EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 22 day of March,
2000, by and between Lone Star Steakhouse & Saloon, Inc., a corporation (the
"Corporation") and X. X. X'Xxxxxxx ("Employee").
RECITALS
WHEREAS, the Employee agrees to serve as Senior Vice President -
Operations of the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management; and
WHEREAS, the Corporation desires to engage the services of Employee,
whose experience, knowledge and abilities with respect to the business and
affairs of the Corporation are extremely valuable to the Corporation; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
Employee acknowledges and agrees that he is not subject to a non-compete
agreement or any other contractual provision, which would prohibit him from
performing his duties as Senior Vice President - Operations for the Corporation.
ARTICLE II
2.1 TERM OF EMPLOYMENT. The Corporation shall initially employ Employee
for a period of three years from the date hereof (the "Initial Term").
2.2 EXTENSION OF INITIAL TERM. Upon each annual anniversary date of
this Agreement, this Agreement shall be
extended automatically for successive terms of one year each, unless either the
Corporation or the Employee gives contrary written notice to the other not later
than 90 days prior to the annual anniversary date thereof.
ARTICLE III
DUTIES OF THE EMPLOYEE
GENERAL DUTIES. Employee shall serve as Senior Vice President -
Operations of the Corporation. He shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business of the
Corporation consistent with such position subject to such policies and
procedures as may be established by the Board.
Employee shall: (i) devote his entire business time, attention, and
energies to the business of the Corporation, and, (ii) faithfully and
competently perform his duties hereunder; and, Employee shall not, during the
term of this Agreement, engage in any other business activity except as
permitted by Article 9.
ARTICLE IV
COMPENSATION
4.1 SALARY. For Employee's services to the Corporation as Senior Vice
President - Operations, Employee shall initially be paid a salary at the annual
rate of $200,000, (herein referred to as "Salary") payable bi-weekly. On the
first day of each calendar year during the term of this Agreement with the
Corporation, Employee shall be eligible for an increase in Salary based on
recommendations made by the Compensation Committee of the Board.
4.2 BONUS. Employee is eligible to participate in the stock option plan
of the employer and all bonus compensation plans, which may be offered from time
to time.
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ARTICLE V
EMPLOYEE BENEFITS
5.1 USE OF AUTOMOBILE. The Corporation shall provide, at the option of
Employee, with either the use of an automobile for business and personal use or
a car allowance of to be specified by the Corporation, which complies with
I.R.S. Guidelines. The Corporation shall pay all expenses of operating,
maintaining and repairing the automobile and shall procure and maintain
automobile liability insurance in respect thereof, with such coverage insuring
each Employee for bodily injury and property damage.
5.2 MEDICAL, LIFE AND DISABILITY INSURANCE BENEFITS. The Corporation
shall provide employee with the medical, life and disability insurance benefits
in accordance with the established benefit policies of the Corporation.
5.3 BUSINESS EXPENSES. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
5.4 VACATIONS. Employee shall be entitled to an annual paid vacation
commensurate with the Corporation's established vacation policy for executive
officers. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee.
5.5 DISABILITY. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability insurance benefits received pursuant to Section
5.2 herein), such amount being paid semi-monthly in twelve equal installments.
ARTICLE VI
TERMINATION
6.1 DEATH. Employee's employment hereunder shall be terminated upon the
Employee's death.
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6.2 DISABILITY. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.
6.3 CAUSE.
(a) The Corporation may terminate Employee's employment hereunder
for Cause. For the purpose of this Agreement, "Cause" shall mean the (i) willful
and intentional failure by Employee to substantially perform his duties
hereunder, other than any failure resulting from Employee's incapacity due to
physical or mental incapacity, or (ii) commission by Employee, in connection
with his employment by the Corporation, of an illegal act or any act (though not
illegal) which is not in the ordinary course of the Employee's responsibilities
and which exposes the Corporation to a significant level of undue liability. For
purposes of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted to
be done by Employee not in good faith without a reasonable belief that his
action or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to Employee a copy of a resolution, duly adopted by the majority vote of the
Board of Directors.
6.4 COMPENSATION UPON TERMINATION FOR CAUSE OR UPON RESIGNATION BY
EMPLOYEE. If Employee's employment shall be terminated for Cause or if Employee
shall resign his position with the Corporation, the Corporation shall pay
Employee's compensation only through the last day of Employee's employment by
the Corporation. The Corporation shall then have no further obligation to
Employee under this Agreement.
6.5 INVOLUNTARY TERMINATION. If:
(i) the Employee is terminated by Corporation at any time prior to
the termination of this Agreement for reasons other than Cause (as
defined herein), (ii) if Corporation gives notice to the Employee,
in accordance with Section 2.2 herein, that this Agreement will not
be renewed;
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Employee shall be paid, over the ensuing six (6) month period, a
sum equal to the cash compensation paid to him excluding all
bonuses of any kind by Corporation for the six (6) month period
immediately preceding such termination or non-renewal. Such six (6)
month period, as the case may be, shall begin: (i) on the date of
termination in the case of termination of Employee's employment;
and (ii) on the date notice of non-renewal is given in the case of
termination of this Agreement not accompanied by simultaneous
termination of Employee's employment with the Corporation.
ARTICLE VII
NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT
ON OTHER CONTRACTUAL RIGHTS
7.1 NO MITIGATION. Employee shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer after Employee's termination or resignation.
7.2 OTHER CONTRACTUAL RIGHTS. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates.
ARTICLE VIII
SUCCESSORS TO THE CORPORATION
EMPLOYEE'S SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's devisee, legatee or
other designee or, if there be no such designee, to Employee's estate.
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ARTICLE IX
RESTRICTIONS ON EMPLOYEE
9.1 NON-DISCLOSURE. (a) The Employee acknowledges that, because of his
duties and his position of trust under this Agreement, the Employee will become
familiar with trade secrets (including, but not limited to, marketing objectives
and strategies, financial reporting, management systems, recipes, procedures,
business methods, processes and financial information) and other confidential
information (including, but not limited to, operating methods and procedures,
secret lists of actual and potential sources of supply, customers and employees,
costs, profits, markets, sales and plans for future developments) (the trade
secrets and other confidential information being referred to herein as "business
information") which are valuable assets and property rights of the Corporation
and not publicly known. Except in connection with the performance of his duties
for the Corporation, the Employee agrees that he will not during or at any time
after the Term and after the termination hereof, either directly or indirectly,
individually or jointly with others, for the benefit of Employee or any third
party, publish, disclose, use, or authorize anyone else to publish, disclose, or
use, any business information or any information relating to any aspect of the
business or operations of the Corporation, including, but not limited to any
secret or business information relating to the business, customers, trade or
industrial practices, trade secrets, technology, recipes or know-how of the
Corporation or any facts concerning the systems, methods, procedures or plans
developed or used by the Corporation and its subsidiaries and affiliates. The
Employee agrees to retain all such business information in a fiduciary capacity
for the sole benefit of the Corporation, its successors and assigns. Upon
termination of his employment by the Corporation or at any time that the
Corporation may so request the Employee will surrender to the Corporation all
non-public papers, notes, reports and other documents (and all copies thereof)
relating to the business of the Corporation which he may then possess or have
under his control.
(b) To the extent that Employee has generated or will generate during the
course of his employment works of authorship (which shall be deemed to be "works
for hire"), copyrightable material, inventions, trademarks, trade dress or other
intellectual property (hereinafter collectively referred to as "Intellectual
Property"), such Intellectual Properly shall be the property of the Corporation.
In the event that the "works for hire" doctrine is found inapplicable, all such
Intellectual Properly, and all rights
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therein, will be and are hereby deed to be, assigned and transferred by this
Agreement to the Corporation, its successors and assigns. The Corporation, its
successor and assigns, will have the exclusive right to obtain copyright patent
and/or trademark registrations or other protection of the Intellectual Property
(including without limitation, maintaining such Intellectual Property as trade
secrets) in the Corporation's own name, or in the names of the Corporation's
successors or assigns, as inventor, author and/or owner and to secure any
renewals and extension of such protection throughout the world. If the
Corporation chooses to maintain any part or all of the Intellectual Property as
a trade secrets, the Corporation shall so inform the Employee and the Employee
shall maintain such Intellectual Property as confidential to the extent required
by this paragraph. The Employee further agrees as follows:
(i) The Employee hereby acknowledges that he retain no
rights whatsoever with respect to the aforementioned Intellectual
Property, including but no limited to, any rights to reproduce such
Intellectual Property, or to make, have made, use and/or sell
products based upon the Intellectual Property, or otherwise to
prepare derivatives thereof, to file patent, copyright or trademark
applications with respect thereto, to distribute copies of any
Intellectual Property in any manner whatsoever, to exhibit, use or
display any such Intellectual Property publicly or otherwise, or to
license or assign to any third party the right to do any of the
foregoing; and
(ii) The Employee will without further remuneration (except
for out-of-pocket) expenses, execute and deliver any documents and
give any assistance as may be reasonably requested by the
Corporation to effect the ownership rights as provided in this
Agreement or otherwise to further the purposes of this paragraph.
9.2 NON-SOLICITATION. (a) Except in the performance of his duties
hereunder, at no time during the Term and for a period of twenty-four (24)
months thereafter such Employee shall not directly or indirectly, employ or seek
to employ, target or assist others in employing or seeking to employ directly or
indirectly any employee of the Corporation.
(b) In addition during the Term and for such twenty-four (24) months
thereafter, the Employee shall not influence or attempt to influence customers
or suppliers of the Corporation or
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any of its present or future subsidiaries or affiliates, either directly or
indirectly to divert their business to any individual, partnership, firm,
corporation or other entity then in direct or indirect competition with the
business of the Corporation, or any subsidiary or affiliate of the Corporation.
9.3 NON-COMPETITION. During the Term and for twenty-four (24)
months thereafter, regardless of any termination pursuant to Article 6 or any
voluntary termination or resignation by Employee, Employee shall not in any
capacity whatsoever, individually or jointly with others, directly or
indirectly, whether for his own account or for that of any other person or
entity be employed by, engage in, serve as an officer, director, consultant,
agent, partner, proprietor or other participant, or own or hold any ownership
interest in any person or entity engaged in a restaurant business, which
features steak and where steak sales, as a percentage of food sales, exceed
thirty percent (30%) which restaurant business is located within a one hundred
mile radius of any existing Lone Star Steakhouse & Saloon restaurant, Del
Frisco's Double Eagle Steak House restaurant or Xxxxxxxx'x Steakhouse restaurant
without the Corporation's written consent.
ARTICLE X
UNIQUENESS OF PROVISIONS
The provisions of Article 9 of this Agreement are of a unique nature
and of extraordinary value and of such a character that a material breach of the
provisions of Article 9 of this Agreement by the Employee will result in
irreparable damage and injury to the Corporation for which the Corporation will
not have any adequate remedy at law. Therefore, in the event that the Employee
commits or threatens to commit any such breach, the Corporation will have (a)
the right and remedy to have the provision of Article 9 of this Agreement
specifically enforced by any court having equity jurisdiction, it being agreed
that in any proceeding for an injunction, and upon any motion for a temporary or
permanent injunction, the Employee's ability to answer in damages shall not be a
bar or interposed as a defense to the granting of such injunction and (b) the
right and remedy to require the Employee to account for and to pay over to the
Corporation all compensation, profits, monies, accruals, increments and other
benefits (hereinafter referred to collective as the "Benefits" derived or
received by him as a result of any transactions constituting a breach of any of
the provisions of Article 9 of this Agreement, and the Employee hereby agrees to
account for and pay over such
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Benefits to the Corporation. Each of the rights and remedies enumerated in
Article 9 above shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Corporation on
law or in equity.
ARTICLE XI
MISCELLANEOUS
11.1 INDEMNIFICATION. To the full extent permitted by law, the
Board shall authorize the payment of expenses incurred by or shall satisfy
judgments or fines rendered or levied against Employee in any action brought by
a third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized hereunder shall include amounts paid and expenses incurred in
settling any such action or threatened action.
11.2 ARBITRATION. The parties agree that any disputes, claims or
controversy of any kind arising out of this agreement or out of the employment
relationship between Employee and the Corporation shall be submitted to
arbitration. Employee simultaneously with execution of this agreement agrees to
execute the Receipt acknowledging receipt of the Corporation's Mandatory
Arbitration Policy.
11.3 NOTICES. All notices, requests, demands and other
communications hereunder, including notice of termination by the Employee under
Article 12.1 or 12.2 of this Agreement must be in writing and shall be deemed to
have been duly given upon receipt if delivered by hand, sent by telecopier or
courier, and three (3) days after such communication is mailed within the
continental United States by first class certified mail, return receipt
requested, postage prepaid, to the other party.
11.4 WAIVER OF BREACH. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by any party.
11.5 AMENDMENT. No amendment or modification of this Agreement
shall be deemed effective unless or until executed in writing by the parties
hereto.
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11.6 VALIDITY. This Agreement, having been executed and delivered in
the State of Kansas, its validity, interpretation, performance and enforcement
will be governed by the laws of that state.
11.7 ARTICLE HEADINGS. Article and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.8 COUNTERPART EXECUTION. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
11.9 LEGAL FEES. Except in the event of termination for Cause, and
only in the event a change of control of the Corporation has occurred, the
Corporation shall pay all legal fees and expenses which Employee may incur as a
result of the Corporation's contesting the validity, enforceability or
Employee's interpretation of, or determination under, this Agreement.
11.10 EXCLUSIVITY. Specific arrangements referred to in this
Agreement are not intended to exclude Employee's participation in any other
benefits available to executive personnel generally or to preclude other
compensation or benefits as may be authorized by the Board from time to time.
11.11 PARTIAL INVALIDITY. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
ARTICLE XII
12.1 CHANGE OF CONTROL. The Employee shall have the right to
terminate his employment hereunder, upon 10 days notice to the Corporation
within six months of Change of Control. For the purposes of this Agreement, a
"Change of Control" means (i) the direct or indirect, sale, lease, exchange or
other transfer of all or substantially all (50% or more) of the assets of the
Corporation to any Person or Group of Persons other than an Affiliate or an
entity controlled by an Affiliate, (ii) the merger, consolidation or other
business combination of the Corporation with or into another corporation with
the effect that the shareholders of the Corporation
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immediately prior to the business combination hold 50% or less of the combined
voting power of the then outstanding securities of the surviving Person of such
merger ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors, (iii) the replacement of
a majority of the Board of the Corporation over any period of two years or less,
from the directors who constituted the Board of the Corporation at the beginning
of such period, and such replacement(s) shall not have been approved by the
Board of the Corporation as constituted at the beginning of such period, (iv) a
Person or Group of Persons other than an Affiliate or an entity controlled by an
Affiliate, shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of securities
of the Corporation representing 50% or more of the combined voting power of the
then outstanding securities of the Corporation ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors. A transaction constituting a Change of Control shall be deemed to
have occurred upon the closing of the transaction. Notwithstanding the
foregoing, a transaction shall not constitute a Change of Control under this
Agreement if the transaction is approved by (i) at least a majority of the Board
of the Corporation as constituted immediately prior to the transaction and (ii)
Xxxxx X. Xxxxxxx, the Chairman of the Board of the Corporation.
For the purposes of this Agreement, an "Affiliate" of the
Corporation shall mean any person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with the Corporation, including but not limited to the executive officer and
directors of the Corporation.
12.2 TERMINATION OF NON-COMPETE AND NON-SOLICITATION. In the event
the Employee elects to terminate this Agreement in connection with a Change of
Control under the terms of Article 12.1, the provisions of Article 9.2
Non-Solicitation and 9.3 Non-Competition shall be deemed to have expired and be
of no further force or effect as of the date of termination of the Employee.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and the Employee has executed this Agreement, as of the day and year first above
written.
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"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
/s/ Xxxxxx X. Xxxxx BY /s/ Xxxxx X. Xxxxxxx
------------------------------- --------------------------------
Xxxxxx X. Xxxxx, Secretary Xxxxx X. Xxxxxxx, Chairman
and Chief Executive Officer
Witness "EMPLOYEE"
/s/ X.X. X'Xxxxxxx
------------------------------- --------------------------------
X.X. X'Xxxxxxx
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