9
SEVERANCE AGREEMENT AND RELEASE
This Severance Agreement and Release (the "Agreement") is entered into by
and between Pizza Inn, Inc. (the "Company") and C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇.
▇▇▇▇▇▇"), effective this 21st day of August, 2002.
WHEREAS, ▇▇. ▇▇▇▇▇▇'▇ employment with the Company will terminate by mutual
agreement on August 21, 2002;
WHEREAS, in connection with the termination of ▇▇. ▇▇▇▇▇▇'▇ employment with
the Company, the Company and ▇▇. ▇▇▇▇▇▇ desire to enter into this Agreement on
the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the Company and ▇▇. ▇▇▇▇▇▇ hereby agree as
follows:
1. AGREEMENTS BY ▇▇. ▇▇▇▇▇▇.
In consideration of the mutual promises, conditions, and covenants by the
Company set forth in this Agreement, and in accordance with the recitals set
forth above, ▇▇. ▇▇▇▇▇▇ agrees as follows:
(A) RESIGNATION: ▇▇. ▇▇▇▇▇▇ agrees that he has resigned all positions
with the Company and its affiliates, including without limitation as a member
and Vice-Chairman of the Company's Board of Directors and as Chief Executive
Officer of the Company, as well as any trustee position or signatory authority.
(B) RELEASE OF CLAIMS: ▇▇. ▇▇▇▇▇▇ hereby RELEASES AND FOREVER DISCHARGES
the Company (including, without limitation, the Company's affiliates, owners,
stockholders, agents, directors, officers, members, partners, employees,
insurers, representatives, lawyers, employee welfare benefit plans, pension
plans and/or deferred compensation plans and their trustees, administrators or
other fiduciaries, the successors or assigns of any of the foregoing, and all
persons acting by, through, under, or in concert with them, or any of them) of
and from any and all manner of action or actions, cause or causes of action, at
law or in equity, suits, debts, liens, contracts, agreements, promises,
liabilities, claims, demands, damages, loss, cost or expense, of any nature
whatsoever, known or unknown, fixed or contingent, asserted or unasserted,
liquidated or unliquidated, due or to become due (hereinafter called "claims"),
which ▇▇. ▇▇▇▇▇▇ now has or may hereafter have against the Company by reason of
any matter, cause, or thing whatsoever from the beginning of time to the date
hereof including but not limited to those claims arising out of his employment
with the Company or the termination of such employment. Without limiting the
generality of the foregoing, the claims released herein include any claims
arising out of, based upon, or in any way related to:
(1) the Employment Agreement between the Company and ▇▇. ▇▇▇▇▇▇ dated July
1, 1999, and any amendments or supplements to that agreement;
(2) any claim of entitlement to present or future employment or reemployment
with the Company;
(3) any property, contract, or tort claims, including any and all claims of
wrongful discharge, breach of employment contract, breach of any covenant of
good faith and fair dealing, retaliation, intentional or negligent infliction of
emotional distress, tortious interference with contract or existing or
prospective economic advantage, negligence, misrepresentation, breach of
privacy, defamation, loss of consortium, breach of fiduciary duty, violation of
public policy, or any other common law claim of any kind;
(4) any violation or alleged violation of Title VII of the Civil Rights Act
of 1964, as amended, the Older Workers Benefit Protection Act of 1990, the Equal
Pay Act, as amended, the Fair Labor Standards Act, the Employee Retirement
Income Security Act, the Americans With Disabilities Act, the Texas Labor Code,
the Texas Unemployment Insurance Act, the Texas Worker's Compensation Act, the
Civil Rights Act of 1866, the Consolidated Omnibus Budget Reconciliation Act, or
any other federal, state, or local statute, regulation, or ordinance;
(5) any violation or alleged violation of the Age Discrimination in
Employment Act, as amended;
(6) any claim for severance pay, bonus, sick leave, vacation or holiday pay,
life insurance, health insurance, disability or medical insurance, or any
other employee benefit ;
(7) any claim relating to or arising under any other local, state, or
federal statute or principle of common law (whether in contract or in tort)
governing employment, discrimination in employment, and/or the payment of wages
or benefits; and
(8) any claim that the Company has acted improperly, illegally, or
unconscionably in any manner whatsoever at any time prior to the execution of
this Agreement;
provided however, that the release described herein shall not apply to any
claims that ▇▇. ▇▇▇▇▇▇ has or may have in the future (i) with respect to any
breach of this Agreement by the Company or (ii) with respect to any claim under
the Company's directors and officers insurance policies or claims for
indemnification pursuant to the Company's bylaws or (iii) with respect to stock
options currently held by ▇▇. ▇▇▇▇▇▇ which shall continue to be subject to the
provisions of the Company's stock option plans, and (iv) with respect for any
vested benefits of ▇▇. ▇▇▇▇▇▇ under any Company employee benefit plan.
(C) OWBPA REPRESENTATIONS: With respect to ▇▇. ▇▇▇▇▇▇'▇ agreement to
release any claims for violations or alleged violations of the Age
Discrimination in Employment Act, as amended, as discussed in Paragraph 1(b)(5),
above, ▇▇. ▇▇▇▇▇▇ understands that this Agreement is written in a manner
calculated to be understood by him, that he understands this Agreement, that he
does not waive any rights or claims that may arise after the date this Agreement
is executed, that he is waiving any rights or claims only in exchange for
consideration in addition to anything of value to which he already is entitled,
that he is advised to consult with an attorney prior to executing this
Agreement, that he has a period of at least 21 days within which to consider
this Agreement, that he has a period of at least seven days following the
execution of this Agreement within which to revoke this Agreement, and this
Agreement will not become effective or enforceable until the revocation period
has expired.
(D) COVENANT NOT TO ▇▇▇: ▇▇. ▇▇▇▇▇▇ agrees that it is his intention in
executing this agreement that it shall be effective to bar each and every claim
that he now has or could have against the Company arising from ▇▇. ▇▇▇▇▇▇'▇
employment with the Company except as otherwise provided in this Agreement. In
signing this Agreement, ▇▇. ▇▇▇▇▇▇ agrees never to institute any claim at law or
equity against the Company relating to his employment with the Company or the
termination of such employment.
(E) WARRANTY THAT CLAIMS HAVE NOT BEEN ASSIGNED OR CONVEYED: ▇▇.
▇▇▇▇▇▇ represents and warrants that he is the only person who may be entitled to
assert any claims against the Company arising from any claim relating to his
former employment with the Company and the termination of such employment, and
that he has not assigned or conveyed to anyone else any part of or interest in
his claims against the Company. ▇▇. ▇▇▇▇▇▇ agrees to indemnify and hold the
Company harmless from any liability, demand, cost, expense, or attorney's fee
incurred as the result of the assertion of any such claim or claims by any other
person based on such an assignment or conveyance from ▇▇. ▇▇▇▇▇▇.
(F) AGREEMENT TO INDEMNIFY IF CLAIM AGAINST COMPANY IS FILED: ▇▇.
▇▇▇▇▇▇ agrees that if he hereafter commences, joins in, or in any manner seeks
relief against any of the parties released hereunder through any administrative
claim, lawsuit, or arbitration arising out of, based upon, or relating to any of
the claims released hereunder or in any manner asserts against the Company any
of the claims released hereunder, then ▇▇. ▇▇▇▇▇▇ shall pay, in addition to any
other damages caused thereby, all attorney's fees and costs incurred by the
Company in defending or otherwise responding to said suit or claim.
(G) NONDISCLOSURE OF CONFIDENTIAL INFORMATION: ▇▇. ▇▇▇▇▇▇ agrees to
hold in strictest confidence, and not to directly or indirectly use, disclose,
publish, disseminate, distribute, sell, transfer to any person, firm or
corporation, copy, remove from the Company premises, or commercially exploit,
without the written authorization of the Company, any Proprietary Information of
the Company. As used herein, "Proprietary Information" means business, pricing,
marketing, production, customer and cost data of the Company; compensation and
fee information for all personnel, including independent contractors of the
Company; information regarding the skills and performance of employees of the
Company; other personnel records of the Company; business plans (including any
strategic, marketing or sales plans), budgets, financial statements of the
Company; contents of agreements and contracts with customers and suppliers of
the Company; contents of agreements with joint ventures of the Company; customer
lists, requirements and specifications of the Company; and any other information
the Company treats as a trade secret or has marked "secret," "proprietary,"
"confidential," or treated in a similar manner. ▇▇. ▇▇▇▇▇▇ acknowledges that he
is aware of the policies that the Company has implemented to keep Proprietary
Information secret, including disclosing the information only on a need-to-know
basis, labeling documents as "confidential," and keeping Proprietary Information
in secure areas. ▇▇. ▇▇▇▇▇▇ also acknowledges that the Proprietary Information
has been developed or acquired by the Company through the expenditure of
substantial time, effort, and money and provides the Company with an advantage
over competitors who do not know or use such Proprietary Information.
(H) NOTIFICATION TO COMPANY: In the event ▇▇. ▇▇▇▇▇▇ is required by a
court of any competent jurisdiction to disclose any Proprietary Information, ▇▇.
▇▇▇▇▇▇ agrees to promptly notify the Company so that the Company may seek an
appropriate protective order and/or waive ▇▇. ▇▇▇▇▇▇'▇ compliance with Paragraph
1(g), above. In the event such protective order or other remedy is not
obtained, then ▇▇. ▇▇▇▇▇▇ agrees to disclose only that portion of such
Proprietary Information that he is legally required to disclose.
(I) RETURN OF COMPANY PROPERTY: ▇▇. ▇▇▇▇▇▇ agrees to deliver to the
Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all property, records, notes, reports, proposals, lists,
correspondence, materials, equipment, rolodex cards, or other documents or
property, together with all copies hereof (in whatever medium recorded)
belonging to the Company, whether located at the Company, ▇▇. ▇▇▇▇▇▇'▇ home or
elsewhere; provided however, that ▇▇. ▇▇▇▇▇▇ shall be entitled to retain (A)
his rolodex (provided that a copy may be retained by the Company), (B) a copy
of his personal email addresses, and (C) all personal effects, awards, files and
art work, all of which shall be promptly delivered to ▇▇. ▇▇▇▇▇▇ by the Company.
(J) NO DISPARAGEMENT OF COMPANY: ▇▇. ▇▇▇▇▇▇ agrees that he will not
disparage, directly or indirectly, the Company or its affiliates, owners,
stockholders, agents, directors, officers, members, franchisees, partners,
employees, insurers, representatives, or lawyers.
(K) NONCOMPETITION, TRADE SECRETS, AND PROPRIETARY INFORMATION
COVENANTS: ▇▇. ▇▇▇▇▇▇ agrees that Articles 9 and 10 the Employment Agreement
between the Company and ▇▇. ▇▇▇▇▇▇ dated July 1, 1999, and any amendments or
supplements to that agreement (the "Employment Agreement"), remain in full force
and effect. Except as set forth in the preceding sentence, the Employment
Agreement shall be of no further force or effect.
(L) AGREEMENT REGARDING ERRONEOUS BONUS ADVANCE: ▇▇. ▇▇▇▇▇▇ agrees
that the bonus of approximately $120,000.00 paid to him by the Company in July
2002 was paid by mistake. ▇▇. ▇▇▇▇▇▇ agrees to repay the sum of $120,000.00 to
the Company on or before January 1, 2003. ▇▇. ▇▇▇▇▇▇ agrees that if the entire
sum is not repaid to the Company by this date, then the Company may offset
monthly payments promised to ▇▇. ▇▇▇▇▇▇ in accordance with paragraph 2(a)(7),
below, which shall be the Company's sole and exclusive remedy in the event of
such nonpayment.
(M) EFFECT OF REVOCATION OF AGREEMENT BY ▇▇. ▇▇▇▇▇▇: Notwithstanding
the Company's agreements to pay ▇▇. ▇▇▇▇▇▇, in the event of any revocation by
▇▇. ▇▇▇▇▇▇ of this Agreement pursuant to Paragraph 1(c), above, the Company will
not be obligated to make any payments to ▇▇. ▇▇▇▇▇▇ and all amounts previously
paid to ▇▇. ▇▇▇▇▇▇ pursuant to Paragraphs 2(a)-(b) below (other than the
payments described in Paragraphs 2(a)(1) and 2(a)(2)) shall be immediately due
and payable to the Company upon written notice to ▇▇. ▇▇▇▇▇▇ by the Company.
(N) LITIGATION AND REGULATORY COOPERATION: ▇▇. ▇▇▇▇▇▇ agrees to
cooperate with the Company in the prosecution or defense of any claims or
actions now in existence or that may be brought in the future against or on
behalf of the Company that relate to events or occurrences that transpired while
▇▇. ▇▇▇▇▇▇ was employed by the Company. ▇▇. ▇▇▇▇▇▇'▇ cooperation in connection
with such claims or actions shall include, but not be limited to, being
available to meet with counsel to prepare for discovery or trial and to act as a
witness on behalf of the Company at mutually convenient times. ▇▇. ▇▇▇▇▇▇ also
shall cooperate fully with the Company in connection with any investigation or
review by any federal, state, or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
▇▇. ▇▇▇▇▇▇ was employed by the Company. The Company shall provide ▇▇. ▇▇▇▇▇▇
with compensation on a per diem basis calculated at the sum of $3,000.00 per
day, prorated as applicable on the basis of an 8-hour day less all withholdings
required by law, for such requested litigation and regulatory cooperation, and
shall reimburse ▇▇. ▇▇▇▇▇▇ for all costs and expenses incurred in connection
with his performance under this paragraph, including, but not limited to,
reasonable attorneys' fees and costs.
2. AGREEMENTS BY THE COMPANY.
In consideration of the mutual promises, conditions, and covenants by ▇▇.
▇▇▇▇▇▇ set forth in this Agreement, and in accordance with the recitals set
forth above, the Company agrees as follows:
(A) PAYMENTS TO ▇▇. ▇▇▇▇▇▇: The Company agrees to pay ▇▇. ▇▇▇▇▇▇ the
following sums of money by delivery of such payments to counsel for ▇▇. ▇▇▇▇▇▇:
(1) The Company agrees to pay ▇▇. ▇▇▇▇▇▇ all accrued, unpaid base
salary, less applicable withholdings required by law, until and including August
21, 2002. This payment will be made to ▇▇. ▇▇▇▇▇▇ upon execution of this
Agreement.
(2) The Company agrees to pay ▇▇. ▇▇▇▇▇▇ the total amount of $26,314.18
less applicable withholdings required by law, for all accrued, unused vacation.
This payment will be made to ▇▇. ▇▇▇▇▇▇ upon execution of this Agreement.
(3) The Company agrees to pay ▇▇. ▇▇▇▇▇▇ the total amount of
$195,000.00, less applicable withholdings required by law, for 90 days of base
salary. This payment will be made to ▇▇. ▇▇▇▇▇▇ 8 days after execution of this
Agreement, assuming no revocation or breach of this Agreement by ▇▇. ▇▇▇▇▇▇.
(4) The Company agrees to pay ▇▇. ▇▇▇▇▇▇ the total amount of $50,000.00
for premiums on life insurance policies, as determined to be appropriate by ▇▇.
▇▇▇▇▇▇ in his sole discretion. This payment will be made to ▇▇. ▇▇▇▇▇▇ upon
execution of this Agreement.
(5) The Company agrees to pay ▇▇. ▇▇▇▇▇▇ the total amount of $25,000.00
for executive recruiting assistance, as determined to be appropriate by ▇▇.
▇▇▇▇▇▇ in his sole discretion. This payment will be made to ▇▇. ▇▇▇▇▇▇ upon
execution of this Agreement.
(6) The Company agrees to pay to counsel for ▇▇. ▇▇▇▇▇▇ the total
amount of $30,713.51 for reasonable legal fees incurred by ▇▇. ▇▇▇▇▇▇ in
connection with this Agreement. This payment is earmarked for counsel to ▇▇.
▇▇▇▇▇▇ and will be delivered upon execution of this Agreement.
(7) The Company agrees to pay ▇▇. ▇▇▇▇▇▇ the total amount of $24,000.00
per month for 5 months - on January 1, 2003, February 1, 2003, March 1, 2003,
April 1, 2003, and May 1, 2003. These payments will be made to ▇▇. ▇▇▇▇▇▇ on
the dates specified, assuming no revocation of this Agreement by ▇▇. ▇▇▇▇▇▇.
However, these payments are subject to offset in accordance with paragraph 1(l)
of this Agreement, above.
(B) CONTINUATION OF COBRA HEALTH INSURANCE BENEFITS: The Company
agrees to make monthly payments for ▇▇. ▇▇▇▇▇▇' COBRA medical benefits coverage
(including family members presently enrolled, as applicable under the Company's
current insurance), subject to payment of required deductibles and copays for a
period of 18 months after execution of this Agreement, assuming no revocation of
this Agreement by ▇▇. ▇▇▇▇▇▇. Terms of these medical benefits will continue to
be governed by the applicable plans.
(C) RELEASE OF CLAIMS: The Company, on behalf of itself, its
subsidiaries and its affiliates, hereby RELEASES AND FOREVER DISCHARGES ▇▇.
▇▇▇▇▇▇ and his successors or assigns, and all persons acting by, through, under,
or in concert with them, or any of them) of and from any and all manner of
action or actions, cause or causes of action, at law or in equity, suits, debts,
liens, contracts, agreements, promises, liabilities, claims, demands, damages,
loss, cost or expense, of any nature whatsoever, known or unknown, fixed or
contingent, asserted or unasserted, liquidated or unliquidated, due or to become
due (hereinafter called "claims"), which the Company now has or may hereafter
have against ▇▇. ▇▇▇▇▇▇ by reason of any matter, cause, or thing whatsoever from
the beginning of time to the date hereof including but not limited to those
claims arising out of his employment with the Company or any compensation or
reimbursement related to such employment; provided however, that the release
described herein shall not apply to any claims that the Company has or may have
in the future (i) with respect to any breach of this Agreement by ▇▇. ▇▇▇▇▇▇ or
(ii) with respect to that certain promissory note in the original principal
amount of $1,949,697.51 dated October 6, 1999 or (iii) with respect to the bonus
described in Paragraph 1(l) above, subject to Paragraph 2(a)(7) above.
(D) NO DISPARAGEMENT OF ▇▇. ▇▇▇▇▇▇: The Company agrees, on behalf of
itself, its directors, officers and employees, that it and they will not
disparage, directly or indirectly, ▇▇. ▇▇▇▇▇▇ and will use its best reasonable
efforts to cause its franchisees and other agents to not disparage ▇▇. ▇▇▇▇▇▇.
If asked for references, the Company agrees to disclose only ▇▇. ▇▇▇▇▇▇'▇
position and dates of employment.
(E) CONFIDENTIALITY. The Company agrees that it will not disclose to
anyone the contents of ▇▇. ▇▇▇▇▇▇' personnel file, other than to confirm dates
of employment, positions held, and salary received, unless requested to do so by
▇▇. ▇▇▇▇▇▇ or an appropriate governmental entity or compelled by legal process.
Nothing in this Agreement, however, will be deemed to preclude the Company, its
agents, employees, successors and assigns, from giving statements, affidavits,
depositions, testimony, declarations, or other disclosures required by or
pursuant to legal process or otherwise required by law.
(F) D & O INSURANCE. The Company agrees to use its best reasonable
efforts to maintain its current directors and officers liability insurance
coverage and will take no action to deprive ▇▇. ▇▇▇▇▇▇ of the benefits of such
coverage.
3. LEGAL AND EQUITABLE REMEDIES.
The parties agrees that each party hereto has the right to enforce this
Agreement and any of its provisions by injunction, specific performance or other
equitable relief, without bond and without prejudice to any other rights and
remedies that such party may have for a breach of this Agreement by the other
party.
4. OTHER PROVISIONS.
(A) GOVERNING LAW AND CONSENT TO PERSONAL JURISDICTION: This
Agreement is governed by and will be construed in accordance with the internal
laws of the State of Texas without giving effect to any choice of law or
conflict provisions or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas, and each party hereby expressly consents to the
personal jurisdiction of the state and federal courts located in Dallas County,
Texas for any lawsuit filed arising from or relating to this Agreement.
(B) SUCCESSORS AND ASSIGNS: This Agreement will be binding upon ▇▇.
▇▇▇▇▇▇'▇ heirs, executors, administrators and other legal representatives and
will be for the benefit of the Company, its successors and its assigns. This
Agreement will be binding upon the Company's successors and assigns and will be
for the benefit of ▇▇. ▇▇▇▇▇▇' heirs, executors, administrators and other legal
representatives.
(C) THIRD-PARTY BENEFICIARIES: ▇▇. ▇▇▇▇▇▇ and the Company acknowledge
and agree that the terms of this Agreement, including but not limited to the
releases of claims by ▇▇. ▇▇▇▇▇▇, will inure to the benefit of the Company's
affiliated entities, owners, stockholders, agents, directors, officers, members,
partners, employees, insurers, representatives, lawyers, employee welfare
benefit plans, pension plans and/or deferred compensation plans and their
trustees, administrators or other fiduciaries, the successors or assigns of any
of the foregoing, and all persons acting by, through, under, or in concert with
them, or any of them.
(D) SEVERABILITY: Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law; but if any provision of this Agreement is prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
provision or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
(E) HEADINGS AND CONSTRUCTION: The headings in this Agreement are for
convenience only and are not considered a part of or used in the construction or
interpretation of any provision of this Agreement.
(F) ENTIRE AGREEMENT: The matters set forth in this Agreement
constitute the sole and entire agreement between ▇▇. ▇▇▇▇▇▇ and the Company and
supersede all prior agreements (except as otherwise set forth herein),
negotiations, and discussions between the parties hereto and/or their respective
counsel with respect to the subject matter hereof. No other representations,
covenants, undertakings, or other prior or contemporaneous agreements, oral or
written, regarding the matters set forth in this Agreement shall be deemed to
exist or bind any of the parties hereto. Each party understands and agrees that
it has not relied on any statement or representation by the other party or any
of its representatives in entering into this Agreement.
(G) AMENDMENT TO THIS AGREEMENT: Any amendment to this Agreement must
be writing and signed by duly authorized representatives of the parties hereto
and stating of the intent of the parties to amend this Agreement.
(H) VOLUNTARY EXECUTION: This Agreement has been entered into as a
result of arms-
length negotiations between ▇▇. ▇▇▇▇▇▇ and the Company, and the parties each
represent that they are voluntarily executing this Agreement after an adequate
opportunity to consult with counsel of their choosing regarding its meaning and
effect.
(I) EXECUTION IN COUNTERPARTS: This Agreement may be executed in
counterparts, including facsimile counterparts, with the same force and
effectiveness as if it were executed in one complete document.
IN WITNESS WHEREOF, the Company and ▇▇. ▇▇▇▇▇▇ have executed and delivered
this Agreement as of the date first written above.
AGREED: Pizza Inn, Inc.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman of the Board
By:/s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
AGREED: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Dallas PC DOCS 598414
