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EXHIBIT 10.3
TRANSITIONAL FINANCIAL AND ACCOUNTING
SERVICES AGREEMENT
THIS TRANSITIONAL FINANCIAL AND ACCOUNTING SERVICES AGREEMENT (the
"Agreement"), made as of this 1st day of July, 1998 (the "Closing Date"), by and
between NPC MANAGEMENT, INC., a Kansas corporation ("NPC Management"); and
ROMACORP, INC., a Delaware corporation ("Romacorp"). Romacorp and NPC Management
are collectively referred to herein as the "Parties" and individually as a
"Party."
WITNESSETH:
WHEREAS, NPC Management is a wholly-owned subsidiary of NPC
International, Inc., a Kansas corporation ("Parent"), and provides management,
accounting, financial reporting services and information services to Parent and
certain of Parent's affiliates;
WHEREAS, Parent, NPC Restaurant Holdings, Inc., a Delaware corporation
and wholly-owned subsidiary of Parent, and Sentinel Capital Partners, L.P., a
Delaware limited partnership ("Sentinel") have entered into a Recapitalization
Agreement, dated April 24, 1998 ("Recapitalization Agreement");
WHEREAS, pursuant to Section 10.2(i) of the Recapitalization Agreement,
Parent has agreed to cause the execution and delivery of this Agreement on the
Closing Date, whereby NPC Management would provide certain services to Romacorp
and the Romacorp Affiliates (as defined below) to the same extent currently
provided by NPC Management to Romacorp and the Romacorp Affiliates in the
ordinary course of Romacorp's and the Romacorp Affiliates' businesses consistent
with past practices for a period of up to one year;
NOW, THEREFORE, for good, valid and binding consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
1. Scope of Services.
1.1 General. NPC Management hereby agrees to provide Romacorp
and the Romacorp Affiliates with the services, the parameters of which are
described in Annex A, which consist of the management, accounting, financial
reporting services and information services provided by NPC Management to
Romacorp in the ordinary course of Romacorp business consistent with past
practices (the "Services") , provided that the Services shall not exceed in
scope that amount or level of Services that NPC Management and its affiliates
provides to Romacorp and the Romacorp Affiliates as of the Closing Date, or has
provided during the twelve-month period prior to the Closing Date and shall not
include Services that have been assumed during such twelve-month period by
Romacorp, the Romacorp Affiliates or any of the businesses, personnel and
resources contributed to Romacorp in contemplation of the
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Recapitalization Agreement. "Romacorp Affiliates" shall mean (i) the
corporations, partnerships and other entities, the equity of which is at the
applicable time directly or indirectly wholly owned by Romacorp, (ii) Roma
Huntington Beach Associates, and (iii) Xxxx Xxxxxxx Associates.
1.2 Legal Services. After the date hereof, NPC Management and
its affiliates will continue to require the services of the legal staff of Roma
Dining LP (a Romacorp Affiliate), principally Xxxxx Xxxxx, for a period of up to
one year. NPC Management will reimburse Roma Dining LP for these services in
accordance with the following schedule based upon detailed xxxxxxxx completed by
Mr. Short for services provided to NPC Management and its affiliates:
Xxxxx Xxxxx $75.00 per hour
Legal Assistant $25.00 per hour
1.3 Requirements Regarding Software. During the term of this
Agreement, NPC Management may develop upgrades to, and will endeavor to maintain
a consistent code base for, the NPC Software (as defined below) which will be
used in connection with the Services provided by NPC Management. Accordingly,
Romacorp shall, and shall cause the Romacorp Affiliates to, accept all such
changes to the NPC Software, provided that NPC Management will not implement any
such changes that would materially adversely affect or cause undue hardship to
the business of Romacorp and the Romacorp Affiliates or which would prevent
Romacorp or the Romacorp Affiliates from being able to utilize the NPC Software.
2. Software Maintenance.
2.1 License of NPC Software.
(a) Upon termination of this Agreement, NPC
Management will grant to Romacorp a nonexclusive, nontransferable,
royalty-free, perpetual license to use its proprietary internally
developed and owned General Ledger Software and Back-Office Software,
which in any case does not include the POS System (collectively, the
"NPC Software") which was developed and is owned by NPC Management.
Romacorp agrees that the NPC Software licensed hereby shall be solely
for the use of Romacorp and the Romacorp Affiliates in the conduct of
Romacorp's current line of business (casual dining rib restaurant
business), as conducted on the date hereof, provided that such
limitation on use shall not preclude Romacorp or the Romacorp
Affiliates from increasing the number of stores owned by Romacorp or
the Romacorp Affiliates and using the NPC Software in and in connection
with those additional stores. Neither Romacorp nor any Romacorp
Affiliate will (i) license, sell, give or otherwise transfer the NPC
Software, any derivative thereof, or any right to use thereof to any
person, or (ii) copy the NPC Software other than for the use of
Romacorp and the Romacorp Affiliates as provided for herein. The
license granted herein shall be subject to any vendor licensed
software, which is not being licensed hereby, and therefor is subject
to completion of the rewrite of certain software
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currently being undertaken by NPC Management which is intended to limit
or eliminate the use of certain vendor licensed software.
(b) "General Ledger Software" is a group of AS400
programs, in source code and executable code forms, developed and owned
by NPC Management to support the various home office accounting and
payroll functions. This does not include the Fixed Asset System or any
other vendor licensed programs.
(c) "Back-Office Software" is a Windows 95 based
software package developed and owned by NPC Management which performs
management and administration functions (i.e., payroll, inventory, cash
sheet, etc.). Copies of the Back-Office Software will be provided in,
and the license granted in Section 2.1 shall only be for, the
executable form during the term of this Agreement and, if executed,
during the term of the Software Management Agreement. If the Software
Management Agreement is not executed, the source code of the
Back-Office Software will be provided to Romacorp and the Romacorp
Affiliates and included in the license granted in Section 2.1.
(d) "POS System" is software for one or more personal
computers, touch monitors and printers running Progressive Software's
point of sale software. This system is used in the restaurant to record
the customer sale and is also referred to as the "Front of House"
system.
(e) Romacorp acknowledges and agrees that during the
term of this Agreement, it may be required to acquire for its use and
the use of the Romacorp Affiliates XcelleNet software and Server
licenses to operate the Back-Office Software. At the termination of
this Agreement, Romacorp may purchase XcelleNet software and Server
licenses to poll its stores. Upon the request of Romacorp, NPC
Management shall provide reasonable assistance to Romacorp to obtain
such software and licenses. If Romacorp uses software other than
XcelleNet software for polling individual stores, NPC will not offer
such support for the Back-Office Software.
(f) During the term of this Agreement and thereafter
during the term of any Software Management Agreement, all systems
running copies of Back-Office Software shall utilize hardware and a
configuration approved by NPC Management (such approval not to be
unreasonably withheld or delayed) to ensure system compatibility.
(g) ROMACORP AGREES TO TAKE THE NPC SOFTWARE LICENSED
HEREBY "AS-IS" AND IN THE FORM AND CONDITION SUCH SOFTWARE EXISTS ON
THE DATE HEREOF AND IS BEING USED BY ROMACORP ON THE DATE HEREOF. NPC
MANAGEMENT MAKES NO WARRANTIES REGARDING THE NPC SOFTWARE, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NPC
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MANAGEMENT IS NOT OBLIGATED TO UPGRADE, IMPROVE, ENHANCE OR OTHERWISE
ALTER THE NPC SOFTWARE.
(h) NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, AT LAW OR IN EQUITY, IN NO EVENT SHALL ANY PARTY BE
LIABLE FOR PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES (INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS
PROFITS OR BUSINESS INTERRUPTION) ARISING FROM OR RELATING TO ANY CLAIM
MADE UNDER THIS AGREEMENT OR REGARDING THE PROVISION OF OR THE FAILURE
TO PROVIDE THE SERVICES.
2.2 Post Termination Support.
(a) Romacorp understands and agrees that NPC
Management will provide no support for Romacorp's use of the General
Ledger Software following termination of this Agreement, and that use
of that software after the termination of this Agreement shall be
solely at the risk of Romacorp and the Romacorp Affiliates.
(b) If Romacorp and the Romacorp Affiliates continue
the use of the Back-Office Software after termination of this Agreement
and require technical assistance from NPC Management, Romacorp and NPC
Management may enter into a software maintenance agreement ("Software
Maintenance Agreement") which will provide for Romacorp to pay NPC
Management an annual software maintenance fee to be negotiated by the
parties on a per store and user basis for continued support of the
software, which Software Maintenance Agreement shall have a term to be
negotiated by the parties. The software maintenance fee will be paid to
NPC Management annually and will afford Romacorp and the Romacorp
Affiliates access to NPC Management technical services and any
applicable software updates. After termination of this Agreement, NPC
Management will make its help desk services available to Romacorp only
if Romacorp enters into the Software Maintenance Agreement and such
services shall be made available only so long as the Software
Maintenance Agreement remains in effect, which agreement shall set
forth the scope of the help desk support services and the costs
thereof. Romacorp may from time to time, during the term of this
Agreement and thereafter so long as a Software Maintenance Agreement is
in effect, request system or process changes to the Back-Office
Software. NPC Management will review and consider such requested
changes and will implement such changes to the extent such changes can
be made within the existing structure of NPC Management's organization,
process and systems. Any such requested changes that are unique to
Romacorp will not be undertaken by NPC Management unless the parties
agree to the funding of such development and ongoing support by
Romacorp.
(c) After the termination of this Agreement, if
Romacorp has not
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entered into a Software Maintenance Agreement and it requires technical
services regarding the Back-Office Software from NPC Management, NPC
Management may, in its sole discretion, provide technical support
services on an "as time permits" basis at the rate of $350.00 per hour
plus all reasonable out-of-pocket expenses.
2.3 Breach. In the event of any material uncured breach of
Section 2.1(a) of this Agreement by Romacorp, NPC Management may, at its option,
terminate the licenses granted therein and require Romacorp to cease use of the
NPC Software and return all copies to NPC Management.
3. Term. The term of this Agreement shall be for a period commencing on
the Closing Date and continuing until the end of Romacorp's twelfth fiscal
period following the Closing Date, unless earlier terminated by Romacorp upon
written notice to NPC Management by Romacorp, in which case this Agreement shall
terminate at the end of Romacorp's fiscal period ending at least sixty (60) days
after such notice. Either Party to this Agreement may terminate this Agreement
upon notice to the other Party if such other Party has breached or otherwise
failed to perform any of its obligations under this Agreement and failed to cure
such breach or failure within sixty (60) days, in which case this Agreement
shall terminate at the end of Romacorp's fiscal period ending at least sixty
(60) days after such notice.
4. Payment. During the term of this Agreement, Romacorp agrees to pay
NPC Management fees for each fiscal period for which services are provided in an
amount equal to $16,000 per week during such fiscal period, provided that after
not less than thirty (30) day' prior written notice by Romacorp to NPC
Management, Romacorp may discontinue one or more of the following categories of
Services (which, except for the services provided by the Chief Financial Officer
of NPC, are described in Annex A), in which case the foregoing weekly fee will
be reduced by the amount indicated below as of the 30th day following the
receipt of such notice by NPC Management:
Service Fee Reduction
MIS Service $ 9,100.00
Accounting and Other Service 5,000.00
Chief Financial Officer 2,400.00
The fee is due fifteen (15) days following the end of each such fiscal period.
Romacorp will reimburse NPC Management for all Reimbursable Expenses within
thirty (30) days of the date of the invoice from NPC Management as outlined in
Annex A. "Reimbursable Expenses" are expenses incurred on behalf of Romacorp or
any Romacorp Affiliate which, consistent with past practices prior to the
Closing Date, have been historically charged to Romacorp or any Romacorp
Affiliate by Parent or NPC Management on a separate company basis. Additionally,
Romacorp will pay for incremental fees incurred as a result of any material
increase in the scope of the Services from the level historically provided as of
the Closing Date but only if such increase in scope was expressly requested by
Romacorp and agreed to by NPC Management.
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5. Cooperation and Additional Instruments. Romacorp shall, and shall
cause the Romacorp Affiliates to, execute and obtain at NPC Management's expense
and, upon NPC Management's reasonable request, any additional documents or
instruments reasonably necessary or prudent to effect the intent of this
Agreement. Romacorp shall, and shall cause the Romacorp Affiliates to, cooperate
with NPC Management as reasonably necessary for the performance of NPC
Management's obligations hereunder, including making the services of Romacorp
and Romacorp Affiliates employees reasonably available to NPC Management without
cost.
6. Indemnification. Romacorp shall indemnify and hold NPC Management,
Parent and their affiliates and their respective employees, officers, directors
and agents (the "Indemnitees") harmless from and against any and all Damages (as
hereinafter defined) suffered by any Indemnitee arising out of the Services
provided by NPC Management, including the preparation of financial statements,
except to the extent such Damages arise out of NPC Management's gross negligence
or wilful misconduct or resulting from Romacorp's or any Romacorp Affiliate's
use and possession of the NPC Software. "Damages" means all losses, claims,
damages, costs, fines, penalties, obligations, payments and liabilities
(including those arising out of any action, suit, arbitration, inquiry,
proceeding or investigation by or before any governmental authority or
arbitrator (collectively, an "Action")), together with all reasonable costs and
expenses (including reasonable outside attorneys' fees and reasonable
out-of-pocket expenses) incurred in connection with any of the foregoing, but
shall not include any damages arising out of any interruption of business, loss
of profits, loss of use of facilities, claims of customers, loss of goodwill of
NPC Management or any indirect, incidental or special damages incurred by NPC
Management.
7. Attorneys' Fees. If any Action is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such Action or proceeding in
addition to any other relief to which it may be entitled.
8. Miscellaneous Provisions.
8.1 Severability. If any provision of this Agreement as
applied to any Party or to any circumstance shall be held invalid, illegal or
unenforceable by any court of competent jurisdiction, (i) the validity, legality
and enforceability of the remaining provisions of this Agreement will remain in
full force and effect and (ii) the application of such provision to any other
Party or to any other circumstance shall not be affected or impaired thereby.
8.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the Parties; provided, however, that neither this Agreement
nor any of the rights or obligations thereunder may be assigned by any Party
without the prior written consent of the other Party.
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8.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which, when taken together, shall constitute one and the
same agreement.
8.4 Headings. The table of contents, captions and headings
used in this Agreement are inserted for convenience only and shall not be deemed
to constitute part of this Agreement or to affect the construction or
interpretation hereof.
8.5 Waiver. Any of the terms or conditions of this Agreement
may be waived in writing at any time by the Party which is entitled to the
benefits thereof. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of such provision at any time in the future
or a wavier of any other provision hereof. The rights and remedies of the
Parties are cumulative and not alternative. Neither the failure nor any delay by
any Party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege.
8.6 No Third-Party Beneficiaries. Nothing in this Agreement,
express or implied, shall create or confer upon any person (including but not
limited to any Employees), other than the Parties or their respective successors
and permitted assigns, any legal or equitable rights, remedies, obligations,
liabilities or claims under or with respect to this Agreement, except as
expressly provided herein. The Indemnitees are intended third-party
beneficiaries of the indemnification provisions set forth in Section 6.
8.7 Notices. Unless otherwise provided herein, any notice,
request, waiver, instruction, consent or other document or communication
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given and received (a) when delivered by
hand (with written confirmation of receipt), (b) when received by the addressee,
if sent by a nationally-recognized overnight delivery service or (c) when
received by the addressee, if mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
If to NPC Management:
NPC Management, Inc.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxx 00000
Attn: Xxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
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Xxxx X. Xxxxxx, Esq.
Xxxxxxx, Mag & Fizzell, P.C.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000)000-0000
Facsimile: (000)000-0000
If to Romacorp:
Romacorp, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Page
Telephone: (000)000-0000
Facsimile: (000)000-0000
with a copy to:
Sentinel Capital Partners, L.P.
000 Xxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. XxXxxxxxx
Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with an additional copy to:
Xxxxxxxxx Xxxxx, Esq.
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address or facsimile number for such Party as shall be
specified in writing by that Party.
8.8 Governing Law. This Agreement shall be construed in
accordance with and governed by the Laws of the State of Kansas applicable to
agreements made and to be performed wholly within such jurisdiction, without
regard to conflicts of law principles.
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8.9 Interpretation.
(a) Unless specifically stated otherwise, references to
Annex refers to the Annex of this Agreement.
References to "includes" and "including" mean
"includes without limitation" and "including without
limitation."
(b) Each Party is a sophisticated legal entity that was
advised by experienced counsel and, to the extent it
deemed necessary, other advisors in connection with
this Agreement.
(c) No provision of this Agreement shall be interpreted
in favor of, or against, any of the Parties by reason
of the extent to which any such Party or its counsel
participated in the drafting thereof or by reason of
the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
8.10 Exclusive Jurisdiction and Consent to Service of Process.
The Parties agree that any Action arising out of or relating to this Agreement
or the transactions contemplated hereby shall be instituted in a federal or
state court sitting in Xxxxxxx County, Kansas, which shall be the exclusive
venue of any such Action. Each Party waives any objection which such Party may
now or hereafter have to the laying of venue of any such Action, and irrevocably
consents and submits to the jurisdiction of any such court (and the appropriate
appellate courts) in any such Action. Any and all service of process and any
other notice in any such Action shall be effective against such Party when
transmitted in accordance with Section 8.7. Nothing contained herein shall be
deemed to affect the right of any Party to serve process in any manner permitted
by Law.
8.11 Entire Agreement. This Agreement, together with the Annex
hereto, constitutes the sole understanding of the Parties with respect to the
matters contemplated hereby and thereby and supersedes and renders null and void
all prior agreements and understandings, written and oral, between or among the
Parties with respect to the subject matter hereof and thereof. No Party shall be
liable or bound to any other Party in any manner by any promises, conditions,
representations, warranties, covenants, agreements and understandings, except as
specifically set forth herein or therein.
8.12 Amendment. No amendment, modification or alteration of
the terms or provisions of this Agreement, including the Annex, shall be binding
unless the same shall be in writing and duly executed by the Party against whom
such amendment, modification or alteration is sought to be enforced.
IN WITNESS WHEREOF, the undersigned have affixed their respective
signatures.
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NPC MANAGEMENT, INC.
By:
Xxxx X. Xxxx, Vice President
ROMACORP, INC.
By:
Xxxxxx X. Page, President
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ANNEX A
MIS SERVICE PARAMETERS
- NPC Management will provide support for all POS System(s), Back-Office
Software, and ROI software. As set forth in Section 1.3 of the Agreement,
during the term of the Agreement. NPC Management may develop upgrades
to, and will endeavor to maintain a consistent code base for, the NPC
Software which will be used in connection with the Services provided by NPC
Management. Accordingly, Romacorp shall, and shall cause the Romacorp
Affiliates to, accept all such changes to the NPC Software, provided that
NPC Management will not implement any such changes that would materially
adversely affect or cause undue hardship to the business of Romacorp and
the Romacorp Affiliates or which would prevent Romacorp or the Romacorp
Affiliates from being able to utilize the NPC Software.
- NPC Management will provide first level support (including contacting IBM
Support) to Romacorp for all POS and Back-Office hardware maintenance and
repair; however, Romacorp will be required to purchase an inventory of
spare systems in sufficient quantity to support its systems. This inventory
will be maintained at Romacorp and released as needed. Furthermore, systems
removed from operation by Romacorp or any Romacorp Affiliate will be the
responsibility of Romacorp or the Romacorp Affiliate.
- NPC Management will poll all Xxxx Xxxx'x stores wholly-owned by Romacorp or
any Romacorp Affiliate nightly. Stores failing to be polled must contact
NPC Management's Help Desk for support. It will be Romacorp's
responsibility to resolve any store who fails polling and does not contact
the Help Desk.
- Consistent with the current arrangement, NPC Management will process and
transmit the daily and weekly FLASH in accordance with the following
schedule.
- Weekly
- Preliminary -- Monday afternoon
- Final -- Tuesday afternoon
- Rerun -- each Saturday
- Daily
- Runs each morning includes rerun of prior two days.
Note: Run times vary based on processing load
- Consistent with the current arrangement, Romacorp will be responsible for
the maintenance and repair of all hardware and software associated with the
Dallas office network and telephone system.
- NPC Management will provide access to the AS400 via the existing lease
line. The lease line facilities will be available from 8:00 a.m. to 6:00
p.m. Central Time.
- For security purposes, NPC Management will restrict Romacorp's and the
Romacorp
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Affiliates' lease line access to specific users (no more than 7)
who will be restricted to specific areas/files/programs. Romacorp
will be responsible to ensure the equipment is properly secured and
accessed only by individuals with the appropriate authority and
training.
- Should Romacorp and the Romacorp Affiliates decide to move to a new
facility, they are responsible for any costs that are incurred to
relocate the existing lease line and associated equipment but solely
to the extent expressly requested by Romacorp.
- In the event Romacorp's and the Romacorp Affiliates' level of activity
escalates requiring the expansion of the band width of the lease line
to Dallas, Romacorp will be charged for the associated incremental
costs but solely to the extent expressly requested by Romacorp.
- Consistent with the current arrangement, Romacorp will be responsible for
the maintenance/repair of their local AS400 printer and terminals. Upon
conclusion of this agreement, this equipment will remain with Romacorp.
NPC Management will continue to provide assistance where possible.
- NPC Management is responsible for the maintenance/repair of the Perle
Controller, Adtran TSU and Micom Controller located in the Dallas office.
Upon conclusion of the support agreement, this equipment will be returned
to NPC Management.
- NPC Management's services on all systems will be restricted to maintenance
programming. This will include regular maintenance, changes to fix coding
problems, "bug" fixes, and changes necessary to meet legal requirements.
Enhancements will be performed consistent with current practice, based upon
priority and scheduling availability.
- NPC Management will provide any program updates or changes to the Romacorp
system after testing and approval of such by Romacorp.
- Any new facilities (i.e. insurance, banks, etc.) initiated by Romacorp or
any Romacorp Affiliate must conform to the existing design of NPC
Management's systems. NPC Management will make changes to rates, account
numbers, and codes as required; however, we will not redesign the system
input, output, or processing to accommodate the new requirement.
- Romacorp will be responsible to test, approve, schedule, train and roll-out
all new or revised hardware or software. NPC Management will continue to
support electronic software distribution when appropriate.
- Romacorp will be responsible for maintaining inventory-related files. NPC
Management will continue to maintain back-office files, system files, menu,
cash sheet and Flash authoring.
- As long as Romacorp's local area network ("LAN") is connected to NPC
Management's wide area network ("WAN"), any changes to Romacorp's LAN
configuration must be approved in advance by NPC Management, which approval
shall not be unreasonably withheld.
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ACCOUNTING AND OTHER SERVICE PARAMETERS
PAYROLL
- I-9's - management, keypunch, control, and all associated forms will be
processed.
- Personnel Files - all personnel files held by NPC Management will continue
to be maintained by NPC Management until the termination of this Agreement
or earlier requested by Romacorp, at which time such will be delivered to
Romacorp.
- Payroll Tax Reporting - all payroll tax returns will be completed by NPC
Management and forwarded to Romacorp for review and signing.
- In order to maintain direct deposit, Romacorp must continue to use a bank
with a direct deposit data/media format consistent with that currently used
by NPC Management.
- Romacorp must continue to use Gates XxXxxxxx for unemployment processing
during the term of this agreement.
ACCOUNTING
- NPC Management will process Romacorp's month-end close in accordance with
the following scheme:
- Romacorp will adhere to current week, period and year ending dates.
- Romacorp's month-end accounting processing will be performed in
accordance with the current schedule with targeted preliminary general
ledger close on or around the 5th day after the end of the period.
- Romacorp will be responsible for all accounting estimates including but
not limited to the allowance for bad debts, accrued vacation, property
tax, insurance, income tax expense, and the related tax liability,
depreciation expense, and related accumulated depreciation amounts. NPC
Management will continue to record transactions to those accounts
consistent with past process. Upon commencement of this Agreement, new
rates will need to be established for the majority of these estimates.
The parties to this agreement will put forth commercially reasonable
efforts to mutually establish such amounts necessary to reflect the
estimates in the financial statements in accordance with the current
process. Romacorp will review, approve, and accept responsibility for all
estimates.
- NPC Management will put forth commercially reasonable efforts to provide
final general ledger close ten (10) business days following the end of
each fiscal period. During such time, three preliminary closes will be
processed in priority fashion (i.e., prior to processing Pizza Hut
close). Additional preliminary closes will be performed subject to system
capacity as assessed by NPC Management. Note: Both parties acknowledge
that the timing and volume of adjusting journal entries may cause the
above schedule to be delayed.
- NPC Management will continue to process sales and use tax returns. The
returns will be
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reviewed and signed by Romacorp.
- NPC Management will provide assistance in the preparation of federal and
state income tax returns and estimated tax payments which will be prepared
by the service provider used to prepare the NPC International, Inc. and
subsidiaries tax returns (currently Xxxxx, Xxxxx & Xxxxxx). Service
provider fees for preparation of such returns will be billed directly to
Romacorp. Romacorp will have all necessary access to the service provider
and information included in the returns. Romacorp will be responsible for
review and signing of the returns.
- NPC Management will process all property tax returns with RASH &
Associates. The fees for RASH & Associates will be billed directly to
Romacorp.
- Account evaluations will be performed prior to the close of the next
period.
- All reports will be printed and mailed by NPC Management consistent with
past practices.
- NPC Management will provide all property management functions; however,
any lease extensions, communications with landlords, etc. will be reviewed
and approved by Romacorp.
- Romacorp will be responsible for the development and maintenance of a
reliable system of internal controls. Specifically, all monitoring
controls, as defined by generally accepted auditing standards, will be
performed by Romacorp, and Romacorp will satisfy itself that application
controls over processes related to their financial statements are
operating properly.
- NPC Management will retain no responsibility for the validity of cash
disbursements and will manage cash sweeping practices as directed by
Romacorp. All checks processed by NPC Management will be signed with a
nameplate. These checks will be sent to Romacorp for authorization and
disbursement.
- NPC Management and its employees will not provide any representation
and/or warranties with respect to the financial statements of Romacorp or
its internal control system. NPC Management will not incur the time or
expense to have any procedures performed with respect to an independent
accountant's report related to the requirements of Statement or Auditing
Standards No. 70.
- Romacorp must renegotiate "stand-alone" terms with credit card processors.
All information received by NPC Management from the Romacorp credit card
processors must remain in present format.
- All check stock must be prepared by Rapco consistent with NPC Management's
existing format.
- Any changes in vendors must be coordinated with NPC Management;
specifically, information (invoice) processing must remain on a
substantially consistent basis with NPC Management's existing system.
- Accounting statement format changes will be executed on a priority basis;
however,
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changes to account numbers may be made at the discretion of NPC Management.
- Romacorp will utilize "positive pay" check processing so as to allow NPC
Management to continue to use its bank account reconciliation software.
BENEFITS
- Romacorp will be responsible for all employee benefits processing and
management.
GENERAL
- All express and other mailing charges required by this arrangement will be
charged to Romacorp's billing code at that vendor or direct billed by NPC
Management.
Romacorp will reimburse NPC Management for any expenses incurred on its behalf
for products or services formerly charged to NPC Management on a consolidated
basis including but not limited to the following:
REIMBURSEMENTS
- AT&T telephone charges & long distance credit cards
- Gates XxXxxxxx Unemployment Processing
- Credit Card Processing Fees
- Diners Club Travel Charges
- IBM Maintenance Fees
- AS400 Lease Line Costs
Reimbursement for such expenses is due within thirty (30) days of invoice date
from NPC Management to Romacorp.
