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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) APRIL 22, 2005
PIZZA INN, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-12919 47-0654575
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3551 PLANO PARKWAY, THE COLONY, TEXAS 75056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 384-5000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On April 22, 2005, Pizza Inn, Inc. entered into an Executive Compensation
Agreement with Shawn M. Preator, the Company's Chief Financial Officer, and an
Executive Compensation Agreement with Ward T. Olgreen, the Company's Senior Vice
President of Franchise Operations and Concept Development. The April 22
Executive Compensation Agreements replace existing Executive Compensation
Agreements entered into between the Company and Mr. Preator and the Company and
Mr. Olgreen on December 16, 2002.
Terms of the April 22 agreement with Mr. Preator include, among others, a
term expiring on December 31, 2005; provisions for minimum annual salary,
benefits, and bonuses of not less than $150,000; a $30,000 bonus; and severance
payments based upon certain predetermined salary, benefit, and bonus amounts in
connection with any termination of Mr. Preator's employment by the Company for
any reason other than cause or any termination of his employment by Mr. Preator
for any reason or no reason at all.
Terms of the April 22 agreement with Mr. Olgreen include, among others, a term
expiring on December 31, 2005; provisions for minimum annual salary, benefits,
and bonuses of not less than $168,000; a $33,600 bonus; and severance payments
based upon certain predetermined salary, benefit, and bonus amounts in
connection with any termination of Mr. Olgreen's employment by the Company for
any reason other than cause or any termination of his employment by Mr. Olgreen
for any reason or no reason at all.
The Executive Compensation Agreements entered into by the Company and Mr.
Preator and the Company and Mr. Olgreen are furnished as Exhibit 10.1 and
Exhibit 10.2, respectively, to this report and incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
10.1 Executive Compensation Agreement entered into between the Company and
- ----
Shawn M. Preator dated April 22, 2005 (furnished herewith and incorporated
herein by reference)
10.2 Executive Compensation Agreement entered into between the Company and
- ----
Ward T. Olgreen dated April 22, 2005 (furnished herewith and incorporated herein
by reference)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Pizza Inn, Inc.
Date: April 26, 2005 By: /s/ Rod J. McDonald
Name : Rod J. McDonald
Title: Secretary
EXECUTIVE COMPENSATION AGREEMENT
THIS EXECUTIVE COMPENSATION AGREEMENT ("Agreement") is made and entered
into and effective the 22nd day of April, 2005, by and between Shawn Preator
(hereinafter referred to as "Executive") and Pizza Inn, Inc. (hereinafter
referred to as the "Company").
W I T N E S S E T H:
WHEREAS, the Company currently employs Executive as its Chief Financial
Officer and Vice President of Distribution pursuant to that certain Executive
Compensation Agreement dated as of December 16, 2002, and the Company and
Executive desire to continue and extend such employment on the terms and
conditions set forth herein;
WHEREAS, the Company and the Executive hereby agree to terminate that
certain Executive Compensation Agreement dated as of December 16, 2002 between
the Company and the Executive effective upon the execution of this Agreement;
WHEREAS, the parties concurrently herewith will enter into a new employment
agreement, effective upon the expiration of the Agreement;
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Executive hereby agree as follows:
ARTICLE I
COMPENSATION
1.01 SALARY AND BONUS. During the period of employment of Executive by the
Company, the Board of Directors of the Company (the "Board") or the Compensation
Committee or Stock Award Plan Committee thereof shall determine, based on the
recommendations of the Company's Chief Executive Officer from time to time, the
compensation of Executive, including salary, bonus, grants of stock options, and
other benefits; provided, however, that Executive shall receive an annual
salary, bonus and all other benefits not less than (i) $150,000, (ii) a bonus
equal to $30,000 (the "Section 1.01 Bonus"), and (iii) other benefits, except
stock options, including such increases as the Board or Compensation Committee
approve from time to time. Such salary shall be payable in such periodic
installments as established by the Board of Directors of the Company.
1.02 BENEFITS. Executive shall receive a Company provided vehicle or a car
allowance and reimbursement of certain expenses in accordance with past
practices. All benefits listed above in this section 1.02 shall be referred to
as the "Defined Benefits." Executive may also participate in the Company's
benefit plans.
ARTICLE II
TERMINATION OF EMPLOYMENT
2.01 TERMINATION BY THE COMPANY; FOR CAUSE. The Company may at any time
terminate Executive's employment for Cause. "Cause" shall mean the occurrence of
the following event: the Executive is convicted of any felony or of any
misdemeanor involving dishonesty such as theft, forgery or fraud, or having been
indicted for, or had an information filed on him for, such a crime, enters a
plea of guilty or nolo contendere;
2.02 TERMINATION BY THE COMPANY; OTHER THAN CAUSE. The Company may at any time
terminate Executive's employment for other than Cause.
2.03 TERMINATION BY EXECUTIVE. Executive's employment may be terminated by
Executive with or without any reason at any time through December 31, 2005 by
giving the Company at least fifteen (15) calendar days prior written notice of
such termination.
2.04 NOTICE AND DATE OF TERMINATION. Any termination by the Company or by
Executive shall be communicated by written notice. "Date of Termination" means
if Executive's employment is terminated by the Company or by Executive, the date
of receipt of the notice of termination.
ARTICLE III
OBLIGATIONS OF THE COMPANY UPON TERMINATION
3.01 TERMINATION BY COMPANY; OTHER THAN CAUSE. If the Company terminates
Executive's employment for any reason other than cause, then the Company shall
pay to Executive within fifteen (15) calendar days of the Date of Termination in
a lump sum an amount equal to six months of the Executive's then current annual
salary (provided that such salary shall be deemed to be no lower than
Executive's highest salary during any one of the immediately preceding three
years). Further, within fifteen (15) calendar days of the Date of Termination,
the Company will pay Executive in a lump sum a total equal to any unpaid bonus
Executive would have been entitled to receive had he worked through December 31,
2005. Said bonus will be for the fiscal year period ending June 2005 as well as
any accrued bonus through December 31, 2005. Said bonus for the fiscal periods
described in the preceding sentence shall be at least $45,000, unless previously
paid. Furthermore, Executive shall be entitled to receive for six months from
the Date of Termination all: medical, health, dental, disability, life
insurance; any other type of insurance; any accrued vacation days; and any
unpaid extra days, as defined in the Company's employee handbook, Policy No.
310, consistent with Executive's then current medical, health, dental,
disability, life insurance; and any other type of insurance. Further, within
fifteen (15) calendar days of the Date of Termination, the Company will pay
Executive in a lump sum the value of any accrued vacation days and any unpaid
extra days Executive would have been entitled to receive had he worked through
December 31, 2005. However, whenever the Executive obtains employment that
provides comparable medical, health, dental, disability, life insurance; and any
other type of insurance to what Executive was entitled to receive from the
Company through December 31, 2005, the Company's obligation to provide any
specific comparable medical, health, dental, disability, life insurance; and any
other type of insurance will cease.
If payment is not made within fifteen (15) calendar days of the Date of
Termination, then Company agrees to pay Executive interest at the highest rate
of interest allowed by law and compounded at the highest compounding allowed by
law, on all unpaid amounts due to Executive from Company until paid in full.
Further, if payment is not made within fifteen (15) calendar days of the Date of
Termination in addition to the rights, remedies and damages Executive possesses
--------------
or can obtain under this contract, Executive will also be entitled to all
rights, remedies and damages available to Executive under the contract entered
into between the Company and Executive dated December 16, 2002.
3.02 TERMINATION BY COMPANY; FOR CAUSE. If Executive's employment is terminated
by the Company for Cause, this Agreement shall terminate without further
obligations to Executive other than the obligation to pay to Executive, within
fifteen (15) calendar days of the Date of Termination, salary plus accrued bonus
and any accrued vacation days and any unpaid extra days, as defined in the
Company's employee handbook, Policy No. 310, due Executive through the Date of
Termination and the amount of any compensation previously deferred by Executive,
in each case to the extent theretofore unpaid.
3.03 TERMINATION BY EXECUTIVE. If the Executive terminates his employment for
any reason or no reason at all, then the Company shall pay to Executive within
fifteen (15) calendar days of the Date of Termination in a lump sum an amount
equal to six months of the Executive's then current annual salary (provided that
such salary shall be deemed to be no lower than Executive's highest salary
during any one of the immediately preceding three years). Further, within
fifteen (15) calendar days of the Date of Termination, the Company will pay
Executive in a lump sum a total equal to any unpaid bonus Executive would have
been entitled to receive had he worked through December 31, 2005. Said bonus
will be for the fiscal year period ending June 2005 as well as any accrued bonus
through December 31, 2005. Said bonus for the fiscal periods described in the
preceding sentence shall be at least $45,000, unless previously paid.
Furthermore, Executive shall be entitled to receive through December 31, 2005
any accrued vacation days and any unpaid extra days, as defined in the Company's
employee handbook, Policy No. 310. Further, within fifteen (15) calendar days
of the Date of Termination, the Company will pay Executive in a lump sum the
value of any accrued vacation days and any unpaid extra days Executive would
have been entitled to receive had he worked through December 31, 2005.
If payment is not made within fifteen (15) calendar days of the Date of
Termination, then Company agrees to pay Executive interest at the highest rate
of interest allowed by law and compounded at the highest compounding allowed by
law, on all unpaid amounts due to Executive from Company until paid in full.
Further, if payment is not made within fifteen (15) calendar days of the Date of
Termination in addition to the rights, remedies and damages Executive possesses
--------------
or can obtain under this contract, Executive will also be entitled to all
rights, remedies and damages available to Executive under the contract entered
into between the Company and Executive dated December 16, 2002.
3.04 NOT A PENALTY OR FORFEITURE. The parties hereto acknowledge and agree that
any payment under this Agreement is not a penalty or a forfeiture; rather, the
amount specified is a reasonable and fair reflection of the valuable protection,
benefits, and consideration Executive is giving up by agreeing to terminate that
certain Executive Compensation agreement dated December 16, 2002.
3.05 TAX LIMITATION. (a) If any payment received or to be received by Executive
in connection with a Change in Control of the Company or termination of
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement, or agreement with the Company, any person whose
actions result in a Change in Control of the Company, or any person affiliated
with the Company or such person (the "Total Payments")), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code, the Company
will pay to Executive, within 30 days of any payments giving rise to excise tax,
an additional amount (the "gross-up payment") such that the net amount retained
or to be retained by Executive, after deduction of any excise tax on the total
payments and any federal and state and local income tax and excise tax on the
gross-up payment provided for by this section, will equal the total payments.
(b) For purposes of determining the amount of the gross-up payment, Executive
will be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year that the payment is to be made, and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the executive's residence on the date of termination or
the date that excise tax is withheld by the Company, net of the maximum
reduction in federal income taxes that could be obtained by deducting such state
and local taxes.
(c) For purposes of determining whether any of the total payments would not be
deductible by the Company and would be subject to the excise tax, and the amount
of such excise tax, (i) total payments will be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Internal Revenue Code, and all
parachute payments in excess of the base amount within the meaning of Section
280G(b)(3) will be treated as subject to the excise tax unless, in the opinion
of tax counsel selected by the Company's independent auditors and acceptable to
Executive such total payments (in whole or in part) are not parachute payments,
or such parachute payments in excess of the base amount (in whole or in part)
are otherwise not subject to the excise tax, and (ii) the value of any non-cash
benefits or any deferred payment or benefit will be determined by the Company's
independent auditors in accordance with Sections 280G(d)(3) and (4) of the
Internal Revenue Code.
ARTICLE IV
TERM
4.01 The term (the "Term") of this Agreement shall commence on the date of this
Agreement as set forth above (the "Effective Date") and shall continue through
December 31, 2005.
ARTICLE V
PROPRIETARY INFORMATION, ETC.
5.01 PROPRIETARY INFORMATION. (a) Disclosure of Information. It is recognized
that Executive will have access to certain confidential information of the
Company and its affiliates and subsidiaries, and that such information
constitutes valuable, special and unique property of the Company and its
affiliates and subsidiaries. Executive shall not at any time disclose any such
confidential information to any party for any reason or purpose except as may be
made in the normal course of business of the Company or its affiliates and
subsidiaries and for the Company's or its affiliates' or subsidiaries' benefits.
(b) Return of Information. All advertising, sales and other materials or
articles of information, including without limitation data processing reports,
invoices, or any other materials or data of any kind furnished to Executive by
the Company or developed by Executive on behalf of the Company or at the
Company's direction or for the Company's use or otherwise in connection with
Executive' employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during, upon or after the termination of Executive's employment,
Executive shall immediately deliver the same to the Company.
ARTICLE VI
TITLE AND AUTHORITY
6.01 In performing the duties of Chief Financial Officer and Vice President of
Distribution hereunder, Executive shall give the Company the benefit of his
special knowledge, skills, contacts and business experience and shall devote
substantially all of his business time, attention, ability and energy
exclusively to the business of the Company. It is agreed that Executive may have
other business investments and participate in other business ventures which may,
from time to time, require minor portions of his time, but which shall not
interfere or be inconsistent with his duties hereunder.
ARTICLE VII
ARBITRATION
7.01 Any controversy or claim arising out of or relating to this Agreement or
the breach thereof of Executive's employment relationship with the Company shall
be settled by arbitration in the City of Dallas in accordance with the laws of
the State of Texas by one arbitrator, pursuant to the American Arbitration
Association rules for resolution of employment disputes. The American
Arbitration Association shall provide each party with a list of five arbitrators
from the American Arbitration Association's list of employment law panel
arbitrators and each party to the arbitration shall be allowed to strike up to
two of the arbitrators from the list provided. The arbitration shall be
conducted in accordance with the rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction.
ARTICLE VIII
MISCELLANEOUS
8.01 NOTICES. Any notices to be given hereunder by either party to the other
shall be in writing and may be effected either by personal delivery, via fax, or
by mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the following addresses:
If to Company: Pizza Inn, Inc.
3551 Plano Parkway
The Colony, Texas 75056
Attn: Corporate Secretary
Fax: (469) 384-5061
If to Executive: 808 Cresthaven Dr.
McKinney, TX 75070
Any party may change his or its address by written notice in accordance with
this Paragraph 8.01. Notice delivered personally shall be deemed communicated as
of actual receipt; mailed notices shall be deemed communicated as of three days
after proper mailing.
8.02 LAW GOVERNING AGREEMENT. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas and all obligations shall be
performable in Denton County, Texas.
8.03 WAIVERS. No term or condition of this Agreement shall be deemed to have
been waived nor shall there be any estoppel to enforce any of the terms or
provisions of this Agreement except by written instrument of the party charged
with such waiver or estoppel, and, if the Company is the waiving party, such
waiver must be approved by the Board. Further, it is agreed that no waiver at
any time of any of the terms or provisions of this Agreement shall be construed
as a waiver of any of the other terms or provisions of this Agreement, and that
a waiver at any time of any of the terms or provisions of this Agreement shall
not be construed as a waiver at any subsequent time of the same terms or
provisions.
8.04 AMENDMENTS. No amendment or modification of this Agreement shall be deemed
effective unless and until executed in writing by all of the parties hereto and
approved by the Board.
8.05 SEVERABILITY AND LIMITATION. All agreements and covenants contained herein
are severable and in the event any of them shall be held to be invalid by any
competent court, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein. Should any court or other
legally constituted authority determine that for any such agreement or covenant
to be effective that it must be modified to limit its duration or scope, the
parties hereto shall consider such agreement or covenant to be amended or
modified with respect to duration and scope so as to comply with the orders of
any such court or other legally constituted authority, and, as to all other
portions of such agreements or covenants, they shall remain in full force and
effect as originally written.
8.06 HEADINGS. All headings set forth in this Agreement are intended for
convenience only and shall not control or affect the meaning, construction or
effect of this Agreement or of any of the provisions thereof.
8.07 SURVIVAL. Articles III, V and VII shall survive termination of this
Agreement.
8.08 AUTHORITY. The signatories to this agreement represent and warrant that
they have full authority to enter into this agreement and any board approval
necessary to enter into this agreement has been obtained.
8.09 LEGAL EXPENSES. Within thirty (30) days of receipt of any bill for
Executive's legal fees and expenses that Executive may incur as a result of the
Company contesting the validity, enforceability or Executive's interpretation of
or determinations under this Agreement, including but not limited to the issue
of whether or not the Company had good cause for terminating Executive and/or
the amounts owed by the Company to Executive, the Company will pay said bill.
Executive shall be entitled to redact from the attorneys' fee and expenses bill
he submits to the Company any confidential information or attorney-client
communications that may be referenced in said bill.
The Company shall not be entitled to withhold or delay payment of Executive's
attorneys' fees and expenses bill, even if the Company believes that the bill is
unreasonable or Executive's actions and/or interpretation of this Agreement are
frivolous.
However, after a final decision is rendered by the arbitrator, the Company can
seek repayment of some or all of the attorneys' fees and expenses bill it paid
to Executive, if and only if, the Company can prove that the claims which
Executive brought against the Company or Executive's interpretation of this
Agreement were frivolous and brought in bad faith.
8.10 NO MITIGATION REQUIRED. The Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement. Executive shall not
be required to seek employment or take any other action to mitigate or reduce
the damages Executive suffers in the event that the Company breaches this
Agreement. The amount of any payment owed under this Agreement by the Company
to Executive shall not be reduced in any amount by any remuneration Executive
may earn from his own business, another employer, or government benefits that
Executive receives following his termination of employment with the Company.
EXECUTED as of the date and year first above written.
PIZZA INN, INC.
By:
/s/ Tim Taft
- --------------
Tim Taft
Chief Executive Officer
EXECUTIVE
/s/ Shawn Preator
- -------------------
SHAWN PREATOR
EXECUTIVE COMPENSATION AGREEMENT
THIS EXECUTIVE COMPENSATION AGREEMENT ("Agreement") is made and entered
into and effective the 22nd day of April, 2005, by and between Ward Olgreen
(hereinafter referred to as "Executive") and Pizza Inn, Inc. (hereinafter
referred to as the "Company").
W I T N E S S E T H:
WHEREAS, the Company currently employs Executive as its Senior Vice
President of Franchise Operations and Concept Development pursuant to that
certain Executive Compensation Agreement dated as of December 16, 2002, and the
Company and Executive desire to continue and extend such employment on the terms
and conditions set forth herein;
WHEREAS, the Company and the Executive hereby agree to terminate that
certain Executive Compensation Agreement dated as of December 16, 2002 between
the Company and the Executive effective upon the execution of this Agreement;
WHEREAS, the parties concurrently herewith will enter into a new employment
agreement, effective upon the expiration of the Agreement;
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Executive hereby agree as follows:
ARTICLE I
COMPENSATION
1.01 SALARY AND BONUS. During the period of employment of Executive by the
Company, the Board of Directors of the Company (the "Board") or the Compensation
Committee or Stock Award Plan Committee thereof shall determine, based on the
recommendations of the Company's Chief Executive Officer from time to time, the
compensation of Executive, including salary, bonus, grants of stock options, and
other benefits; provided, however, that Executive shall receive an annual
salary, bonus and all other benefits not less than (i) $168,000, (ii) a bonus
equal to $33,600 (the "Section 1.01 Bonus"), and (iii) other benefits, except
stock options, including such increases as the Board or Compensation Committee
approve from time to time. Such salary shall be payable in such periodic
installments as established by the Board of Directors of the Company.
1.02 BENEFITS. Executive shall receive a Company provided vehicle or a car
allowance and reimbursement of certain expenses in accordance with past
practices. All benefits listed above in this section 1.02 shall be referred to
as the "Defined Benefits." Executive may also participate in the Company's
benefit plans.
ARTICLE II
TERMINATION OF EMPLOYMENT
2.01 TERMINATION BY THE COMPANY; FOR CAUSE. The Company may at any time
terminate Executive's employment for Cause. "Cause" shall mean the occurrence of
the following event: the Executive is convicted of any felony or of any
misdemeanor involving dishonesty such as theft, forgery or fraud, or having been
indicted for, or had an information filed on him for, such a crime, enters a
plea of guilty or nolo contendere;
2.02 TERMINATION BY THE COMPANY; OTHER THAN CAUSE. The Company may at any time
terminate Executive's employment for other than Cause.
2.03 TERMINATION BY EXECUTIVE. Executive's employment may be terminated by
Executive with or without any reason at any time through December 31, 2005 by
giving the Company at least fifteen (15) calendar days prior written notice of
such termination.
2.04 NOTICE AND DATE OF TERMINATION. Any termination by the Company or by
Executive shall be communicated by written notice. "Date of Termination" means
if Executive's employment is terminated by the Company or by Executive, the date
of receipt of the notice of termination.
ARTICLE III
OBLIGATIONS OF THE COMPANY UPON TERMINATION
3.01 TERMINATION BY COMPANY; OTHER THAN CAUSE. If the Company terminates
Executive's employment for any reason other than cause, then the Company shall
pay to Executive within fifteen (15) calendar days of the Date of Termination in
a lump sum an amount equal to six months of the Executive's then current annual
salary (provided that such salary shall be deemed to be no lower than
Executive's highest salary during any one of the immediately preceding three
years). Further, within fifteen (15) calendar days of the Date of Termination,
the Company will pay Executive in a lump sum a total equal to any unpaid bonus
Executive would have been entitled to receive had he worked through December 31,
2005. Said bonus will be for the fiscal year period ending June 2005 as well as
any accrued bonus through December 31, 2005. Said bonus for the fiscal periods
described in the preceding sentence shall be at least $45,000, unless previously
paid. Furthermore, Executive shall be entitled to receive for six months from
the Date of Termination all: medical, health, dental, disability, life
insurance; any other type of insurance; any accrued vacation days; and any
unpaid extra days, as defined in the Company's employee handbook, Policy No.
310, consistent with Executive's then current medical, health, dental,
disability, life insurance; and any other type of insurance. Further, within
fifteen (15) calendar days of the Date of Termination, the Company will pay
Executive in a lump sum the value of any accrued vacation days and any unpaid
extra days Executive would have been entitled to receive had he worked through
December 31, 2005. However, whenever the Executive obtains employment that
provides comparable medical, health, dental, disability, life insurance; and any
other type of insurance to what Executive was entitled to receive from the
Company through December 31, 2005, the Company's obligation to provide any
specific comparable medical, health, dental, disability, life insurance; and any
other type of insurance will cease.
If payment is not made within fifteen (15) calendar days of the Date of
Termination, then Company agrees to pay Executive interest at the highest rate
of interest allowed by law and compounded at the highest compounding allowed by
law, on all unpaid amounts due to Executive from Company until paid in full.
Further, if payment is not made within fifteen (15) calendar days of the Date of
Termination in addition to the rights, remedies and damages Executive possesses
--------------
or can obtain under this contract, Executive will also be entitled to all
rights, remedies and damages available to Executive under the contract entered
into between the Company and Executive dated December 16, 2002.
3.02 TERMINATION BY COMPANY; FOR CAUSE. If Executive's employment is terminated
by the Company for Cause, this Agreement shall terminate without further
obligations to Executive other than the obligation to pay to Executive, within
fifteen (15) calendar days of the Date of Termination, salary plus accrued bonus
and any accrued vacation days and any unpaid extra days, as defined in the
Company's employee handbook, Policy No. 310, due Executive through the Date of
Termination and the amount of any compensation previously deferred by Executive,
in each case to the extent theretofore unpaid.
3.03 TERMINATION BY EXECUTIVE. If the Executive terminates his employment for
any reason or no reason at all, then the Company shall pay to Executive within
fifteen (15) calendar days of the Date of Termination in a lump sum an amount
equal to six months of the Executive's then current annual salary (provided that
such salary shall be deemed to be no lower than Executive's highest salary
during any one of the immediately preceding three years). Further, within
fifteen (15) calendar days of the Date of Termination, the Company will pay
Executive in a lump sum a total equal to any unpaid bonus Executive would have
been entitled to receive had he worked through December 31, 2005. Said bonus
will be for the fiscal year period ending June 2005 as well as any accrued bonus
through December 31, 2005. Said bonus for the fiscal periods described in the
preceding sentence shall be at least $45,000, unless previously paid.
Furthermore, Executive shall be entitled to receive through December 31, 2005
any accrued vacation days and any unpaid extra days, as defined in the Company's
employee handbook, Policy No. 310. Further, within fifteen (15) calendar days
of the Date of Termination, the Company will pay Executive in a lump sum the
value of any accrued vacation days and any unpaid extra days Executive would
have been entitled to receive had he worked through December 31, 2005.
If payment is not made within fifteen (15) calendar days of the Date of
Termination, then Company agrees to pay Executive interest at the highest rate
of interest allowed by law and compounded at the highest compounding allowed by
law, on all unpaid amounts due to Executive from Company until paid in full.
Further, if payment is not made within fifteen (15) calendar days of the Date of
Termination in addition to the rights, remedies and damages Executive possesses
--------------
or can obtain under this contract, Executive will also be entitled to all
rights, remedies and damages available to Executive under the contract entered
into between the Company and Executive dated December 16, 2002.
3.04 NOT A PENALTY OR FORFEITURE. The parties hereto acknowledge and agree that
any payment under this Agreement is not a penalty or a forfeiture; rather, the
amount specified is a reasonable and fair reflection of the valuable protection,
benefits, and consideration Executive is giving up by agreeing to terminate that
certain Executive Compensation agreement dated December 16, 2002.
3.05 TAX LIMITATION. (a) If any payment received or to be received by Executive
in connection with a Change in Control of the Company or termination of
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement, or agreement with the Company, any person whose
actions result in a Change in Control of the Company, or any person affiliated
with the Company or such person (the "Total Payments")), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code, the Company
will pay to Executive, within 30 days of any payments giving rise to excise tax,
an additional amount (the "gross-up payment") such that the net amount retained
or to be retained by Executive, after deduction of any excise tax on the total
payments and any federal and state and local income tax and excise tax on the
gross-up payment provided for by this section, will equal the total payments.
(b) For purposes of determining the amount of the gross-up payment, Executive
will be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year that the payment is to be made, and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the executive's residence on the date of termination or
the date that excise tax is withheld by the Company, net of the maximum
reduction in federal income taxes that could be obtained by deducting such state
and local taxes.
(c) For purposes of determining whether any of the total payments would not be
deductible by the Company and would be subject to the excise tax, and the amount
of such excise tax, (i) total payments will be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Internal Revenue Code, and all
parachute payments in excess of the base amount within the meaning of Section
280G(b)(3) will be treated as subject to the excise tax unless, in the opinion
of tax counsel selected by the Company's independent auditors and acceptable to
Executive such total payments (in whole or in part) are not parachute payments,
or such parachute payments in excess of the base amount (in whole or in part)
are otherwise not subject to the excise tax, and (ii) the value of any non-cash
benefits or any deferred payment or benefit will be determined by the Company's
independent auditors in accordance with Sections 280G(d)(3) and (4) of the
Internal Revenue Code.
ARTICLE IV
TERM
4.01 The term (the "Term") of this Agreement shall commence on the date of this
Agreement as set forth above (the "Effective Date") and shall continue through
December 31, 2005.
ARTICLE V
PROPRIETARY INFORMATION, ETC.
5.01 PROPRIETARY INFORMATION. (a) Disclosure of Information. It is recognized
that Executive will have access to certain confidential information of the
Company and its affiliates and subsidiaries, and that such information
constitutes valuable, special and unique property of the Company and its
affiliates and subsidiaries. Executive shall not at any time disclose any such
confidential information to any party for any reason or purpose except as may be
made in the normal course of business of the Company or its affiliates and
subsidiaries and for the Company's or its affiliates' or subsidiaries' benefits.
(b) Return of Information. All advertising, sales and other materials or
articles of information, including without limitation data processing reports,
invoices, or any other materials or data of any kind furnished to Executive by
the Company or developed by Executive on behalf of the Company or at the
Company's direction or for the Company's use or otherwise in connection with
Executive' employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during, upon or after the termination of Executive's employment,
Executive shall immediately deliver the same to the Company.
ARTICLE VI
TITLE AND AUTHORITY
6.01 In performing the duties of Chief Financial Officer and Vice President of
Distribution hereunder, Executive shall give the Company the benefit of his
special knowledge, skills, contacts and business experience and shall devote
substantially all of his business time, attention, ability and energy
exclusively to the business of the Company. It is agreed that Executive may have
other business investments and participate in other business ventures which may,
from time to time, require minor portions of his time, but which shall not
interfere or be inconsistent with his duties hereunder.
ARTICLE VII
ARBITRATION
7.01 Any controversy or claim arising out of or relating to this Agreement or
the breach thereof of Executive's employment relationship with the Company shall
be settled by arbitration in the City of Dallas in accordance with the laws of
the State of Texas by one arbitrator, pursuant to the American Arbitration
Association rules for resolution of employment disputes. The American
Arbitration Association shall provide each party with a list of five arbitrators
from the American Arbitration Association's list of employment law panel
arbitrators and each party to the arbitration shall be allowed to strike up to
two of the arbitrators from the list provided. The arbitration shall be
conducted in accordance with the rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction.
ARTICLE VIII
MISCELLANEOUS
8.01 NOTICES. Any notices to be given hereunder by either party to the other
shall be in writing and may be effected either by personal delivery, via fax, or
by mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the following addresses:
If to Company: Pizza Inn, Inc.
3551 Plano Parkway
The Colony, Texas 75056
Attn: Corporate Secretary
Fax: (469) 384-5061
If to Executive: 5908 Whisperfield Drive
Plano, TX 75024
Any party may change his or its address by written notice in accordance with
this Paragraph 8.01. Notice delivered personally shall be deemed communicated as
of actual receipt; mailed notices shall be deemed communicated as of three days
after proper mailing.
8.02 LAW GOVERNING AGREEMENT. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas and all obligations shall be
performable in Denton County, Texas.
8.03 WAIVERS. No term or condition of this Agreement shall be deemed to have
been waived nor shall there be any estoppel to enforce any of the terms or
provisions of this Agreement except by written instrument of the party charged
with such waiver or estoppel, and, if the Company is the waiving party, such
waiver must be approved by the Board. Further, it is agreed that no waiver at
any time of any of the terms or provisions of this Agreement shall be construed
as a waiver of any of the other terms or provisions of this Agreement, and that
a waiver at any time of any of the terms or provisions of this Agreement shall
not be construed as a waiver at any subsequent time of the same terms or
provisions.
8.04 AMENDMENTS. No amendment or modification of this Agreement shall be deemed
effective unless and until executed in writing by all of the parties hereto and
approved by the Board.
8.05 SEVERABILITY AND LIMITATION. All agreements and covenants contained herein
are severable and in the event any of them shall be held to be invalid by any
competent court, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein. Should any court or other
legally constituted authority determine that for any such agreement or covenant
to be effective that it must be modified to limit its duration or scope, the
parties hereto shall consider such agreement or covenant to be amended or
modified with respect to duration and scope so as to comply with the orders of
any such court or other legally constituted authority, and, as to all other
portions of such agreements or covenants, they shall remain in full force and
effect as originally written.
8.06 HEADINGS. All headings set forth in this Agreement are intended for
convenience only and shall not control or affect the meaning, construction or
effect of this Agreement or of any of the provisions thereof.
8.07 SURVIVAL. Articles III, V and VII shall survive termination of this
Agreement.
8.08 AUTHORITY. The signatories to this agreement represent and warrant that
they have full authority to enter into this agreement and any board approval
necessary to enter into this agreement has been obtained.
8.09 LEGAL EXPENSES. Within thirty (30) days of receipt of any bill for
Executive's legal fees and expenses that Executive may incur as a result of the
Company contesting the validity, enforceability or Executive's interpretation of
or determinations under this Agreement, including but not limited to the issue
of whether or not the Company had good cause for terminating Executive and/or
the amounts owed by the Company to Executive, the Company will pay said bill.
Executive shall be entitled to redact from the attorneys' fee and expenses bill
he submits to the Company any confidential information or attorney-client
communications that may be referenced in said bill.
The Company shall not be entitled to withhold or delay payment of Executive's
attorneys' fees and expenses bill, even if the Company believes that the bill is
unreasonable or Executive's actions and/or interpretation of this Agreement are
frivolous.
However, after a final decision is rendered by the arbitrator, the Company can
seek repayment of some or all of the attorneys' fees and expenses bill it paid
to Executive, if and only if, the Company can prove that the claims which
Executive brought against the Company or Executive's interpretation of this
Agreement were frivolous and brought in bad faith.
8.10 NO MITIGATION REQUIRED. The Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement. Executive shall not
be required to seek employment or take any other action to mitigate or reduce
the damages Executive suffers in the event that the Company breaches this
Agreement. The amount of any payment owed under this Agreement by the Company
to Executive shall not be reduced in any amount by any remuneration Executive
may earn from his own business, another employer, or government benefits that
Executive receives following his termination of employment with the Company.
EXECUTED as of the date and year first above written.
PIZZA INN, INC.
By:
/s/ Tim Taft
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Tim Taft
Chief Executive Officer
EXECUTIVE
/s/ Ward Olgreen
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WARD OLGREEN