EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 1st day of
January, 1999, by and between Lone Star Steakhouse & Saloon, Inc., a Delaware
corporation (the "Corporation") and Xxxxxxx X. Xxxxxx ("Employee").
RECITALS
WHEREAS, the Employee is currently serving as a Chief Operating
Officer - Xxxxxxxx'x/Del Frisco's of the Corporation and various subsidiaries of
the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management;
WHEREAS, the Corporation desires to continue 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
Employment Agreement. The Employment Agreement dated February 1
1998, executed by the Corporation and the Employee is hereby terminated and
shall be superseded by this Agreement.
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 Principal Place of Employment. The Corporation acknowledges that
the Employee's principal residence is currently located in Dallas, Texas. The
Corporation acknowledges and agrees that the Employee shall
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be employed by the Corporation at an office to be established by Employee on
behalf of the Corporation in Dallas, Texas (the "Dallas Office").
Employee may hire a secretary or secretarial services, upon such
salary terms and other terms and conditions which are acceptable to the
Corporation, which such acceptance will not be unreasonably withheld.
The Corporation shall be responsible to pay or immediately reimburse
Employee for any and all costs and expenses incurred in establishing and
operating the Dallas Office, including without limitation, any and all costs and
expenses arising out of any of the activities and items contemplated hereby.
2.3 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. General Duties. Employee shall serve as Chief
Operating Officer - Del Frisco's/Xxxxxxxx'x of the Corporation. In close
coordination and cooperation with the Corporation, Employee shall continue to
have the responsibility for the development of the Corporation's upscale
steakhouse restaurant concept with an average meal check price in excess of
$18.00 (the "Division"). Employee shall continue to be responsible for marketing
and growth of the Division. Employee shall be responsible for the management and
day-to-day operations of the Division. 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 or her 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.
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ARTICLE IV
Compensation
4.1 Salary. For Employee's services to the Corporation as Chief
Operating Officer - Xxxxxxxx'x/Del Frisco's, Employee shall be paid a salary at
the annual rate of $250,000.00, (herein referred to as "Salary") payable in
twenty-four equal installments on the first and fifteenth day of each month. 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.
4.3 Bonus. Employee shall be eligible to receive a bonus (the
"Bonus"), which Bonus will be equal to sixty percent (60%) of the Employee's
then Salary, for any annual period hereunder. The Bonus shall be paid at the
discretion of the Corporation. Employee and the Corporation agree to establish
mutually and in good faith within sixty (60) days following the date of this
Agreement, goals and objectives, in writing, for the Employee for each annual
period of this Agreement, which such goals and objective shall be described in
as measurable and objective standards and criteria as practicable. In the event
that Employee does not fully achieve the goals and objectives upon which the
Bonus is based in any annual period, Employee shall nonetheless be entitled to
receive a proportionate amount of the full amount of the Bonus that would
otherwise have been paid to Employee for such annual period if Employee had
fully achieved the goals and objective. The determination of the proportionate
amount of the Bonus to which Employee shall be entitled shall correspond to the
level, percentage or degree of Employee's achievement of goals and objective,
and shall not be an "all or nothing" test.
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.
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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. In
addition, the Corporation shall pay or reimburse Employee for payment of those
certain (i) life insurance and (ii) long term disability insurance policies of
Employee in effect as of the date hereof, which such payments in the aggregate
equal approximately $4,700 annually.
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.
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
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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. Except as otherwise set forth in Section 5.6 hereof, 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 1.2 herein, that this Agreement will not be
renewed;
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.
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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.
ARTICLE IX
Restrictions on Employee
9.1 Non-Disclosure; Non-Solicitation. Except in the performance of
his duties hereunder, at no time during the Term of Employment , and for
eighteen (18) months after the termination hereof, shall Employee, 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 secret
or confidential material or information relating to any aspect of the business
or operations of the Corporation, including, without
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limitation, any secret or confidential information relating to the business,
customers, trade or industrial practices, trade secrets, technology, recipes or
know-how of the Corporation. Except in the performance of his duties hereunder,
at no time during the term or six (6) months thereafter, shall Employee for
himself or on behalf of any other person or entity contact any employee of the
Corporation for the purpose of hiring, diverting or otherwise soliciting the
employee.
9.2 Non-Competition. During the Term of Employment and for eighteen
(18) months thereafter, regardless of any termination pursuant to Article VI or
any voluntary termination or resignation by Employee, Employee shall not,
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,
own, or hold any ownership interest in any person or entity engaged in a
restaurant business the same as or similar to any restaurant business of the
Corporation without the Corporation's written consent.
ARTICLE X
Miscellaneous
10.1 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.
10.2 Notices. All notices, requests, demands and other
communications hereunder, including notice of termination by the Employee under
Article 11.1 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.
10.3 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
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agreement agrees to execute the Receipt acknowledging receipt of the
Corporation's Mandatory Arbitration Policy.
10.4 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.
10.5 Amendment. No amendment or modification of this Agreement shall
be deemed effective unless or until executed in writing by the parties hereto.
10.6 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.
10.7 Section Headings. Section 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.
10.8 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.
10.9 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.
10.10 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.
10.11 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 XI
11.1 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,
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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
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.
11.2 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 11.1, 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
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authorized; and the Employee has executed this Agreement, as of the day and year
first above written.
"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
By
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Xxxxxx X. Xxxxx, Secretary Xxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
Witness "EMPLOYEE"
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Xxxxxxx X. Xxxxxx
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