive understands that the restrictions set forth here may limit Executive’s
ability to engage in certain businesses in certain geographic regions during
the
period provided for above, but acknowledges that Executive will receive
sufficiently high remuneration and other benefits under this Agreement to
justify such restriction. Executive acknowledges that money damages would not
be
sufficient remedy for any breach of Section 10 or 11 by Executive, and
Luby’s shall be entitled to enforce the provisions thereof by terminating any
payments then owing to Executive under this Agreement and/or by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach,
but shall be in addition to all remedies available at law or in equity to
Luby’s, including without limitation, the recovery of damages from Executive and
Executive’s agents involved in such breach and remedies available to Luby’s
pursuant to other agreements with Executive.
13. Insurance.
Luby’s
may, in its sole and absolute discretion, at any time after the Effective Date,
apply for and procure, as owner and for its own benefit, insurance on the life
of Executive, in such amounts and in such forms as Luby’s may choose. Unless
otherwise agreed by Luby’s, Executive shall have no interest whatsoever in any
such policy or policies, but Executive shall, at Luby’s request, submit to such
medical examinations, supply such information, and execute and deliver such
documents as may be required by the insurance company or companies to which
Luby’s has applied for such insurance.
11
14. Notice.
All
notices and communications hereunder shall be in writing and shall be deemed
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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If
to Executive:
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Xxxxxxxxxxx X.
Xxxxxx
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| ___________________ |
000
Xxxx
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Xxxxxxx,
Xxxxx 00000
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||
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with
a copy to:
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Xxxxx
Xxxxxxxxxxx
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000
Xxxxxxx Xxxx.
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||
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Xxxxxxx,
Xxxxx 00000
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||
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and
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Fulbright
& Xxxxxxxx, L.L.P.
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0000
XxXxxxxx Xxxxx 0000
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||
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Xxxxxxx,
Xxxxx 00000-0000
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||
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Attn:
Xxxxxxx X. Still
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||
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If
to Luby’s:
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Xxxx’x,
Inc.
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|
|
00000
Xxxxxxxxx Xxxxxxx, Xxxxx 000
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||
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Xxxxxxx,
Xxxxx 00000
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||
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Attention:
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Chairman
of the Board and
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|
|
General
Counsel
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||
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With
a copy to:
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Xxxxxxxxxx
Xxxxxxx Xxxxxx & Xxxxxx Incorporated
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|
|
0000
Xxxxxxxx, Xxxxx 000
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||
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Xxx
Xxxxxxx, Xxxxx 00000
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||
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Attention:
Xxxx X. Xxxxxx, Xx.
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Any
of
the above addresses may be changed at any time by notice given as provided
above; provided, however, that any such notice of change of address shall be
effective only upon receipt. All notices, requests or instructions given in
accordance herewith shall be deemed received on the date of delivery, if hand
delivered, on the date of receipt, if telecopied, three Business Days after
the
date of mailing, if mailed by registered or certified mail, return receipt
requested, and one Business Day after the date of sending, if sent by Federal
Express or other recognized overnight courier
15. CONTROLLING
LAW.
THIS
AGREEMENT SHALL BE DETERMINED AND GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW
PROVISIONS.
16. Additional
Instruments.
This
Agreement governs the rights and obligations of Executive and Luby’s with
respect to Executive’s base salary and certain perquisites of employment.
Executive’s rights and obligations both during the term of his employment and
thereafter with respect to stock options, life insurance policies insuring
the
life of Executive, and other benefits under the plans and programs maintained
by
Luby’s shall be governed by the separate agreements, plans, and other documents
and instruments governing such matters.
12
17. Liquidated
Damages.
In
light of the difficulties in estimating the damages for any early termination
of
employment, Luby’s and Executive hereby agree that the payments, if any, to be
received by Executive pursuant to this Agreement shall be received by Executive
as liquidated damages. Payment of the amounts set forth in this Agreement,
if
any, shall be in lieu of any severance benefit Executive may be entitled to
under any severance plan or policy of Luby’s.
18. Severability.
If any
term or other provision of this Agreement is invalid, illegal, or incapable
of
being enforced by any rule of applicable law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated herein are not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal, or incapable of being enforced, the parties hereto shall negotiate
in
good faith to modify this Agreement so as to effect the original intent of
the
parties as closely as possible in a mutually acceptable manner in order that
the
transactions contemplated herein are consummated as originally contemplated
to
the fullest extent possible.
19. Miscellaneous.
No
provision of this Agreement may be modified, waived or discharged orally, but
only by a waiver, modification or discharge in writing signed by the Executive,
and such officer of the Company as may be designated by the Board. No waiver
by
either party hereto at any time of any breach by the other party hereto of,
or
compliance with, any condition or provision of this Agreement to be performed
by
such other party shall be deemed a waiver of similar or dissimilar provisions
or
conditions at the time or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set
forth in this Agreement. Wherever appropriate to the intention of the parties
hereto, the respective rights and obligations of the parties hereto, will
survive any termination or expiration of the term of this Agreement as
specifically set forth herein; in addition Sections 9, 10, 11, 12, 14, 15,
16,
17, 18, 19, 20, 21 and 23 shall survive such termination or expiration to the
extent the context thereof requires.
20. Entire
Agreement.
This
Agreement (which term shall be deemed to include the exhibits hereto and any
other certificates, documents or instruments delivered hereunder), the Purchase
Agreement dated March 9, 2001 among the Company, Executives, and the other
signatories thereto, as amended from time to time (the “Purchase Agreement”),
and the other Transaction Documents (as defined in the Purchase Agreement)
constitute the entire agreement of the Parties hereto and supercede all prior
agreements and understandings, both written and oral, among the parties as
to
the subject matter hereof. There are no representations or warranties,
agreements, or covenants other than those expressly set forth herein, in the
Purchase Agreement and in the other Transaction Documents.
21. Effect
of Agreement.
This
Agreement shall be binding upon Executive and his heirs, executors, legal
representatives, successors and assigns, and Luby’s and its legal
representatives, successors and assigns. Except as provided in the preceding
sentence, this Agreement, and the rights and obligations of the Parties
hereunder, are personal and neither this Agreement, nor any right, benefit,
or
obligation of either Party hereto, shall be subject to voluntary or involuntary
assignment, alienation, or transfer, whether by operation of law or otherwise,
without the prior written consent of the other Party.
13
22. Execution.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
23. Deemed
Resignations.
Any
termination of Executive’s employment shall constitute an automatic resignation
as an officer and director of Luby’s and each subsidiary or affiliate of Luby’s.
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
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/s/Xxxxxxxxxxx
X. Xxxxxx
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Xxxxxxxxxxx X.
Xxxxxx
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Xxxx’x,
Inc.
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/s/Xxxxxx
Xxx, III
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Xxxxxx
Xxx, III
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Chairman
of the Board
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14
