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EXHIBIT 10.2
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 effective as of the 9th
day of March 2001 ("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. 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.
2. TERM. Subject to the provisions for termination of employment as
provided in Section 7(a), Executive's employment under this Agreement shall be
for a period beginning on the Effective Date and ending on March 31, 2004
("Term").
3. 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 base salary
(the "Base Salary") of One Hundred Thousand Dollars ($100,000) per
year. Luby's and Executive have agreed that the majority of Executive's
compensation shall be incentive based and, consequently, no adjustments
in Base Salary are appropriate during 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.
(b) Bonus. In addition to the Base Salary, Executive shall be
eligible to receive bonus compensation in such amounts and at such
times as the Board of Directors of Luby's or an authorized committee
thereof shall from time to time determine in its sole discretion.
(c) Stock Option Grant. On the Effective Date, Luby's shall
grant to Executive a nonqualified stock option ("Option") to purchase
1,120,000 shares of $.32 par value common stock of Luby's ("Common
Stock"), with an exercise price per share equal to five dollars ($5.00)
per share and otherwise with the terms of the Option Agreement attached
hereto as Exhibit A.
4. 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
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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 San Antonio, 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.
5. 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 San Antonio, 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 10
hereof, and shall not appropriate for Executive's own benefit any such business
opportunities.
6. 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 6 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, (ii) serving as a
member of the board of directors or trustees of other companies or
not-for-profit entities, or
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(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.
7. 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 7(b));
(iii) the termination of the Executive's
employment by the Executive for "Good
Reason" (as defined in Section 7(d));
(iv) the termination of the Executive's
employment by Luby's for Cause (as defined
in Section 7(c)); or
(v) for any reason whatsoever in the discretion
of the Executive or Luby's.
(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 Bexar 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
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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;
(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.
8. 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
the Option, which is governed by its own terms in such circumstances, shall
terminate contemporaneously with termination of his employment.
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(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
Option, 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 Option, 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).
(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 plan 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 5 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 9 and 10
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 Option and the benefits thereof shall
not be in any way affected by this clause (d)(ii) of this Section 8.
9. 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
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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.
10. 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 (as defined below) 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 in the form attached hereto as Exhibit B and adopted in
connection with this Agreement) 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 of the Company ("Common Stock"), or right to acquire Common Stock, to any
person or group (as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, and the regulations promulgated thereunder) that would
subsequent to such sale Beneficially Own (as defined in the Purchase Agreement
dated March 9, 2001 between the Company, Employee and the other signatories
thereto (the "Purchase Agreement") 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 Securities Exchange Act of
1934, 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.
(c) "Covenant Period" means:
(i) twenty-four (24) months if Employee is terminated
by the Company for Cause or if Employee terminates his
employment without Good Reason; or (ii) if Employee's
employment is terminated for any other reason:
(x) twelve (12) months for the
activities prohibited by clause
(ii) and (iv) of Section 10(b) and
(y) twenty-four (24) months for the
activities prohibited by any other
provision of Section 10.
11. 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 9 or 10 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.
12. 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
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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.
13. 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):
If to Executive:
Xxxxxxxxxxx X. Xxxxxx
000 Xxxx
Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxxx Xxxxxxxxxxx
000 Xxxxxxx Xxxx.
Xxxxxxx, Xxxxx 00000
and
Fulbright & Xxxxxxxx, L.L.P.
0000 XxXxxxxx Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Still
If to Luby's:
Xxxx'x, Inc.
0000 Xxxxxxxxx Xxxx 000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Chairman of the Board
With a copy to:
Xxxxxxxx Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxx & Xxxxxx Incorporated
000 X. Xx. Xxxx'x Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Xx.
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
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14. 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.
15. 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.
16. 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.
17. 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.
18. 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 8, 11, 13, 14, 15, 16, 17, 18, 19 and 20 shall survive such termination
or expiration to the extent the context thereof requires.
19. 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 and the other Transaction Documents
(as defined therein) 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.
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20. 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.
21. 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.
22. 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.
/s/ XXXXXXXXXXX X. XXXXXX
------------------------------------
Xxxxxxxxxxx X. Xxxxxx
Xxxx'x, Inc.
/s/ XXXXXX X. XXXXXX
------------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board
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EXHIBIT A
XXXX'X, INC.
STOCK OPTION
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NAME OF EMPLOYEE: Xxxxxxxxxxx X. Xxxxxx
DATE OF GRANT: March 9, 2001
EXPIRATION DATE: March 9, 2011
NUMBER OF OPTION SHARES: 1,120,000
OPTION PRICE PER SHARE: $5.00
THIS OPTION is granted on the above date (the "Date of Grant") by
Xxxx'x, Inc. (together with its subsidiaries, the "Company") to the person named
above (the "Employee"), upon the following terms and conditions:
1. GRANT OF OPTION. The Company hereby grants to the Employee an option
to purchase, on the terms and conditions stated herein, all or any part of the
aggregate number of shares specified above (the "Option Shares") of the
Company's Common Stock, par value $0.32 per share, ("Common Stock") at the
Option Price specified above.
2. EXERCISE OF OPTION. Subject to the earlier expiration of this Option
as herein provided, this Option may be exercised, by written notice to the
Company at its principal executive office at any time and from time to time
after the Date of Grant hereof, but, except as otherwise provided below, this
Option shall not be exercisable for more than a cumulative percentage of the
aggregate number of Option Shares determined by the number of full years from
the date of grant hereof to the date of such exercise, in accordance with the
following schedule:
Number of Full Years From Percentage of Shares
Date of Grant That May Be Purchased
------------------------------- --------------------------------
Less than 1 year 0%
1 year 50%
2 years 75%
3 years or more 100%
Notwithstanding the preceding sentence, this Option shall be
exercisable for 25% of the aggregate number of Option Shares at any time and
from time to time after the Last Sale Price of the Common Stock (as defined in
Section 3) has exceeded $8.475 for twenty consecutive Trading Days (as defined
in Section 3).
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This Option is not transferable by Employee otherwise than by will or
the laws of descent and distribution, and may, subject to the next sentence of
this paragraph as to Permitted Transferees, be exercised only by Employee during
Employee's lifetime. Employee may transfer this Option, subject to the terms and
conditions hereof, for no consideration to (a) a member of his Immediate Family
(as defined below), (b) a trust solely for the benefit of the Employee and/or
one or more members of his Immediate Family or (c) a partnership, corporation or
limited liability company whose only partners, shareholders or members are the
Employee and/or one or more members of his Immediate Family. Any transferee
described in the preceding two sentences is referred to herein as a "Permitted
Transferee." The term "Immediate Family" means, with respect to the Employee,
such Employee's spouse, children and grandchildren (including adopted and step
children and grandchildren). Upon any transfer to a Permitted Transferee, the
terms and conditions of this Option shall be binding upon the Permitted
Transferee who receives a transfer of the Option, except that a Permitted
Transferee may not transfer the Option other than by will or by the laws of
descent and distribution. No transfer pursuant to the terms hereof shall be
effective unless (i) the Company receives prior written notice of the terms and
conditions of any intended transfer and (ii) the Company reasonably determines
that the intended transfer complies with the requirements set forth herein. Any
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance that does not satisfy the requirements set forth herein shall be
void and unenforceable against the Company.
This Option may be exercised only while Employee remains an employee or
consultant of the Company and will terminate and cease to be exercisable upon
Employee's termination of employment with the Company, except that:
(a) DISABILITY. If Employee's employment by the Company
terminates by reason of disability (as defined in that certain
Employment Agreement between the Company and the Employee dated March
7, 2001), this Option may be exercised to the extent the Option was
exercisable on the date of termination or would become exercisable
within six months of the date of termination by Employee, or Employee's
attorney-in-fact, guardian or estate or the person who acquires this
Option by will or the laws of descent and distribution, within six
months following the date of such termination but in no event later
than the Expiration Date.
(b) DEATH. If Employee dies while in the employ of the
Company, Employee's estate, or the person who acquires this Option by
will or the laws of descent and distribution, may exercise this Option
to the extent the Option was exercisable on the date of Employee's
death or would become exercisable within six months of the date of
Employee's death at any time within six months following the date of
Employee's death but in no event later than the Expiration Date.
(c) CAUSE OR WITHOUT GOOD REASON. If Employee's employment by
the Company is terminated for "Cause", or Employee terminates his
employment without "Good Reason" (as such terms are defined in that
certain Employment Agreement between the Company and the Employee dated
March 7, 2001), this Option may be exercised by Employee at any time
during the period of 30 days following such
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termination, or by Employee's estate (or the person who acquires this
Option by will or the laws of descent and distribution during such
period if Employee dies during such 30-day period), but in each case no
later than the Expiration Date and only as to the number of shares
Employee was entitled to purchase hereunder as of the date Employee's
employment so terminates.
(d) WITHOUT CAUSE OR WITH GOOD REASON. If Employee's
employment by the Company is terminated without Cause or Employee
terminates his employment with Good Reason, this Option shall,
notwithstanding the provisions of the first paragraph of this Section
2, be fully vested and may be exercised by Employee (or Employee's
estate or the person who acquires this Option by will of the laws of
descent and distribution), in whole or in part, at any time prior to
the Expiration Date.
This Option shall not be exercisable in any event after the Expiration
Date. No fraction of a share of Common Stock shall be issued by the Company upon
exercise of an Option or accepted by the Company in payment of the exercise
price thereof; rather, Employee or his Permitted Transferee shall provide a cash
payment for such amount as is necessary to effect the issuance and acceptance of
only whole shares of Common Stock. Unless and until a certificate or
certificates representing such shares shall have been issued by the Company to
Employee or his Permitted Transferee, Employee or his Permitted Transferee (or
the person permitted to exercise this Option in the event of Employee's death)
shall not be or have any of the rights or privileges of a shareholder of the
Company with respect to shares acquirable upon an exercise of this Option.
3. PAYMENT FOR SHARES. Payment for shares purchased upon exercise of
this Option shall be made in full at the time of exercise of the Option in cash
or by delivering Common Stock of the Company having a fair market value on the
date of exercise at least equal to the Option Price, or a combination of Common
Stock and cash. Such fair market value on any day shall be deemed to be the Last
Sale Price on the date on which this Option is exercised. "Last Sale Price" on
any Trading Day shall mean (i) the closing price regular way (or, if no closing
price is reported the average of the bid and asked prices) as reported on the
New York Stock Exchange Composite Tape, or (ii) if on such Trading Day the
Common Stock is not listed or admitted to trading on such exchange, the closing
price regular way (or, if no closing price is reported the average of the bid
and asked prices) on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or (iii) if not listed or
admitted to trading on any national securities exchange on such Trading Day,
then the average of the closing bid and asked prices as reported through the
National Association of Securities Dealers, Inc. on its NASDAQ National Market
or other NASDAQ market or through a similar organization if NASDAQ is no longer
reporting information, or (iv) if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on such National Market or
other NASDAQ market on such Trading Day, then the average of the closing bid and
asked prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that purpose,
or (v) if not quoted by any such organization on such Trading Day, the fair
value of such Common Stock on such Trading Day, as reasonably determined by the
Board of Directors in good faith. "Trading Day" shall
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mean each Monday, Tuesday, Wednesday, Thursday and Friday other than a day on
which securities are not traded on the New York Stock Exchange.
4. METHOD OF EXERCISE. This Option may be exercised only by written
notice given to the Company, in form satisfactory to the Company, specifying the
number of Option Shares which the holder of the Option elects to purchase, the
number of Option Shares which the holder is paying for in cash and the number of
Option Shares which the holder is paying for with shares of Common Stock. Such
written notice shall be accompanied by a check payable to the order of the
Company for the cash portion, if any, of the purchase price and, if applicable,
by the delivery of certificates representing shares of Common Stock duly
endorsed and otherwise in proper form for transfer to the Company of such number
of shares of Common Stock as are required to equal the fair market value of the
Option Shares being paid for in stock. Upon each exercise of this Option, the
Company, as promptly as practicable, will mail or deliver to the person
exercising this Option a certificate or certificates representing the shares
then purchased. The Company may require any person exercising this Option to
make such representations and furnish such information as the Company may
reasonably consider appropriate in connection with the issuance of the shares in
compliance with applicable law.
5. WITHHOLDING OF TAX. To the extent that the exercise of this Option
or the disposition of shares of Common Stock acquired by exercise of this Option
results in compensation income to Employee for federal or state income tax
purposes, Employee shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Common Stock as the Company may
require to meet its obligation under applicable tax laws or regulations, and, if
Employee fails to do so, the Company is authorized to withhold from any cash or
Common Stock remuneration then or thereafter payable to Employee any tax
required to be withheld by reason of such resulting compensation income. Upon an
exercise of this Option, the Company is further authorized in its discretion to
satisfy any such withholding requirement out of any cash or shares of Stock
distributable to Employee upon such exercise.
6. STATUS OF STOCK. The Company will register for issuance the shares
of Common Stock acquirable upon exercise of this Option on Form S-8 within sixty
(60) days of the date of grant, and will use its reasonable best efforts to keep
such registration effective throughout the period this Option is exercisable.
Employee agrees that the shares of Common Stock which Employee may
acquire by exercising this Option will not be sold or otherwise disposed of in
any manner which would constitute a violation of any applicable securities laws,
whether federal or state. Employee also agrees (i) that the certificates
representing the shares of Common Stock purchased under this Option may bear
such legend or legends as the Company deems appropriate in order to assure
compliance with applicable securities laws, (ii) that the Company may refuse to
register the transfer of the shares of Common Stock purchased under this Option
on the stock transfer records of the Company if such proposed transfer would in
the opinion of counsel satisfactory to the Company constitute a violation of any
applicable securities law and (iii) that the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer
of the shares of Common Stock purchased under this Option.
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7. ADJUSTMENTS. The Exercise Price and the number of Option Shares
purchasable hereunder are subject to adjustment from time to time as follows:
(a) MERGER, SALE OF ASSETS, ETC. If at any time while this
Option, or any portion hereof, is outstanding and unexpired there shall
be (i) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), (ii)
a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity
but the shares of the Company's capital stock outstanding immediately
prior to the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash, or otherwise, or
(iii) a sale or transfer of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the holder of this Option shall
thereafter be entitled to receive upon exercise of this Option, during
the period specified herein and upon payment of the Option Price then
in effect, the number of Option Shares or other securities or property
of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares
deliverable upon exercise of this Option would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer
if this Option had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 7. The foregoing
provisions of this section shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to
the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Option. If the per-share
consideration payable to the holder hereof for shares in connection
with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in
good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions
of this Option with respect to the rights and interests of the holder
after the transaction, to the end that the provisions of this Option
shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event
upon exercise of this Option.
(b) RECLASSIFICATION, ETC. If the Company, at any time while
this Option, or any portion hereof, remains outstanding and unexpired
by reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this Option exist into the
same or a different number of securities of any other class or classes,
this Option shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of
such change with respect to the securities that were subject to the
purchase rights under this Option immediately prior to such
reclassification or other change and the Exercise Price therefor shall
be appropriately adjusted, all subject to further adjustment as
provided in this Section 7.
(c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the
Company at any time while this Option, or any portion hereof, remains
outstanding and unexpired shall split, subdivide or combine the
securities as to which purchase rights under this Option
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exist, into a different number of securities of the same class, the
Option Price for such securities shall be proportionately decreased in
the case of a split or subdivision or proportionately increased in the
case of a combination.
(d) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR
PROPERTY. If while this Option, or any portion hereof, remains
outstanding and unexpired, the holders of the securities as to which
purchase rights under this Option exist at the time shall have
received, or, on or after the record date fixed for the determination
of eligible stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then
and in each case, this Option shall represent the right to acquire, in
addition to the number of shares of the security receivable upon
exercise of this Option, and without payment of any additional
consideration therefor, the amount of such other or additional stock or
other securities or property (other than cash) of the Company that such
holder would hold on the date of such exercise had it been the holder
of record of the security receivable upon exercise of this Option on
the date hereof and had thereafter, during the period from the date
hereof to and including the date of such event, retained such shares
and/or all other additional stock available by it as aforesaid during
such period, giving effect to all adjustments called for during such
period by the provisions of this Section 7.
(e) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 7, the Company at
its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the holder of this
Option a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment
is based.
8. REGISTRATION RIGHTS. Upon exercise of this Option, the holder shall
have and be entitled to exercise, together with all other holders of registrable
securities possessing registration rights under that certain Purchase Agreement
and related Registration Rights Agreement, of even date herewith (together the
"Purchase Agreement"), between the Company and the parties who have executed the
counterpart signature pages thereto or are otherwise bound thereby, the rights
of registration granted under the Purchase Agreement to with respect to the
shares of Common Stock issuable upon exercise of this Option.
9. RIGHTS. Whenever the Company shall issue shares of Common Stock upon
exercise of this Option, the Company shall issue, together with each such share
of Common Stock, one right to purchase one-half of one share of Common Stock of
the Company (or other securities in lieu thereof) pursuant to the Rights
Agreement dated as of April 16, 1991 between Luby's Cafeterias, Inc. and
AmeriTrust Company, N.A., as amended, or any similar rights issued to holders of
Common Stock in addition thereto or in the replacement therefor (such rights,
together with any additional or replacement rights, being collectively referred
to as the "Rights"), whether or not such Rights shall be exercisable at such
time, but only if such Rights are issued and outstanding and held by the other
holders of Common Stock (or evidenced by outstanding share certificates
representing Common Stock) at such time and have not expired or been redeemed.
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10. EMPLOYMENT RELATIONSHIP. Although this Option may be exercised only
as provided in Section 2 hereof, it is understood that, subject to the terms of
any employment contract, employment of the Employee shall be at the pleasure of
the employer, and at such compensation as the employer shall reasonably
determine from time to time. Nothing in this Option shall confer on the Employee
any right to continue in the employment of the Company or any of its affiliates
or to interfere in any way with the right of the Company or its affiliates to
terminate his or her employment at any time. For purposes of this Agreement,
Employee shall be considered to be in the employment of the Company as long as
Employee remains an employee of, or consultant to, either the Company, a parent
or subsidiary corporation (as defined in section 424 of the Code) of the
Company, or a corporation or a parent or subsidiary of such corporation assuming
or substituting a new option for this Option.
11. RESERVATION OF STOCK. The Company covenants that during the term
this Option is exercisable, the Company will reserve from its authorized and
unissued Common Stock and/or its treasury stock a sufficient number of shares to
provide for the issuance of Common Stock upon the exercise of this Option.
12. NOTICES. All notices and other 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):
If to Employee:
Xxxxxxxxxxx X. Xxxxxx
000 Xxxx
Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxxx Xxxxxxxxxxx
000 Xxxxxxx Xxxx.
Xxxxxxx, Xxxxx 00000
and
Fulbright & Xxxxxxxx, L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Still
If to Luby's:
Xxxx'x, Inc.
0000 Xxxxxxxxx Xxxx 000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Chairman of the Board
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with a copy to:
Xxxxxxxx Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxx & Xxxxxx Incorporated
000 X. Xx. Xxxx'x Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Xx.
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.
13. SUCCESSORS; GOVERNING LAW. This Option shall be binding upon any
successors or assigns of the Company. THIS OPTION SHALL CONSTITUTE A CONTRACT
UNDER THE LAWS OF TEXAS AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES.
14. ENTIRE AGREEMENT. This Option Agreement (which term shall be deemed
to include the exhibits hereto and any other certificates, documents or
instruments delivered hereunder) the Purchase Agreement, and the other
transaction documents (as defined therein) 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.
15. COUNTERPARTS. This Option 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 ore
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.
16. HEADINGS. The headings of this Option are for convenience of
reference only and are not part of the substance of this Option.
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17. SEVERABILITY. If any term or other provision of this Option is
invalid, illegal or incapable of being enforced by any rule of applicable law,
or public policy, all other conditions and provisions of this Option 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 Option 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.
18. MODIFICATION. No provisions of this Option may be modified, waived
or discharged orally, but only by a waiver, modification or discharge in writing
signed by the Employee 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
Option 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.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
in duplicate by its proper corporate officers thereunto duly authorized, and
Employee has executed this Option, all as of the Date of Grant.
ATTEST: XXXX'X, INC.
By:
--------------------------------- ----------------------------
Secretary Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
ACCEPTED:
---------------------------------
Xxxxxxxxxxx X. Xxxxxx
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EXHIBIT B
XXXX'X, INC.
RESOLUTIONS OF BOARD OF DIRECTORS
MARCH 7, 2001
----------
DISCUSSION - CORPORATE OPPORTUNITY
WHEREAS, for purposes of facilitating the initiation of new arrangements between
the Company and Xxxxxxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx and (collectively the
"Executives"), who will become directors and officers of the Company as of the
date of adoption of this resolution, and in accordance with Section 122(17) of
the General Corporation Law of the State of Delaware, the Board of Directors of
the Company does hereby adopt the following preambles and resolutions:
WHEREAS, for purposes hereof the following terms shall have the following
meanings
(1) "Cafeteria-style Restaurant Business" shall mean the traditional
cafeteria type business engaged in by the Company, or in a restaurant
which sells food utilizing cafeteria style serving of entrees, or
selling food on an "all you can eat" basis, or utilizing buffet style
serving of the general type operated by "Luby's", "Morrison's",
"Piccadilly", "Xxxxx'x", "Golden Corral" or "Xxxxx Steak House".
Notwithstanding the terms of the immediately preceding sentence, for
purposes of this definition the sale of food on an "all you can eat"
basis or utilizing buffet style serving, shall not include
restaurants which serve primarily one type of ethnic or specialty
foods such as Mexican or Chinese food or barbecue or seafood;
(2) The "Areas of Geographic Operation" shall mean the states of Texas,
New Mexico, Arizona, Oklahoma, Kansas, Arkansas, Missouri, Tennessee,
Mississippi and Florida and all states contiguous to such states;
(3) A "Xxxxxx Generated Land or Building Redevelopment Opportunity" shall
mean any opportunity to lease or purchase land in any location or to
lease or purchase a building and land for redevelopment in any
location which arises from or in connection with the ordinary course
of the business of Xxxxxx Restaurants and is first communicated to
executive, officers or employees of Xxxxxx Restaurants other then the
Executives; provided that any such opportunity that is first
presented to either of the Executives shall be considered a business
opportunity for the Company.
NOW, THEREFORE, be it resolved that the Company does hereby renounce as a
corporate opportunity, for a period of six (6) years from the date of this
resolution, (i) any business or corporate opportunity (whether operated by an
Executive or not) which shall involve the operation of any restaurant or food
service business other than a Cafeteria-style Restaurant Business in the Areas
of Geographic Operation, and (ii) any Xxxxxx Generated Land or Building
Redevelopment Opportunity.
