Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), between Luby's, Inc., a
Delaware corporation ("Luby's" or the "Company"), and Christopher J. Pappas, a
resident of Houston, Texas, ("Executive") is executed this 9th day of November,
2005 to be effective as of the 1st day of September, 2005 ("Effective Date").
For purposes of this Agreement, "Luby's" or the "Company" shall include the
subsidiaries of Luby's. Luby's and Executive are sometimes referred to herein
individually as a "Party," and collectively as the "Parties." The Parties hereby
agree as follows:
1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" means, with respect to any Person, any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person. For purposes of this
definition and this Agreement, the term "control" (and correlative terms
"controlling," "controlled by" and "under common control with") means possession
of the power, whether by contract, equity ownership or otherwise, to direct the
policies or management of a Person.
"Associate" has the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act.
"Beneficially Own" or "Beneficial Ownership" is defined in Rules 13d-3
and 13d-5 of the Exchange Act, but without taking into account any contractual
restrictions or limitations on voting or other rights.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Business Combination" means (i) any consolidation, merger, share
exchange or similar business combination transaction involving the Company with
any Person or (ii) the sale, assignment, conveyance, transfer, lease or other
disposition by the Company of all or substantially all of its assets.
"Change of Control" shall means the occurrence of any of the events
described in subsections (i) through (iv) below:
(i) The Rights Agreement shall have been determined
to be invalid or is otherwise abrogated by a court of competent
jurisdiction in a final and non-appealable judgment rendered in
connection with a contest for control of the Company and a
substitute defense mechanism having the effectiveness of the
Rights Agreement is not promptly adopted or, if adopted, is
determined to be invalid or is otherwise abrogated, and either
(y) the Company has received a report on Schedule 13D, or an
amendment to such a report, filed with the SEC pursuant to
Section 13(d) of the Exchange Act disclosing that any Person or
13d Group other than Christopher J. Pappas or Harris J. Pappas,
individually or
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together with their Affiliates and Associates and any 13d Group
of which they are a part, Beneficially Owns, directly or
indirectly, twenty percent or more of the combined voting power
of the outstanding Common Stock, or (z) the Board of Directors
has actual knowledge of facts on the basis of which any Person
or 13d Group other than Christopher J. Pappas or Harris J.
Pappas, individually or together with their Affiliates and
Associates and any 13d Group of which they are a part, is
required to file such a report on Schedule 13D, or to make an
amendment to such a report, with the SEC (or would be required
to file such a report or amendment upon the lapse of the
applicable period of time specified in Section 13(d) of the
Securities Act) disclosing that such Person or 13d Group other
than Christopher J. Pappas or Harris J. Pappas, individually or
together with their Affiliates and Associates and any 13d Group
of which they are a part, Beneficially Owns, directly or
indirectly, twenty percent or more of the combined voting power
of the outstanding Common Stock.
(ii) Either (y) the purchase by any Person, other
than the Company or a wholly-owned subsidiary of the Company or
Christopher J. Pappas or Harris J. Pappas, individually or
together with their Affiliates and Associates and any 13d Group
of which they are a part, of shares of Common Stock pursuant to
a tender or exchange offer to acquire any Common Stock (or
securities convertible into Common Stock) for cash, securities
or any other consideration or (z) any Person, other than the
Company or a wholly-owned subsidiary of the Company or
Christopher J. Pappas or Harris J. Pappas or any of their
Affiliates, Associates or members of any 13d Group of which they
are a part, individually or together, shall make any such offer
to acquire any Common Stock pursuant to a tender or exchange
offer for cash, securities or any other consideration and either
(1) the Company shall have recommended that stockholders accept
such offer or (2) within 10 business days (as such term is used
in Rule 14e-2 under the Exchange Act), the Company shall have
made no recommendation that stockholders reject such offer or
(3) the Company shall have recommended that stockholders reject
such offer and the Rights Agreement shall have been determined
to be invalid or is otherwise abrogated by a court of competent
jurisdiction in a final and non-appealable judgment rendered in
connection with a contest for control of the Company and a
substitute defense mechanism having the effectiveness of the
Rights Agreement is not promptly adopted or, if adopted, is
determined to be invalid or is otherwise abrogated, provided
that, after consummation of any such offer, such Person
Beneficially Owns, or would Beneficially Own, directly or
indirectly, twenty percent or more of the combined voting power
of the outstanding Common Stock (calculated as provided in
paragraph (d) of Rule 13d-3 under the Exchange Act in the case
of rights to acquire stock).
(iii) The Company shall, after approval by its Board
of Directors or an authorized committee thereof, enter into any
agreement contemplating a transaction described below, other
than any such transaction with Christopher J. Pappas or Harris
J. Pappas, individually or together with their Affiliates and
Associates and any 13d Group of which they are a part: (v) a
transaction pursuant to which the Company agrees to issue or
sell, regardless of the consideration
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therefor, a number of its shares of Common Stock that would
result in any Person acquiring Beneficial Ownership, directly or
indirectly, of twenty percent or more of the combined voting
power of the outstanding Common Stock, calculated as in clause
(ii) above; (w) any consolidation, merger or similar transaction
involving the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of Common
Stock would be converted into cash, securities or other
property, other than a consolidation, merger or similar
transaction involving the Company in which holders of its Common
Stock immediately prior to the consolidation or merger or
similar transaction own at least a majority of the combined
voting power of the outstanding capital stock of the surviving
corporation immediately after the consolidation, merger or
similar transaction (or at least a majority of the combined
voting power of the outstanding capital stock of a corporation
which owns directly or indirectly all of the voting stock of the
surviving corporation); (x) any consolidation, merger or similar
transaction involving the Company in which the Company is the
continuing or surviving corporation but in which the
stockholders of the Company immediately prior to the
consolidation, merger or similar transaction do not hold at
least a majority of the combined voting power of the outstanding
Common Stock of the continuing or surviving corporation (except
where such holders of Common Stock hold at least a majority of
the combined voting power of the outstanding capital stock of
the corporation which owns directly or indirectly all of the
voting stock of the Company); (y) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company (except such a transfer to a corporation which is wholly
owned, directly or indirectly, by the Company), or any complete
liquidation of the Company; or (z) any consolidation, merger or
similar transaction involving the Company where, after the
consolidation, merger or similar transaction, one Person owns
100% of the shares of Common Stock (except where the holders of
the Company's voting stock immediately prior to such
consolidation, merger or similar transaction own at least a
majority of the combined voting power of the outstanding capital
stock of such Person immediately after such consolidation,
merger or similar transaction).
(iv) A change in the majority of the members of the
board of directors of the Company within a 24-month period
unless the election or nomination for election by the
shareholders of each new director was approved by the vote of at
least two-thirds of the directors then still in office who were
in office at the beginning of the 24-month period.
For purposes of this Agreement, the "effective date of a Change of
Control" is the date that an event described in subsection (i), (ii),
(iii) or (iv) occurs or the date upon which all the events necessary to
constitute the Change of Control shall have occurred.
"Common Stock" means the Company's common stock, par value $.32 per
share, and any capital stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to an agreement or Business Combination to which the Company is a party.
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"Covenant Period" means:
(i) twenty-four (24) months if Employee is
terminated by the Company for Cause or if Executive terminates
his employment without Good Reason; or (ii) if Executive's
employment is terminated for any other reason;
(x) twelve (12) months for the activities
prohibited by clauses (ii) and (iv) of
Section 11(b); and
(y) twenty-four (24) months for the
activities prohibited by any other
provision of Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Rights Agreement" means the Rights Agreement dated April 16, 1991
between the Company and Ameritrust Company, N.A. as Agent, as amended from time
to time.
"SEC" means the Securities and Exchange Commission.
"13d Group" means a group within the meaning of Section 13(d)(3) of the
Exchange Act.
2. Employment. Luby's hereby employs Executive, and Executive
hereby accepts employment with Luby's, subject to the terms and conditions set
forth in this Agreement.
3. Term. Subject to the provisions for termination of employment as
provided in Section 8(a), Executive's employment under this Agreement shall be
for a period beginning on the Effective Date and ending on August 31, 2008
("Term").
4. Compensation. Executive's compensation during his employment
under the terms of this Agreement shall be as follows:
(a) Base Salary. Luby's shall pay to Executive a fixed
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annual base salary (the "Base Salary") of Four Hundred Thousand Dollars
($400,000) for each year of the Term. The Base Salary shall be payable
in equal, semi-monthly installments on the 15th day and last day of each
month or at such other times and in such installments as may be agreed
between Luby's and Executive. All payments shall be subject to the
deduction of payroll taxes, income tax withholdings, and similar
deductions and withholdings as required by law.
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(b) Bonus. During each year of the Term, in addition to the
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Base Salary, Executive shall be eligible, but not entitled, to receive
bonus compensation as the Board of Directors of Luby's or an authorized
committee thereof shall from time to time determine in its sole
discretion.
5. Expenses and Benefits.
(a) During his employment hereunder, Executive is authorized
to incur reasonable and appropriate expenses related to the business of
Luby's, including expenses for entertainment, travel, and similar
matters. Luby's will reimburse Executive for such expenses upon
presentation by Executive of such accounts and records as Luby's may
from time to time reasonably require.
(b) Luby's also agrees to provide Executive with the
following benefits during his employment hereunder:
(i) Employee Benefit Plans. Executive and, to the
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extent applicable, Executive's spouse, dependents, and
beneficiaries, shall be allowed to participate on the same terms
in all benefits, plans, and programs, including improvements or
modifications of the same, which are now, or may hereafter be,
available to other executive employees of Luby's; provided that
Executive shall not be permitted without the express consent of
the Board of Directors of Luby's to participate in any bonus,
incentive, profit-sharing, or similar cash payment plan. Such
benefits, plans, and programs may include, without limitation,
stock option or thrift plans, health insurance or health care
plans, life insurance, disability insurance, supplemental
retirement plans, vacation, and sick leave. Luby's shall not,
however, by reason of this paragraph be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing
any such benefit plan or program, so long as such changes are
similarly applicable to executive employees generally.
(ii) Vacations. Executive shall be entitled (in
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addition to the usual Luby's holidays) to paid vacation time for
periods in each calendar year not exceeding four (4) weeks.
(iii) Working Facilities. Executive shall be furnished
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by Luby's with an office at the Company's principal office in
Houston, Texas, secretarial help and other facilities and
services, including but not limited to, full use of Luby's mail
and communication facilities and services reasonably suitable to
his position and reasonably necessary for the performance of his
duties under this Agreement.
6. Positions and Duties. Executive is employed hereunder as Chief
Executive Officer of Luby's or in such other positions as the Parties may
mutually agree. In addition, if requested to do so, Executive shall serve as the
chief executive officer or other officer or as a member of the Board of
Directors, or both, of any subsidiary or affiliate of Luby's. Executive agrees
to serve in the position referred to above and to perform diligently and to the
best of his abilities the duties and services appertaining to such office, as
well as such additional duties and services appropriate to such offices which
the Parties mutually may agree upon from time to time.
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Executive's employment shall also be subject to the policies maintained and
established by Luby's that are of general applicability to Luby's executive
employees, as such policies may be amended from time to time. Executive's duties
shall be performed principally at Luby's principal place of business in Houston,
Texas and at the locations of its operations. Executive acknowledges and agrees
that Executive owes a fiduciary duty of loyalty to act at all times in the best
interests of Luby's. In keeping with such duty, Executive represents that he
owes no duty to any other entity or person regarding, and shall make full
disclosure to Luby's of, all business opportunities pertaining to Company's
business which have not been previously renounced by the Board of Directors, as
contemplated by Section 11 hereof, and shall not appropriate for Executive's own
benefit any such business opportunities.
7. Extent of Service. Executive shall, during the term of this
Agreement, devote his primary working time, attention, energies and business
efforts to his duties as an employee of Luby's and to the business and affairs
of Luby's generally, and shall not, during the term of this Agreement, engage,
directly or indirectly, in any other business activity whatsoever, whether or
not such business activity is pursued for gain, profit or other pecuniary
advantage, except with the consent of the Board of Directors of Luby's; however,
this Section 7 shall not be construed to prevent Executive from, nor require
board consent with respect to, (i) continuing executive's senior level
management of non-cafeteria style restaurant businesses operated by executive's
privately-held family company ("Executive's Family Company"), (ii) serving as a
member of the board of directors or board of trustees of Executive's Family
Company or other companies or not-for-profit entities, or (iii) from investing
his personal, private assets as a passive investor in such form or manner as
will not require any active services on the part of Executive in the management
or operation of the affairs of the companies, partnerships, or other business
entities in which any such passive investments are made; provided in case of
clause (i), (ii), or (iii) such activities do not conflict with the business and
affairs of Luby's or interfere with Executive's ability to perform the services
and discharge the duties required of him hereunder.
8. Termination.
(a) Termination of Employment. Notwithstanding the
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provisions of Section 2, the employment of the Executive pursuant to
this Agreement shall terminate prior to the expiration of the Term, upon
the occurrence of any of the following events:
(i) the death of the Executive;
(ii) the termination of the Executive's employment by
Luby's due to the Executive's Disability (as defined in Section
8(b));
(iii) the termination of the Executive's employment by
the Executive for "Good Reason" (as defined in Section 8(d));
(iv) the termination of the Executive's employment by
Luby's for "Cause" (as defined in Section 8(c)); or
(v) for any reason whatsoever in the discretion of
the Executive or Luby's.
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(b) Disability. For the purposes of this Agreement, the term
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"Disability" shall mean Executive becoming incapacitated by accident,
sickness, or other circumstance that renders him physically or mentally
unable to carry out the duties and services required of him hereunder on
a full-time basis for more than one hundred twenty (120) days in any one
hundred eighty (180) day period. If a dispute arises between the
Executive and the Company concerning the Executive's physical or mental
ability to continue or return to the performance of his duties as
aforesaid, the Executive shall submit to examination by a competent
physician mutually agreeable to both parties or, if the parties are
unable to agree, by a physician appointed by the president of the Harris
County Medical Association, and such physician's opinion shall be final
and binding.
(c) Cause. For purposes of this Agreement, the term "Cause"
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shall mean:
(i) Executive's conviction of a crime constituting a
felony, or a misdemeanor involving moral turpitude;
(ii) The commission by Executive, or participation
in, an illegal act or acts that were intended to defraud Luby's;
(iii) the willful refusal by Executive to fulfill the
duties and responsibilities as Chief Executive Officer;
(iv) the breach by Executive of material provisions
of this Agreement, a policy of Luby's, or the code of conduct of
Luby's in each case after written notice from the Board of
Directors and, if correctible, the failure to correct such
breach within 30 days from the date such notice is given;
(v) gross negligence or willful misconduct by
Executive in the performance of his duties and obligations to
Luby's;
(vi) willful engagement by Executive in conduct known
(or which should have been known) to be materially injurious to
Luby's.
(d) Good Reason. For purposes of this Agreement, "Good
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Reason" shall mean the occurrence of any of the following circumstances,
without the consent of the Executive, unless such circumstances are
remedied in all material respects by Luby's 30 days after Luby's receipt
of written notice thereof given by the Executive:
(i) the material diminution in the nature, scope, or
duties of the Executive or assignment of duties inconsistent
with those of the Chief Executive Officer or a change in the
location of the principal business office of the Company in
which his services are to be carried out, to a place outside of
Texas;
(ii) any breach of a material provision of this
Agreement by Luby's after written notice from Employee and, if
correctible, the failure to correct such breach within 30 days
from the date such notice is given;
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(iii) within two years after sale by Luby's of all or
substantially all of its assets or the merger, share exchange,
or other reorganization of Luby's into or with another
corporation or entity (with respect to which Luby's does not
survive), a diminution in employee benefits (including but not
limited to medical, dental, life insurance, and long-term
disability plans) and perquisites applicable to Executive from
the greater of (A) the employee benefits and perquisites
provided by Luby's to executives with comparable duties or (B)
the employee benefits and perquisites to which Executive was
entitled immediately prior to the date on which a change in
control occurs.
(e) Notice of Termination. If Luby's or Executive desires to
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terminate Executive's employment hereunder at any time prior to
expiration of the Term, it or he shall do so by giving written notice to
the other party that it or he has elected to terminate Executive's
employment hereunder and stating the proposed effective date and reason
for such termination, provided that no such action shall alter or amend
any other provisions hereof or rights arising hereunder.
9. Consequences of Termination.
(a) By Expiration. If Executive's employment hereunder shall
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terminate upon expiration of the Term, then all compensation for periods
subsequent to termination and all benefits to Executive hereunder, other
than (i) the nonqualified stock option to purchase 1,120,000 shares of
Common Stock of Luby's, with an exercise price per share equal to five
dollars ($5.00) per share dated March 9, 2001 and (ii) any other equity
based compensation awards granted to Executive by Luby's (collectively,
the "Awards"), each of which is governed by its own terms in such
circumstances, shall terminate contemporaneously with termination of his
employment.
(b) Death or Disability. If the Executive's employment is
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terminated during the Term by reason of the Executive's death or
Disability, all Compensation and benefits to Executive under this
Agreement, other than the Awards, each of which is governed by its own
terms in such circumstances, shall terminate contemporaneously with the
termination of employment and without further obligation to the
Executive or the Executive's legal representatives under the Agreement
(other than payment of the Executive's Base Salary in respect of the
period through his date of death or termination for Disability).
(c) Termination by the Executive without Good Reason or by
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the Company For Cause. If the Executive's employment is terminated by
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the Executive without Good Reason, or by the Company for Cause, all
compensation and benefits to Executive under this Agreement, other than
the Awards, each of which is governed by its own terms in such
circumstances, shall terminate contemporaneously with such termination
of employment and without further obligation to Executive or Executive's
legal representatives under this Agreement (other than payment of
Executive's Base Salary in respect of the period through his date of
termination).
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(d) Termination by the Executive for Good Reason or by the
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Company without Cause.
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(i) If the Executive's employment is terminated by
the Company without Cause or by the Executive for Good Reason,
the Company shall be obligated to pay to, or make available to,
the Executive Executive's monthly Base Salary and benefits in
effect on the date of termination for the remainder of the Term.
The Executive shall have no obligation to seek other employment
during any time period for which he may receive payment pursuant
to this subsection (d), and in the event the Executive obtains
other employment during such period, the Company's obligations
to make payments pursuant to this subsection (d) shall not be
reduced. In the event that continued participation in any Luby's
benefit plan contemplated by Section 5(b)(i) hereof is for
whatever reason impermissible during the remainder of the Term,
Company shall arrange upon comparable terms benefits
substantially equivalent to those that may not be so provided
under the plan maintained by Luby's. The parties agree that the
payments provided for herein constitute part of the
consideration provided by the Company for the Executive's
agreements contained in Section 6 hereof.
(ii) Notwithstanding clause (i) of this subsection
(d), if, at any time during which the Executive would otherwise
be entitled to receive any payment pursuant to clause (i) of
subsection (d), the Executive engages in any activity or takes
any action which would be prohibited under Sections 10 and 11
hereof, then the Executive shall be deemed to have irrevocably
forfeited any right to receive any further payments pursuant to
this Agreement, provided such forfeiture shall not limit Luby's
rights to seek to enforce such provision or to seek damages;
provided, however, that the Awards and the benefits thereof
shall not be in any way affected by this clause (d)(ii) of this
Section 9.
10. Disclosure of Confidential Information. Executive acknowledges
that Luby's will disclose to Executive, or place Executive in a position to have
access to or develop, trade secrets or Confidential Information of Luby's or its
affiliates, and shall entrust Executive with business opportunities of Luby's or
its affiliates, and shall place Executive in a position to develop business
goodwill on behalf of Luby's or its affiliates. Except to the extent required in
the performance of his duties and obligations to Luby's as expressly authorized
herein, or by prior written consent of a duly authorized officer or director of
Luby's, Executive will not, directly or indirectly, at any time during his
employment with Luby's, or for 18 months subsequent to the termination thereof,
for any reason whatsoever, with or without cause, breach the confidence reposed
in him by Luby's by using, disseminating, disclosing, divulging, or in any
manner whatsoever disclosing or permitting to be divulged or disclosed in any
manner Confidential Information to any person, firm, corporation, association,
or other business entity. As used herein, the term "Confidential Information"
means any and all information concerning ideas, concepts, products, processes,
and services related to the business of Luby's, including information relating
to research, development, inventions, manufacture, purchasing, accounting,
engineering, marketing, merchandising, or the selling of any product or products
to any customers of Luby's, disclosed to Executive or known by Executive as a
consequence of or through his employment by Luby's (or any parent, subsidiary or
affiliated corporations of Luby's)
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including, but not necessarily limited to, any person, firm, corporation,
association, or other business entity with which Luby's has any type of agency
agreement, or any shareholders, directors, or officers of any such person, firm,
corporation, association, or other business entity; provided, however, that
Confidential Information shall not include information generally known in any
industry in which Luby's is or may become engaged during the term of this
Agreement, information disclosed publicly by Luby's or any information, ideas,
products, processes, services, and concepts existing and known to Executive
prior to his employment by Luby's. On termination of employment with Luby's, all
documents, records, notebooks, e-mails, or similar repositories of or containing
Confidential Information, including all copies of any documents, records,
notebooks, e-mail, or similar repositories of or containing Confidential
Information, then in Executive's possession or in the possession of any third
party under the control of Executive or pursuant to any agreement with
Executive, whether prepared by Executive or any other person, firm, corporation,
association, or other business entity, will be delivered to Luby's by Executive.
11. Noncompetition; Standstill.
(a) Executive recognizes and understands that in performing
the responsibilities of his employment, he will occupy a position of
fiduciary trust and confidence, pursuant to which he will develop and
acquire experience and knowledge with respect to Luby's business. It is
the expressed intent and agreement of Executive and Luby's that such
knowledge and experience shall be used exclusively in the furtherance of
the interests of Luby's and not in any manner which would be detrimental
to Luby's interests. In consideration of the benefits herein, Executive
therefore agrees that so long as he is employed by Luby's and for the
Covenant Period after termination of Executive's employment, Executive
will not directly or indirectly:
(i) engage in any other "cafeteria-style" restaurant
business (as defined in the resolution of the Board of Directors
of the Company dated March 7, 2001 adopted in connection with
Executive's initial employment by the Company) or own any
interests whether as an owner, shareholder, joint venturer,
partner or otherwise, in any other association or entity that
engages, directly or indirectly, in any "cafeteria-style"
restaurant business in each case in any state where Luby's or
any of its affiliates are conducting business on the date of
this Agreement or in any contiguous state; provided, however,
that nothing herein shall prohibit Executive from holding or
making passive investments in limited partnerships or
corporations whose securities are traded in a generally
recognized market provided that Executive's interest, together
with those of his affiliates and family do not exceed 1% of the
outstanding shares or interests in such corporation or
partnership; or
(ii) render advice or services to, or otherwise
assist, any other person, association, or entity engaged,
directly or indirectly, in any "cafeteria-style" restaurant
business in any state where Luby's or its affiliates conduct
business on the date of this Agreement or in any contiguous
state; or
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(iii) contact or solicit any employee of Luby's or any
of its affiliates to induce them to terminate his or her
employment with Luby's or such affiliates.
(b) Executive agrees that for so long as he is employed by
Luby's and for the Covenant Period he will not without the prior written
consent of the Company: (i) knowingly, after due inquiry, sell any
shares of Common Stock, or right to acquire Common Stock, to any person
or group (as defined in Section 13(d)(3) of the Exchange Act, as
amended, and the regulations promulgated thereunder) that would
subsequent to such sale Beneficially Own in excess of 10% of the
Company's issued and outstanding Common Stock (1% in the case of
industry competitors), (ii) solicit, or participate in a solicitation of
proxies or votes or consents to vote any voting securities of the
Company or grant (except to the Company or its representatives or
representatives of the Executive) any proxies to vote such securities or
subject their shares in the Company to any voting trust or other voting
arrangement or agreement, (iii) form, join, or in any way participate
in, any group (as defined in Section 13(d)(3) of the Exchange Act, as
amended, and the regulations promulgated thereunder) with respect to
voting securities of the Company, or (iv) seek, propose, or make any
public statement regarding any merger, tender or exchange offer or other
business combination involving the Company or any sale, assignment,
transfer, lease or other disposition by the Company of all or
substantially all of its assets; provided, however, the covenants
contained in this subsection (b) shall terminate and shall be of no
further force or effect upon the occurrence of a Change of Control.
12. Enforcement and Remedies. Executive understands that the
restrictions set forth here may limit Executive's ability to engage in certain
businesses in certain geographic regions during the period provided for above,
but acknowledges that Executive will receive sufficiently high remuneration and
other benefits under this Agreement to justify such restriction. Executive
acknowledges that money damages would not be sufficient remedy for any breach of
Section 10 or 11 by Executive, and Luby's shall be entitled to enforce the
provisions thereof by terminating any payments then owing to Executive under
this Agreement and/or by specific performance and injunctive relief as remedies
for such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach, but shall be in addition to all remedies
available at law or in equity to Luby's, including without limitation, the
recovery of damages from Executive and Executive's agents involved in such
breach and remedies available to Luby's pursuant to other agreements with
Executive.
13. Insurance. Luby's may, in its sole and absolute discretion, at
any time after the Effective Date, apply for and procure, as owner and for its
own benefit, insurance on the life of Executive, in such amounts and in such
forms as Luby's may choose. Unless otherwise agreed by Luby's, Executive shall
have no interest whatsoever in any such policy or policies, but Executive shall,
at Luby's request, submit to such medical examinations, supply such information,
and execute and deliver such documents as may be required by the insurance
company or companies to which Luby's has applied for such insurance.
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14. Notice. All notices and communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to Executive: Christopher J. Pappas
642 Yale
Houston, Texas 77007
with a copy to: Frank Markantonis
645 Heights Blvd.
Houston, Texas 77007
and Fulbright & Jaworski, L.L.P.
1301 McKinney Suite 5100
Houston, Texas 77010-3095
Attn: Charles H. Still
If to Luby's: Luby's, Inc.
13111 Northwest Freeway, Suite 600
Houston, Texas 77040
Attention: Chairman of the Board and
General Counsel
With a copy to: Hornberger Sheehan Fuller & Beiter Incorporated
7373 Broadway, Suite 300
San Antonio, Texas 78209
Attention: Drew R. Fuller, Jr.
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier
15. CONTROLLING LAW. THIS AGREEMENT SHALL BE DETERMINED AND GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.
16. Additional Instruments. This Agreement governs the rights and
obligations of Executive and Luby's with respect to Executive's base salary and
certain perquisites of employment. Executive's rights and obligations both
during the term of his employment and thereafter with respect to stock options,
life insurance policies insuring the life of Executive, and other benefits under
the plans and programs maintained by Luby's shall be governed by the separate
agreements, plans, and other documents and instruments governing such matters.
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17. Liquidated Damages. In light of the difficulties in estimating
the damages for any early termination of employment, Luby's and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Agreement shall be received by Executive as liquidated damages. Payment of the
amounts set forth in this Agreement, if any, shall be in lieu of any severance
benefit Executive may be entitled to under any severance plan or policy of
Luby's.
18. Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of applicable
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein are not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.
19. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged orally, but only by a waiver, modification or discharge in
writing signed by the Executive, and such officer of the Company as may be
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the time or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. Wherever
appropriate to the intention of the parties hereto, the respective rights and
obligations of the parties hereto, will survive any termination or expiration of
the term of this Agreement as specifically set forth herein; in addition
Sections 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21 and 23 shall survive such
termination or expiration to the extent the context thereof requires.
20. Entire Agreement. This Agreement (which term shall be deemed to
include the exhibits hereto and any other certificates, documents or instruments
delivered hereunder), the Purchase Agreement dated March 9, 2001 among the
Company, Executives, and the other signatories thereto, as amended from time to
time (the "Purchase Agreement"), and the other Transaction Documents (as defined
in the Purchase Agreement) constitute the entire agreement of the Parties hereto
and supercede all prior agreements and understandings, both written and oral,
among the parties as to the subject matter hereof. There are no representations
or warranties, agreements, or covenants other than those expressly set forth
herein, in the Purchase Agreement and in the other Transaction Documents.
21. Effect of Agreement. This Agreement shall be binding upon
Executive and his heirs, executors, legal representatives, successors and
assigns, and Luby's and its legal representatives, successors and assigns.
Except as provided in the preceding sentence, this Agreement, and the rights and
obligations of the Parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either Party hereto, shall be subject
to voluntary or involuntary assignment, alienation, or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
Party.
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22. Execution. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
23. Deemed Resignations. Any termination of Executive's employment
shall constitute an automatic resignation as an officer and director of Luby's
and each subsidiary or affiliate of Luby's.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
---------------------------
Christopher J. Pappas
Luby's, Inc.
---------------------------
Gasper Mir, III
Chairman of the Board
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