UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For quarter ended Commission file number
March 24, 1998 0-19907
LONE STAR STEAKHOUSE & SALOON, INC.
(Exact name of registrant as specified in its charter)
Delaware 48-1109495
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
224 East Douglas, Suite 700
Wichita, Kansas 67202
(Address of principal executive offices) (Zip code)
(316) 264-8899
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days
/X/ Yes / / No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at April 28, 1998
Common Stock, $.01 par value 41,197,969 shares
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Index
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
at March 24, 1998 and December 30, 1997 2
Condensed Consolidated Statements of
Income for the twelve weeks ended
March 24, 1998 and March 25, 1997 3
Condensed Consolidated Statements of
Cash Flows for the twelve weeks ended
March 24, 1998 and March 25, 1997 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 7
PART II. OTHER INFORMATION
Items 1 through 5 have been omitted
since the items are either inapplicable or the
answer is negative
Item 6. Exhibits and Reports on Form 8-K 14
PART III. EXHIBITS
11.1 Statement regarding computation of per share earnings
-1-
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 24, 1998 December 30, 1997
-------------- -----------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $136,679,458 $ 135,996,996
Inventories 11,142,576 10,955,361
Pre-opening costs - net 6,566,121 9,162,642
Other current assets 5,797,201 6,523,785
------------ -----------
Total current assets 160,185,356 162,638,784
Property and equipment, net 443,306,609 429,732,586
Intangible and other assets, net 28,656,262 28,440,560
------------ -----------
Total assets $632,148,227 $ 620,811,930
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,360,353 $ 16,746,604
Other current liabilities 31,059,833 29,118,934
------------ ------------
Total current liabilities 41,420,186 45,865,538
Deferred income taxes 8,667,995 8,619,262
Other non-current liabilities 111,340 158,736
Minority interest (1,073,710) 19,927
Stockholders' Equity:
Preferred stock - -
Common stock 411,795 411,562
Additional paid-in capital 350,013,979 349,607,732
Retained earnings 237,726,553 223,015,141
Accumulated other comprehensive income (5,129,911) (6,885,968)
------------ ------------
Total stockholders' equity 583,022,416 566,148,467
------------ ------------
Total liabilities and stockholders' equity $632,148,227 $ 620,811,930
============ ============
</TABLE>
See accompanying notes.
- 2 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
<TABLE>
<CAPTION>
For the twelve weeks ended
----------------------------------
March 24, 1998 March 25, 1997
----------------------------------
<S> <C> <C>
Net sales $153,513,854 $130,255,616
Costs and expenses:
Costs of sales 57,214,706 45,957,040
Restaurant operating expenses 60,899,769 45,389,594
Depreciation and amortization 8,624,125 6,430,554
------------ ------------
Restaurant costs and expenses 126,738,600 97,777,188
------------ ------------
Restaurant operating income 26,775,254 32,478,428
General and administrative expenses 5,442,111 4,643,388
------------ ------------
Income from operations 21,333,143 27,835,040
Other income, principally interest 1,537,880 986,147
Income before income taxes and minority interest 22,871,023 28,821,187
Provision for income taxes (8,077,118) (10,602,788)
Minority interest (82,493) (14,883)
------------ ------------
Net income $ 14,711,412 $ 18,203,516
============ ============
Basic earnings per share $ 0.36 $ 0.45
============ ============
Diluted earnings per share $ 0.35 $ 0.44
============ ============
</TABLE>
See accompanying notes.
- 3 -
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the twelve weeks ended
--------------------------------------------
March 24, 1998 March 25, 1997
--------------- --------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 14,711,412 $ 18,203,516
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,717,298 6,522,664
Net change in operating assets and liabilities:
Change in operating assets 690,433 (3,993,942)
Change in operating liabilities (4,444,015) 3,139,624
------------ ------------
Net cash provided by operating activities 19,675,128 23,871,862
Cash flows from investing activities:
Purchases of property and equipment (19,374,711) (21,423,374)
Other (1,780,492) (906,606)
------------ ------------
Net cash used in investing activities (21,155,203) (22,329,980)
Cash flows from financing activities:
Net proceeds from issuance of common stock 406,480 5,967,855
------------ ------------
Net cash provided by financing activities 406,480 5,967,855
Effect of exchange rate on cash 1,756,057 (238,627)
-------------- ------------
Net increase in cash and cash equivalents 682,462 7,271,110
Cash and cash equivalents at beginning of period 135,996,996 150,721,286
------------ ------------
Cash and cash equivalents at end of period $136,679,458 $157,992,396
============ ============
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 1,503,854 $ 4,690,690
</TABLE>
See accompanying notes.
4
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited condensed consolidated financial statements include all
adjustments, consisting of normal, recurring accruals, which the Company
considers necessary for a fair presentation of the financial position and the
results of operations for the periods presented. The results of the twelve weeks
ended March 24, 1998, are not necessarily indicative of the results to be
expected for the full year ending December 29, 1998. This quarterly report on
Form 10-Q should be read in conjunction with the Company's audited consolidated
financial statements in its 1997 Form 10-K.
2. Stock Options
During the twelve week period ended March 24, 1998, the Company granted
stock options for 8,858 shares of Common Stock at exercise prices ranging from
$17.50 to $21.69 per share pursuant to its 1992 stock option plan for employees.
3. Earnings Per Share
Basic earnings per share amounts are computed based on the weighted
average number of shares actually outstanding. The number of weighted average
shares outstanding for the twelve week periods ended March 24, 1998 and March
25, 1997 were 41,165,028 and 40,840,336, respectively.
For purposes of diluted computations, the number of shares that would be
issued from the exercise of stock options has been reduced by the number of
shares which could have been purchased from the proceeds at the average market
price of the Company's stock or the price of the Company's stock on the exercise
date if options were exercised during the period presented. The number of shares
resulting from this computation of diluted earnings per share for the twelve
weeks ended March 24, 1998 and March 25, 1997 was 42,235,190 and 41,334,247,
respectively.
4. Recently Issued Accounting Standards
In February 1998, the FASB cleared AcSEC's SOP, Accounting for the Costs
of Start-Up Activities, for final issuance subject to certain editorial changes.
AcSEC plans to issue the final SOP by June 1998. The SOP will require the
Company to expense start-up costs, including organizational costs, as incurred
and to report the initial adoption as a cumulative effect of a change in
accounting principle as described in APBO No. 20, Accounting Changes, during the
first quarter of its fiscal year 1999. The cumulative effect upon adoption would
result in a one-time charge to income in an amount equal to the net book value
of the Company's start-up costs. A resulting benefit of this change is the
discontinuance of amortization expense in subsequent periods.
5
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Recently Issued Accounting Standards - continued
As of December 31, 1997, the Company adopted the Financial Accounting
Standards Board Statement 130, Reporting Comprehensive Income. Statement 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. Statement 130 requires the
Company's foreign currency translation adjustments, which prior to adoption were
reported separately in shareholders' equity, to be included in other
comprehensive income.
During the first quarter of 1998 and 1997, total comprehensive income
amounted to $16,467,469 and $17,964,889, respectively.
6
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto included elsewhere in this Form 10-Q.
The Company is continuing its rapid expansion under which it has opened 45
domestic restaurants in 1995, 45 restaurants in 1996, 60 restaurants in 1997 and
intends to open 60 Lone Star Steakhouse & Saloon restaurants in 1998, although
there can be no assurance that the Company will open 60 units in the fiscal year
ended December 30, 1998. All units are expected to be Company-owned and
operated. As of March 24, 1998, the Company has opened two of the 1998
development restaurants.
Pre-opening costs include labor costs, costs of hiring and training
personnel and certain other costs relating to opening new restaurants, and are
capitalized and amortized over a 12 month period, beginning in the period that
the restaurants open.
The Company is continuing to develop its upscale steakhouse concepts. The
Company is currently operating three Del Frisco's locations and has one
additional unit with approximately 16,000 square feet of space in Rockefeller
Plaza in New York City under construction which it expects to open in late
summer of 1998. The Company expects to open one or two other Del Frisco's
restaurants in 1998 in the United States.
The Company developed and operates a second upscale steak restaurant
concept, Sullivan's Steakhouse, where the average check per customer is
approximately $50. The Company is operating five Sullivan's locations and
expects to develop five to seven additional Sullivan's restaurants in 1998.
Internationally, the Company, through a joint venture, operates 36 Lone
Star Steakhouse & Saloon restaurants in Australia, two of which opened this
year, and expects to open an additional six to eight units in 1998.
7
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth for the periods indicated (i) the
percentages which certain items included in the condensed consolidated statement
of income bear to net sales, and (ii) other selected operating data:
<TABLE>
<CAPTION>
Twelve Weeks Ended (1)
March 24, March 25,
1998 1997
--------- ----------
(dollars in thousands)
Income Statement Data:
<S> <C> <C> <C>
Net Sales 100.0% 100.0%
Costs and expenses:
Costs of sales.......................................................... 37.3 35.3
Restaurant operating expenses........................................... 39.7 34.8
Depreciation and amortization........................................... 5.6 4.9
---- ----
Restaurant costs and expenses...................................... 82.6 75.0
---- ----
Restaurant operating income................................................... 17.4 25.0
General and administrative expenses........................................... 3.5 3.6
---- ----
Income from operations........................................................ 13.9 21.4
Other income, principally interest............................................ 1.0 .7
---- ----
Income before provision for income taxes ..................................... 14.9 22.1
Provision for income taxes.................................................... 5.3 8.1
---- ----
Net income ................................................................... 9.6% 14.0%
==== ====
Restaurant Operating Data:
Average sales per restaurant on an annualized basis (2) $2,344 $2,479
Number of restaurants at end of the period 313 244
</TABLE>
(1) The Company operates on a fifty-two or fifty-three week fiscal year ending
the last Tuesday in December. The fiscal quarters for the Company consist
of accounting periods of twelve, twelve, twelve and sixteen or seventeen
weeks, respectively.
(2) Average sales per restaurant on an annualized basis are computed by
dividing a restaurant's total sales for full accounting periods open
during the period by the number of full accounting periods open, and
multiplying the result by thirteen.
8
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Twelve Weeks Ended March 24, 1998 Compared to Twelve Weeks Ended March 25, 1997
Net sales increased $23,258,000 (17.9%) to $153,514,000 for the twelve
weeks ended March 24, 1998 compared to $130,256,000 for the twelve weeks ended
March 25, 1997 principally attributable to $24,750,000 in sales from the 52 new
domestic Lone Star restaurants opened since March 1997, additional sales from
the three Sullivan's restaurants opened since March, 1997 and sales from the 14
additional units opened in the Australian joint venture. The increase was
partially offset by a 7.0% decrease in same-store sales which resulted from
lower customer counts during the quarter.
Costs of sales, primarily food and beverages, increased as a percentage of
sales to 37.3% from 35.3% due to higher beef and produce prices, and the higher
cost of sales of new entree's introduced in the fourth quarter of 1997. During
this period, the Company did not purchase beef under contracted prices although
there may be a possibility of contracting prices in the future.
Restaurant operating expenses for the twelve weeks ended March 24, 1998
increased $15,510,000 (34.2%) from $45,390,000 in the twelve weeks ended March
25, 1997 to $60,900,000, and such expenses increased as a percentage of net
sales from 34.8% to 39.7%. This increase is attributable to higher labor costs
and higher fixed costs for building and equipment maintenance on the domestic
Lone Star restaurants and higher labor and occupancy costs in the Australian
units, and the effect of fixed cost components on lower average restaurant
sales.
Depreciation and amortization increased $2,194,000 (34.1%) in the twelve
weeks ended March 24, 1998 over the twelve weeks ended March 25, 1997, and such
expenses increased as a percentage of net sales from 4.9% to 5.6%. The
capitalized pre-opening expenses for 55 new restaurants opened domestically as
well as 14 restaurants opened in Australia since March 1997 increased the
pre-opening cost amortization for the first quarter of 1998 over the prior year.
General and administrative expenses for the twelve weeks ended March 24, 1998
increased $799,000 (17.2%) from the comparable period in 1997, primarily due to
the increased travel expenses associated with 69 additional locations. Certain
accounting and administrative services are contracted from Coulter Enterprises,
Inc., a restaurant management services company owned by the Company's Chairman
of the Board and Chief Executive Officer. The service agreement provides for
specified accounting and administration services to be provided on a cost
pass-through basis under which the Company paid a fixed annual charge of
$2,010,000, plus an additional fee of $440 per restaurant per 28-day accounting
period and reimbursement of out-of-pocket costs and expenses during the fiscal
year ended December 30, 1997. The service agreement was renewed for fiscal 1998
with the fixed annual charge increasing to $3,737,000 and the per restaurant,
per accounting period fee increasing to $466. Should the service agreement not
be renewed in the future, the Company would incur direct costs for accounting
and administration, personnel, rent and other costs associated with a separate
office; however, the Company believes that such direct costs would not be
materially different than the costs under the contractual arrangement.
Other income, principally interest, for the twelve weeks ended March 24,
1998 was $1,538,000, a $552,000 increase from the comparable period in 1997,
reflecting an increase in interest income from the investment of the net
proceeds of the 1997 public offering.
The effective income tax rates for the twelve weeks ended March 24, 1998
and the twelve weeks ended March 25, 1997 were 35.4% and 36.8%, respectively.
The decrease in the rate is primarily due to a reduction in the tax liability in
certain states.
9
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Impact of inflation
The primary inflationary factors affecting the Company's operations
include food and labor costs. A large number of the Company's restaurant
personnel are paid at the federal and state established minimum wage levels and,
accordingly, changes in such wage levels affect the Company's labor costs. Since
the majority of personnel are tipped employees, minimum wage changes will have
little effect on labor costs. As costs of food and labor have increased, the
Company has historically been able to offset these increases through economies
of scale, although there is no assurance that such offsets will continue. To
date, inflation has not had a material impact on operating margins.
Forward looking statements
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, amended. Stockholders are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the Company to open new restaurants, general market
conditions, competition and pricing. Although the Company believes the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements contained in the report will
prove to be accurate.
Year 2000 Compliance
The registrant currently believes that its essential processes, systems
and business functions will be ready for the millennium transition and is taking
the necessary steps to accomplish this objective. The Year 2000 issue is not
anticipated to have a material impact on the Registrant's results of operations,
financial position or its cash flows.
10
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Liquidity and Capital Resources
The following table presents a summary of the Company's cash flows for
each of the twelve weeks ended March 24, 1998 and March 25, 1997.
<TABLE>
<CAPTION>
Twelve weeks ended
March 24, March 25,
1998 1997
---- ----
<S> <C> <C>
Net cash provided by operating activities............ $ 19,675,128 $ 23,871,862
Net cash used in investment activities............... (21,155,203) (22,329,980)
Net cash provided by financing
activities..................................... 406,480 5,967,855
Effect of exchange rate on cash...................... 1,756,057 (238,627)
Net increase in cash................................. 682,462 7,271,110
</TABLE>
During the twelve week period ended March 24, 1998, the Company's investment in
property and equipment was $19,375,000.
The Company has opened 241 restaurants in the past five fiscal years of
which 60 opened in 1997 and an additional 2 opened during the twelve weeks ended
March 24, 1998. The Company does not have significant receivables or inventory
and receives trade credit based upon negotiated terms in purchasing food and
supplies. Because funds available from cash sales are not needed immediately to
pay for food and supplies, or to finance inventory, they may be considered as a
source of financing for noncurrent capital expenditures.
At March 24, 1998, the Company had $136,679,000 in cash and cash
equivalents. While the Company has not established a credit facility, the
Company believes it could establish a facility on suitable terms. As of March
24, 1998, the Company has acquired eight sites for future development, three of
which are leased. In addition, as of such date the Company had entered into nine
contracts to purchase sites. The Company was also actively negotiating to
purchase or lease 39 additional sites. The Company expects to expend
approximately $95,000,000 to open new restaurants through the remainder of
fiscal 1998.
11
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.2 Employment Agreement dated as of February 1,
1998 by and between Lone Star Steakhouse &
Saloon, Inc. and John D. White
Exhibit 10.8 Employment Agreement dated as of February 1,
1998 by and between Lone Star Steakhouse &
Saloon, Inc. and Michael J. Archer
Exhibit 10.9 Employment Agreement dated as of February 1,
1998 by and between Lone Star Steakhouse &
Saloon, Inc. and Gerald T. Aaron
Exhibit 10.10 Employment Agreement dated as of February 1,
1998 by and between Lone Star Steakhouse &
Saloon, Inc. and Robert M. Kendall
Exhibit 10.11 Employment Agreement dated as of February 1,
1998 by and between Lone Star Steakhouse &
Saloon, Inc. and Frank E. Furstenberg, Jr.
Exhibit 11.1 Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
(b) Forms on 8-K.........................................None
12
<PAGE>
LONE STAR STEAKHOUSE & SALOON, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Lone Star Steakhouse & Saloon, Inc.
(Registrant)
/s/ John D. White
----------------------------------------
Chief Financial and Principal Accounting
Officer, Executive Vice President,
Treasurer and Director
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 1st day of
February, 1998, by and between Lone Star Steakhouse & Saloon, Inc., a
corporation (the "Corporation") and John D. White ("Employee").
RECITALS
WHEREAS, the Employee is currently serving as a Executive Vice
President and Chief Financial Officer of the Corporation and various
subsidiaries of the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management;
WHEREAS, the Corporation desires to continue the services of Employee,
whose experience, knowledge and abilities with respect to the business and
affairs of the Corporation are extremely valuable to the Corporation; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Term of Employment. The Corporation shall initially employ Employee
for a period of three years from the date hereof (the "Initial Term").
1.2 Extension of Initial Term. Upon each annual anniversary date of
this Agreement, this Agreement shall be extended automatically for successive
terms of one year each, unless either the Corporation or the Employee gives
contrary written notice to the other not later than 90 days prior to the annual
anniversary date thereof.
ARTICLE II
Duties of the Employee
General Duties. Employee shall serve as Executive Vice President and
Chief Financial Officer of the Corporation. He shall do and perform all
services, acts, or things necessary or advisable to manage and conduct the
business of the Corporation consistent with such position subject to such
policies and procedures as may be established by the Board.
<PAGE>
Employee shall: (i) devote his or her entire business time, attention,
and energies to the business of the Corporation, and, (ii) faithfully and
competently perform his duties hereunder; and, Employee shall not, during the
term of this Agreement, engage in any other business activity except as
permitted by Article 8.
ARTICLE III
Compensation
3.1 Salary. For Employee's services to the Corporation as Executive
Vice President and Chief Financial Officer, Employee shall be paid a salary at
the annual rate of $259,600, (herein referred to as "Salary") payable in
twenty-four equal installments on the first and fifteenth day of each month. On
the first day of each calendar year during the term of this Agreement with the
Corporation, Employee shall be eligible for an increase in Salary based on
recommendations made by the Compensation Committee of the Board.
3.2 Bonus. Employee is eligible to participate in the stock option plan
of the employer and all bonus compensation plans which may be offered from time
to time.
ARTICLE IV
Employee Benefits
4.1 Use of Automobile. The Corporation shall provide, at the option of
Employee, with either the use of an automobile for business and personal use or
a car allowance of to be specified by the Corporation which complies with I.R.S.
Guidelines. The Corporation shall pay all expenses of operating, maintaining and
repairing the automobile and shall procure and maintain automobile liability
insurance in respect thereof, with such coverage insuring each Employee for
bodily injury and property damage.
4.2 Medical Life and Disability Insurance Benefits. The Corporation
shall provide employee with the medical, life and disability insurance benefits
in accordance with the established benefit policies of the Corporation.
4.3 Business Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
4.4 Vacations. Employee shall be entitled to an annual paid vacation
commensurate with the Corporation's established vacation policy for executive
officers. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee.
-2-
<PAGE>
4.5 Disability. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability insurance benefits received pursuant to Section
4.2 herein), such amount being paid semi-monthly in twelve equal installments.
ARTICLE V
Termination
5.1 Death. Employee's employment hereunder shall be terminated upon the
Employee's death.
5.2 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.
5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Cause. For the purpose of this Agreement, "Cause" shall mean the (i) willful and
intentional failure by Employee to substantially perform his duties hereunder,
other than any failure resulting from Employee's incapacity due to physical or
mental incapacity, or (ii) commission by Employee, in connection with his
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and which
exposes the Corporation to a significant level of undue liability. For purposes
of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted to
be done by Employee not in good faith without a reasonable belief that his
action or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the majority vote of the Board
of Directors.
5.4 Compensation Upon Termination for Cause or Upon Resignation by
Employee. Except as otherwise set forth in Section 5.6 hereof, if Employee's
employment shall be terminated for Cause or if Employee shall resign his
position with the Corporation, the Corporation shall pay Employee's compensation
only through the last day of Employee's employment by the Corporation. The
Corporation shall then have no further obligation to Employee under this
Agreement.
-3-
<PAGE>
5.5 Involuntary Termination. If:
(i) the Employee is terminated by Corporation at any time
prior to the termination of this Agreement for reasons other
than Cause (as defined herein), (ii) if Corporation gives
notice to the Employee, in accordance with Section 1.2 herein,
that this Agreement will not be renewed;
Employee shall be paid, over the ensuing six (6) month period, a sum
equal to the cash compensation paid to him excluding all bonuses of any
kind by Corporation for the six (6) month period immediately preceding
such termination or non-renewal. Such six (6) month period, as the case
may be, shall begin: (i) on the date of termination in the case of
termination of Employee's employment; and (ii) on the date notice of
non-renewal is given in the case of termination of this Agreement not
accompanied by simultaneous termination of Employee's employment with
the Corporation.
ARTICLE VI
No Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
6.1 No Mitigation. Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer after Employee's termination or resignation.
6.2 Other Contractual Rights. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates.
ARTICLE VII
Successors to the Corporation
7.1 Employee's Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there be no such designee, to
Employee's estate.
-4-
<PAGE>
ARTICLE VIII
Restrictions on Employee
8.1 Non-Disclosure; Non-Solicitation. Except in the performance of his
duties hereunder, at no time during the Term of Employment, and for eighteen
(18) months after the termination hereof, shall Employee, individually or
jointly with others, for the benefit of Employee or any third party, publish,
disclose, use, or authorize anyone else to publish, disclose, or use, any secret
or confidential material or information relating to any aspect of the business
or operations of the Corporation, including, without limitation, any secret or
confidential information relating to the business, customers, trade or
industrial practices, trade secrets, technology, recipes or know-how of the
Corporation. Except in the performance of his duties hereunder, at no time
during the term or six (6) months thereafter, shall Employee for himself or on
behalf of any other person or entity contact any employee of the Corporation for
the purpose of hiring, diverting or otherwise soliciting the employee.
8.2 Non-Competition. During the Term of Employment and for eighteen
(18) months thereafter, regardless of any termination pursuant to Section 5 or
any voluntary termination or resignation by Employee, Employee shall not,
individually or jointly with others, directly or indirectly, whether for his own
account or for that of any other person or entity, be employed by, engage in,
own, or hold any ownership Interest in any person or entity engaged in a
restaurant business the same as or similar to any restaurant business of the
Corporation without the Corporation's written consent.
ARTICLE IX
Miscellaneous
9.1 Indemnification. To the full extent permitted by law, the Board
shall authorize the payment of expenses incurred by or shall satisfy judgments
or fines rendered or levied against Employee in any action brought by a
third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized hereunder shall include amounts paid and expenses incurred in
settling any such action or threatened action.
9.2 Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to his residence,
in the case of Employee, or to its principal office, in the case of the
Corporation.
9.3 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
9.4 Amendment. No amendment or modification of this Agreement
-5-
<PAGE>
shall be deemed effective unless or until executed in writing by the parties
hereto.
9.5 Validity. This Agreement, having been executed and delivered in the
State of Kansas, its validity, interpretation, performance and enforcement will
be governed by the laws of that state.
9.6 Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.7 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 Legal Fees. Except in the event of termination for Cause, and only
in the event a change of control of the Corporation has occurred, the
Corporation shall pay all legal fees and expenses which Employee may incur as a
result of the Corporation's contesting the validity, enforceability or
Employee's interpretation of, or determination under, this Agreement.
9.9 Exclusivity. Specific arrangements referred to in this Agreement
are not intended to exclude Employee's participation in any other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board from time to time.
9.10 Partial Invalidity. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and the Employee has executed this Agreement, as of the day and year first above
written.
"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
By:
- -------------------------- --------------------------
Gerald T. Aaron, Secretary Jamie B. Coulter, Chairman and
Chief Executive Officer
Witness "EMPLOYEE"
-----------------------------
John D. White
-6-
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 1st day of
February, 1998, by and between Lone Star Steakhouse & Saloon, Inc., a
corporation (the "Corporation") and Michael J. Archer ("Employee").
RECITALS
--------
WHEREAS, the Employee agrees to serve as Chief Operating Officer - Del
Frisco's/Sullivan's of the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management; and
WHEREAS, the Corporation desires to engage the services of Employee,
whose experience, knowledge and abilities with respect to the business and
affairs of the Corporation are extremely valuable to the Corporation; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Term of Employment. The Corporation shall initially employ Employee
for a period of three years from the date hereof (the "Initial Term").
1.2 Extension of Initial Term. Upon expiration of the initial term of
this Agreement, this Agreement shall be extended automatically for successive
terms of one year each, unless either the Corporation or the Employee gives
contrary written notice to the other not later than 90 days prior to the annual
anniversary date thereof.
1.3 Principal Place of Employment. The Corporation acknowledges that
the Employee's principal residence is currently located in Chicago, Illinois.
The Corporation acknowledges and agrees that the Employee shall be employed by
the Corporation at an office to be established by Employee on behalf of the
Corporation in Chicago, Illinois (the "Chicago Office").
Employee may hire a secretary or secretarial services, such salary
terms and other hems and conditions which are acceptable to the Corporation,
which such acceptance will not be unreasonably withheld.
The Corporation shall be responsible to pay or immediately
<PAGE>
reimburse Employee for any and all costs and expenses incurred in establishing
and operating the Chicago Office, including without limitation, any and all
costs and expenses arising out of any of the activities and items contemplated
hereby.
ARTICLE II
Duties of the Employee
----------------------
General Duties. Employee shall serve as Chief Operating Officer - Del
Frisco's/Sullivan's of the Corporation. In close coordination and cooperation
with the Corporation, Employee shall continue to have the responsibility for the
development of the Corporation's upscale steakhouse restaurant concept with an
average meal check price in excess of $18.00 (the "Division"). Employee shall
continue to be responsible for marketing and growth of the Division. Employee
shall be responsible for the management and day-to-day operations of the
Division. He shall do and perform all services, acts, or things necessary or
advisable to manage and conduct the business of the Corporation consistent with
such position subject to such policies and procedures as may be established by
the Board.
Employee shall: (i) devote his or her entire business time, attention,
and energies to the business of the Corporation, and, (ii) faithfully and
competently perform his duties hereunder; and, Employee shall not, during the
term of this Agreement, engage in any other business activity except as
permitted by Article 8.
ARTICLE III
Compensation
------------
3.1 Salary. For Employee's services Corporation as Chief Operating
Officer - Del Frisco's/Sullivan's, Employee shall be paid a salary at the annual
rate of $220,000 (herein referred to as "Salary") payable in twenty-four equal
installments on the first and fifteenth day of each month. On the first day of
each calendar year during the term of this Agreement with the Corporation,
Employee shall be eligible for an increase in Salary based on recommendations
made by the Compensation Committee of the Board.
3.2 Bonus. Employee is eligible to participate in the stock option plan
of the employer and all bonus compensation plans which may be offered from time
to time.
3.3 Bonus. Employee shall be eligible to receive a bonus (the "Bonus"),
which Bonus will be equal to sixty percent (60%) of the Employee's then Salary,
for any annual period hereunder. The Bonus shall be paid at the discretion of
the Corporation. Employee and the Corporation agree to establish mutually and in
good faith within sixty (60) days following the date of this Agreement, goals
and objectives, in writing, for the Employee for each annual period of this
Agreement, which such goals and objective shall be
2
<PAGE>
described in as measurable and objective standards and criteria as practicable.
In the event that Employee does not fully achieve the goals and objectives upon
which the Bonus is based in any annual period, Employee shall nonetheless be
entitled to receive a proportionate amount of the full amount of the Bonus that
would otherwise have been paid to Employee for such annual period if Employee
had fully achieved the goals and objective. The determination of the
proportionate amount of the Bonus to which Employee shall be entitled shall
correspond to the level, percentage or degree of Employee's achievement of goals
and objective, and shall not be an "all or nothing" test.
ARTICLE IV
Employee Benefits
-----------------
4.1 Use of Automobile. The Corporation shall provide, at the option of
Employee, with either the use of an automobile for business and personal use or
a cash allowance of $750. If the car is furnished by the Corporation, the
Corporation shall pay all expenses of operating, maintaining and repairing the
automobile and shall procure and maintain automobile liability insurance in
respect thereof, with such coverage insuring each Employee for bodily injury and
property damage.
4.2 Medical Life and Disability Insurance Benefits. The Corporation
shall provide Employee with the medical, dental, life and disability insurance
benefits in accordance with the established benefit policies of the Corporation.
In addition, the Corporation shall pay or reimburse Employee for payment of
those certain (i) life insurance and (ii) long term disability insurance
policies of Employee in effect as of the date hereof, which such payments in the
aggregate equal approximately $4,700 annually.
4.3 Business Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
4.4 Vacations. Employee shall be entitled to an annual paid vacation
equal to three (3) weeks, effective immediately. The timing of paid vacations
shall be scheduled in a reasonable manner by the Employee.
4.5 Disability. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability insurance benefits received pursuant to Section
4.2 herein), such amount being paid semi-monthly in twelve equal installments.
4.6 Moving Expenses. If upon joint acceptance by the
3
<PAGE>
Corporation and the Employee, the Employee shall be relocated, the Corporation
shall pay all related moving expenses of the Employee.
ARTICLE V
Termination
-----------
5.1 Death. Employee's employment hereunder shall be terminated upon the
Employee's death.
5.2 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.
5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Cause. For the purpose of this Agreement, "Cause" shall mean the (i) willful and
intentional failure by Employee to substantially perform his duties hereunder,
other than any failure resulting from Employee's incapacity due to physical or
mental incapacity, or (ii) commission by Employee, in connection with his
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and which
exposes the Corporation to a significant level of undue liability. For purposes
of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted to
be done by Employee not in good faith without a reasonable belief that his
action or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the majority vote of the Board
of Directors.
5.4 Compensation Upon Termination for Cause or Upon Resignation by
Employee. If Employee's employment shall be terminated for Cause or if Employee
shall resign his position with the Corporation, the Corporation shall pay
Employee's compensation only through the last day of Employee's employment by
the Corporation. The Corporation shall then have no further obligation to
Employee under this Agreement.
5.5 Involuntary Termination If:
(i) the Employee is terminated by Corporation at any time
prior to the termination of this Agreement for reasons other
than Cause (as defined herein), (ii) if Corporation gives
notice to the Employee, in accordance with Section
4
<PAGE>
1.2 herein, that this Agreement will not be renewed;
Employee shall be paid, over the ensuing six (6) month period, a sum
equal to the cash compensation paid to him excluding all bonuses of any
kind by Corporation for the six (6) month period immediately preceding
such termination or non-renewal. Such six (6) month period, as the case
may be, shall begin: (i) on the date of termination in the case of
termination of Employee's employment; and (ii) on the date notice of
non-renewal is given in the case of termination of this Agreement not
accompanied by simultaneous termination of Employee's employment with
the Corporation.
ARTICLE VI
No Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
---------------------------
6.1 No Mitigation. Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer after Employee's termination or resignation.
6.2 Other Contractual Rights. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates.
ARTICLE VII
Successors to the Corporation
-----------------------------
7.1 Employee's Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there be no such designee, to
Employee's estate.
ARTICLE VIII
Restrictions on Employee
------------------------
8.1 Non-Disclosure; Non-Solicitation. Except in the performance of his
duties hereunder, at no time during the Term of Employment, and for eighteen
(18) months after the termination hereof, shall Employee, individually or
jointly with others, for
5
<PAGE>
the benefit of Employee or any third party, publish, disclose, use, or authorize
anyone else to publish, disclose, or use, any secret or confidential material or
information relating to any aspect of the business or operations of the
Corporation, including, without limitation, any secret or confidential
information relating to the business, customers, trade or industrial practices,
trade secrets, technology, recipes or know-how of the Corporation. Except in the
performance of his duties hereunder, at no time during the term or six (6)
months thereafter, shall Employee for himself or on behalf of any other person
or entity contact any employee of the Corporation for the purpose of hiring,
diverting or otherwise soliciting the employee.
8.2 Non-Competition. During the Term of Employment and for eighteen
(18) months thereafter if Employee is terminated, pursuant to either Section
5.3, or in the event of any voluntary termination or resignation by Employee,
Employee shall not, individually or jointly with others, directly or indirectly,
whether for his own account or for that of any other person or entity, be
employed by, engage in, own, or hold any ownership interest in any person or
entity engaged in a restaurant business the same as or similar to any restaurant
business of the Corporation without the Corporation's written consent.
ARTICLE IX
Miscellaneous
-------------
9.1 Indemnification. To the full extent permitted by law, the Board
shall authorize the payment of expenses incurred by or shall satisfy judgments
or fines rendered or levied against Employee in any action brought by a
third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized hereunder shall include amounts paid and expenses incurred in
settling any such action or threatened action.
9.2 Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to his residence,
in the case of Employee, or to its principal office, in the case of the
Corporation.
9.3 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
9.4 Amendment. No amendment or modification of this Agreement shall be
deemed effective unless or until executed in writing by the parties hereto.
9.5 Validity. This Agreement, having been executed and
6
<PAGE>
delivered in the State of Kansas, its validity, interpretation, performance and
enforcement will be governed by the laws of that state.
9.6 Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.7 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 Legal Fees. Except in the event of termination for Cause, and only
in the event a change of control of the Corporation has occurred, the
Corporation shall pay all legal fees and expenses which Employee may incur as a
result of the Corporation's contesting the validity, enforceability or
Employee's interpretation of, or determination under, this Agreement.
9.9 Exclusivity. Specific arrangements referred to in this Agreement
are not intended to exclude Employee's participation in any other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board from time to time.
9.10 Partial Invalidity. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and the Employee has executed this Agreement, as of the day and year first above
written.
"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
By:
- -------------------------------- ----------------------------
Gerald T. Aaron, Secretary Jamie B. Coulter, Chairman and
Chief Executive Officer
Witness "EMPLOYEE"
- -------------------------------- ----------------------------
Michael J. Archer
7
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 1st of February,
1998, by and between Lone Star Steakhouse & Saloon, Inc., a corporation (the
"Corporation") and Gerald T. Aaron ("Employee").
RECITALS
WHEREAS, the Employee is currently serving as a Senior Vice President -
Counsel of the Corporation and various subsidiaries of the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management;
WHEREAS, the Corporation desires to continue the services of Employee,
whose experience, knowledge and abilities with respect to the business and
affairs of the Corporation are extremely valuable to the Corporation; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Term of Employment. The Corporation shall initially employ Employee
for a period of three years from the date hereof (the "Initial Term").
1.2 Extension of Initial Term. Upon each annual anniversary date of
this Agreement, this Agreement shall be extended automatically for successive
terms of one year each, unless either the Corporation or the Employee gives
contrary written notice to the other not later than 90 days prior to the annual
anniversary date thereof.
ARTICLE II
Duties of the Employee
General Duties. Employee shall serve as Senior Vice President - Counsel
of the Corporation. He shall do and perform all services, acts, or things
necessary or advisable to manage and conduct the business of the Corporation
consistent with such position subject to such policies and procedures as may be
established by the Board.
Employee shall: (i) devote his or her entire business time, attention,
and energies to the business of the Corporation, and,
<PAGE>
(ii) faithfully and competently perform his duties hereunder; and, Employee
shall not, during the term of this Agreement, engage in any other business
activity except as permitted by Article 8.
ARTICLE III
Compensation
3.1 Salary. For Employee's services to the Corporation as Senior Vice
President - Counsel, Employee shall be paid a salary at the annual rate of
$209,000, (herein referred to as "Salary") payable in twenty-four equal
installments on the first and fifteenth day of each month. On the first day of
each calendar year during the term of this Agreement with the Corporation,
Employee shall be eligible for an increase in Salary based on recommendations
made by the Compensation Committee of the Board.
3.2 Bonus. Employee is eligible to participate in the stock option plan
of the employer and all bonus compensation plans which may be offered from time
to time.
ARTICLE IV
Employee Benefits
4.1 Use of Automobile. The Corporation shall provide, at the option of
Employee, with either the use of an automobile for business and personal use or
a car allowance of to be specified by the Corporation which complies with I.R.S.
Guidelines. The Corporation shall pay all expenses of operating maintaining and
repairing the automobile and shall procure and maintain automobile liability
insurance in respect thereof, with such coverage insuring each Employee for
bodily injury and property damage.
4.2 Medical, Life and Disability Insurance Benefits. The Corporation
shall provide employee with the medical, life and disability insurance benefits
in accordance with the established benefit policies of the Corporation.
4.3 Business Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
4.4 Vacations. Employee shall be entitled to an annual paid vacation
commensurate with the Corporation's established vacation policy for executive
officers. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee.
-2-
<PAGE>
4.5 Disability. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability insurance benefits received pursuant to Section
4.2 herein), such amount being paid semi-monthly in twelve equal installments.
ARTICLE V
Termination
5.1 Death. Employee's employment hereunder shall be terminated upon the
Employee's death.
5.2 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.
5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Cause. For the purpose of this Agreement, "Cause" shall mean the (i) willful and
intentional failure by Employee to substantially perform his duties hereunder,
other than any failure resulting from Employee's incapacity due to physical or
mental incapacity, or (ii) commission by Employee, in connection with his
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and which
exposes the Corporation to a significant level of undue liability. For purposes
of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted to
be done by Employee not in good faith without a reasonable belief that his
action or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the majority vote of the Board
of Directors.
5.4 Compensation Upon Termination for Cause or Upon Resignation by
Employee. Except as otherwise set forth in Section 5.6 hereof, if Employee's
employment shall be terminated for Cause or if Employee shall resign his
position with the Corporation, the Corporation shall pay Employee's compensation
only through the last day of Employee's employment by the Corporation. The
Corporation shall then have no further obligation to Employee under this
Agreement.
5.5 Involuntary Termination. If:
-3-
<PAGE>
(i) the Employee is terminated by Corporation at any time
prior to the termination of this Agreement for reasons other
than Cause (as defined herein), (ii) if Corporation gives
notice to the Employee, in accordance with Section 1.2 herein,
that this Agreement will not be renewed;
Employee shall be paid, over the ensuing six (6) month period, a sum
equal to the cash compensation paid to him excluding all bonuses of any
kind by Corporation for the six (6) month period immediately preceding
such termination or non-renewal. Such six (6) month period, as the case
may be, shall begin: (i) on the date of termination in the case of
termination of Employee's employment; and (ii) on the date notice of
non-renewal is given in the case of termination of this Agreement not
accompanied by simultaneous termination of Employee's employment with
the Corporation.
ARTICLE VI
No Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
6.1 No Mitigation. Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer after Employee's termination or resignation.
6.2 Other Contractual Rights. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates.
ARTICLE VII
Successors to the Corporation
7.1 Employee's Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there be no such designee, to
Employee's estate.
-4-
<PAGE>
ARTICLE VIII
Restrictions on Employee
8.1 Non-Disclosure; Non-Solicitation. Except in the performance of his
duties hereunder, at no time during the Term of Employment, and for eighteen
(18) months after the termination hereof, shall Employee, individually or
jointly with others, for the benefit of Employee or any third party, publish,
disclose, use, or authorize anyone else to publish, disclose, or use, any secret
or confidential material or information relating to any aspect of the business
or operations of the Corporation, including, without limitation, any secret or
confidential information relating to the business, customers, trade or
industrial practices, trade secrets, technology, recipes or know-how of the
Corporation. Except in the performance of his duties hereunder, at no time
during the term or six (6) months thereafter, shall Employee for himself or on
behalf of any other person or entity contact any employee of the Corporation for
the purpose of hiring, diverting or otherwise soliciting the employee.
8.2 Non-Competition. During the Term of Employment and for eighteen
(18) months thereafter, regardless of any termination pursuant to Section 5 or
any voluntary termination or resignation by Employee, Employee shall not,
individually or jointly with others, directly or indirectly, whether for his own
account or for that of any other person or entity, be employed by, engage in,
own, or hold any ownership interest in any person or entity engaged in a
restaurant business the same as or similar to any restaurant business of the
Corporation without the Corporation's written consent.
ARTICLE IX
Miscellaneous
9.1 Indemnification. To the full extent permitted by law, the Board
shall authorize the payment of expenses incurred by or shall satisfy judgments
or fines rendered or levied against Employee in any action brought by a
third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized hereunder shall include amounts paid and expenses incurred in
settling any such action or threatened action.
9.2 Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to his residence,
in the case of Employee, or to its principal office, in the case of the
Corporation.
-5-
<PAGE>
9.3 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
9.4 Amendment. No amendment or modification of this Agreement shall be
deemed effective unless or until executed in writing by the parties hereto.
9.5 Validity. This Agreement, having been executed and delivered in the
State of Kansas, its validity, interpretation, performance and enforcement will
be governed by the laws of that state.
9.6 Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.7 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 Legal Fees. Except in the event of termination for Cause, and only
in the event a change of control of the Corporation has occurred, the
Corporation shall pay all legal fees and expenses which Employee may incur as a
result of the Corporation's contesting the validity, enforceability or
Employee's interpretation of, or determination under, this Agreement.
9.9 Exclusivity. Specific arrangements referred to in this Agreement
are not intended to exclude Employee's participation in any other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board from time to time.
9.10 Partial Invalidity. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
-6-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and the Employee has executed this Agreement, as of the day and year first above
written.
"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
By:
- ------------------------ ----------------------------
Gerald T. Aaron, Secretary Jamie B. Coulter, Chairman and
Chief Executive Officer
Witness "EMPLOYEE"
Gerald T. Aaron
-7-
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 1st day of
February, 1998, by and between Lone Star Steakhouse & Saloon, Inc., a
corporation (the "Corporation") and Robert M. Kendall ("Employee").
RECITALS
WHEREAS, the Employee is currently serving as a Chief Operating Officer
- - Lone Star Steakhouse & Saloon of the Corporation and various subsidiaries of
the Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management;
WHEREAS, the Corporation desires to continue the services of Employee,
whose experience, knowledge and abilities with respect to the business and
affairs of the Corporation are extremely valuable to the Corporation; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Term of Employment. The Corporation shall initially employ Employee
for a period of three years from the date hereof (the "Initial Term").
1.2 Extension of Initial Term. Upon each annual anniversary date of
this Agreement, this Agreement shall be extended automatically for successive
terms of one year each, unless either the Corporation or the Employee gives
contrary written notice to the other not later than 90 days prior to the annual
anniversary date thereof.
ARTICLE II
Duties of the Employee
General Duties. Employee shall serve as Chief Operating Officer - Lone
Star Steakhouse & Saloon of the Corporation. He shall do and perform all
services, acts, or things necessary or advisable to manage and conduct the
business of the Corporation consistent with such position subject to such
polices and procedures as may be established by the Board.
<PAGE>
Employee shall: (i) devote his or her entire business time, attention,
and energies to the business of the Corporation, and, (ii) faithfully and
competently perform his duties hereunder; and, Employee shall not, during the
term of this Agreement, engage in any other business activity except as
permitted by Article 8.
ARTICLE III
Compensation
3.1 Salary. For Employee's services to the Corporation as Chief
Operating Officer - Lone Star Steakhouse & Saloon, Employee shall be paid a
salary at the annual rate of $200,000, (herein referred to as "Salary") payable
in twenty-four equal installments on the first and fifteenth day of each month.
On the first day of each calendar year during the term of this Agreement with
the Corporation, Employee shall be eligible for an increase in Salary based on
recommendations made by the Compensation Committee of the Board.
3.2 Bonus. Employee is eligible to participate in the stock option plan
of the employer and all bonus compensation plans which may be offered from time
to time.
ARTICLE IV
Employee Benefits
4.1 Use of Automobile. The Corporation shall provide, at the option of
Employee, with either the use of an automobile for business and personal use or
a car allowance of to be specified by the Corporation which complies with I.R.S.
Guidelines. The Corporation shall pay all expenses of operating, maintaining and
repairing the automobile and shall procure and maintain automobile liability
insurance in respect thereof, with such coverage insuring each Employee for
bodily injury and property damage.
4.2 Medical Life and Disability Insurance Benefits. The Corporation
shall provide employee with the medical, life and disability insurance benefits
in accordance with the established benefit policies of the Corporation.
4.3 Business Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
4.4 Vacations. Employee shall be entitled to an annual paid vacation
commensurate with the Corporation's established vacation
-2-
<PAGE>
policy for executive officers. The timing of paid vacations shall be scheduled
in a reasonable manner by the Employee.
4.5 Disability. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability insurance benefits received pursuant to Section
4.2 herein), such amount being paid semi-monthly in twelve equal installments.
ARTICLE V
Termination
5.1 Death. Employee's employment hereunder shall be terminated upon the
Employee's death.
5.2 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues more
than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.
5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Cause. For the purpose of this Agreement, "Cause" shall mean the (i) willful and
intentional failure by Employee to substantially perform his duties hereunder,
other than any failure resulting from Employee's incapacity due to physical or
mental incapacity, or (ii) commission by Employee, in connection with his
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and which
exposes the Corporation to a significant level of undue liability. For purposes
of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted to
be done by Employee not in good faith without a reasonable belief that his
action or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the majority vote of the Board
of Directors.
5.4 Compensation Upon Termination for Cause or Upon Resignation by
Employee. Except as otherwise set forth in Section 5.6 hereof, if Employee's
employment shall be terminated for Cause or if Employee shall resign his
position with the Corporation, the Corporation shall pay Employee's compensation
only through the last day of Employee's employment by the
-3-
<PAGE>
Corporation. The Corporation then shall have no further obligation to Employee
under this Agreement.
5.5 Involuntary Termination. If:
(i) the Employee is terminated by Corporation at any time prior to the
termination of this Agreement for reasons other than Cause (as defined
herein), (ii) if Corporation gives notice to the Employee, in
accordance with Section 1.2 herein, that this Agreement will not be
renewed;
Employee shall be paid, over the ensuing six (6) month period, a sum
equal to the cash compensation paid to him excluding all bonuses of any
kind by Corporation for the six (6) month period immediately preceding
such termination or non-renewal. Such six (6) month period, as the case
may be, shall begin: (i) on the date of termination in the case of
termination of Employee's employment; and (ii) on the date notice of
non-renewal is given in the case of termination of this Agreement not
accompanied by simultaneous termination of Employee's employment with
the Corporation.
ARTICLE VI
No Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
6.1 No Mitigation. Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer after Employee's termination or resignation.
6.2 Other Contractual Rights. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates.
ARTICLE VII
Successors to the Corporation
7.1 Employee's Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in
-4-
<PAGE>
accordance with the terms of this Agreement to Employee's devisee, legatee or
other designee or, if there be no such designee, to Employee's estate.
ARTICLE VIII
Restrictions on Employee
8.1 Non-Disclosure; Non-Solicitation. Except in the performance of his
duties hereunder, at no time during the Term of Employment, and for eighteen
(18) months after the termination hereof, shall Employee, individually or
jointly with others, for the benefit of Employee or any third party, publish,
disclose, use, or authorize anyone else to publish, disclose, or use, any secret
or confidential material or information relating to any aspect of the business
or operations of the Corporation, including, without limitation, any secret or
confidential information relating to the business, customers, trade or
industrial practices, trade secrets, technology, recipes or know-how of the
Corporation. Except in the performance of his duties hereunder, at no time
during the term or six (6) months thereafter, shall Employee for himself or on
behalf of any other person or entity contact any employee of the Corporation for
the purpose of hiring, diverting or otherwise soliciting the employee.
8.2 Non-Competition. During the Term of Employment and for eighteen
(18) months thereafter, regardless of any termination pursuant to Section 5 or
any voluntary termination or resignation by Employee, Employee shall not,
individually or jointly with others, directly or indirectly, whether for his own
account or for that of any other person or entity, be employed by, engage in,
own, or hold any ownership interest in any person or entity engaged in a
restaurant business the same as or similar to any restaurant business of the
Corporation without the Corporation's written consent.
ARTICLE IX
Miscellaneous
9.1 Indemnification. To the full extent permitted by law, the Board
shall authorize the payment of expenses incurred by or shall satisfy judgments
or fines rendered or levied against Employee in any action brought by a
third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized hereunder shall include amounts paid and expenses incurred in
settling any such action or threatened action.
-5-
<PAGE>
9.2 Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to his residence,
in the case of Employee, or to its principal office, in the case of the
Corporation.
9.3 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
9.4 Amendment. No amendment or modification of this Agreement shall be
deemed effective unless or until executed in writing by the parties hereto.
9.5 Validity. This Agreement, having been executed and delivered in the
State of Kansas, its validity, interpretation, performance and enforcement will
be governed by the laws of that state.
9.6 Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.7 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 Legal Fees. Except in the event of termination for Cause, only in
the event a change of control of the Corporation has occurred, the Corporation
shall pay all legal fees and expenses which Employee may incur as a result of
the Corporation's contesting the validity, enforceability or Employee's
interpretation of, or determination under, this Agreement.
9.9 Exclusivity. Specific arrangements referred to in this Agreement
are not intended to exclude Employee's participation in any other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board from time to time.
9.10 Partial Invalidity. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and the Employee has executed this Agreement, as of the day and year first above
written.
-6-
<PAGE>
"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
- ----------------------------- By
Gerald T. Aaron, Secretary -------------------------------
Jamie B. Coulter, Chairman and
Chief Executive Officer
Witness "EMPLOYEE"
- --------------------------- ---------------------------------
Robert M. Kendall
-7-
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of this 1st day of
February, 1998, by and between Lone Star Steakhouse & Saloon, Inc., a
corporation (the "Corporation") and Frank E. Furstenberg, Jr.
("Employee").
RECITALS
--------
WHEREAS, the Employee is currently serving as a Vice President - New
Store Development of the Corporation and various subsidiaries of the
Corporation; and
WHEREAS, Employee is a principal officer of the Corporation and an
integral part of its management;
WHEREAS, the Corporation desires to continue the services of Employee,
whose experience, knowledge and abilities with respect to the business and
affairs of the Corporation are extremely valuable to the Corporation; and
WHEREAS, the parties hereto desire to enter into this Agreement setting
forth the terms and conditions of the continued employment relationship of the
Corporation and Employee.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Term of Employment. The Corporation shall initially employ Employee
for a period of three years from the date hereof (the "Initial Term").
1.2 Extension of Initial Term. Upon each annual anniversary date of
this Agreement, this Agreement shall be extended automatically for successive
terms of one year each, unless either the Corporation or the Employee gives
contrary written notice to the other not later than 90 days prior to the annual
anniversary date thereof.
ARTICLE II
Duties of the Employee
----------------------
General Duties. Employee shall serve as Vice President - New Store
Development of the Corporation. He shall do and perform all services, acts, or
things necessary or advisable to manage and conduct the business of the
Corporation consistent with such position subject to such policies and
procedures as may be established by the Board.
Employee shall: (i) devote his or her entire business time, attention,
and energies to the business of the Corporation, and,
<PAGE>
(ii) faithfully and competently perform his duties hereunder; and, Employee
shall not, during the term of this Agreement, engage in any other business
activity except as permitted by Article 8.
ARTICLE III
Compensation
3.1 Salary. For Employee's services to the Corporation as Vice
President - New Store Development, Employee shall be paid a salary at the annual
rate of $110,000, (herein referred to as "Salary") payable in twenty-four equal
installments on the first and fifteenth day of each month. On the first day of
each calendar year during the term of this Agreement with the Corporation,
Employee shall be eligible for an increase in Salary based on recommendations
made by the Compensation Committee of the Board.
3.2 Bonus. Employee is eligible to participate in the stock option plan
of the employer and all bonus compensation plans which may be offered from time
to time.
ARTICLE IV
Employee Benefits
-----------------
4.1 Use of Automobile. The Corporation shall provide, at the option of
Employee, with either the use of an automobile for business and personal use or
a car allowance of to be specified by the Corporation which complies with I.R.S.
Guidelines. The Corporation shall pay all expenses of operating, maintaining and
repairing the automobile and shall procure and maintain automobile liability
insurance in respect thereof, with such coverage insuring each Employee for
bodily injury and property damage.
4.2 Medical Life and Disability Insurance Benefits. The Corporation
shall provide Employee with the medical, life and disability insurance benefits
in accordance with the established benefit policies of the Corporation.
4.3 Business Expenses. Employee shall be authorized to incur reasonable
expenses for promoting the business of the Corporation including expenses for
entertainment, travel, and similar items. The Corporation shall reimburse
Employee for all such expenses upon the presentation by Employee, from time to
time, of an itemized account of such expenditures.
4.4 Vacations. Employee shall be entitled to an annual paid vacation
commensurate with the Corporation's established vacation policy for executive
officers. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee.
4.5 Disability. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability insurance
<PAGE>
benefits received pursuant to Section 4.2 herein), such amount being paid
semi-monthly in twelve equal installments.
ARTICLE V
Termination
-----------
5.1 Death. Employee's employment hereunder shall be terminated upon the
Employee's death.
5.2 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.
5.3 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
Cause. For the purpose of this Agreement, "Cause" shall mean the (i) willful and
intentional failure by Employee to substantially perform his duties hereunder,
other than any failure resulting from Employee's incapacity due to physical or
mental incapacity, or (ii) commission by Employee, in connection with his
employment by the Corporation, of an illegal act or any act (though not illegal)
which is not in the ordinary course of the Employee's responsibilities and which
exposes the Corporation to a significant level of undue liability. For purposes
of this paragraph, no act or failure to act on Employee's part shall be
considered to have met either of the preceding tests unless done or omitted to
be done by Employee not in good faith without a reasonable belief that his
action or omission was in the best interest of the Corporation.
(b) Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the majority vote of the Board
of Directors.
5.4 Compensation Upon Termination for Cause or Upon Resignation by
Employee. Except as otherwise set forth in Section 5.6 hereof, if Employee's
employment shall be terminated for Cause or if Employee shall resign his
position with the Corporation, the Corporation shall pay Employee's compensation
only through the last day of Employee's employment by the Corporation. The
Corporation shall then have no further obligation to Employee under this
Agreement.
5.5 Involuntary Termination. If:
(i) the Employee is terminated by Corporation at any time prior to
the termination of this Agreement for reasons other than Cause (as
defined herein), (ii) if Corporation
<PAGE>
gives notice to the Employee, in accordance with Section 1.2
herein, that this Agreement will not be renewed;
Employee shall be paid, over the ensuing six (6) month period, a sum
equal to the cash compensation paid to him excluding all bonuses of any
kind by Corporation for the six (6) month period immediately preceding
such termination or non-renewal. Such six (6) month period, as the case
may be, shall begin: (i) on the date of termination in the case of
termination of Employee's employment; and (ii) on the date notice of
non-renewal is given in the case of termination of this Agreement not
accompanied by simultaneous termination of Employee's employment with
the Corporation.
ARTICLE VI
No Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
---------------------------
6.1 No Mitigation. Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Employee as the result
of employment by another employer after Employee's termination or resignation.
6.2 Other Contractual Rights. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amount otherwise payable,
or in any way diminish Employee's existing rights, or rights which would accrue
solely as a result of passage of time under any employee benefit plan or other
contract, plan or arrangement of which Employee is a beneficiary or in which he
participates.
ARTICLE VII
Successors to the Corporation
-----------------------------
7.1 Employee's Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there be no such designee, to
Employee's estate.
ARTICLE VIII
Restrictions on Employee
------------------------
8.1 Non-Disclosure; Non-Solicitation. Except in the performance of his
duties hereunder, at no time during the Term of Employment, and for eighteen
(18) months after the termination
<PAGE>
hereof, shall Employee, individually or jointly with others, for the benefit of
Employee or any third party, publish, disclose, use, or authorize anyone else to
publish, disclose, or use, any secret or confidential material or information
relating to any aspect of the business or operations of the Corporation,
including, without limitation, any secret or confidential information relating
to the business, customers, trade or industrial practices, trade secrets,
technology, recipes or know-how of the Corporation. Except in the performance of
his duties hereunder, at no time during the term or six (6) months thereafter,
shall Employee for himself or on behalf of any other person or entity contact
any employee of the Corporation for the purpose of hiring, diverting or
otherwise soliciting the employee.
8.2 Non-Competition. During the Term of Employment and for eighteen
(18) months thereafter, regardless of any termination pursuant to Section 5 or
any voluntary termination or resignation by Employee, Employee shall not,
individually or jointly with others, directly or indirectly, whether for his own
account or for that of any other person or entity, be employed by, engage in,
own or hold any ownership interest in any person or entity engaged in a
restaurant business the same as or similar to any restaurant business of the
Corporation without the Corporation's written consent.
ARTICLE IX
Miscellaneous
-------------
9.1 Indemnification. To the full extent permitted by law, the Board
shall authorize the payment of expenses incurred by or shall satisfy judgments
or fines rendered or levied against Employee in any action brought by a
third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized hereunder shall include amounts paid and expenses incurred in
settling any such action or threatened action.
9.2 Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by mail to his residence,
in the case of Employee, or to its principal office, in the case of the
Corporation.
9.3 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
9.4 Amendment. No amendment or modification of this Agreement shall be
deemed effective unless or until executed in writing by the parties hereto.
<PAGE>
9.5 Validity. This Agreement, having been executed and delivered in the
State of Kansas, its validity, interpretation, performance and enforcement will
be governed by the laws of that state.
9.6 Section Headings. Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.7 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
9.8 Legal Fees. Except in the event of termination for Cause, and only
in the event a change of control of the Corporation has occurred, the
Corporation shall pay all legal fees and expenses which Employee may incur as a
result of the Corporation's contesting the validity, enforceability or
Employee's interpretation of, or determination under, this Agreement.
9.9 Exclusivity. Specific arrangements referred to in this Agreement
are not intended to exclude Employee's participation in any other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board from time to time.
9.10 Partial Invalidity. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers thereunto duly authorized;
and the Employee has executed this Agreement, as of the day and year first above
written.
"CORPORATION" LONE STAR STEAKHOUSE &
Attest SALOON, INC.
By:
- ----------------------------------- ------------------------------
Gerald T. Aaron, Secretary Jamie B. Coulter, Chairman and
Chief Executive Officer
Witness "EMPLOYEE"
- ----------------------------------- ------------------------------
Frank E. Furstenberg, Jr.
<TABLE>
<CAPTION>
For the Twelve Weeks Ended
-----------------------------------------
March 24, 1998 March 25, 1997
-------------- -------------------------
(in thousands, except per share amounts)
Basic:
<S> <C> <C>
Average weighted shares outstanding 41,165 40,840
Net Income $ 14,711 $ 18,204
========= ========
Per share amount $ 0.36 $ 0.45
========= ========
Diluted:
Average weighted shares outstanding 41,165 40,840
Net effect of dilutive stock options-based
on the treasury stock method using the
average market price of Company stock
during the quarter 1,070 494
--------- --------
Total 42,235 41,334
========= ========
Net Income $ 14,711 $ 18,204
========= ========
Per share amount $ 0.35 $ 0.44
========= ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTER ENDED MARCH 24, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1998
<PERIOD-START> DEC-31-1997
<PERIOD-END> MAR-24-1998
<CASH> 136,679
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 11,143
<CURRENT-ASSETS> 160,185
<PP&E> 443,307
<DEPRECIATION> 0
<TOTAL-ASSETS> 632,148
<CURRENT-LIABILITIES> 41,420
<BONDS> 0
0
0
<COMMON> 412
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 632,148
<SALES> 153,514
<TOTAL-REVENUES> 153,514
<CGS> 57,215
<TOTAL-COSTS> 69,524
<OTHER-EXPENSES> 6,980
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,538
<INCOME-PRETAX> 22,871
<INCOME-TAX> 8,077
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,711
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.35
</TABLE>
