EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of June 19, 2008 between
Oregano’s Pizza Bistro, Inc., an Arizona corporation (the “Company”)
and
Xxxx X. Xxxxxxx (the “Employee”).
INTRODUCTION
Contemporaneously
with the execution and delivery of this Agreement, Restaurant Acquisition
Partners, Inc. (the “Parent”),
Oregano’s Acquisition, Inc., Oregano’s Holdings LLC, the Company and the
Employee have entered into that certain Agreement and Plan of Merger, dated
as
of June 19, 2008 (the “Merger
Agreement”).
The
Company and the Parent desire the Employee’s continued employment with the
Company, and the Employee wishes to accept such continued employment, upon
the
terms and conditions contained in this Agreement.
This
Agreement shall be effective as of the Closing (as defined in the Merger
Agreement) (the “Commencement
Date”).
In
the event that the Closing does not occur, this Agreement shall be null and
void
and of no effect.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties agree as follows:
1. Definitions
(a) “Affiliate”
means
any person, firm, corporation, partnership, association or entity that, directly
or indirectly or through one or more intermediaries, controls, is controlled
by
or is under common control with the Company. For these purposes, “control” shall
mean the direct or indirect ownership of equity securities of the applicable
entity possessing the right to more than fifty percent (50%) of the combined
ordinary voting power of the outstanding voting equity securities of such
entity.
(b) “Board
of Directors”
means
the Board of Directors of the Company.
(c) “Cause”
means
the occurrence of any of the following events: (i) any act of gross negligence
or willful misconduct which the Company deems to be materially injurious
to the
Company, which remains uncured after ten (10) days written notice by the
Company; (ii) any act by the Employee of fraud, misappropriation,
dishonesty, embezzlement or similar conduct against the Company; or
(iii) conviction of, or entry of a pleading of guilty or no contest by the
Employee with respect to a felony or any other crime involving
dishonesty.
(d)
“Change
in Control”
means
any of the following events:
(i)
the
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if persons who were not
stockholders of the Company immediately prior to such merger, consolidation
or
other reorganization own immediately after such merger, consolidation or
other
reorganization fifty percent (50%) or more of the voting power of the
outstanding securities of each of (A) the continuing or surviving entity
and (B)
any direct or indirect parent corporation of such continuing or surviving
entity;
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(ii)
the
consummation of the sale, transfer or other disposition of all or substantially
all of the Company’s assets or the stockholders of the Company approve a plan of
complete
liquidation of the Company;
(iii)
the
composition of the Board of Directors changes, such that individuals who,
as
of the
Commencement Date, were members of the Board of Directors (the “Incumbent Board”) cease
for
any reason to constitute at least a majority thereof; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the shareholders of the Company, was approved
by a
vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual were
a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual
or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies
by or on behalf of a person other than the Board of Directors; or
(iv)
any
“person” (as defined below) who, by the acquisition or aggregation of
securities,
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding
securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors
(the “Base
Capital Stock”); except
that any change in the relative beneficial ownership of
the
Company’s securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any decrease
thereafter in such person’s ownership
of securities, shall be disregarded until such person increases in any manner,
directly or
indirectly, such person’s beneficial ownership of any securities of the Company.
For purposes of
this
Section 1(d)(iv), the term “person” shall have the same meaning as when used in
Sections 13(d)
and
14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary
holding securities
under an employee benefit plan maintained by the Company or an Affiliate and
(2)
a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same
proportions as their ownership of the stock.
Notwithstanding
the foregoing, the term “Change in Control” shall not include a transaction
the sole purpose of which is (a) to change the state of the Company’s
incorporation, (b)
to
form a holding company that will be owned in substantially the same proportions
by the persons
who held the Company’s securities immediately before such transaction; or (c) to
make an
initial public offering of the Company’s stock.
(e)
“Code” means
the
Internal Revenue Code of 1986, as amended.
(f)
“Confidential
Information” means
data and information relating to the business of the Company or an Affiliate
which is or has been disclosed to the Employee or of which the Employee became
aware as a consequence of or through his relationship to the Company or an
Affiliate
and which has value to the Company or an Affiliate and is not generally known
to
its competitors. Confidential Information shall not include any data or
information that has been voluntarily
disclosed to the public by the Company or an Affiliate (except where such public
disclosure has been made by the Employee without authorization) or that has
been
independently developed
and disclosed by others, or that otherwise enters the public domain through
lawful means.
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(g)
“Disability” means
the
inability of the Employee to perform his duties and responsibilities hereunder
with appropriate accommodation due to a physical, mental, or emotional
impairment, as determined by an independent qualified physician (who may be
engaged
by the Company), for a one hundred (180) consecutive day period or for an
aggregate of two
hundred ten (210) days during any three hundred sixty-five (365) day
period.
(h)
“Exchange
Act” means
the
U.S. Securities and Exchange Act of 1934, as amended.
(i)
“Good
Reason” means
the
occurrence of any of the following events which is not cured by the Company
within thirty (30) days after the Employee’s written notice to the Company
of the same: (i) the nature of the Employee’s duties or the scope of his
responsibilities are materially modified to the Employee’s detriment without the
Employee’s written consent, (ii) material
diminution of the Employee’s base salary without the Employee’s written consent,
(iii)
the
Company changes the location of the Employee’s place of employment to more than
fifty (50) miles from its present location, or (iv) a material breach of this
Agreement by the Company; provided that with respect to any of the foregoing
events, the Employee gives the Company
notice of the event within thirty (30) days of the date of the event and
provided the Employee
resigns effective upon not less than fourteen (14) days, and not more than
thirty (30) days
notice to the Company after the expiration of the Company’s thirty (30) day cure
period.
(j)
“Specified
Employee” shall
mean a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code, as determined by the Compensation Committee of the Board of
Directors.
(k)
“Termination
Date” means
the
date which corresponds to the first to occur of (i) the death
or
Disability of the Employee, (ii) the last day of the Term as provided in Section
4(a) below, (iii) the date for termination of employment set forth in a notice
given pursuant to Section 4(b)
below, or (iv) the actual date of the Employee’s termination of
employment.
(l)
“Trade
Secrets”
means
information including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data, financial plans, product plans or lists
of
actual or potential customers
or suppliers which (i) derives economic value, actual or potential, from not
being generally
known to, and not being readily ascertainable by proper means by, other persons
who can
obtain economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable
under the circumstances to maintain its secrecy.
2.
Terms
and Conditions of Employment.
(a)
Employment.
The
Company hereby employs the Employee as its Vice-Chairman and the Employee
accepts employment with the Company in such capacity.
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(b)
Exclusivity.
Throughout the Employee’s employment hereunder, the Employee shall devote
substantially all the Employee’s time, energy and skill during regular business
hours to
the
performance of the duties of the Employee’s employment (vacations and reasonable
absences
due to illness excepted), shall faithfully and industriously perform such
duties, and shall
diligently follow and implement all management policies and decisions of the
Company.
(c)
Place
of Employment. The
Employee shall perform his duties hereunder principally at
the
Company’s Scottsdale, Arizona office, with such travel to such other locations
from time to
time
as required.
3.
Compensation.
(a)
Base
Salary. In
consideration for the Employee’s services hereunder, the Company shall
pay
to the Employee an annual base salary in the amount of Three Hundred Thousand
Dollars $300,000.00 in accordance with the normal payroll payment practices
of
the Company and subject to such deductions and withholdings as law or policies
of the Company, from time to time in effect, require.
(b)
Bonus
and Stock Incentive Plan.
The
Employee shall be entitled to participate in the Company’s Executive Management
Bonus Plan and the Company’s Stock Incentive Plan, if any, subject to the terms
and conditions thereof.
(c)
Vacation. The
Employee shall be entitled to vacation in accordance with Company policy,
but in any event the Employee shall be entitled to no less than 4 weeks of
vacation per year.
Vacation shall be taken at times mutually convenient to the Company and the
Employee.
(d)
Expenses. The
Employee shall be entitled to be reimbursed in accordance with the policies
of the Company, as adopted and amended from time to time, for all reasonable
and
necessary
expenses incurred by the Employee in connection with the performance of the
Employee’s
duties of employment hereunder. The
Employee shall, as a condition to such reimbursement, submit verification of
the
nature and amount of such expenses, in accordance with
the
reimbursement policies adopted from time to time by the Company.
(e)
Benefits.
The
Employee shall be entitled to participate in all employee benefit plans
as
generally may be made available to similarly situated employees of the Company
from time to time;
provided, however, that nothing contained herein shall require the establishment
or continuation
of any particular plan or program.
4.
Term,
Termination and Termination Payments.
(a)
Term. The
term
of this Agreement (the “Term”) shall commence as of the Commencement Date and
shall expire on the third (3rd) anniversary of the Commencement Date.
Thereafter, this Agreement shall be automatically renewed and the Term extended
for additional
consecutive terms of one (1) year (each, a “Renewal
Term”),
unless
such renewal is objected
to by either the Company or the Employee upon sixty (60) days written notice
prior to the commencement of the next Renewal Term. In the event of renewal,
the
last day of the Renewal
Term shall be deemed the new Termination Date.
4
(b)
Termination. The
Employee’s employment by the Company hereunder may be terminated
before expiration of the Term (i) by mutual agreement of the Employee and the
Company;
(ii) by the Employee with Good Reason; (iii) by the Employee within thirty
(30)
days following
a Change in Control; (iv) by the Company without Cause, (v) by the Company
for
Cause; or (vi) by the Company or the Employee due to the Disability of the
Employee. This Agreement shall also terminate immediately upon the death of
the
Employee. Notice of termination by either the Company or the Employee shall
be
given in writing and shall specify the basis for termination and the Termination
Date.
(c)
Effect
of Termination.
Upon
termination of the Employee’s employment hereunder, the Company shall have no
further obligation to the Employee or the Employee’s estate with respect
to this Agreement, except for payment of salary amounts, if any, accrued
pursuant to Section 3(a) hereof and unpaid at the Termination Date, and
termination payments, if any, set forth
in
Section 4(d) hereof, as applicable.
(d)
Certain
Terminations. If
the
Employee terminates his employment pursuant to Section
4(b)(ii) or (iii), if the Company terminates the Employee’s employment pursuant
to Section 4(b)(iv), or
if the
Company objects to the renewal of the Agreement pursuant to Section 4(a),
the
Company shall be obligated to continue to pay the Employee his annual base
salary in effect
at
the time of termination of employment for eighteen (18) months after the
Termination Date. Payments made under this Section 4(d) shall be paid as a
salary continuation beginning with
the
first payroll period following the Termination Date and each such salary
continuation payment
shall be deemed to be a separate payment for purposes of Section 409A of the
Code. The
Employee shall be entitled to participate in the Company’s employee benefit
plans during the
salary continuation period in accordance with the terms of such plans or
programs in effect from
time
to time, and to the extent permitted by applicable law.
(e)
Release.
Notwithstanding any other provision hereof, the Company’s obligation to pay the
severance benefit set forth in Section 4(d), if
applicable, will be contingent upon the Employee executing and providing to
the
Company (and not revoking within the revocation period,
if any, provided pursuant to the applicable release agreement) a form of release
agreement
provided by the Company. The Employee shall execute the release within such
period as is provided for in the applicable release agreement, following the
Company’s provision of such
release agreement to the Employee in connection with the Employee’s termination
of employment.
(f)
Compliance
with Code Section 409A. To
the
fullest extent applicable, amounts and other
benefits payable under this Agreement are intended to be exempt from the
definition of “nonqualified deferred compensation” under Section 409A of the
Code in accordance with one or more of the exemptions available under the final
Treasury regulations promulgated under Code
Section 409A and, to the extent that any such amount or benefit is or becomes
subject to Code
Section 409A due to a failure to qualify for an exemption from the definition
of
nonqualified
deferred compensation in accordance with such final Treasury regulations, this
Agreement
is intended to comply with the applicable requirements of Section 409A of the
Code with
respect to such amounts or benefits and will be interpreted and administered
to
the extent possible
in a manner consistent with the foregoing statement of intent. Notwithstanding
anything herein
to
the contrary, (i) if on the date the Employee “separates from service” within
the meaning
of Treasury Regulation section 1.409A-1(h), (A) the Company is publicly traded,
(B) the Employee is a Specified Employee, and (C) the Company reasonably
determines that (x) a payment or benefit payable hereunder as a result
of the Employee’s termination of employment constitutes nonqualified deferred
compensation that is subject to the requirements of Section 409A of the Code
and
(y) the deferral of the commencement of such payments or benefits is
necessary
in order to prevent any accelerated or additional tax under Section 409A of
the
Code, then
the
Company will withhold and accumulate such payments or benefits hereunder
(without any reduction in such payments or benefits ultimately paid or provided
to Employee) until the date
that
is six months following Employee’s separation from service date (or the earliest
date as is
permitted under Section 409A of the Code), at which time the withheld and
accumulated payments shall be paid to the Employee in a single lump sum payment
and (ii) if any other payments
of money or other benefits due to Employee hereunder could cause the application
of an
accelerated or additional tax under Section 409A of the Code, such payments
or
other benefits shall
be
deferred if deferral will make such payment or other benefits compliant under
Section 409A
of
the Code, or otherwise such payment or other benefits shall be restructured,
to
the extent possible,
in a manner, determined by the Company, that does not cause such an accelerated
or additional
tax.
5
5.
Ownership
and Protection of Proprietary Information.
(a)
Confidentiality.
All
Confidential Information and Trade Secrets and all physical embodiments thereof
received or developed by the Employee while employed by the Company are
confidential to and are and will remain the sole and exclusive property of
the
Company. Except to the extent necessary to perform the duties assigned to him
by
the Company, the Employee
will hold such Confidential Information and Trade Secrets in trust and strictest
confidence,
and will not use, reproduce, distribute, disclose or otherwise disseminate
the
Confidential
Information and Trade Secrets or any physical embodiments thereof and may in
no
event
take any action causing or fail to take the action necessary in order to
prevent, any Confidential
Information and Trade Secrets disclosed to or developed by the Employee to
lose
its character or cease to qualify as Confidential Information or Trade
Secrets.
(b)
Return
of Company Property. Upon
request by the Company, and in any event upon
termination of the employment of the Employee with the Company for any reason,
as a prior condition to receiving any final compensation hereunder (including
payments pursuant to Section
4(d) hereof), the Employee will promptly deliver to the Company all property
belonging to
the
Company, including, without limitation, all Confidential Information and Trade
Secrets (and
all
embodiments thereof) then in the Employee’s custody, control or
possession.
(c)
Survival. The
covenants of confidentiality set forth herein will apply on and after
the
date
hereof to any Confidential Information and Trade Secrets disclosed by the
Company or developed
by the Employee prior to or after the date hereof. The covenants restricting
the
use of Confidential
Information will continue and be maintained by the Employee for a period of
two
years
following the termination of this Agreement. The covenants restricting the
use
of Trade Secrets
will continue and be maintained by the Employee following termination of this
Agreement
for so long as permitted by applicable law.
6
6.
Contracts
or Other Agreements with Former Employer or Business.
The
Employee hereby represents and warrants that he is not subject to any employment
agreement or similar document, except as previously disclosed and delivered
to
the Company, with
a
former employer or any business with which the Employee has been associated,
which on its
face
prohibits the Employee during a period of time which extends through the
Commencement
Date from any of the following: (i) competing with, or in any way participating
in
a
business which competes with the Employee’s former employer or business; (ii)
soliciting personnel
of such former employer or business to leave such former employer’s employment
or to
leave
such business; or (iii) soliciting customers of such former employer or business
on behalf
of
another business.
7.
Remedies.
(a)
The
Employee agrees that the covenants and agreements contained in Sections 5
and
6
hereof are of the essence of this Agreement; that each of such covenants is
reasonable and necessary
to protect and preserve the interests and properties of the Company and the
business of the
Company; that the Employee has access to and knowledge of the Company’s business
and financial plans; that irreparable loss and damage will be suffered by the
Company should the Employee
breach any of such covenants and agreements; that each of such covenants and
agreements
is separate, distinct and severable not only from the other of such covenants
and agreements
but also from the other and remaining provisions of this Agreement; that the
unenforceability
of any such covenant or agreement shall not affect the validity or
enforceability of
any
other such covenant or agreements or any other provision or provisions of this
Agreement;
and that, in addition to other remedies available to it, the Company shall
be
entitled to
specific performance of this Agreement and to both temporary and permanent
injunctions to prevent a breach or contemplated breach by the Employee of any
of
such covenants or agreements.
8.
No
Set-Off.
The
existence of any claim, demand, action or cause of action by the Employee
against the Company, or any Affiliate of the Company, whether predicated upon
this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of any of
its
rights hereunder.
Unless otherwise set forth herein, the existence of any claim, demand, action
or
cause of
action
by the Company against the Employee, whether predicated upon this Agreement
or
otherwise,
shall not constitute a defense to the enforcement by the Employee of any of
his
rights hereunder.
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9.
Notice.
All
notices, requests, demands and other communications required hereunder shall
be
in writing
and shall be deemed to have been duly given if delivered or if mailed, by United
States certified
or registered mail, prepaid to the party to which the same is directed at the
following addresses (or at such other addresses as shall be given in writing
by
the parties to one another):
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If
to the Company:
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Oregano’s
Pizza Bistro, Inc.
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0000
Xxxx Xxxx Xxxx
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Xxxxxxxxxx,
XX 00000
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Attention:
President
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Telephone:
000-000-0000
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Facsimile:
000-000-0000
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If
to the Employee:
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Xxxx
X. Xxxxxxx
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c/o
Xxxx Xxxxxx, Esq.
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Xxxxxxx
& Bosco, P.A.
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0000
X. Xxxxxxxxx Xxxx
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Xxxxx
Xxxxx
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Xxxxxxx,
XX 00000
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Telephone:
000-000-0000
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Facsimile:
602-255-0103
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Notices
delivered in person shall be effective on the date of delivery. Notices
delivered by mail as aforesaid shall be effective upon the third calendar day
subsequent to the postmark date
thereof.
10.
Miscellaneous.
(a)
Assignment. Neither
this Agreement nor any right of the parties hereunder may be assigned
or delegated by any party hereto without the prior written consent of the other
party.
(b)
Waiver. The
waiver by the Company of any breach of this Agreement by the Employee
shall not be effective unless in writing, and no such waiver shall constitute
the waiver of
the
same or another breach on a subsequent occasion.
(c)
Arbitration. Any
controversy or claim arising out of or relating to this Agreement, or
the
breach thereof, shall be adjudicated through binding arbitration before a single
arbitrator in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(“AAA”)
in
Arizona with the Company bearing responsibility for the filing costs charged
by
the AAA for such arbitration. However the provisions of this Section will not
prevent the Company from
instituting an action in a court of law under this Agreement for specific
performance of this Agreement
or temporary or permanent injunctive relief as provided in Section 7 hereof.
The
parties
hereto agree that the exclusive venue for any such lawsuit will be Arizona
and
the Employee
consents to the exercise of personal jurisdiction of Arizona for the purposes
of
such lawsuit.
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Any
party
who desires to submit a claim to arbitration in accordance with this Section
shall file its demand for arbitration with AAA within thirty (30) days of the
event or incident giving
rise to the claim. A copy of said demand shall be served on the other party
in
accordance with
the
notice provisions in Section 9 of this Agreement. The parties agree that they
shall attempt
in good faith to select an arbitrator by mutual agreement within twenty (20)
days after the responding party’s receipt of the demand for arbitration. If the
parties do not agree on the selection
of an arbitrator within that timeframe, the selection shall be made pursuant
to
the rules from
the
panels of arbitrators maintained by the AAA. Any award rendered by the
arbitrator shall be
accompanied by a written opinion providing the reasons for the award. The
arbitrator’s award shall
be
final and non-appealable. Nothing in this Subsection shall prevent the parties
from settling
any dispute or controversy by mutual agreement at any time.
(d)
Applicable
Law.
This
Agreement shall be construed and enforced under and in accordance
with the laws of the State of Arizona (without regard to choice of law
provisions).
(e)
Entire
Agreement.
This
Agreement embodies the entire agreement of the parties hereto
relating to the subject matter hereof and supersedes all oral agreements, and
to
the extent inconsistent
with the terms hereof, all other written agreements.
(f)
Amendment.
This
Agreement may not be modified, amended, supplemented or terminated
except by a written instrument executed by the parties hereto.
(g)
Severability. Each
of
the covenants and agreements hereinabove contained shall be deemed
separate, severable and independent covenants, and in the event that any
covenant shall be
declared invalid by any court of competent jurisdiction, such invalidity shall
not in any manner
affect or impair the validity or enforceability of any other part or provision
of such covenant
or of any other covenant contained herein.
(h)
Captions
and Section Headings.
Except
as set forth in Section 1 hereof, captions and
section headings used herein are for convenience only and are not a part of
this
Agreement and
shall
not be used in construing it.
(i)
Counterparts.
This
Agreement may be executed in counterparts, each of which will
be
deemed to be an original hereof, but all of which together will constitute
one
and the same
instrument.
9
IN
WITNESS WHEREOF, the Company and the Employee have each executed and
delivered
this Agreement as of the date first shown above.
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THE
COMPANY:
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OREGANO’S
PIZZA BISTRO, INC.
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By:
/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx
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Title:
President
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THE
EMPLOYEE:
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By:
/s/ Xxxx X. Xxxxxxx
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Signature Page to the Employment Agreement -
