EXHIBIT 10.2
PERSONAL SERVICE AND EMPLOYMENT AGREEMENT
This Personal Service and Employment Agreement (the "Agreement") is made
and entered into effective as of January 1, 1998 (the "Execution Date"), by and
between LANDRY'S SEAFOOD RESTAURANTS, INC., a Delaware corporation (the
"Company") and TILMAN J. FERTITTA, an individual, ("Fertitta").
WHEREAS, the Company wishes to retain the services of Fertitta as Chief
Executive Officer and President of the Company and its subsidiaries, subject to
and in accordance with the terms and provisions of this Agreement; and
WHEREAS, Fertitta desires to be employed by the Company subject to and in
accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:
1 . Engagement. The Company hereby engages and retains Fertitta to
perform the "Duties" (as hereinafter set forth) and Fertitta hereby
accepts the engagement to perform the Duties upon the terms and
conditions set forth herein.
2. Term. Subject to the other terms and provisions of the Agreement, the
term of this Agreement, unless sooner terminated, shall begin on the
Execution Date and shall expire on December 31, 2002 (the "Initial
Term"). Upon the expiration of the Initial Term, this Agreement shall
be automatically extended for an additional period of five (5) years
unless written notice is received twelve (12) months prior to such
expiration from the party electing not to extend this Agreement. (As
used herein, the Initial Term and any extension is herein called the
"Term.")
3. Duties. During the Term, Fertitta shall serve as the Chief Executive
Officer and President of the Company or such other office as shall be
mutually agreed upon by Fertitta and the Company. Fertitta shall
perform such duties and responsibilities as may be prescribed from
time to time by the Board of Directors of the Company (the "Board").
Without limiting the foregoing, during the Term, Fertitta shall, in
accordance with this Agreement and the directions and policies from
time to time established by the Board:
(a) Devote a majority of his time, attention and energies to the
Company, and without the consent of the Board, shall not render
any services of a business nature to any other person, firm,
corporation, or organization.
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(b) Perform such services for the Company as shall be prescribed
from time to time by the Board provided that such services shall
not be inconsistent with the normal and customary duties of a
Chief Executive Officer and President of a company of similar
character;
(c) Use his best efforts to promote the interests and objectives of
the Company.
(d) Provide to the members of the Board, within a reasonable period
of time, in advance of the Board's consideration of each
particular matter within the scope of Fertitta's responsibility,
all information material to a decision of the Board in respect
to such matter;
(e) Supervise, administer and manage the day-to-day operations of
the Company, provided that the actions and decisions of Fertitta
shall be reviewable by the requisite action of the Board and
stockholders of the Company in accordance with the Certificate
of Incorporation, the Bylaws of the Company and applicable law;
(f) Be responsible for the development and execution of short and
long term plans and goals in all functional areas of the
Company; provided that the actions and decisions of Fertitta
shall be reviewable by requisite action of the Board and
stockholders of the Company in accordance with the Certificate
of Incorporation, the Bylaws of the Company and applicable law;
(g) Recommend to the Board staffing and personnel policies
appropriate to achieving the best interests and objectives of
the Company and be responsible for implementing such policies as
are approved by the Board;
(h) Oversee and supervise all officers, employees and consultants of
the Company to the end that the best interests and objectives of
the Company are diligently and efficiently served by them;
(i) Render, at all times, all of the services explicitly and
implicitly hereunder, including, without limitation, careful
preparation and submission to the Board of accurate and
reasonable facts, data, estimates, projections and
recommendations.
4. Compensation.
(a) For services rendered pursuant to this Agreement, the Company
shall pay to Fertitta a base salary (the "Base Salary")
calculated at a rate of $585,000.00 per annum, payable on a bi-
weekly basis. Such sums shall be reduced by applicable
withholding, FICA, and other necessary pay-related taxes. The
Company also agrees that the compensation committee of the Board
("Compensation Committee")
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shall review Fertitta's salary at least annually to determine if
any salary increase is appropriate in the discretionary and sole
judgment of the Compensation Committee. Any increase in the Base
Salary or other compensation granted by the Board shall in no way
limit or reduce any other obligation of the Company hereunder
and, once established at an increased specific rate, Fertitta's
Base Salary hereunder shall not thereafter be reduced. For
purposes of this Agreement, "Base Salary" shall mean Fertitta's
initial Base Salary or, if increased, the increased Base Salary.
(b) Fertitta shall be entitled to participate in and receive bonus
awards under any bonus program established by the Company for its
management or key personnel. In the absence of or in addition to
such a program, Fertitta shall be entitled to receive such bonus,
if any, as may be determined from time to time by the
Compensation Committee in its discretionary and sole judgment
based on merit and the Company's performance.
(c) As of the date hereof, and if requested by Fertitta, on each
third anniversary of this Agreement, for Fertitta's business and
private use, the Company shall provide Fertitta with a new
automobile suitable to Fertitta's position and a driver. In
addition, the Company shall either directly pay or reimburse
Fertitta for all costs of OPERATING and maintaining such
automobile, including insurance thereon. The cost, excluding
operating expenses, maintenance and insurance, of any automobile
provided by the Company shall not exceed $200,000.00.
(d) The Company shall provide an expense allowance to Fertitta in
an amount to be set by the Board. In addition, throughout the
term of this Agreement, the Company shall reimburse Fertitta for
all reasonable business expenses (including expenses of travel
and entertainment) incurred by Fertitta. The Company shall also
pay directly or reimburse Fertitta for membership or initiation
fees and monthly dues for clubs Fertitta deems necessary to carry
out the duties set forth herein. The Company shall also provide
Fertitta with the use of Company transportation for his personal
use, benefit and travel.
(e) Fertitta shall be entitled to group life insurance, accidental
death and dismemberment insurance, hospitalization, surgical,
major medical coverage, long-term disability, and such other
insurance coverage at least equal to, or, if approved by the
Compensation Committee, greater than that which may be made
available to other executive officers of the Company. Provided,
however, Fertitta shall only be entitled to such insurance
coverage to the extent that such general claim of coverage is
provided to any other executive officer of the Company. The
Company shall pay directly or reimburse Fertitta for
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100% of any medical expense or charge not otherwise paid for by
the Company provided insurances, including deductibles or any
other charges. The Company shall also provide for the personal
security of Fertitta at all times.
(f) During the Term of this Agreement, Fertitta shall be entitled to
thirty (30) paid vacation days per year, or such additional
numbers as may be determined by the Board from time to time. For
purpose of this paragraph, weekends shall not count as vacation
days, and Fertitta shall also be entitled to all paid holidays
given by the Company to its other executive officers. The time or
times at which Fertitta will be permitted to take such vacation
time shall be determined by the mutual agreement of the Company
and Fertitta.
(g) The Company shall provide Fertitta, at the Company's expense,
with $70,000,000 of split-dollar life insurance and/or last-to-
die life insurance or any combination thereof (the "Policy") on
the life of Fertitta naming such beneficiaries thereunder as
Fertitta shall designate. The Policy shall be owned by Fertitta
or his designee.
(h) Each year of this Agreement, the Company shall make matching
charitable contributions to a charity or charities of Fertitta's
choice in the same amount made by Fertitta to the charity or
charities not to exceed a total amount of $250,000 in any one
year.
(i) During the Initial Term of this Agreement, Fertitta shall be
granted stock options in an amount no less than what Fertitta
received in stock options granted for the three (3) fiscal years
prior to 1998 (the "Minimum Number") at a price equal to the
fair market value of the common stock at the time of the grant
or grants. The date of grant or grants shall be in the sole
discretion of the Stock Option Committee, provided, however,
that at least fifty percent of the Minimum Number of options
granted hereunder shall be granted prior to December 31, 1999.
Fertitta shall have the right to exercise the stock options for
a term of ten (10) years. The stock options shall vest over
three (3) years from the date of grant or grants in equal annual
installments. Notwithstanding anything set forth herein or in
any stock option agreement, in the event the stock price
appreciates in value more than forty (40%) percent from the
grant price, all stock options at such price, shall become
immediately vested. All shares issuable to Fertitta upon
exercise of the options shall be registered pursuant to
applicable federal securities laws.
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5. Termination.
(a) Definitions.
(1) "Cause" shall mean:
(i) Dishonesty which is not the result of an inadvertent
or innocent mistake of Fertitta with respect to the
Company or any of its subsidiaries;
(ii) Willful misfeasance or nonfeasance of duty by
Fertitta intended to injure or having the effect of
injuring in some material fashion the reputation,
business, or business relationships of the Company
or any of its subsidiaries or any of their
respective officers, directors, or employees;
(iii) Material violation by Fertitta of any term of this
Agreement if such violation is not remedied or
reasonable steps to effect such remedy are not
commenced within thirty (30) days after written
notice of such violation and diligently pursued to
completion;
(iv) Conviction of Fertitta of any felony, any crime
involving moral turpitude or any crime other than a
vehicular offense which could reflect in some
material fashion unfavorably upon the Company or any
of its subsidiaries.
(2) A "Change of Control" shall be deemed to have occurred if:
(i) Any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) other than a trustee or other
fiduciary holding securities under an employee
benefit plan of the Company becomes the "beneficial
owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or
indirectly, of 50% or more of the Company's then
outstanding voting common stock; or
(ii) At any time during any consecutive thirty-six (36)
month period (not including any period prior to the
date hereof), individuals who at the beginning of
such period constituted the Board (and any new
director whose election by the Board or whose
nomination for election by the Company's
shareholders were approved by a vote of at least
two-thirds of the
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directors then still in office who either were
directors at the beginning of such period or whose
election or nomination for election was previously
so approved) cease for any reason to constitute a
majority thereof; or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than merger or consolidation (a)
in which a majority of the directors of the
surviving entity were directors of the Company prior
to such consolidation or merger, and (b) which would
result in the voting securities of the company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by
being changed into voting securities of the
surviving entity) more than 50% of the combined
voting power of the voting securities of the
surviving entity outstanding immediately after such
merger or consolidation; or
(iv) The stockholders approve a plan of complete
liquidation of the Company or an agreement for the
sale or disposition by the Company of all or
substantially all of the Company's assets.
(3) A "Disability" shall mean the absence of Fertitta from his
duties with the Company on a full-time basis for 180
consecutive days, or 180 days in a 365-day period, as a
result of incapacity due to mental or physical illness
which results in Fertitta being able to perform the
essential functions of his position, with or without
reasonable accommodation.
(4) A "Good Reason" shall mean any of the following (without
Fertitta's express written consent):
(i) A substantial and material alteration in the nature
or status of Fertitta's responsibilities, or the
assignment of duties inconsistent with, or a
substantial and material alteration in the nature or
status of, Fertitta's duties and responsibilities;
(ii) A failure by the Company to continue in effect any
employee benefit plan in which Fertitta was
participating, or the taking of any action by the
Company that would adversely affect Fertitta's
participation in, or materially reduce Fertitta's
benefits under, any such employee benefit plan,
unless such failure or such taking of any action
adversely affects
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the senior members of corporate management of the
Company generally;
(iii) A relocation of the Company's principal offices, or
Fertitta's relocation to any place other than the
principal offices, exceeding a distance of twenty
(20) miles from the Company's current corporate
office located in Houston, Texas, except for
reasonably required travel by Fertitta on the
Company's business;
(iv) Any material breach by the Company of any provision
of this Agreement if such material breach has not
been cured within thirty (30) days following written
notice of such breach by Fertitta to the Company
setting forth with reasonable specificity the nature
of the breach; or
(v) Any failure by the Company to obtain the assumption
and performance of this Agreement by any successor
(by merger, consolidation, or otherwise) or assign
of the Company.
(5) "Termination Date" shall mean the date Fertitta is
terminated for any reason pursuant to this Agreement.
(6) "Termination Following a Change of Control" shall mean: (i)
a Termination of Fertitta without Cause by the Company in
connection with or within one (1) year following a Change
of Control; (ii) a termination of Fertitta's employment
with the Company by Fertitta for Good Reason within one (1)
year following a Change of Control; (iii) failure of any
successor/surviving company to adopt this Agreement; or
(iv) a termination of Fertitta's employment with the
Company by Fertitta for any reason within one (1) year
following a Change of Control.
(b) Termination Without Cause, Termination Following a Change of
Control, or For Good Reason: Benefits. In the event there is a
termination without Cause, a Termination Following a Change of
Control, or if Fertitta terminates for Good Reason (a
"Termination Event"), this Agreement shall terminate and
Fertitta shall be entitled to the following severance benefits:
(1) Two (2) years of Base Salary at the rate in effect
immediately prior to the Termination Event, payable in full
within five (5) days of the Termination Event. Moreover,
the Company shall remain obligated to maintain, provide,
and keep all benefits set forth in paragraph 4(e) available
to Fertitta at the Company's expense for a period of two
(2) years after the
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Termination Date. Moreover, Fertitta shall receive at no
additional cost, the automobile and the certificate of
title to the automobile referenced in paragraph 4(c) free
from any lien, claim, or encumbrance.
(2) Any stock options which Fertitta has received shall vest
immediately, and any options required to be granted
pursuant to Paragraph 4(i) which have not been so granted,
shall be granted and shall vest immediately and if there is
a Change in Control the grant price shall be the lowest
price of the Company's common stock during the 365 days
prior to the announcement of such Change in Control.
(3) To the extent not theretofore paid or provided, the Company
shall pay two million dollars ($2,000,000) to Fertitta in
lieu of any additional payments for the split dollar
insurance within five (5) days of the Termination Date and
shall pay or provide all other benefits which Fertitta is
eligible to receive as if he were still employed by the
Company for a period of two (2) years after the Termination
Date;
(4) If Fertitta receives any payments hereunder which are
subject to an excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended, or any similar
tax imposed under federal, state, or local law
(collectively, "Excise Taxes"), the Company shall pay
Fertitta (on or before the date which Fertitta is required
to pay such Excise Taxes), 1) an additional amount equal to
all Excise Taxes then due and payable, and 2) the amount
necessary to defray Fertitta's increased (federal, state,
and local) income tax liability arising due to such
payments and any costs and expenses, including penalties
and interest incurred by Fertitta in connection with any
audit, proceedings, etc. related to the payment of such
Excise Taxes. For purposes of calculating the amount
payable to Fertitta under this Paragraph, the federal and
state income tax rates used shall be the highest marginal
federal and state rates applicable to ordinary income in
Fertitta's state of residence, taking into account any
federal income tax deductions or credits available to
Fertitta for state income taxes. The Company shall cause
its independent auditors to calculate such amount and
provide Fertitta a copy of such calculation at least ten
(10) days prior to the date specified above for payment of
such amount;
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(5) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to
Fertitta in a lump sum in cash within five (5) days after
the Termination Date along with the certificate of title
referenced in paragraph 5(b)(1) above.
(6) Fertitta, in addition to all other amounts, payments or
benefits provided hereunder, and in further consideration
of Fertitta's agreement under Section 8 below, shall
receive a lump sum payment in the amount of three million
dollars ($3,000,000), to be paid within five (5) days
following such Termination.
(7) Fertitta shall be free to accept other employment during
such period, and there shall be no offset of any employment
compensation earned by Fertitta in such other employment
during such period against payments due to Fertitta
hereunder, and there shall be no offset of any compensation
received from such other employment against the Base Salary
set forth above; provided, however, that such compensation
may terminate if acceptance of such employment would
violate any of the provisions of Section 8 below.
(c) Termination In Event of Death or Disability: Benefits. If
Fertitta's employment is terminated by reason of Fertitta's
death or Disability during the term of this Agreement (the
"Employment Period"), this Agreement shall terminate without
further obligation to Fertitta's legal representatives under
this Agreement, other than for payment of all compensation,
otherwise due to Fertitta during the Term hereof as if Fertitta
had not died or become disabled, unreimbursed expenses and the
timely payment or provision of Other Benefits through the date
of death or Disability. Such amounts shall be paid to Fertitta
or Fertitta's estate or beneficiary, as applicable, in a lump
sum cash payment within ninety (90) days after the date of death
or Disability. With respect to the provision of Other Benefits,
the term Other Benefits as used in this Paragraph 5(c) shall
include, without limitation, benefits at least equal to the most
favorable benefits provided by the Company to the estates and
beneficiaries of other executive level employees of the Company
under such plans, programs, practices, and policies relating to
death or Disability benefits, if any, as in effect with respect
to other executives and their beneficiaries at any time during
the 120-day period immediately preceding the date of death or
Disability. Additionally, all stock options for which Fertitta
would have been eligible had he completed the term of this
Agreement, shall be granted and vest immediately, and Fertitta
or Fertitta's estate or beneficiary shall be vested in all other
options held by Fertitta as of the date of Fertitta's
termination.
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(d) Voluntary Termination by Employee and Termination for Cause:
Benefits. Fertitta may terminate his employment with the
Company by giving written notice of his intent and stating an
effective Termination Date at least ninety (90) days after the
date of such notice; provided, however, that the Company may
accelerate such effective date by paying Fertitta through the
proposed Termination Date. The Company may terminate Fertitta's
employment for Cause at any time upon thirty (30) days prior
written notice. In the event Fertitta is terminated for Cause,
Fertitta may request a review of such decision by the entire
Board at the next regularly scheduled Board meeting. Upon such
termination by Fertitta or upon termination for Cause by the
Company, this Agreement shall terminate and the Company shall
pay to Fertitta all accrued compensation, unreimbursed expenses
and the Other Benefits through the Termination Date. Such
amounts shall be paid to Fertitta in a lump sum in cash within
thirty (30) days after the later of the date of termination or
the date of the Board's decision as set forth herein.
6. Indemnification: Liability Insurance. The Company shall indemnify and
hold Fertitta (or his legal representative) harmless to the full
extent permitted by applicable law for all legal expenses and all
liabilities, losses, judgments, fines, expenses, and amounts paid in
settlement in connection with any proceeding involving him (including
any action by or in the right of the Company) by reason of his being
or having been a director, officer, employee, consultant or agent of
the Company or any of its subsidiaries, affiliates, or any other
enterprise if he is serving or has served at the request of the
Company. In addition, the Company shall cause any such subsidiary,
affiliate, or enterprise also to so indemnify and hold Fertitta
harmless to the full extent permitted by applicable law. The
foregoing shall not be deemed to limit any rights of Fertitta
pursuant to applicable indemnification provisions of the Company's
Certificate of Incorporation or Bylaws or otherwise. In addition, the
Company shall acquire and maintain with reputable insurance companies
or associations acceptable to Fertitta, directors' and officers'
liability insurance for the benefit of Fertitta providing terms and
coverage amounts at least as favorable as those provided to other
officers or directors of the Company. Such insurance shall remain in
place (to the extent that the Company is able to purchase the same
for any officer or director) as long as necessary under applicable
statutes of limitations to cover all events occurring during the Term
of this Agreement regardless of when the claim is made.
7. Advance of Expenses. In the event of any action, proceeding or claim
against Fertitta arising out of his serving or having served in a
capacity specified in paragraph 6 above, the Company shall provide
Fertitta with counsel, who may be counsel for the Company as well, as
long as no conflict of interest exists between the Company and
Fertitta, and no ethical or professional responsibility rules prevent
the same counsel from representing both Fertitta and the Company. In
the event of any such conflict of interest or other bar to Fertitta
being represented by counsel for
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the Company, Fertitta may retain his own separate counsel (such
choice of counsel may be made in his sole and absolute discretion),
and the Company shall be obligated to advance to Fertitta (or pay
directly to his counsel) reasonable counsel fees and other costs
associated with Fertitta's defense of such action, proceeding or
claim; provided, however, that in such event, Fertitta shall first
agree in writing, without posting bond or collateral, to repay all
sums paid or advanced to him pursuant to this provision in the event
that the final disposition of such action, proceeding or claim is one
for which Fertitta would not be entitled to indemnification pursuant
to the provisions hereof.
8. Non-Competition. Fertitta and the Company expressly agree that during
the Term and for a period of one (1) year immediately following the
termination of Fertitta's employment with the Company for any reason,
Fertitta will not, for himself, or on behalf of any other person,
persons, firm, partnership, company, corporation or organization,
engage, directly or indirectly, in any business involving the
operation or management of seafood restaurants, either as a
principal, partner, agent, employee, director, officer or in any
other capacity, within a one hundred (100) mile radius of any
location in which the Company operates a seafood restaurant.
9. No Mitigation Required. Fertitta's rights hereunder upon termination
of employment shall be cumulative with and in addition to any other
rights or remedies he may be entitled to by reason of any such
termination. In addition, Fertitta shall have no obligation to
mitigate his damages hereunder, whether by seeking new employment or
otherwise, nor shall the amount of any payment provided for in this
Agreement be reduced by any compensation earned by Fertitta as the
result of employment by another employer after the date of
termination of Fertitta's employment with the Company, or otherwise.
10. Nondisclosure. Except as otherwise required by law or court order,
Fertitta, at any time during the Term, shall not disclose or use,
except in the course of Fertitta's employment with the Company in the
pursuit of the business of the Company or any of its subsidiaries or
affiliates, any confidential information or nonpublic proprietary
data of the Company or any of its subsidiaries or affiliates, whether
such information or proprietary data is in Fertitta's memory or
embodied in writing or other physical form.
11. Representations and Warranties. The Company represents and warrants
that the execution of this Agreement by the Company has been duly
authorized by resolution of the Board.
12. Entire Agreement. This Agreement constitutes the entire understanding
between Company and Fertitta relating to Fertitta's employment
hereunder and supersedes and cancels all prior written and oral
understandings and agreements with respect to such matters.
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13. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns. The right and obligations of Fertitta under
this Agreement are of a personal nature and shall neither be assigned
nor transferred in whole or in part by Fertitta.
14. Arbitration. In the event any dispute arises out of Fertitta's
employment with Company, or separation therefrom, which cannot be
resolved by the parties to this Agreement, such dispute shall be
submitted to final and binding arbitration. The arbitration shall be
conducted in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association ("AAA").
If the parties cannot agree on an arbitrator, a list of seven (7)
arbitrators will be requested from AAA, and the arbitrator will be
selected using alternate strikes with Fertitta striking first. The
cost of the arbitration will be shared equally by Fertitta and
Company. Arbitration of such disputes is mandatory and in lieu of any
and all civil causes of action and lawsuits either party may have
against the other arising out of the Fertitta's employment with
Company, or separation therefrom. Such arbitration shall be held in
Houston, Texas.
15. Miscellaneous.
(a) This Agreement shall be subject to and governed by the laws of
the state of Texas and venue shall lie in the courts of Harris
County.
(b) Failure by either party to insist upon strict compliance with
any provision hereof shall not be deemed a waiver of such
provision or any other provision hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or any breach
hereof, shall be deemed a waiver of such right in the future of
any other right or remedy available under this Agreement.
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(e) The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other
provision.
(f) The section and paragraph headings contained in this Agreement
are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first set out above.
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ Joe Max Taylor
-------------------------------------------
Joe Max Taylor
Chairman Compensation Committee
Employee: /s/ Tilman J. Fertitta
-------------------------------------
Tilman J. Fertitta
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PERSONAL SERVICE AND EMPLOYMENT AGREEMENT
This Personal Service and Employment Agreement (the "Agreement") is made
and entered into effective as of January 1, 1998 (the "Execution Date"), by and
between LANDRY'S SEAFOOD RESTAURANTS, INC., a Delaware corporation (the
"Company") and Steven L. Scheinthal an individual ("Executive").
WHEREAS, the Company wishes to retain the services of Executive as Vice
President of Administration, General Counsel, and Corporate Secretary of the
Company, subject to and in accordance with the terms and provisions of this
Agreement; and
WHEREAS, Executive desires to be employed by the Company subject to and in
accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Engagement. The Company hereby engages and retains Executive to
perform the "Duties" (as hereinafter set forth) and Executive hereby
accepts the engagement to perform the Duties upon the terms and
conditions set forth herein.
2. Term. Subject to the other terms and provisions of the Agreement, the
term of this Agreement, unless sooner terminated, shall begin on the
Execution Date and shall expire on December 31, 2002 (the "Term").
3. Duties. During the Term, Executive shall serve as the Vice President
of Administration, General Counsel, and Corporate Secretary of the
Company or such other office as shall be mutually agreed upon by
Executive and the Company. Executive shall perform such duties and
responsibilities as may be prescribed from time to time by the Board
of Directors of the Company (the "Board") or the Company's Chief
Executive Officer ("Chief Executive"). At the request of the Chief
Executive, Executive shall be nominated to serve on the Board of
Directors of the Company. At the Chief Executive's request, Executive
shall serve as an officer and/or on the Board of Directors of one or
more of the Company's subsidiaries. Without limiting the foregoing,
during the Term, Executive shall, in accordance with this Agreement
and the directions and policies from time to time established by the
Board and Chief Executive:
(a) Devote his full time, attention and energies to the Company, and
without the consent of the Board and Chief Executive, shall not
render any services of a business nature to any other person,
firm, corporation, or organization.
(b) Perform such services for the Company as shall be prescribed
from time to time by the Board and Chief Executive provided that
such services shall not be inconsistent with the normal and
customary duties of a company of similar character;
(c) Use his best efforts to promote the interests and objectives of
the Company.
4. Stock Ownership. So long as Executive is employed by the Company or
serves on its Board of Directors, Executive shall maintain ownership
of no less than the greater of 12,500 shares of common stock in the
Company or twenty percent (20%) of Executive's total grant of vested
options for the current calendar year.
5. Compensation.
(a) For services rendered pursuant to this Agreement, the Company
shall pay to Executive a base salary (the "Base Salary")
calculated at a rate of $185,000 per annum, payable on a bi-
weekly basis. Such sums shall be reduced by applicable
withholding, FICA, and other necessary pay-related taxes. The
Company also agrees that the compensation committee of the Board
("Compensation Committee") shall review Executive's salary at
least annually to determine if any salary increase is
appropriate in the discretionary and sole judgment of the
Compensation Committee. Any increase in the Base Salary or other
compensation granted by the Board shall in no way limit or
reduce any other obligation of the Company hereunder and, once
established at an increased specific rate, Executive's Base
Salary hereunder shall not thereafter be reduced. For purposes
of this Agreement, "Base Salary" shall mean Executive's initial
Base Salary or, if increased, the increased Base Salary.
(b) Executive shall be entitled to participate in and receive bonus
awards under any bonus program established by the Company for
its management or key personnel. In the absence of or in
addition to such a program, Executive shall be entitled to
receive such bonus, if any, as may be determined from time to
time by the Compensation Committee in its discretionary and sole
judgment based on merit and the Company's performance.
(c) As of the date hereof, the Company shall provide Executive
with a new automobile suitable to Executive's position with the
Company. In addition, the Company shall either directly pay or
reimburse Executive for all costs of operating and maintaining
such automobile, including insurance thereon.
(d) The Company shall provide an expense allowance to Executive in
an amount to be set by the Board. In addition, throughout the
term of this Agreement, the Company shall reimburse Executive
for all reasonable business expenses (including expenses of
travel and entertainment) incurred by Executive. The Company
shall also pay directly or reimburse Executive for membership or
initiation fees and reasonable monthly dues (excluding
miscellaneous charges) for
2
clubs located in the Greater Houston area that Executive deems
necessary to carry out the duties set forth herein. The
Company's obligation to pay for initiation fees shall not
exceed $10,000 during the Term. At least once a year during the
Term, and subject to availability as determined by the
Company's Chief Executive, the Company shall also provide
Executive with the use of Company transportation for his
personal use, benefit, and travel to and from a single
destination located within the continental United States.
(e) Executive shall be entitled to group life insurance, accidental
death and dismemberment insurance, hospitalization, surgical,
major medical coverage, long-term disability, and such other
insurance coverage that is made available to other executive
officers of the Company excluding the Chief Executive.
Provided, however, Executive shall only be entitled to such
insurance coverage to the extent that such coverage is provided
to all other executive officers of the Company excluding the
Chief Executive. The Company shall pay directly or reimburse
Executive for any medical expenses or charges not otherwise
paid for by the Company provided insurances, including
deductibles or any other charges, not to exceed $3,000 during
each year of the Term.
(f) During the Term of this Agreement, Executive shall be entitled
to twenty (20) paid vacation days per year, or such additional
numbers as may be determined by the Board from time to time.
For purpose of this paragraph, weekends shall not count as
vacation days, and Executive shall also be entitled to all paid
holidays given by the Company to its other executive officers.
The time or times at which Executive will be permitted to take
such vacation time shall be determined by the mutual agreement
of the Chief Executive and Executive.
(g) The Company shall provide Executive with $5,000,000 of split-
dollar variable life insurance (the "Policy") on the life of
Executive naming such beneficiaries thereunder as Executive
shall designate. The Policy shall be owned by Executive or his
designee.
(h) Each year of this Agreement, the Company shall make matching
charitable contributions to a charity or charities of
Executive's choice in the same amount made by Executive to the
charity or charities not to exceed a total amount of $15,000 in
any one year.
(i) During the Term of this Agreement, Executive shall be granted
no less than 200,000 stock options (the "Minimum Number") at a
price equal to the fair market value of the common stock at the
time of the grant or grants. The date of grant or grants shall
be in the sole discretion of the Stock Option Committee,
provided, however, that at least fifty percent of the Minimum
Number of options granted
3
hereunder shall be granted prior to December 31, 1999.
Executive shall have the right to exercise the stock options
for a term of ten (10) years. The stock options shall vest over
three (3) years from the respective dates of grant in equal
annual installments. All shares issuable to Executive upon
exercise of the options shall be registered pursuant to
applicable federal securities laws.
6. Termination.
(a) Definitions.
(1) "Cause" shall mean:
(i) Dishonesty which is not the result of an
inadvertent or innocent mistake of Executive with
respect to the Company or any of its subsidiaries;
(ii) Insubordination;
(iii) Willful misfeasance of duty by Executive intended
to injure or having the effect of injuring in some
material fashion the reputation, business, or
business relationships of the Company or any of its
subsidiaries or any of their respective officers,
directors, or employees;
(iv) Material violation by Executive of any term of this
Agreement;
(v) Conviction of Executive of any felony, any crime
involving moral turpitude or any crime other than a
vehicular offense which could reflect in some
material fashion unfavorably upon the Company or
any of its subsidiaries; and
(vi) Failure of Executive to perform the Duties required
hereunder.
(2) A "Change of Control" shall be deemed to have occurred if:
(i) Any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) other than a trustee or other
fiduciary holding securities under an employee
benefit plan of the Company becomes the "beneficial
owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or
indirectly, of 50% or more of
4
the Company's then outstanding voting common stock;
or
(ii) At any time during any consecutive thirty-six (36)
month period (not including any period prior to the
date hereof), individuals who at the beginning of
such period constituted the Board (and any new
director whose election by the Board or whose
nomination for election by the Company's
stockholders were approved by a vote of at least
two-thirds of the directors then still in office
who either were directors at the beginning of such
period or whose election or nomination for election
was previously so approved) cease for any reason to
constitute a majority thereof; or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than merger or consolidation (a)
in which a majority of the directors of the
surviving entity were directors of the Company
prior to such consolidation or merger, or (b) which
would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being changed into voting
securities of the surviving entity) more than 50%
of the combined voting power of the voting
securities of the surviving entity outstanding
immediately after such merger or consolidation; or
(iv) The stockholders approve a plan of complete
liquidation of the Company or an agreement for the
sale or disposition by the Company of all or
substantially all of the Company's assets.
(3) A "Disability" shall mean the absence of Executive from
his duties with the Company on a full-time basis for 180
consecutive days, or 180 days in a 365-day period, as a
result of incapacity due to mental or physical illness
which results in Executive being able to perform the
essential functions of his position, with or without
reasonable accommodation.
(4) "Termination Date" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.
(5) "Termination Following a Change of Control" shall mean:
(i) a Termination of Executive without Cause by the
Company in connection with or within one (1) year
following a Change of
5
Control; (ii) failure of any successor/surviving company
to adopt this Agreement; or (iii) a termination of
Executive's employment with the Company by Executive for
any reason within one (1) year following a Change of
Control.
(b) Termination Following a Change of Control. In the event there
is a Termination Following a Change of Control, this Agreement
shall terminate and Executive shall be entitled to the
following severance benefits:
(1) For a period of twelve (12) months after the Termination
Date (the "Compensation Period"), Base Salary at the rate
in effect immediately prior to the Termination Event,
payable monthly, in arrears. in addition, the Company
shall remain obligated to maintain and keep all benefits
set forth in paragraphs 5(e) and (g) available to
Executive at the Company's expense for a period of one (1)
year after the Termination Date. Moreover, Executive shall
receive at no additional cost, the automobile and
certificate of title to the automobile referenced in
paragraph 5(c) free of any lien, claim, or encumbrance.
(2) Any stock options which Executive has received shall vest
immediately, and all options required to be granted
pursuant to Paragraph 5(i) which have not been so granted,
shall be granted and shall vest immediately and the grant
price shall be the lowest price of the Company's common
stock during the 120 days prior to the announcement of
such Change in Control.
(3) If Executive receives any payments hereunder which are
subject to an excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended, or any similar
tax imposed under federal, state, or local law
(collectively, "Excise Taxes"), the Company shall pay
Executive (on or before the date which Executive is
required to pay such Excise Taxes), 1) an additional
amount equal to all Excise Taxes then due and payable, and
2) the amount necessary to defray Executive's increased
(federal, state, and local) income tax liability arising
due to such payments and any costs and expenses, including
penalties and interest incurred by Executive in connection
with any audit, proceedings, etc. related to the payment
of such Excise Taxes. For purposes of calculating the
amount payable to Executive under this Paragraph, the
federal and state income tax rates used shall be the
highest marginal federal and state rates applicable to
ordinary income in Executive's state of residence, taking
into account any federal income tax deductions or credits
available to Executive for state income taxes. The Company
6
shall cause its independent auditors to calculate such
amount and provide Executive a copy of such calculation at
least ten (10) days prior to the date specified above for
payment of such amount.
(4) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days
after the Termination Date along with the certificate of
title referenced in paragraph 6(b)(1) above.
(5) Executive, in addition to all other amounts, payments or
benefits provided hereunder, and in consideration of
Executive's agreement under Section 9 below, shall receive
a lump sum payment in the amount of one million five
hundred thousand dollars ($1,500,000), to be paid within
five (5) days following such Termination.
(6) Executive shall be free to accept other employment during
the Compensation Period, and there shall be no offset of
any employment compensation earned by Executive in such
other employment during the Compensation Period against
payments due to Executive hereunder, and there shall be no
offset of any compensation received from such other
employment against the Base Salary set forth above;
provided, however, that such compensation may terminate if
Executive violate any of the provisions of Section 9
below.
(c) Termination In Event of Death or Disability: Benefits. If
Executive's employment is terminated by reason of Executive's
death or Disability during the term of this Agreement (the
"Employment Period"), this Agreement shall terminate without
further obligation to Executive's legal representatives under
this Agreement, other than for payment of all compensation
under Section 5(a) otherwise due to Executive during the Term
hereof as if Executive had not died or become disabled and,
unreimbursed expenses and the timely payment or provision of
Other Benefits through the date of death or Disability. The
Section 5(a) compensation shall be payable monthly in arrears
at the Base Salary of Executive in effect immediately preceding
Executive's death or Disability. Such other amounts shall be
paid to Executive or Executive's estate or beneficiary, as
applicable, in a lump sum cash payment within ninety (90) days
after the date of death or Disability. With respect to the
provision of Other Benefits, the term Other Benefits as used in
this Paragraph 6(c) shall mean benefits at least equal to the
most favorable benefits provided by the Company to the estates
and beneficiaries of other executive level employees of the
Company under such plans, programs, practices, and policies
relating to death or Disability benefits, if any,
7
as in effect with respect to other executives and their
beneficiaries at any time during the 120-day period immediately
preceding the date of death or Disability. Additionally, all
stock options for which Executive would have been eligible had
he completed the Term of this Agreement, shall be granted and
vest immediately, and Executive or Executive's estate or
beneficiary shall be vested in all other options held by
Executive as of the date of Executive's termination.
(d) Voluntary Termination by Employee and Termination :For Cause:
Benefits. Executive may terminate his employment with the
Company by giving written notice of his intent and stating an
effective Termination Date at least ninety (90) days after the
date of such notice; provided, however, that the Company may
accelerate such effective date by paying Executive through the
proposed Termination Date. The Company may terminate
Executive's employment for Cause at any time without prior
written notice. Upon such termination by Executive or upon
termination for Cause by the Company, this Agreement shall
terminate and the Company shall pay to Executive all accrued
compensation, and unreimbursed expenses through the Termination
Date. Such amounts shall be paid to Executive in a lump sum in
cash within thirty (30) days after the date of termination.
(e) Termination Without Cause. The Company may terminate
Executive's employment without Cause at any time without prior
notice. In the event there is a termination without Cause, this
Agreement shall terminate and Executive shall only be entitled
to the following severance benefits:
(1) For a period of twelve (12) months after the Termination
Date (the "Compensation Period"), Base Salary at the rate
in effect immediately prior to the Termination Date,
payable monthly, in arrears. In addition, the Company
shall remain obligated to maintain and keep all benefits
set forth in paragraphs 5(e) and (g) available to
Executive at the Company's expense for a period of one (1)
year after the Termination Date.
(2) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days
after the Termination Date; and
(3) Executive shall be free to accept other employment during
the Compensation Period, and there shall be no offset of
any employment compensation earned by Executive in such
other employment during the Compensation Period against
payments due to Executive hereunder, and there shall be no
8
offset of any compensation received from such other
employment against the Base Salary set forth above;
provided, however, that such compensation may terminate if
Executive violates any of the provisions of Section 9
below.
(f) Termination as Officer or Director. Upon any termination of
Executive's employment, Executive shall be deemed as having
tendered his resignation as an Officer and a Director of the
Company and each of its subsidiaries or related companies.
7. Indemnification; Liability Insurance. The Company shall indemnify
and hold Executive (or his legal representative) harmless to the
full extent permitted by applicable law for all legal expenses and
all liabilities, losses, judgments, fines, expenses, and amounts
paid in settlement in connection with any proceeding involving him
(including any action by or in the right of the Company) by reason
of his being or having been a director, officer, employee,
consultant or agent of the Company or any of its subsidiaries,
affiliates, or any other enterprise if he is serving or has served
at the request of the Company. In addition, the Company shall cause
any such subsidiary, affiliate, or enterprise also to so indemnify
and hold Executive harmless to the full extent permitted by
applicable law. The foregoing shall not be deemed to limit any
rights of Executive pursuant to applicable indemnification
provisions of the Company's Certificate of Incorporation or Bylaws
or otherwise. In addition, the Company shall acquire and maintain
with reputable insurance companies or associations acceptable to
Executive, directors' and officers' liability insurance for the
benefit of Executive providing terms and coverage amounts at least
as favorable as those provided to other officers or directors of the
Company. Such insurance shall remain in place (to the extent that
the Company is able to purchase the same for any officer or
director) as long as necessary under applicable statutes of
limitations to cover all events occurring during the Term of this
Agreement regardless of when the claim is made.
8. Advance of Expenses. In the event of any action, proceeding or claim
against Executive arising out of his serving or having served in a
capacity specified in paragraph 6 above, the Company shall provide
Executive with counsel, who may be counsel for the Company as well,
as long as no conflict of interest exists between the Company and
Executive, and no ethical or professional responsibility rules
prevent the same counsel from representing both Executive and the
company. In the event of any such conflict of interest or other bar
to Executive being represented by counsel for the Company, Executive
may retain his own separate counsel (such choice of counsel may be
made in his sole and absolute discretion), and the Company shall be
obligated to advance to Executive (or pay directly to his counsel)
reasonable counsel fees and other costs associated with Executive's
defense of such action, proceeding or claim; provided, however, that
in such event, Executive shall first agree in writing, without
posting bond or collateral, to repay all sums paid or advanced to
him pursuant to this
9
provision in the event that the final disposition of such action,
proceeding or claim is one for which Executive would not be entitled
to indemnification pursuant to the provisions hereof.
9. Non-Competition and Non-Solicitation.
(a) Executive and the Company expressly agree that during the Term
and for a period of one (1) year immediately following the
termination of Executive's employment with the Company for any
reason, Executive will not, for himself, or on behalf of any
other person, persons, firm, partnership, company, corporation
or organization, engage in, or provide services to, directly or
indirectly, any casual dining restaurant business either as a
principal, partner, agent, employee, director, officer,
independent contractor, consultant, or in any other capacity in
the United States of America.
(b) Employee agrees that during his period of employment with the
Company and for a period of two years after the termination of
employment (for any reason), Employee will not, directly or
indirectly, solicit, divert, or hire away or attempt to
solicit, divert, or hire away any person employed by the
Company, whether or not such person is a full-time or temporary
employee of the Company and will not make known to any person,
firm, entity, or corporation the names and addresses of any of
the employees of the Company or any information pertaining to
the employees of the Company.
10. No Mitigation Required. Executive's rights hereunder upon
termination of employment shall be cumulative with and in addition
to any other rights or remedies he may be entitled to by reason of
any such termination. In addition, Executive shall have no
obligation to mitigate his damages hereunder, whether by seeking new
employment or otherwise, nor shall the amount of any payment
provided for in this Agreement be reduced by any compensation earned
by Executive as the result of employment by another employer after
the date of termination of Executive's employment with the Company,
or otherwise.
11. Nondisclosure. Except as otherwise required by law or court order,
Executive, at any time during the Term, shall not disclose or use,
except in the course of Executive's employment with the Company in
the pursuit of the business of the Company or any of its
subsidiaries or affiliates, any confidential information or
nonpublic proprietary data of the Company or any of its subsidiaries
or affiliates, whether such information or proprietary data is in
Executive's memory or embodied in writing or other physical form.
Upon termination of employment with the Company for any reason
whatsoever, Executive shall forthwith deliver or cause to be
delivered to the Company any and all confidential information,
including drawings, notebooks, computers, keys, data, and other
documents and materials belonging to the Company which is in his
possession or under Executive's
10
control relating to the Company or the business of the Company, and
will deliver to the Company upon such termination of employment any
other property of the Company which is in his possession or under
his control.
12. Representations and Warranties. The Company represents and warrants
that the execution of this Agreement by the Company has been duly
authorized by resolution of the Board.
13. Entire Agreement. This Agreement constitutes the entire
understanding between Company and Executive relating to Executive's
employment hereunder and supersedes and cancels all prior written
and oral understandings and agreements with respect to such matters.
14. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon
its successors and assigns. The right and obligations of Executive
under this Agreement are of a personal nature and shall neither be
assigned nor transferred in whole or in part by Executive.
15. Miscellaneous.
(a) This Agreement shall be subject to and governed by the laws of
the state of Texas and venue shall lie in the courts of Harris
County.
(b) Failure by either party to insist upon strict compliance with
any provision hereof shall not be deemed a waiver of such
provision or any other provision hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or any breach
hereof, shall be deemed a waiver of such right in the future of
any other right or remedy available under this Agreement.
(e) The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other
provision.
(f) The section and paragraph headings contained in this Agreement
are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first set out above.
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ Tilman J. Fertitta
--------------------------------
Name: Tilman J. Fertitta
----------------------------
Title: President
---------------------------
Executive: /s/ Steven L. Scheinthal
-------------------------
Steven L. Scheinthal
12
PERSONAL SERVICE AND EMPLOYMENT AGREEMENT
This Personal Service and Employment Agreement (the "Agreement") is made
and entered into effective as of January 1, 1998 (the "Execution Date"), by and
between LANDRY'S SEAFOOD RESTAURANTS, INC., a Delaware corporation (the
"Company") and Paul S. West an individual ("Executive").
WHEREAS, the Company wishes to retain the services of Executive as Chief
Financial Officer of the Company, subject to and in accordance with the terms
and provisions of this Agreement; and
WHEREAS, Executive desires to be employed by the Company subject to and in
accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:
1 . Engagement. The Company hereby engages and retains Executive to
perform the "Duties" (as hereinafter set forth) and Executive hereby
accepts the engagement to perform the Duties upon the terms and
conditions set forth herein.
2. Term. Subject to the other terms and provisions of the Agreement, the
term of this Agreement, unless sooner terminated, shall begin on the
Execution Date and shall expire on December 31, 2002 (the "Term").
3. Duties. During the Term, Executive shall serve as the Chief Financial
Officer of the Company or such other office as shall be mutually
agreed upon by Executive and the Company. Executive shall perform
such duties and responsibilities as may be prescribed from time to
time by the Board of Directors of the Company (the "Board") or the
Company's Chief Executive Officer ("Chief Executive"). At the request
of the Chief Executive, Executive shall be nominated to serve on the
Board of Directors of the Company. At the Chief Executive's request,
Executive shall serve as an officer and/or on the Board of Directors
of one or more of the Company's subsidiaries. Without limiting the
foregoing, during the Term, Executive shall, in accordance with this
Agreement and the directions and policies from time to time
established by the Board and Chief Executive:
(a) Devote his full time, attention and energies to the Company, and
without the consent of the Board and Chief Executive, shall not
render any services of a business nature to any other person,
firm, corporation, or organization.
(b) Perform such services for the Company as shall be prescribed
from time to time by the Board and Chief Executive provided that
such services shall not be inconsistent with the normal and
customary duties of a company of similar character;
(c) Use his best efforts to promote the interests and objectives
of the Company.
4. Stock Ownership. So long as Executive is employed by the Company or
serves on its Board of Directors, Executive shall maintain ownership
of no less than the greater of 10,000 shares of common stock in the
Company or twenty percent (20%) of Executive's total grant of vested
options for the current calendar year.
5. Compensation.
(a) For services rendered pursuant to this Agreement, the Company
shall pay to Executive a base salary (the "Base Salary")
calculated at a rate of $180,000 per annum, payable on a bi-
weekly basis. Such sums shall be reduced by applicable
withholding, FICA, and other necessary pay-related taxes. The
Company also agrees that the compensation committee of the Board
("Compensation Committee") shall review Executive's salary at
least annually to determine if any salary increase is
appropriate in the discretionary and sole judgment of the
Compensation Committee. Any increase in the Base Salary or other
compensation granted by the Board shall in no way limit or
reduce any other obligation of the Company hereunder and, once
established at an increased specific rate, Executive's Base
Salary hereunder shall not thereafter be reduced. For purposes
of this Agreement, "Base Salary" shall mean Executive's initial
Base Salary or, if increased, the increased Base Salary.
(b) Executive shall be entitled to participate in and receive bonus
awards under any bonus program established by the Company for
its management or key personnel. In the absence of or in
addition to such a program, Executive shall be entitled to
receive such bonus, if any, as may be determined from time to
time by the Compensation Committee in its discretionary and sole
judgment based on merit and the Company's performance.
(c) As of the date hereof, the Company shall provide Executive with
a new automobile suitable to Executive's position with the
Company. In addition, the Company shall either directly pay or
reimburse Executive for all costs of operating and maintaining
such automobile, including insurance thereon.
(d) The Company shall provide an expense allowance to Executive in
an amount to be set by the Board. In addition, throughout the
term of this Agreement, the Company shall reimburse Executive
for all reasonable business expenses (including expenses of
travel and entertainment) incurred by Executive. The Company
shall also pay directly or reimburse Executive for membership or
initiation fees and reasonable monthly dues (excluding
miscellaneous charges) for
2
clubs located in the Greater Houston area that Executive deems
necessary to carry out the duties set forth herein. The
Company's obligation to pay for initiation fees shall not exceed
$10,000 during the Term. At least once a year during the Term,
and subject to availability as determined by the Company's Chief
Executive, the Company shall also provide Executive with the use
of Company transportation for his personal use, benefit, and
travel to and from a single destination located within the
continental United States.
(e) Executive shall be entitled to group life insurance, accidental
death and dismemberment insurance, hospitalization, surgical,
major medical coverage, long-term disability, and such other
insurance coverage that is made available to other executive
officers of the Company excluding the Chief Executive. Provided,
however, Executive shall only be entitled to such insurance
coverage to the extent that such coverage is provided to all
other executive officers of the Company excluding the Chief
Executive. The Company shall pay directly or reimburse Executive
for any medical expenses or charges not otherwise paid for by
the Company provided insurances, including deductibles or any
other charges, not to exceed $3,000 during each year of the
Term.
(f) During the Term of this Agreement, Executive shall be entitled
to twenty (20) paid vacation days per year, or such additional
numbers as may be determined by the Board from time to time. For
purpose of this paragraph, weekends shall not count as vacation
days, and Executive shall also be entitled to all paid holidays
given by the Company to its other executive officers. The time
or times at which Executive will be permitted to take such
vacation time shall be determined by the mutual agreement of the
Chief Executive and Executive.
(g) The Company shall provide Executive with $5,000,000 of split-
dollar variable life insurance (the "Policy") on the life of
Executive naming such beneficiaries thereunder as Executive
shall designate. The Policy shall be owned by Executive or his
designee.
(h) Each year of this Agreement, the Company shall make matching
charitable contributions to a charity or charities of
Executive's choice in the same amount made by Executive to the
charity or charities not to exceed a total amount of $15,000 in
any one year.
(i) During the Term of this Agreement, Executive shall be granted no
less than 200,000 stock options (the "Minimum Number") at a
price equal to the fair market value of the common stock at the
time of the grant or grants. The date of grant or grants shall
be in the sole discretion of the Stock Option Committee,
provided, however, that at least fifty percent of the Minimum
Number of options granted
3
hereunder shall be granted prior to December 31, 1999. Executive
shall have the right to exercise the stock options for a term of
ten (10) years. The stock options shall vest over three (3)
years from the respective dates of grant in equal annual
installments. All shares issuable to Executive upon exercise of
the options shall be registered pursuant to applicable federal
securities laws.
6. Termination.
(a) Definitions.
(1) "Cause" shall mean:
(i) Dishonesty which is not the result of an
inadvertent or innocent mistake of Executive with
respect to the Company or any of its subsidiaries;
(ii) Insubordination;
(iii) Willful misfeasance of duty by Executive intended to
injure or having the effect of injuring in some
material fashion the reputation, business, or
business relationships of the Company or any of its
subsidiaries or any of their respective officers,
directors, or employees;
(iv) Material violation by Executive of any term of this
Agreement;
(v) Conviction of Executive of any felony, any crime
involving moral turpitude or any crime other than a
vehicular offense which could reflect in some
material fashion unfavorably upon the Company or any
of its subsidiaries; and
(vi) Failure of Executive to perform the Duties required
hereunder.
(2) A "Change of Control" shall be deemed to have occurred if:
(i) Any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) other than a trustee or other
fiduciary holding securities under an employee
benefit plan of the Company becomes the "beneficial
owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or
indirectly, of 50% or more of
4
the Company's then outstanding voting common stock;
or
(ii) At any time during any consecutive thirty-six (36)
month period (not including any period prior to the
date hereof), individuals who at the beginning of
such period constituted the Board (and any new
director whose election by the Board or whose
nomination for election by the Company's
stockholders were approved by a vote of at least
two-thirds of the directors then still in office who
either were directors at the beginning of such
period or whose election or nomination for election
was previously so approved) cease for any reason to
constitute a majority thereof; or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than merger or consolidation (a)
in which a majority of the directors of the
surviving entity were directors of the Company prior
to such consolidation or merger, or (b) which would
result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by
being changed into voting securities of the
surviving entity) more than 50% of the combined
voting power of the voting securities of the
surviving entity outstanding immediately after such
merger or consolidation; or
(iv) The stockholders approve a plan of complete
liquidation of the Company or an agreement for the
sale or disposition by the Company of all or
substantially all of the Company's assets.
(3) A "Disability" shall mean the absence of Executive from his
duties with the Company on a full-time basis for 180
consecutive days, or 180 days in a 365-day period, as a
result of incapacity due to mental or physical illness
which results in Executive being able to perform the
essential functions of his position, with or without
reasonable accommodation.
(4) "Termination Date" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.
(5) "Termination Following a Change of Control" shall mean: (i)
a Termination of Executive without Cause by the Company in
connection with or within one (1) year following a Change
of
5
Control; (ii) failure of any successor/surviving company to
adopt this Agreement; or (iii) a termination of Executive's
employment with the Company by Executive for any reason
within one (1) year following a Change of Control.
(b) Termination Following a Change of Control. In the event there is
a Termination Following a Change of Control, this Agreement
shall terminate and Executive shall be entitled to the following
severance benefits:
(1) For a period of twelve (12) months after the Termination
Date (the "Compensation Period"), Base Salary at the rate
in effect immediately prior to the Termination Event,
payable monthly, in arrears. In addition, the Company shall
remain obligated to maintain and keep all benefits set
forth in paragraphs 5(e) and (g) available to Executive at
the Company's expense for a period of one (1) year after
the Termination Date. Moreover, Executive shall receive at
no additional cost, the automobile and the certificate of
title to the automobile referenced in paragraph 5(c) free
of any lien, claim, or encumbrance.
(2) Any stock options which Executive has received shall vest
immediately, and all options required to be granted
pursuant to Paragraph 5(i) which have not been so granted,
shall be granted and shall vest immediately and the grant
price shall be the lowest price of the Company's common
stock during the 120 days prior to the announcement of such
Change in Control.
(3) If Executive receives any payments hereunder which are
subject to an excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended, or any similar
tax imposed under federal, state, or local law
(collectively, "Excise Taxes"), the Company shall pay
Executive (on or before the date which Executive is
required to pay such Excise Taxes), 1) an additional amount
equal to all Excise Taxes then due and payable, and 2) the
amount necessary to defray Executive's increased (federal,
state, and local) income tax liability arising due to such
payments and any costs and expenses, including penalties
and interest incurred by Executive in connection with any
audit, proceedings, etc. related to the payment of such
Excise Taxes. For purposes of calculating the amount
payable to Executive under this Paragraph, the federal and
state income tax rates used shall be the highest marginal
federal and state rates applicable to ordinary income in
Executive's state of residence, taking into account any
federal income tax deductions or credits available to
Executive for state income taxes. The Company
6
shall cause its independent auditors to calculate such
amount and provide Executive a copy of such calculation at
least ten (10) days prior to the date specified above for
payment of such amount.
(4) All accrued compensation and unreimbursed expenses
through the Termination Date. Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days
after the Termination Date along with the certificate of
title referenced in paragraph 6(b)(1) above.
(5) Executive, in addition to all other amounts, payments or
benefits provided hereunder, and in consideration of
Executive's agreement under Section 9 below, shall receive
a lump sum payment in the amount of one million five
hundred thousand dollars ($1,500,000), to be paid within
five (5) days following such Termination.
(6) Executive shall be free to accept other employment during
the Compensation Period, and there shall be no offset of
any employment compensation earned by Executive in such
other employment during the Compensation Period against
payments due to Executive hereunder, and there shall be no
offset of any compensation received from such other
employment against the Base Salary set forth above;
provided, however, that such compensation may terminate if
Executive violate any of the provisions of Section 9 below.
(c) Termination in Event of Death or Disability: Benefits.
If Executive's employment is terminated by reason of
Executive's death or Disability during the term of this
Agreement (the "Employment Period"), this Agreement shall
terminate without further obligation to Executive's legal
representatives under this Agreement, other than for payment of
all compensation under Section 5(a) otherwise due to Executive
during the Term hereof as if Executive had not died or become
disabled and, unreimbursed expenses and the timely payment or
provision of Other Benefits through the date of death or
Disability. The Section 5(a) compensation shall be payable
monthly in arrears at the Base Salary of Executive in effect
immediately preceding Executive's death or Disability. Such
other amounts shall be paid to Executive or Executive's estate
or beneficiary, as applicable, in a lump sum cash payment
within ninety (90) days after the date of death or Disability.
With respect to the provision of Other Benefits, the term Other
Benefits as used in this Paragraph 5(c) shall mean benefits at
least equal to the most favorable benefits provided by the
Company to the estates and beneficiaries of other Executive
level employees of the Company under such plans, programs,
practices, and policies relating to death or Disability
benefits, if any,
7
as in effect with respect to other executives and their
beneficiaries at any time during the 120-day period immediately
preceding the date of death or Disability. Additionally, all
stock options for which Executive would have been eligible had
he completed the Term of this Agreement, shall be granted and
vest immediately, and Executive or Executive's estate or
beneficiary shall be vested in all other options held by
Executive as of the date of Executive's termination.
(d) Voluntary Termination by Employee and Termination for Cause:
Benefits. Executive may terminate his employment with the
Company by giving written notice of his intent and stating an
effective Termination Date at least ninety (90) days after the
date of such notice; provided, however, that the Company may
accelerate such effective date by paying Executive through the
proposed Termination Date. The Company may terminate Executive's
employment for Cause at any time without prior written notice.
Upon such termination by Executive or upon termination for Cause
by the Company, this Agreement shall terminate and the Company
shall pay to Executive all accrued compensation, and
unreimbursed expenses through the Termination Date. Such amounts
shall be paid to Executive in a lump sum in cash within thirty
(30) days after the date of termination.
(e) Termination Without Cause. The Company may terminate Executive's
employment without Cause at any time without prior notice. In
the event there is a termination without Cause, this Agreement
shall terminate and Executive shall only be entitled to the
following severance benefits:
(1) For a period of twelve (12) months after the Termination
Date (the "Compensation Period"), Base Salary at the rate
in effect immediately prior to the Termination Date,
payable monthly, in arrears. In addition, the Company shall
remain obligated to maintain and keep all benefits set
forth in paragraphs 5(e) and (g) available to Executive at
the Company's expense for a period of one (1) year after
the Termination Date.
(2) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days
after the Termination Date; and
(3) Executive shall be free to accept other employment during
the Compensation Period, and there shall be no offset of
any employment compensation earned by Executive in such
other employment during the Compensation Period against
payments due to Executive hereunder, and there shall be no
8
offset of any compensation received from such other
employment against the Base Salary set forth above;
provided, however, that such compensation may terminate if
Executive violates any of the provisions of Section 9
below.
(f) Termination as Officer or Director. Upon any termination of
Executive's employment, Executive shall be deemed as having
tendered his resignation as an Officer and a Director of the
Company and each of its subsidiaries or related companies.
7. Indemnification, Liability Insurance. The Company shall indemnify and
hold Executive (or his legal representative) harmless to the full
extent permitted by applicable law for all legal expenses and all
liabilities, losses, judgments, fines, expenses, and amounts paid in
settlement in connection with any proceeding involving him (including
any action by or in the right of the Company) by reason of his being
or having been a director, officer, employee, consultant or agent of
the Company or any of its subsidiaries, affiliates, or any other
enterprise if he is serving or has served at the request of the
Company. In addition, the Company shall cause any such subsidiary,
affiliate, or enterprise also to so indemnify and hold Executive
harmless to the full extent permitted by applicable law. The
foregoing shall not be deemed to limit any rights of Executive
pursuant to applicable indemnification provisions of the Company's
Certificate of Incorporation or Bylaws or otherwise. In addition, the
Company shall acquire and maintain with reputable insurance companies
or associations acceptable to Executive, directors' and officers'
liability insurance for the benefit of Executive providing terms and
coverage amounts at least as favorable as those provided to other
officers or directors of the Company. Such insurance shall remain in
place (to the extent that the Company is able to purchase the same
for any officer or director) as long as necessary under applicable
statutes of limitations to cover all events occurring during the Term
of this Agreement regardless of when the claim is made.
8. Advance of Expenses. In the event of any action, proceeding or claim
against Executive arising out of his serving or having served in a
capacity specified in paragraph 6 above, the Company shall provide
Executive with counsel, who may be counsel for the Company as well,
as long as no conflict of interest exists between the Company and
Executive, and no ethical or professional responsibility rules
prevent the same counsel from representing both Executive and the
Company. In the event of any such conflict of interest or other bar
to Executive being represented by counsel for the Company, Executive
may retain his own separate counsel (such choice of counsel may be
made in his sole and absolute discretion), and the Company shall be
obligated to advance to Executive (or pay directly to his counsel)
reasonable counsel fees and other costs associated with Executive's
defense of such action, proceeding or claim; provided, however, that
in such event, Executive shall first agree in writing, without
posting bond or collateral, to repay all sums paid or advanced to him
pursuant to this
9
provision in the event that the final disposition of such action,
proceeding or claim is one for which Executive would not be entitled
to indemnification pursuant to the provisions hereof.
9. Non-Competition and Non-Solicitation.
(a) Executive and the Company expressly agree that during the Term
and for a period of one (1) year immediately following the
termination of Executive's employment with the Company for any
reason, Executive will not, for himself, or on behalf of any
other person, persons, firm, partnership, company, corporation
or organization, engage in, or provide services to, directly or
indirectly, any casual dining restaurant business either as a
principal, partner, agent, employee, director, officer,
independent contractor, consultant, or in any other capacity in
the United States of America.
(b) Employee agrees that during his period of employment with the
Company and for a period of two years after the termination of
employment (for any reason), Employee will not, directly or
indirectly, solicit, divert, or hire away or attempt to solicit,
divert, or hire away any person employed by the Company, whether
or not such person is a full-time or temporary employee of the
Company and will not make known to any person, firm, entity, or
corporation the names and addresses of any of the employees of
the Company or any information pertaining to the employees of
the Company.
10. No Mitigation Required. Executive's rights hereunder upon termination
of employment shall be cumulative with and in addition to any other
rights or remedies he may be entitled to by reason of any such
termination. In addition, Executive shall have no obligation to
mitigate his damages hereunder, whether by seeking new employment or
otherwise, nor shall the amount of any payment provided for in this
Agreement be reduced by any compensation earned by Executive as the
result of employment by another employer after the date of
termination of Executive's employment with the Company, or otherwise.
11. Nondisclosure. Except as otherwise required by law or court order,
Executive, at any time during the Term, shall not disclose or use,
except in the course of Executive's employment with the Company in
the pursuit of the business of the Company or any of its subsidiaries
or affiliates, any confidential information or nonpublic proprietary
data of the Company or any of its subsidiaries or affiliates, whether
such information or proprietary data is in Executive's memory or
embodied in writing or other physical form. Upon termination of
employment with the Company for any reason whatsoever, Executive
shall forthwith deliver or cause to be delivered to the Company any
and all confidential information, including drawings, notebooks,
computers, keys, data, and other documents and materials belonging to
the Company which is in his possession or under Executive's
10
control relating to the Company or the business of the Company, and
will deliver to the Company upon such termination of employment any
other property of the Company which is in his possession or under his
control.
12. Representations and Warranties. The Company represents and warrants
that the execution of this Agreement by the Company has been duly
authorized by resolution of the Board.
13. Entire Agreement. This Agreement constitutes the entire understanding
between Company and Executive relating to Executive's employment
hereunder and supersedes and cancels all prior written and oral
understandings and agreements with respect to such matters.
14. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns. The right and obligations of Executive under
this Agreement are of a personal nature and shall neither be assigned
nor transferred in whole or in part by Executive.
15. Miscellaneous.
(a) This Agreement shall be subject to and governed by the laws of
the state of Texas and venue shall lie in the courts of Harris
County.
(b) Failure by either party to insist upon strict compliance with
any provision hereof shall not be deemed a waiver of such
provision or any other provision hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or any breach
hereof, shall be deemed a waiver of such right in the future of
any other right or remedy available under this Agreement.
(e) The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other
provision.
(f) The section and paragraph headings contained in this Agreement
are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set out above.
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ Tilman J. Fertitta
---------------------------------------
Name: Tilman J. Fertitta
----------------------------------
Title: President
---------------------------------
Executive: /s/ Paul S. West
--------------------------------
Paul S. West
12
PERSONAL SERVICE AND EMPLOYMENT AGREEMENT
This Personal Service and Employment Agreement (the "Agreement") is made
and entered into effective as of January 1, 1998 (the "Execution Date"), by and
between LANDRY'S SEAFOOD RESTAURANTS, INC., a Delaware corporation (the
"Company") and Richard E. Ervin an individual ("Executive").
WHEREAS, the Company wishes to retain the services of Executive as
Vice President of Restaurant Operations of the Company, subject to and in
accordance with the terms and provisions of this Agreement; and
WHEREAS, Executive desires to be employed by the Company subject to and in
accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Engagement. The Company hereby engages and retains Executive to
perform the "Duties" (as hereinafter set forth) and Executive hereby
accepts the engagement to perform the Duties upon the terms and
conditions set forth herein.
2. Term. Subject to the other terms and provisions of the Agreement, the
term of this Agreement, unless sooner terminated, shall begin on the
Execution Date and shall expire on December 31, 2002 (the "Term").
3. Duties. During the Term, Executive shall serve as the Vice-President
of Restaurant Operations of the Company or such other office as shall
be mutually agreed upon by Executive and the Company. Executive shall
perform such duties and responsibilities as may be prescribed from
time to time by the Board of Directors of the Company (the "Board")
or the Company's Chief Executive Officer ("Chief Executive"). At the
request of the Chief Executive, Executive shall be nominated to serve
on the Board of Directors of the Company. At the Chief Executive's
request, Executive shall serve as an officer and/or on the Board of
Directors of one or more of the Company's subsidiaries. Without
limiting the foregoing, during the Term, Executive shall, in
accordance with this Agreement and the directions and policies from
time to time established by the Board and Chief Executive:
(a) Devote his full time, attention and energies to the Company, and
without the consent of the Board and Chief Executive, shall not
render any services of a business nature to any other person,
firm, corporation, or organization.
(b) Perform such services for the Company as shall be prescribed
from time to time by the Board and Chief Executive provided that
such services shall not be inconsistent with the normal and
customary duties of a company of similar character;
(c) Use his best efforts to promote the interests and objectives of
the Company.
4. Stock Ownership. So long as Executive is employed by the Company or
serves on its Board of Directors, Executive shall maintain ownership
of no less than the greater of 8,000 shares of common stock in the
Company or twenty percent (20%) of Executive's total grant of vested
options for the current calendar year.
5. Compensation.
(a) For services rendered pursuant to this Agreement, the Company
shall pay to Executive a base salary (the "Base Salary")
calculated at a rate of $120,000 per annum, payable on a bi-
weekly basis. Such sums shall be reduced by applicable
withholding, FICA, and other necessary pay-related taxes. The
Company also agrees that the compensation committee of the
Board ("Compensation Committee") shall review Executive's
salary at least annually to determine if any salary increase is
appropriate in the discretionary and sole judgment of the
Compensation Committee. Any increase in the Base Salary or
other compensation granted by the Board shall in no way limit
or reduce any other obligation of the Company hereunder and,
once established at an increased specific rate, Executive's
Base Salary hereunder shall not thereafter be reduced. For
purposes of this Agreement, "Base Salary" shall mean
Executive's initial Base Salary or, if increased, the increased
Base Salary.
(b) Executive shall be entitled to participate in and receive bonus
awards under any bonus program established by the Company for
its management or key personnel. In the absence of or in
addition to such a program, Executive shall be entitled to
receive such bonus, if any, as may be determined from time to
time by the Compensation Committee in its discretionary and sole
judgment based on merit and the Company's performance.
(c) As of the date hereof, the Company shall provide Executive with
a new automobile suitable to Executive's position with the
Company. In addition, the Company shall either directly pay or
reimburse Executive for all costs of operating and maintaining
such automobile, including insurance thereon.
(d) The Company shall provide an expense allowance to Executive in
an amount to be set by the Board. In addition, throughout the
term of this Agreement, the Company shall reimburse Executive
for all reasonable business expenses (including expenses of
travel and entertainment) incurred by Executive. The Company
shall also pay directly or reimburse Executive for membership or
initiation fees and reasonable monthly dues (excluding
miscellaneous charges) for
2
clubs located in the Greater Houston area that Executive deems
necessary to carry out the duties set forth herein. The
Company's obligation to pay for initiation fees shall not
exceed $10,000 during the Term. At least once a year during the
Term, and subject to availability as determined by the
Company's Chief Executive, the Company shall also provide
Executive with the use of Company transportation for his
personal use, benefit, and travel to and from a single
destination located within the continental United States.
(e) Executive shall be entitled to group life insurance, accidental
death and dismemberment insurance, hospitalization, surgical,
major medical coverage, long-term disability, and such other
insurance coverage that is made available to other executive
officers of the Company excluding the Chief Executive.
Provided, however, Executive shall only be entitled to such
insurance coverage to the extent that such coverage is provided
to all other executive officers of the Company excluding the
Chief Executive. The Company shall pay directly or reimburse
Executive for any medical expenses or charges not otherwise
paid for by the Company provided insurances, including
deductibles or any other charges, not to exceed $3,000 during
each year of the Term.
(f) During the Term of this Agreement, Executive shall be entitled
to twenty (20) paid vacation days per year, or such additional
numbers as may be determined by the Board from time to time.
For purpose of this paragraph, weekends shall not count as
vacation days, and Executive shall also be entitled to all paid
holidays given by the Company to its other executive officers.
The time or times at which Executive will be permitted to take
such vacation time shall be determined by the mutual agreement
of the Chief Executive and Executive.
(g) The Company shall provide Executive with $3,000,000 of split-
dollar variable life insurance (the "Policy") on the life of
Executive naming such beneficiaries thereunder as Executive
shall designate. The Policy shall be owned by Executive or his
designee.
(h) Each year of this Agreement, the Company shall make matching
charitable contributions to a charity or charities of
Executive's choice in the same amount made by Executive to the
charity or charities not to exceed a total amount of $10,000 in
any one year.
(i) During the Term of this Agreement, Executive shall be granted
no less than 125,000 stock options (the "Minimum Number") at a
price equal to the fair market value of the common stock at the
time of the grant or grants. The date of grant or grants shall
be in the sole discretion of the Stock Option Committee,
provided, however, that at least fifty percent of the Minimum
Number of options granted
3
hereunder shall be granted prior to December 31, 1999.
Executive shall have the right to exercise the stock options
for a term of ten (10) years. The stock options shall vest over
three (3) years from the respective dates of grant in equal
annual installments. All shares issuable to Executive upon
exercise of the options shall be registered pursuant to
applicable federal securities laws.
6. Termination.
(a) Definitions.
(1) "Cause" shall mean:
(i) Dishonesty which is not the result of an
inadvertent or innocent mistake of Executive with
respect to the Company or any of its subsidiaries;
(ii) Insubordination;
(iii) Willful misfeasance of duty by Executive intended
to injure or having the effect of injuring in some
material fashion the reputation, business, or
business relationships of the Company or any of its
subsidiaries or any of their respective officers,
directors, or employees;
(iv) Material violation by Executive of any term of this
Agreement;
(v) Conviction of Executive of any felony, any crime
involving moral turpitude or any crime other than a
vehicular offense which could reflect in some
material fashion unfavorably upon the Company or
any of its subsidiaries; and
(vi) Failure of Executive to perform the Duties required
hereunder.
(2) A "Change of Control" shall be deemed to have occurred if:
(i) Any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934) other than a trustee or other fiduciary
holding securities under an employee benefit plan of
the Company becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of 50% or more of
4
the Company's then outstanding voting common stock;
or
(ii) At any time during any consecutive thirty-six (36)
month period (not including any period prior to the
date hereof), individuals who at the beginning of
such period constituted the Board (and any new
director whose election by the Board or whose
nomination for election by the Company's
stockholders were approved by a vote of at least
two-thirds of the directors then still in office who
either were directors at the beginning of such
period or whose election or nomination for election
was previously so approved) cease for any reason to
constitute a majority thereof, or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than merger or consolidation (a)
in which a majority of the directors of the
surviving entity were directors of the Company prior
to such consolidation or merger, or (b) which would
result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by
being changed into voting securities of the
surviving entity) more than 50% of the combined
voting power of the voting securities of the
surviving entity outstanding immediately after such
merger or consolidation; or
(iv) The stockholders approve a plan of complete
liquidation of the Company or an agreement for the
sale or disposition by the Company of all or
substantially all of the Company's assets.
(3) A "Disability" shall mean the absence of Executive from
his duties with the Company on a full-time basis for 180
consecutive days, or 180 days in a 365-day period, as a
result of incapacity due to mental or physical illness
which results in Executive being able to perform the
essential functions of his position, with or without
reasonable accommodation.
(4) "Termination Date" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.
(5) "Termination Following a Change of Control" shall mean:
(i) a Termination of Executive without Cause by the
Company in connection with or within one (1) year
following a Change of
5
Control; (ii) failure of any successor/surviving company
to adopt this Agreement; or (iii) a termination of
Executive's employment with the Company by Executive for
any reason within one (1) year following a Change of
Control.
(b) Termination Following a Change of Control. In the event there
is a Termination Following a Change of Control, this Agreement
shall terminate and Executive shall be entitled to the
following severance benefits:
(1) For a period of twelve (12) months after the Termination
Date (the "Compensation Period"), Base Salary at the rate
in effect immediately prior to the Termination Event,
payable monthly, in arrears. In addition, the Company
shall remain obligated to maintain and keep all benefits
set forth in paragraphs 5(e) and (g) available to
Executive at the Company's expense for a period of one (1)
year after the Termination Date. Moreover, Executive shall
receive at no additional cost, the automobile and the
certificate of title to the automobile referenced in
paragraph 5(c) free of any lien, claim, or encumbrance.
(2) Any stock options which Executive has received shall vest
immediately, and all options required to be granted
pursuant to Paragraph 5(i) which have not been so granted,
shall be granted and shall vest immediately and the grant
price shall be the lowest price of the Company's common
stock during the 120 days prior to the announcement of
such Change in Control.
(3) If Executive receives any payments hereunder which are
subject to an excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended, or any similar
tax imposed under federal, state, or local law
(collectively, "Excise Taxes"), the Company shall pay
Executive (on or before the date which Executive is
required to pay such Excise Taxes), 1) an additional
amount equal to all Excise Taxes then due and payable, and
2) the amount necessary to defray Executive's increased
(federal, state, and local) income tax liability arising
due to such payments and any costs and expenses, including
penalties and interest incurred by Executive in connection
with any audit, proceedings, etc. related to the payment
of such Excise Taxes. For purposes of calculating the
amount payable to Executive under this Paragraph, the
federal and state income tax rates used shall be the
highest marginal federal and state rates applicable to
ordinary income in Executive's state of residence, taking
into account any federal income tax deductions or credits
available to Executive for state income taxes. The Company
6
shall cause its independent auditors to calculate such
amount and provide Executive a copy of such calculation at
least ten (10) days prior to the date specified above for
payment of such amount.
(4) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days
after the Termination Date along with the certificate of
title referenced in paragraph 6(b)(1) above.
(5) Executive, in addition to all other amounts, payments or
benefits provided hereunder, and in consideration of
Executive's agreement under Section 9 below, shall receive
a lump sum payment in the amount of seven hundred fifty
thousand dollars ($750,000), to be paid within five (5)
days following such Termination.
(6) Executive shall be free to accept other employment during
the Compensation Period, and there shall be no offset of
any employment compensation earned by Executive in such
other employment during the Compensation Period against
payments due to Executive hereunder, and there shall be no
offset of any compensation received from such other
employment against the Base Salary set forth above;
provided, however, that such compensation may terminate if
Executive violate any of the provisions of Section 9
below.
(c) Termination In Event of Death or Disability: Benefits. If
Executive's employment is terminated by reason of Executive's
death or Disability during the term of this Agreement (the
"Employment Period"), this Agreement shall terminate without
further obligation to Executive's legal representatives under
this Agreement, other than for payment of all compensation
under Section 5(a) otherwise due to Executive during the Term
hereof as if Executive had not died or become disabled and,
unreimbursed expenses and the timely payment or provision of
Other Benefits through the date of death or Disability. The
Section 5(a) compensation shall be payable monthly in arrears
at the Base Salary of Executive in effect immediately preceding
Executive's death or Disability. Such other amounts shall be
paid to Executive or Executive's estate or beneficiary, as
applicable, in a lump sum cash payment within ninety (90) days
after the date of death or Disability. With respect to the
provision of Other Benefits, the term Other Benefits as used in
this Paragraph 5(c) shall mean benefits at least equal to the
most favorable benefits provided by the Company to the estates
and beneficiaries of other executive level employees of the
Company under such plans, programs, practices, and policies
relating to death or Disability benefits if any
7
as in effect with respect to other executives and their beneficiaries
at any time during the 120-day period immediately preceding the date
of death or Disability. Additionally, all stock options for which
Executive would have been eligible had he completed the Term of this
Agreement, shall be granted and vest immediately, and Executive or
Executive's estate or beneficiary shall be vested in all other
options held by Executive as of the date of Executive's termination.
(d) Volunta[y Termination bY Employee and Termination for Cause:
Benefits. Executive may terminate his employment with the
Company by giving written notice of his intent and stating an
effective Termination Date at least ninety (90) days after the
date of such notice; provided, however, that the Company may
accelerate such effective date by paying Executive through the
proposed Termination Date. The Company may terminate Executive's
employment for Cause at any time without prior written notice.
Upon such termination by Executive or upon termination for Cause
by the Company, this Agreement shall terminate and the Company
shall pay to Executive all accrued compensation, and
unreimbursed expenses through the Termination Date. Such amounts
shall be paid to Executive in a lump sum in cash within thirty
(30) days after the date of termination.
(e) Termination Without Cause. The Company may terminate Executive's
employment without Cause at any time without prior notice. In
the event there is a termination without Cause, this Agreement
shall terminate and Executive shall only be entitled to the
following severance benefits:
(1) For a period of twelve (12) months after the Termination
Date (the "Compensation Period"), Base Salary at the rate
in effect immediately prior to the Termination Date,
payable monthly, in arrears. In addition, the Company shall
remain obligated to maintain and keep all benefits set
forth in paragraphs 5(e) and (g) available to Executive at
the Company's expense for a period of one (1) year after
the Termination Date.
(2) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days
after the Termination Date; and
(3) Executive shall be free to accept other employment during
the Compensation Period, and there shall be no offset of
any employment compensation earned by Executive in such
other employment during the Compensation Period against
payments due to Executive hereunder, and there shall be no
8
offset of any compensation received from such other
employment against the Base Salary set forth above;
provided, however, that such compensation may terminate if
Executive violates any of the provisions of Section 9
below.
(f) Termination as Officer or Director. Upon any termination of
Executive's employment, Executive shall be deemed as having
tendered his resignation as an Officer and a Director of the
Company and each of its subsidiaries or related companies.
7. Indemnification: Liability Insurance. The Company shall indemnify
and hold Executive (or his legal representative) harmless to the
full extent permitted by applicable law for all legal expenses and
all liabilities, losses, judgments, fines, expenses, and amounts
paid in settlement in connection with any proceeding involving him
(including any action by or in the right of the Company) by reason
of his being or having been a director, officer, employee,
consultant or agent of the Company or any of its subsidiaries,
affiliates, or any other enterprise if he is serving or has served
at the request of the Company. In addition, the Company shall cause
any such subsidiary, affiliate, or enterprise also to so indemnify
and hold Executive harmless to the full extent permitted by
applicable law. The foregoing shall not be deemed to limit any
rights of Executive pursuant to applicable indemnification
provisions of the Company's Certificate of Incorporation or Bylaws
or otherwise. In addition, the Company shall acquire and maintain
with reputable insurance companies or associations acceptable to
Executive, directors' and officers' liability insurance for the
benefit of Executive providing terms and coverage amounts at least
as favorable as those provided to other officers or directors of the
Company. Such insurance shall remain in place (to the extent that
the Company is able to purchase the same for any officer or
director) as long as necessary under applicable statutes of
limitations to cover all events occurring during the Term of this
Agreement regardless of when the claim is made.
8. Advance of Expenses. In the event of any action, proceeding or claim
against Executive arising out of his serving or having served in a
capacity specified in paragraph 6 above, the Company shall provide
Executive with counsel, who may be counsel for the Company as well,
as long as no conflict of interest exists between the Company and
Executive, and no ethical or professional responsibility rules
prevent the same counsel from representing both Executive and the
Company. In the event of any such conflict of interest or other bar
to Executive being represented by counsel for the Company, Executive
may retain his own separate counsel (such choice of counsel may be
made in his sole and absolute discretion), and the Company shall be
obligated to advance to Executive (or pay directly to his counsel)
reasonable counsel fees and other costs associated with Executive's
defense of such action, proceeding or claim; provided, however, that
in such event, Executive shall first agree in writing, without
posting bond or collateral, to repay all sums paid or advanced to
him pursuant to this
9
provision in the event that the final disposition of such action,
proceeding or claim is one for which Executive would not be entitled
to indemnification pursuant to the provisions hereof.
9. Non-Competition and Non-Solicitation.
(a) Executive and the Company expressly agree that during the Term
and for a period of one (1) year immediately following the
termination of Executive's employment with the Company for any
reason, Executive will not, for himself, or on behalf of any
other person, persons, firm, partnership, company, corporation
or organization, engage in, or provide services to, directly or
indirectly, any casual dining restaurant business either as a
principal, partner, agent, employee, director, officer,
independent contractor, consultant, or in any other capacity in
the United States of America.
(b) Employee agrees that during his period of employment with the
Company and for a period of two years after the termination of
employment (for any reason), Employee will not, directly or
indirectly, solicit, divert, or hire away or attempt to
solicit, divert, or hire away any person employed by the
Company, whether or not such person is a full-time or temporary
employee of the Company and will not make known to any person,
firm, entity, or corporation the names and addresses of any of
the employees of the Company or any information pertaining to
the employees of the Company.
10. No Mitigation Required. Executive's rights hereunder upon termination
of employment shall be cumulative with and in addition to any other
rights or remedies he may be entitled to by reason of any such
termination. In addition, Executive shall have no obligation to
mitigate his damages hereunder, whether by seeking new employment or
otherwise, nor shall the amount of any payment provided for in this
Agreement be reduced by any compensation earned by Executive as the
result of employment by another employer after the date of
termination of Executive's employment with the Company, or otherwise.
11. Nondisclosure. Except as otherwise required by law or court order,
Executive, at any time during the Term, shall not disclose or use,
except in the course of Executive's employment with the Company in
the pursuit of the business of the Company or any of its subsidiaries
or affiliates, any confidential information or nonpublic proprietary
data of the Company or any of its subsidiaries or affiliates, whether
such information or proprietary data is in Executive's memory or
embodied in writing or other physical form. Upon termination of
employment with the Company for any reason whatsoever, Executive
shall forthwith deliver or cause to be delivered to the Company any
and all confidential information, including drawings, notebooks,
computers, keys, data, and other documents and materials belonging to
the Company which is in his possession or under Executive's
10
control relating to the Company or the business of the Company, and
will deliver to the Company upon such termination of employment any
other property of the Company which is in his possession or under his
control.
12. Representations and Warranties. The Company represents and warrants
that the execution of this Agreement by the Company has been duly
authorized by resolution of the Board.
13. Entire Agreement. This Agreement constitutes the entire understanding
between Company and Executive relating to Executive's employment
hereunder and supersedes and cancels all prior written and oral
understandings and agreements with respect to such matters.
14. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns. The right and obligations of Executive under
this Agreement are of a personal nature and shall neither be assigned
nor transferred in whole or in part by Executive.
15. Miscellaneous.
(a) This Agreement shall be subject to and governed by the laws of
the state of Texas and venue shall lie in the courts of Harris
County.
(b) Failure by either party to insist upon strict compliance with
any provision hereof shall not be deemed a waiver of such
provision or any other provision hereof.
(c) This Agreement may not be modified except by an agreement in
writing executed by the parties hereto.
(d) No waiver by either party to this Agreement of any right to
enforce any term or condition of this Agreement, or any breach
hereof, shall be deemed a waiver of such right in the future of
any other right or remedy available under this Agreement.
(e) The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other
provision.
(f) The section and paragraph headings contained in this Agreement
are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first set out above.
LANDRY'S SEAFOOD RESTAURANTS, INC.
By: /s/ Tilman J. Fertitta
--------------------------------------
Name: Tilman J. Fertitta
----------------------------------
Title: President
---------------------------------
Executive: /s/ Richard E. Ervin
-------------------------------
Richard E. Ervin
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