Exhibit 10.7
EMPLOYMENT AGREEMENT
(W. XXXX XXXXXX)
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of May
5, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the
"COMPANY"), and W. XXXX XXXXXX, a resident of the Commonwealth of Kentucky
("EXECUTIVE").
RECITALS
A. The Company is preparing for an initial public offering (the "IPO")
of its shares of Class A Common Stock, $0.001 par value ("CLASS A COMMON
STOCK"), and has filed a Registration Statement on Form S-1 (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
B. Executive has been appointed as Chairman of the Company.
C. The Company desires that the employment of Executive, and Executive
wishes such employment, as Chairman of the Company following the IPO, to be
governed by the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements of the Company and Executive set forth below, the Company
and Executive, intending to be legally bound, agree as follows:
1. EFFECTIVE DATE. The terms and conditions of Executive's
employment hereunder shall become effective upon completion and closing
of the IPO (the "EFFECTIVE DATE"). Notwithstanding the preceding
sentence, the terms and conditions of Executive's employment hereunder
shall not become effective and this Agreement shall immediately
terminate if, prior to the Effective Date, any of the following shall
occur: (a) Executive resigns from his employment with the Company, (b)
the death or Disability (as defined in Section 10 hereof) of Executive,
(c) the withdrawal of the Registration Statement prior to its
effectiveness, (d) if the IPO does not close on or prior to December
31, 2004, or (e) Executive's employment is terminated by the Company.
Neither Executive nor the Company may revoke or cancel this Agreement
prior to the Effective Date without written agreement of the other
party.
2. EMPLOYMENT. Subject to all the terms and conditions of this
Agreement, Executive's period of employment under this Agreement shall
be the period commencing on the Effective Date and ending on the last
day of the twelfth full fiscal quarter following the Effective Date
(the "THIRD ANNIVERSARY DATE"), which initial twelve fiscal quarter
term, unless otherwise agreed to by the parties, shall be extended on
the Third Anniversary Date and on each anniversary of that date
thereafter, for a period of four fiscal quarters thereafter (which
initial twelve fiscal quarter term together with any such extensions,
if any, the "TERM"), unless the Executive's employment terminates
earlier in accordance with Section 9 hereof. Thereafter, if Executive
continues in the employ of the Company, the employment relationship
shall continue to be at will, terminable by either Executive or the
Company at any time and for any reason, with or without cause, and
subject to such terms and conditions established by the Company from
time to time.
3. POSITION AND DUTIES.
(a) EMPLOYMENT WITH THE COMPANY. While Executive is
employed by the Company during the Term, Executive shall be employed as
Chairman of the Company, and such other titles as the Company may
designate, and shall perform such duties and responsibilities as the
Company shall assign to him from time to time, including duties and
responsibilities relating to the Company's wholly-owned and partially
owned subsidiaries and other affiliates.
(b) PERFORMANCE OF DUTIES AND RESPONSIBILITIES.
Executive shall serve the Company faithfully and to the best of his
ability and shall devote his full working time, attention and efforts
to the business of the Company during his employment with the Company
hereunder. While Executive is employed by the Company during the Term,
Executive shall report to the Board of Directors of the Company (the
"BOARD"). Executive hereby represents and confirms that he is under no
contractual or legal commitments that would prevent him from fulfilling
his duties and responsibilities as set forth in this Agreement. During
his employment with the Company, Executive shall not accept other
employment or engage in other material business activity, except as
approved in writing by the Board. Executive may participate in
charitable activities and personal investment activities to a
reasonable extent, and he may serve as a director of business
organizations as approved by the Board, so long as such activities and
directorships do not interfere with the performance of his duties and
responsibilities hereunder.
4. COMPENSATION.
(a) BASE SALARY. While Executive is employed by the
Company during the Term, the Company shall pay to Executive a base
salary at the rate of Three Hundred Thousand and no/100 Dollars
($300,000.00) per fiscal year, less deductions and withholdings, which
base salary shall be paid in accordance with the Company's normal
payroll policies and procedures. The Executive's base salary may be
reviewed by the Compensation Committee of the Board on or after
September 30, 2005, and annually thereafter, to determine whether it
should be increased.
(b) INCENTIVE BONUS. Commencing with the first full
fiscal quarter following the Effective Date and for each full fiscal
quarter thereafter that Executive is employed by the Company during the
Term, Executive shall be eligible for a quarterly incentive bonus in an
amount up to Fifty Thousand and no/100 Dollars ($50,000), based upon
achievement of defined goals established by the Compensation Committee
of the Board and in accordance with the terms of any incentive plan of
the Company in effect from time to time (the "INCENTIVE BONUS"). The
level of achievement of the objectives
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each fiscal quarter and the amount payable as Incentive Bonus shall be
determined in good faith by the Compensation Committee. Any Incentive
Bonus earned for a fiscal quarter shall be paid to Executive on or
before the 90th day following the last day of such fiscal quarter. The
amount of the Executive's quarterly incentive bonus may be reviewed by
the Compensation Committee of the Board on or after September 30, 2005,
and annually thereafter, to determine whether it should be increased.
(c) BENEFITS. While Executive is employed by the
Company during the Term, Executive shall be entitled to participate in
all employee benefit plans and programs of the Company that are
available to executive officers generally to the extent that Executive
meets the eligibility requirements for each individual plan or program.
The Company provides no assurance as to the adoption or continuance of
any particular employee benefit plan or program, and Executive's
participation in any such plan or program shall be subject to the
provisions, rules and regulations applicable thereto.
(d) EXPENSES. While Executive is employed by the
Company during the Term, the Company shall reimburse Executive for all
reasonable and necessary out-of-pocket business, travel and
entertainment expenses incurred by him in the performance of his duties
and responsibilities hereunder, subject to the Company's normal
policies and procedures for expense verification and documentation.
5. AFFILIATED ENTITIES. As used in Sections 6, 7 and 8 of this
Agreement, "COMPANY" shall include the Company and each corporation,
limited liability company, partnership, or other entity that is
controlled by the Company, or is under common control with the Company
(in each case "CONTROL" meaning the direct or indirect ownership of 50%
or more of all outstanding equity interests).
6. CONFIDENTIAL INFORMATION. Except as required in the
performance of Executive's duties as an employee of the Company or as
authorized in writing by the Board, Executive shall not, either during
Executive's employment with the Company or at any time thereafter, use,
disclose or make accessible to any person any confidential information
for any purpose. "CONFIDENTIAL INFORMATION" means information
proprietary to the Company or its suppliers or prospective suppliers
and not generally known (including trade secret information) about the
Company's suppliers, products, services, personnel, customers, recipes,
pricing, sales strategies, technology, computer software code, methods,
processes, designs, research, development systems, techniques,
finances, accounting, purchasing, and plans. All information disclosed
to Executive or to which Executive obtains access, whether originated
by Executive or by others, during the period of Executive's employment
by the Company (whether before, during, or after the Term), shall be
presumed to be Confidential Information if it is treated by the Company
as being Confidential Information or if Executive has a reasonable
basis to believe it to be Confidential Information. Executive
acknowledges that the above-described knowledge and information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company, and that any
disclosure or other use of such knowledge or information other than for
the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. During
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Executive's employment with the Company, Executive shall refrain from
committing any acts that would materially reduce the value of such
knowledge or information to the Company. The foregoing obligations of
confidentiality shall not apply to any knowledge or information that
(i) is now or subsequently becomes generally publicly known, or (ii) is
required to be disclosed by law or legal process, other than as a
direct or indirect result of the breach of this Agreement by Executive.
Executive acknowledges that the obligations imposed by this Section 6
are in addition to, and not in place of, any obligations imposed by
applicable statutory or common law.
7. NONCOMPETITION COVENANT.
(a) AGREEMENT NOT TO COMPETE. During Executive's
employment with the Company (whether before, during, or after the Term)
and during the Restricted Period (as defined below), Executive shall
not, directly or indirectly, on his own behalf or on behalf of any
person or entity other than the Company, including without limitation
as a proprietor, principal, agent, partner, officer, director,
stockholder, employee, member of any association, consultant or
otherwise, engage in any business that is directly competitive with the
business of the Company, including without limitation any business that
operates one or more full-service, casual dining steakhouse
restaurants. The provisions of this section 7(a) shall also apply to
any business which is directly competitive with any other business
which the Company acquires or develops during Executive's employment
with the Company.
(b) AGREEMENT NOT TO HIRE. Except as required in the
performance of Executive's duties as an employee of the Company, during
Executive's employment with the Company (whether before, during, or
after the Term) and during the Restricted Period, Executive shall not,
directly or indirectly, hire, engage or solicit or induce or attempt to
induce to cease working for the Company, any person who is then an
employee of the Company or who was an employee of the Company during
the six (6) month period immediately preceding Executive's termination
of employment with the Company.
(c) AGREEMENT NOT TO SOLICIT. Except as required in
the performance of Executive's duties as an employee of the Company,
during Executive's employment with the Company (whether before, during,
or after the Term) and during the Restricted Period, Executive shall
not, directly or indirectly, solicit, request, advise, induce or
attempt to induce any vendor, supplier or other business contact of the
Company to cancel, curtail, cease doing business with, or otherwise
adversely change its relationship with the Company.
(d) RESTRICTED PERIOD. "RESTRICTED PERIOD" hereunder
means the period commencing on the last day of Executive's employment
with the Company and ending on the date that is two years following the
last day of the Term.
(e) ACKNOWLEDGMENT. Executive hereby acknowledges
that the provisions of this Section 7 are reasonable and necessary to
protect the legitimate
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interests of the Company and that any violation of this Section 7 by
Executive shall cause substantial and irreparable harm to the Company
to such an extent that monetary damages alone would be an inadequate
remedy therefor. Therefore, in the event that Executive violates any
provision of this Section 7, the Company shall be entitled to an
injunction, in addition to all the other remedies it may have,
restraining Executive from violating or continuing to violate such
provision.
(f) BLUE PENCIL DOCTRINE. If the duration of, the
scope of or any business activity covered by any provision of this
Section 7 is in excess of what is determined to be valid and
enforceable under applicable law, such provision shall be construed to
cover only that duration, scope or activity that is determined to be
valid and enforceable. Executive hereby acknowledges that this Section
7 shall be given the construction that renders its provisions valid and
enforceable to the maximum extent, not exceeding its express terms,
possible under applicable law.
(g) PERMITTED EQUITY OWNERSHIP. Ownership by
Executive, as a passive investment, of less than 2.5% of the
outstanding shares of capital stock of any corporation listed on a
national securities exchange or publicly traded in the over-the-counter
market shall not constitute a breach of this Section 7.
8. INTELLECTUAL PROPERTY.
(a) DISCLOSURE AND ASSIGNMENT. As of the Effective
Date, Executive hereby transfers and assigns to the Company (or its
designee) all right, title, and interest of Executive in and to every
idea, concept, invention, and improvement (whether patented, patentable
or not) conceived or reduced to practice by Executive whether solely or
in collaboration with others while he is employed by the Company, and
all copyrighted or copyrightable matter created by Executive whether
solely or in collaboration with others while he is employed by the
Company that relates to the Company's business (collectively,
"CREATIONS"). Executive shall communicate promptly and disclose to the
Company, in such form as the Company may request, all information,
details, and data pertaining to each Creation. Every copyrightable
Creation, regardless of whether copyright protection is sought or
preserved by the Company, shall be a "work made for hire" as defined in
17 U.S.C. Section 101, and the Company shall own all rights in and to
such matter throughout the world, without the payment of any royalty or
other consideration to Executive or anyone claiming through Executive.
(b) TRADEMARKS. All right, title, and interest in and
to any and all trademarks, trade names, service marks, and logos
adopted, used, or considered for use by the Company during Executive's
employment (whether or not developed by Executive) to identify the
Company's business or other goods or services (collectively, the
"MARKS"), together with the goodwill appurtenant thereto, and all other
materials, ideas, or other property conceived, created, developed,
adopted, or improved by Executive solely or jointly during Executive's
employment by the Company and relating to its business shall be owned
exclusively by the Company. Executive shall not have, and
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will not claim to have, any right, title, or interest of any kind in or
to the Marks or such other property.
(c) DOCUMENTATION. Executive shall execute and
deliver to the Company such formal transfers and assignments and such
other documents as the Company may request to permit the Company (or
its designee) to file and prosecute such registration applications and
other documents it deems useful to protect or enforce its rights
hereunder. Any idea, invention, copyrightable matter, or other property
relating to the Company's business and disclosed by Executive prior to
the first anniversary of the effective date of Executive's termination
of employment shall be deemed to be governed by the terms of this
Section 8 unless proven by Executive to have been first conceived and
made after such termination date.
(d) NON-APPLICABILITY. Executive is hereby notified
that this Section 8 does not apply to any invention for which no
equipment, supplies, facility, Confidential Information, or other trade
secret information of the Company was used and which was developed
entirely on Executive's own time, unless (i) the invention relates (A)
directly to the business of the Company or (B) to the Company's actual
or demonstrably anticipated research or development, or (ii) the
invention results from any work performed by Executive for the Company.
9. TERMINATION OF EMPLOYMENT.
(a) Executive's employment with the Company shall
terminate immediately upon:
(i) Executive's receipt of written
notice from the Company of the
termination of his employment;
(ii) the Company's receipt of
Executive's written resignation
from the Company;
(iii) Executive's Disability (as defined
below); or
(iv) Executive's death.
(b) The date upon which Executive's termination of
employment with the Company occurs shall be the "TERMINATION
DATE."
10. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If Executive's employment with the Company is
terminated by reason of:
(i) Executive's abandonment of his
employment or Executive's
resignation for any reason (whether
or not such
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resignation is set forth in writing
or otherwise communicated to the
Company);
(ii) termination of Executive's
employment by the Company for Cause
(as defined below); or
(iii) termination of Executive's
employment by the Company without
Cause following expiration of the
Term; or
the Company shall pay to Executive his then-current base salary through
the Termination Date.
(b) If Executive's employment with the Company is
terminated by the Company effective prior to the expiration of the Term
for any reason other than for Cause (as defined below), then the
Company shall pay to Executive, subject to Section 10(i) of this
Agreement:
(i) his then-current base salary
through the Termination Date;
(ii) any earned and unpaid annual
Incentive Bonus for the fiscal
quarter immediately preceding the
fiscal quarter in which the
Termination Date occurs; and
(iii) a crisp $100 xxxx from the Board.
Any amount payable to Executive pursuant to Section 10(b)(ii) shall be
paid to Executive by the Company in the same manner and at the same
time that Incentive Bonus payments are made to current employees of the
Company, but no earlier than the first normal payroll date of the
Company following the expiration of all applicable rescission periods
provided by law.
(c) If Executive's employment with the Company is
terminated effective prior to the expiration of the Term by reason of
Executive's death or Disability, the Company shall pay to Executive or
his beneficiary or his estate, as the case may be, his then-current
base salary through the Termination Date, any earned and unpaid
quarterly Incentive Bonus for the fiscal quarter preceding the fiscal
quarter in which the Termination Date occurs and a pro-rated portion of
any quarterly Incentive Bonus for the fiscal quarter in which the
Termination Date occurs, based on the number of days during such fiscal
quarter that Executive was employed by the Company, payable in the same
manner and at the same time that Incentive Bonus payments are made to
current employees of the Company.
(d) Cause. "CAUSE" hereunder shall mean:
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(i) an act or acts of dishonesty
undertaken by Executive and
intended to result in substantial
gain or personal enrichment of
Executive at the expense of the
Company;
(ii) unlawful conduct or gross misconduct
that is willful and deliberate on
Executive's part and that, in either
event, is materially injurious to
the Company;
(iii) the conviction of Executive of a
felony;
(iv) material and deliberate failure of
Executive to perform his duties and
responsibilities hereunder or to
satisfy his obligations as an
officer or employee of the Company,
which failure has not been cured by
Executive within ten days after
written notice thereof to Executive
from the Company; or
(v) material breach of any terms and
conditions of this Agreement by
Executive not caused by the Company,
which breach has not been cured by
Executive within ten days after
written notice thereof to Executive
from the Company.
(e) "DISABILITY" hereunder shall mean the inability
of Executive to perform on a full-time basis the duties and
responsibilities of his employment with the Company by reason of his
illness or other physical or mental impairment or condition, if such
inability continues for an uninterrupted period of 45 days or more
during any 360-day period. A period of inability shall be
"uninterrupted" unless and until Executive returns to full-time work
for a continuous period of at least 30 days.
(f) In the event of termination of Executive's
employment, the sole obligation of the Company hereunder shall be its
obligation to make the payments called for by Sections 10(a), 10(b), or
10(c) hereof, as the case may be, and the Company shall have no other
obligation to Executive or to his beneficiary or his estate, except as
otherwise provided by law.
(g) Notwithstanding any other provision hereof, the
Company shall not be obligated to make any payments under Section
10(b)(ii) or (iii) of this Agreement unless Executive has signed a full
release of claims against the Company, in a form and scope to be
prescribed by the Board, all applicable consideration periods and
rescission periods provided by law shall have expired, and Executive is
in strict compliance with the terms of this Agreement as of the dates
of the payments.
11. RETURN OF PROPERTY. Upon termination of Executive's
employment with the Company, Executive shall deliver promptly to the
Company all records, files, manuals, books, forms, documents, letters,
memoranda, data, customer lists, tables, photographs,
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video tapes, audio tapes, computer disks and other computer storage
media, and copies thereof, that are the property of the Company, or
that relate in any way to the business, products, services, personnel,
customers, prospective customers, suppliers, practices, or techniques
of the Company, and all other property of the Company (such as, for
example, computers, cellular telephones, pagers, credit cards, and
keys), whether or not containing Confidential Information, that are in
Executive's possession or under Executive's control.
12. REMEDIES. Executive acknowledges that it would be
difficult to fully compensate the Company for monetary damages
resulting from any breach by him of the provisions of Sections 6, 7,
and 8 hereof. Accordingly, in the event of any actual or threatened
breach of any such provisions, the Company shall, in addition to any
other remedies it may have, be entitled to injunctive and other
equitable relief to enforce such provisions, and such relief may be
granted without the necessity of proving actual monetary damages.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed
by, subject to, and construed in accordance with the laws of the
Commonwealth of Kentucky without regard to conflict of law principles.
Any action relating to this Agreement shall only be brought in a court
of competent jurisdiction in the Commonwealth of Kentucky, and the
parties consent to the jurisdiction, venue and convenience of such
courts.
(b) JURISDICTION AND LAW. Executive and the Company
consent to jurisdiction of the courts of the Commonwealth of Kentucky
and/or the federal district courts, Western District of Kentucky, for
the purpose of resolving all issues of law, equity, or fact, arising
out of or in connection with this Agreement. Any action involving
claims of a breach of this Agreement shall be brought in such courts.
Each party consents to personal jurisdiction over such party in the
state and/or federal courts of Kentucky and hereby waives any defense
of lack of personal jurisdiction or FORUM NON CONVENIENS. Venue, for
the purpose of all such suits, shall be in Jefferson County,
Commonwealth of Kentucky.
(c) ENTIRE AGREEMENT. Except for any written stock
option agreement and related agreements between Executive and the
Company, this Agreement contains the entire agreement of the parties
relating to Executive's employment with the Company and supersedes all
prior agreements and understandings with respect to such subject
matter, and the parties hereto have made no agreements, representations
or warranties relating to the subject matter of this Agreement that are
not set forth herein.
(d) NO VIOLATION OF OTHER AGREEMENTS. Executive
hereby represents and agrees that neither (i) Executive's entering into
this Agreement, (ii) Executive's employment with the Company, nor (iii)
Executive's carrying out the provisions of this Agreement, will violate
any other agreement (oral, written or other) to which Executive is a
party or by which Executive is bound.
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(e) AMENDMENTS. No amendment or modification of this
Agreement shall be deemed effective unless made in writing and signed
by the parties hereto.
(f) NO WAIVER. No term or condition of this Agreement
shall be deemed to have been waived, except by a statement in writing
signed by the party against whom enforcement of the waiver is sought.
Any written waiver shall not be deemed a continuing waiver unless
specifically stated, shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically
waived.
(g) ASSIGNMENT. This Agreement shall not be
assignable, in whole or in part, by either party without the prior
written consent of the other party, except that the Company may,
without the consent of Executive, assign its rights and obligations
under this Agreement (i) to any entity with which the Company may merge
or consolidate, or (ii) to any corporation or other person or business
entity to which the Company may sell or transfer all or substantially
all of its assets. After any such assignment by the Company, the
Company shall be discharged from all further liability hereunder and
such assignee shall thereafter be deemed to be the "Company" for
purposes of all terms and conditions of this Agreement, including this
Section 13.
(h) COUNTERPARTS. This Agreement may be executed in
any number of counterparts, and such counterparts executed and
delivered, each as an original, shall constitute but one and the same
instrument.
(i) SEVERABILITY. Subject to Section 7(f) hereof, to
the extent that any portion of any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and
the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
(j) SURVIVAL. The terms and conditions set forth in
Sections 5, 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other
provision that continues by its terms, shall survive expiration of the
Term or termination of Executive's employment for any reason.
(k) CAPTIONS AND HEADINGS. The captions and paragraph
headings used in this Agreement are for convenience of reference only
and shall not affect the construction or interpretation of this
Agreement or any of the provisions hereof.
(l) NOTICES. Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing and
either delivered in person or sent by first class certified or
registered mail, postage prepaid, if to the Company, at the Company's
principal place of business, and if to Executive, at his home address
most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the
other party hereto.
* * * * *
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IN WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of the date set forth in the first paragraph.
TEXAS ROADHOUSE, INC.
By: /S/ XXXXXX X. XXXX
-------------------------------------------
Xxxxxx X. Xxxx, Chief Executive Officer
W. XXXX XXXXXX
/S/ W. XXXX XXXXXX
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