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EXHIBIT 10.5
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of
July 1, 1998, by and among Roma Restaurant Holdings, Inc. (formerly known as
Romacorp, Inc.), a Delaware corporation (the "Company"), and Xxxxxx X. Page
("Executive"). Certain definitions are set forth in SECTION 14 of this
Agreement.
The Company and Executive desire to enter into an agreement
(i) setting forth the terms pursuant to which the Company shall grant to
Executive an option to acquire certain shares of Common; (ii) setting forth the
terms and conditions of Executive's employment with the Company; and (iii)
setting forth the obligation of Executive to refrain from competing with the
Company and/or its Subsidiaries under certain circumstances as provided herein.
The parties hereto agree as follows:
STOCK AND OPTION PROVISIONS
1. [This Section intentionally omitted]
2. Stock Option.
(a) Grant of Option. Pursuant to the Plan, the Company hereby grants to
Executive a nonqualified stock option (the "Option") to purchase 11.11 shares
(the "Option Shares") of Common, at a price per share of $12,500.00 (the
"Exercise Price"). The Exercise Price and the number of Option Shares may be
adjusted as provided in the Plan. The Option is not intended to be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code.
(b) Executive Bound by Plan. Attached hereto as Annex A is a copy of
the Plan which is incorporated herein by reference and made a part hereof.
Executive hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all the terms and provisions thereof. The Plan should be carefully
examined before any decision is made to exercise the option.
(c) Exercisability. Subject to SECTION 2(F), the Option shall be
exercisable, in whole or in part, by written notice to the Company at any time,
and from time to time, during the period of time after the date hereof and prior
to the tenth anniversary of the date hereof or such earlier date upon which the
Option expires as specified herein or in the Plan. The Option may not be
exercised for a fraction of a share of Common. The Option is subject to
cancellation as provided in the Plan.
(d) Vesting of Option. The Option shall vest with respect to the Option
Shares as follows:
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(i) Time Option Shares. This Option shall vest with respect to
5.55 Option Shares subject to this Option (the "Time Option Shares") provided
the Executive remains continuously employed with the Company after the date
hereof and through and including the vesting dates described below as follows:
NUMBER OF TIME
VESTING DATE OPTION SHARES WHICH VEST
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The first anniversary of the date hereof 1.11
The last day of each of the first 48 months 0.0925
after the first anniversary of the date hereof
provided, that upon the closing of a Sale of the Company, this Option will
immediately vest with respect to all of the unvested Time Option Shares.
(ii) Performance Option Shares. This Option shall vest with
respect to 5.55 Option Shares (the "Performance Option Shares") upon the
attainment of certain goals described in this SECTION 2(d)(II). This Option
shall vest with respect to 1.85 Performance Option Shares as of the vesting
dates set forth below if (x) the Company's EBITDA (as defined below) for the
fiscal year ending on such vesting date equals at least the dollar amount set
forth opposite such vesting date (each a "Target EBITDA") and (y) the Executive
has been continuously employed with the Company from the date hereof through the
applicable vesting date:
VESTING DATES TARGET EBITDA
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Last day of fiscal year 1999 $18,468,000
Last day of fiscal year 2000 $20,011,000
Last day of fiscal year 2001 $23,455,000
Last day of fiscal year 2002 $27,545,000
; provided that the last day of fiscal year 2002 vesting date is provided only
for the purposes of vesting Performance Option Shares, if any, which do not vest
on the last day of fiscal year 2001 and in no event shall more than 5.55 Option
Shares vest pursuant to this Section 2(d)(ii).
The effective date of vesting shall be as set forth above even though EBITDA for
the applicable period may not be determined until a date thereafter.
In the event that the Company does not achieve the Target
EBITDA provided in the table above as of the last day of fiscal year 1999, the
last day of fiscal year 2000 and/or the last day of fiscal year 2001, the
portion of the Option which did not vest on any such date shall vest if the
actual EBITDA for the following fiscal year exceeds the Target EBITDA for such
following fiscal year by an amount greater than or equal to the shortfall in
Target EBITDA for the prior fiscal year.
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In the event that (a) the Company consummates any acquisition
of the capital stock or assets of another corporation in any given year or (b)
the Company commits to a one-time unusual capital expenditure, the Target EBITDA
for such year will be adjusted to account for the pro-forma and pro-rata EBITDA
impact of such acquired corporation or such capital expenditure, as the case may
be.
"EBITDA" means earnings before interest, income taxes,
depreciation, amortization, Sentinel Capital Partners, L.P.'s or one of its
affiliate's management fee and non-recurring charges.
(e) Early Expiration Upon Termination of Employment. Any portion of the
Option that has previously vested prior to or on the date Executive's employment
with the Company, Roma Restaurant Holdings, Inc. (the Company's parent) or the
Company's Subsidiaries terminates (the "Termination Date") for any reason other
than termination by the Company for Cause may be exercised by Executive within
30 days of the Termination Date. If Executive does not elect to exercise any
vested portion of the Option within 30 days of the Termination Date, such
portion shall expire and shall no longer be exercisable. If Executive elects to
exercise any portion of such Option within 30 days of the Termination Date, such
portion shall be immediately subject to the Repurchase Option pursuant to the
terms and conditions set forth in SECTION 3. If the Executive's employment is
terminated by the Company for Cause, the portion of the Option that is vested
but not yet exercised shall be forfeited.
(f) Procedure for Exercise. Executive may exercise all or a portion of
the Option by delivering written notice of exercise to the Company, together
with (i) written acknowledgment that Executive has read and has been afforded an
opportunity to ask questions of management of the Company regarding all
financial and other information provided to Executive regarding the Company and
(ii) payment in full by delivery of a cashier's or certified check in the amount
equal to the sum of (A) the Exercise Price multiplied by the number of shares of
Common to be acquired and (B) the amount, if any, of any additional federal and
state income taxes required to be withheld by reason of the exercise of the
Option. As a condition to the exercise of any part of the Option, Executive will
permit the Company to, and at the request of Executive the Company shall,
deliver to him all financial and other information regarding the Company and its
Subsidiaries which it believes necessary to enable Executive to make an informed
investment decision.
(g) Securities Laws Restrictions. Executive represents that when
Executive exercises the Option he will be purchasing Option Shares for
Executive's own account and not on behalf of others. Executive understands and
acknowledges that federal and state securities laws govern and restrict
Executive's right to offer, sell or otherwise dispose of any Option Shares
unless Executive's offer, sale or other disposition thereof is registered under
the Securities Act and state securities laws or, in the opinion of the Company'
counsel, such offer, sale or other disposition is exempt from registration
thereunder. Executive agrees that he will not offer, sell or otherwise dispose
of any Option Shares in any manner which would: (i) require the Company to file
any registration statement (or similar filing under state law) with the
Securities and Exchange Commission or to amend or supplement any such filing or
(ii) violate or cause the Company to violate the Securities Act, the rules and
regulations promulgated thereunder or any other state or federal law. Executive
further understands that the certificates for any Option Shares Executive
purchases will bear the legend set
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forth in SECTION 5 hereof or such other legends as the Company deems necessary
or desirable in connection with the Securities Act or other rules, regulations
or laws.
(h) Non-Transferability of the Option. The Option is personal to
Executive and is not transferable by Executive. Only Executive or Permitted
Transferees or their respective estates or heirs are entitled to exercise the
Option.
(i) Effect of Transfers in Violation of Agreement. The Company will not
be required (i) to transfer on its books any Option Shares which have been sold
or transferred in violation of any of the provisions set forth in this
Agreement, or (ii) to treat as owner of such shares, to accord the right to vote
as such owner or to pay dividends to any transferee to whom such shares have
been transferred in violation of this Agreement.
(j) Delivery of Shares. The date on which Executive has delivered to
the Company the items required under SECTION 2(f) is referred to herein as
Executive's "Exercise Date". Certificates for Option Shares purchased upon
exercise of the Option shall be delivered by the Company to Executive within
five business days after Executive's Exercise Date.
(k) Date of Issuance. The Option Shares issuable upon the exercise of
the Option shall be deemed to have been issued to Executive on Executive's
Exercise Date, and Executive shall be deemed for all purposes to have become the
record holder of such Option Shares on Executive's Exercise Date.
(l) Fully Paid. The issuance of certificates for Option Shares upon
exercise of the Option shall be made without charge to Executive for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise. Each Option Share issuable upon exercise of the
Option shall, upon payment of the exercise price therefor, be fully paid and
nonassessable and free from all liens and charges with respect to the issuance
thereof.
(m) Book Transfer. The Company shall not close its books against the
transfer of any Option Shares issued or issuable upon the exercise of the Option
in any manner which interferes with the timely exercise of the Option.
(n) Filings. The Company shall assist and cooperate with Executive to
make any required governmental filings or obtain any governmental approvals
prior to or in connection with any exercise of the Option.
(o) Reservation. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common solely for the
purpose of issuance upon the exercise of the Option, such number of shares of
Common as are issuable upon the exercise of all outstanding Options. All Option
Shares which are so issuable shall, when issued, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges. The
Company shall take all such actions as may be necessary to assure that all such
Option Shares may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
or market upon which shares of Common may be listed (except for official notice
of issuance which shall be immediately delivered by the Company upon each such
issuance).
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3. Repurchase Option.
(a) Repurchase Option. In the event that Executive is no longer
employed by the Company or any of its Subsidiaries for any reason, the Executive
Securities, whether held by Executive, or one or more Permitted Transferees,
will be subject to repurchase by the Company and the Investors pursuant to the
terms and conditions set forth in this SECTION 3 (the "Repurchase Option").
(b) Termination for Reasons Other than for Cause. If the Executive's
employment with the Company or any of its Subsidiaries is terminated for any
reason other than for Cause, then within one year after the Termination Date,
the Company may elect to purchase all or some of 50% of the Executive Securities
(other than the Option Shares) and 100% of the Option Shares (collectively, the
"Eligible Stock"), at a price per share equal to the Fair Market Value thereof
(x) as determined on the Termination Date, if the Repurchase Notice (as defined
in SECTION 3(D) below) has been delivered within three months after the
Termination Date, or (y) as determined as of a date determined by the Board
within 30 days prior to the delivery of the Repurchase Notice, if the Repurchase
Notice is delivered after the third month following the Termination Date;
provided that if Executive terminates his employment and violates SECTIONS 10,
11 OR 12, the repurchase price for each share of Eligible Stock shall be equal
to the lesser of its Fair Market Value or the Original Value thereof.
(c) Termination for Cause. If Executive is no longer employed by the
Company or any of its Subsidiaries as a result of Executive's termination for
Cause, then within one year after the Termination Date, the Company may elect to
purchase all or any portion of the Executive Securities (collectively, the
"Available Stock"), at a price per share equal to the lower of the Fair Market
Value thereof and the Original Value thereof.
(d) Repurchase Procedures. The Company may elect to exercise the right
to purchase all or any portion of the Eligible Stock or the Available Stock, as
the case may be, by delivering written notice (the "Repurchase Notice") to the
holder or holders of such Executive Securities. The Repurchase Notice will set
forth the number of shares of Executive Securities to be acquired from such
holder(s), the aggregate consideration to be paid for such shares and the time
and place for the closing of the transaction. If any shares of Executive
Securities are held by Permitted Transferees of Executive, the Company shall
purchase the shares elected to be purchased from such holder(s) of shares of
Executive Securities pro rata according to the number of shares of Executive
Securities held by such holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share).
(e) Investors' Rights.
(i) If for any reason the Company does not elect to purchase
all of the Eligible Stock or the Available Stock, as the case may be, prior to
the 90th day following the Termination Date, Sentinel and then in certain
circumstances, each Investor will be entitled to exercise the Repurchase Option,
in the manner set forth in SECTION 3(d), for the Eligible Stock or the Available
Stock, as the case may be, that the Company has not elected to purchase (the
"Available Shares"). As soon as practicable, but in any event within thirty (30)
days after the Company determines that
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there will be Available Shares, the Company will deliver written notice (the
"Option Notice") to all Investors setting forth the number of Available Shares
and the price for each Available Share.
(ii) Sentinel will be permitted to purchase all or some of the
number (the "Sentinel Portion") of Available Shares equal to the product of (A)
Sentinel's Pro Rata Share and (B) the number of Available Shares, by delivering
written notice to the Company and the other Investors within 30 days after
receipt of the Option Notice from the Company (such 30-day period being referred
to herein as the "Sentinel Election Period"). The quotient determined by
dividing (x) the number of shares of Available Shares elected to be purchased by
Sentinel and (y) the Sentinel Portion, shall be referred to as the "Sentinel
Percentage." If Sentinel elects to purchase any of the Available Shares, each of
the other Investors shall be permitted to purchase all or some of the number of
Available Shares equal to the product of (m) the Sentinel Percentage, (n) such
Investor's Pro Rata Share and (o) the number of Available Shares, by delivering
written notice to the Company within 30 days after receipt of the Option Notice
from the Company.
(f) Closing. The closing of the transactions contemplated by this
SECTION 3 will take place on the date designated by the Company in the
Repurchase Notice, which date will not be more than 90 days after the delivery
of such notice. The Company and/or the Investors, as the case may be, will pay
for the Executive Securities to be purchased pursuant to the Repurchase Option
by delivery of, in the case of an Investor, a check payable to the holder of
Executive Securities, and in the case of the Company (i) a check payable to the
holder of such Executive Securities, (ii) a note or notes payable in three equal
annual installments beginning on the first anniversary of the closing of such
purchase and bearing interest (payable quarterly) at a rate per annum equal to
10% or (iii) both (i) and (ii) in the aggregate amount of the purchase price for
such shares (which note will also become due upon a Change of Ownership). The
Company and/or the Investors, as the case may be, will receive customary
representations and warranties from Executive regarding the sale of the
Executive Securities, including but not limited to the representation that
Executive has good and marketable title to the Executive Securities to be
transferred free and clear of all liens, claims and other encumbrances.
(g) Restrictions on Repurchase. Notwithstanding anything to the
contrary contained in this Agreement, all repurchases of Executive Securities by
the Company shall be subject to applicable restrictions contained in the
Delaware General Corporation Law and in the Company's and its Subsidiaries' debt
and equity financing agreements. If any such restrictions prohibit the
repurchase of Executive Securities hereunder which the Company is otherwise
entitled or required to make, the Company may make such repurchases as soon as
it is permitted to do so under such restrictions.
(h) Termination of Repurchase Right. The right of the Company and the
Investors to repurchase Executive Securities pursuant to this SECTION 3 shall
terminate upon the first to occur of an Sale of the Company or a Qualified
Public Offering.
4. Stockholders Agreement. The parties hereto acknowledge that the shares of
Executive Securities are subject to the terms and conditions of the Stockholders
Agreement and such shares shall be deemed to be "Company Shares" and the
Executive shall be deemed to be a "Stockholder" for all purposes of the
Stockholders Agreement.
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5. Restrictions on Transfer.
(a) The certificates representing the Executive Securities shall bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON , 1998, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET
FORTH IN A MANAGEMENT AGREEMENT AMONG ROMA RESTAURANT HOLDINGS, INC.
(THE "COMPANY") AND EXECUTIVE DATED AS OF JULY 1, 1998, AS AMENDED AND
MODIFIED FROM TIME TO TIME. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) No holder of Executive Securities may sell, transfer or dispose of
any Executive Securities (except pursuant to an effective registration statement
under the Securities Act) without first delivering to the Company an opinion of
counsel (reasonably acceptable in form and substance to the Company) that
neither registration nor qualification under the Securities Act and applicable
state securities laws is required in connection with such transfer.
EMPLOYMENT PROVISIONS
6. Employment. The Company shall employ Executive, and Executive hereby accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof and ending as provided in
SECTION 9 hereof (the "Employment Period").
7. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Chief
Executive Officer of the Company and shall have the normal duties,
responsibilities and authority of the Chief Executive Officer, subject to the
power of the Board to expand or limit such duties, responsibilities and
authority and to override actions of the President.
(b) Executive shall report to the Board, and Executive shall devote his
best efforts and substantially all of his business time and attention (except
for permitted vacation periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
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(c) In addition, Executive shall be responsible for (i) providing
assistance to the Company in maintaining all of the Company's relationships with
its customers and suppliers, and (ii) assisting the Company in the evaluation of
new business opportunities.
8. Base Salary; Benefits and Bonuses.
(a) During the Employment Period, Executive's base salary shall be
$200,000 per annum or such higher rate as the Board may designate from time to
time (the "Base Salary"), which salary shall be payable in regular installments
in accordance with the Company's general payroll practices and shall be subject
to customary withholding. In addition, during the Employment Period, Executive
shall be entitled to participate in all of the Company's employee benefit
programs for which senior executive employees of the Company and its
Subsidiaries are generally eligible, including, but not limited to the Company's
group medical coverage program, and Executive shall be eligible for paid
vacation in accordance with the policies of the Company.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, the Board shall award a bonus to
Executive following the end of each fiscal year equal to up to 50% of the
Executive's Base Salary based upon performance, determined at the discretion of
the Board. It is anticipated that in any given fiscal year if the Company were
to just meet the performance goals contained in the Company's management plan,
the bonus awarded under this SECTION 8(c) would be approximately 25% of the
Executive's Base Salary.
9. Term; Termination.
(a) The Employment Period shall end on the third annual anniversary of
the date hereof; provided that (i) the Employment Period shall terminate prior
to such date upon Executive's death, resignation or Disability; (ii) the
Employment Period may be terminated by the Company at any time prior to such
date for Cause or without Cause; (iii) the Employment Period may be terminated
by Executive at any time for any reason (a "Voluntary Termination"); and (iv)
unless each party is notified in writing within 30 days before the third annual
anniversary of the date hereof or the end of a Renewal Period, the Employment
Period shall automatically be extended for additional one year periods (each
such period, a "Renewal Period").
(b) Upon (1) a Voluntary Termination of the employment relationship by
Executive other than within 10 days of a Good Reason Event or (2) termination of
the Executive's employment relationship by the Company for Cause, prior to the
end of the Employment Period (the "Term"), all future compensation or bonuses to
which Executive would otherwise be entitled and all future benefits for which
Executive would otherwise be eligible shall cease and terminate as of the date
of such termination; provided, however, that any salary, bonus, incentive
payment, deferred compensation or other compensation or benefit which has been
earned by or accrued for the benefit
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of Executive prior to the date of termination shall not be forfeited and shall
be paid to Executive promptly.
(c) Upon a termination of Executive's employment prior to the end of
the Term other than (i) a termination by the Company for Cause or (ii) a
Voluntary Termination of the employment relationship by Executive other than
within 10 days of a Good Reason Event, the Executive shall be entitled, in
consideration of Executive's continuing obligations hereunder after such
termination (including, without limitation, Executive's non-competition
obligations), to receive his Base Salary, payable bi-weekly, and fringe
benefits, as if Executive's employment (which shall cease on the date of such
termination) had continued for the twelve (12) months following termination;
provided, that in the event Executive's employment is terminated for the reasons
set forth in clauses (i) or (ii) above, Executive shall be required to use his
reasonable best efforts to obtain, as expeditiously as possible, employment with
at least comparable salary and responsibilities commensurate with those set
forth herein. In such event, Executive's right to receive the amounts and
benefits set forth in this SECTION 9(c) shall terminate. Notwithstanding the
foregoing, if Executive obtains employment in accordance with this SECTION 9(c)
and the salary to be paid to Executive is less than the Base Salary, the Company
shall pay to Executive an amount equal to such deficiency, payable bi-weekly,
for the remainder of the severance period.
MISCELLANEOUS PROVISIONS
10. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries (including those obtained while employed by the Company prior to
the date of this Agreement) concerning the business or affairs of the Company or
any of its Subsidiaries ("Confidential Information") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that he shall not
disclose to any unauthorized person or use for his own purposes any Confidential
Information without the prior written consent of the Board, unless and to the
extent that (i) such information was otherwise available to Executive from a
source other than the Company and (ii) the aforementioned matters become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions. Executive shall deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or the
business of the Company or any Subsidiary which he may then possess or have
under his control.
11. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) which
relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company and its Subsidiaries ("Work Product") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
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12. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of his employment
with the Company prior to the date of this Agreement he has become familiar, and
during his continued employment with the Company he shall become familiar, with
the Company's trade secrets and with other Confidential Information concerning
the Company and its Subsidiaries and that his services have been and shall be of
special, unique and extraordinary value to the Company and its Subsidiaries.
Therefore, Executive agrees that, during the period commencing on the date
hereof and ending on the third anniversary of the termination of the Employment
Period (including any Renewal Period) (the "Noncompete Period"), he shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with, or render services for, any Person that is in the casual dining
rib restaurant business in the United States. Nothing herein shall prohibit
Executive from being a passive owner of not more than 5% of the outstanding
stock of any class of a corporation which is publicly traded, so long as
Executive has no active participation in the business of such corporation.
(b) During the Noncompete Period, Executive shall not directly, or
indirectly through another entity, (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary (including, without
limitation, making any negative statements or communications about the Company
or its Subsidiaries).
13. Enforcement. If, at the time of enforcement of SECTIONS 10, 11 OR 12 of this
Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information and Work
Product, the parties hereto agree that money damages would not be an adequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security). In addition, in
the event of an alleged breach or violation by Executive of SECTION 12, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in SECTION 12 are
reasonable.
14. Definitions. All references to a fiscal year refer to the Company's fiscal
year.
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by, or under common control with such Person. For
purposes of this Agreement, the term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"
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as used with respect to any Person) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person whether through ownership of voting securities, by
contract or otherwise.
"Board" means the board of directors of the Company.
"Cause" means (i) the continued failure by Executive to
perform duties described under SECTION 7 hereof (which failure is not cured
within 5 days following notice from the Board), (ii) gross negligence (which is
not cured within 5 days after notice from the Board) or willful misconduct by
Executive in the performance of his duties or (iii) Executive's commission of a
felony or other offense involving moral turpitude.
"Change of Ownership" is any event pursuant to which (i) any
Person together with such Person's Affiliates (other than the Investors and
their Affiliates) collectively own at least 50% of the aggregate number of
shares of Common outstanding at any given time, and (ii) the Investors and their
Affiliates collectively cease to own at least 50% of the aggregate number of
shares of Common that they own on the date hereof (as adjusted for stock splits,
stock dividends and recapitalization and for exchanges in connection with a
merger, consolidation, reorganization or sale).
"Closing" means the closing of the transactions contemplated
by the Recapitalization Agreement.
"Common" means the Company's Common Stock, par value $.01 per
share.
"Disability" means Executive's inability, due to illness,
accident, injury, physical or mental incapacity or other disability, to carry
out effectively his duties and obligations to the Company or to participate
effectively and actively in the management of the Company for a period of at
least 90 consecutive days or for shorter periods aggregating 14 days (whether or
not consecutive) during each three month period for not less than six months, as
determined by an independent physician.
"Executive Securities" means (i) the Option Shares which are
issued and outstanding from time to time, (ii) any other shares of Common
otherwise issued to, acquired by or held by Executive and (iii) shares of the
Company's capital stock issued with respect to the securities specified in
clauses (i) or (ii) above by way of a stock split, stock dividend or other
recapitalization; provided that Executive Securities shall continue to be
Executive Securities in the hands of any holder other than Executive (except for
the Company and the Investors and except for transferees in a Public Sale), and
except as otherwise provided herein, each such other holder of Executive
Securities shall succeed to all rights and obligations attributable to Executive
as a holder of Executive Securities hereunder.
"Fair Market Value" of each Option Share or share of Executive
Securities, as the case may be, means the market value as determined in good
faith mutually by the Board and Executive; provided that if the parties cannot
agree within 30 days, the Fair Market Value will be
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decided by a mutually acceptable independent investment bank, whose
determination will be final and binding.
"Family Group" means Executive's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants.
"Good Reason Event" means:
(a) Notwithstanding the exercise of the power granted
to the Company and the Board by the concluding clause of
SECTION 7(a) hereof, the assignment to the Employee of any
duties inconsistent in any material respect with Employee's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities initially
assigned to Executive and as contemplated by SECTION 7 of this
Agreement, or any other action that results in a diminution in
such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith that is remedied
within 10 days after receipt of written notice thereof from
the Employee to the Company; or
(b) Any failure by the Company to comply with any of
the provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith that is remedied within 10 days after receipt of written
notice thereof from the Employee to the Company.
"Investor Shares" means (i) any Common acquired by the
Investors, and (ii) any equity securities of the Company issued or issuable
directly or indirectly with respect to the securities referred to in clause (i)
above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; provided that Investor Shares shall not include (a) shares of
Common issued pursuant to the conversion or exercise of any options, warrants or
other convertible securities or (b) any equity securities of the Company issued
or issuable with respect to the securities referred to in clause (a) above in
connection with a combination or split of shares, recapitalization, merger,
consolidation or other reorganization.
"Investors" means the parties listed on Schedule 1 attached
hereto, provided that if a party who is an employee of the Company as of the
date hereof or becomes an employee of the Company at any time after the date
hereof ceases to be an employee of the Company hereafter or thereafter, such
party shall be deemed to have been removed from the Schedule and shall no longer
be deemed an Investor for purposes of this Agreement.
"Option Shares" means, collectively, the Time Option Shares
and the Performance Option Shares.
"Original Value" means with respect to each Option Share, the
exercise price paid for such Option Share (each as proportionally adjusted for
all stock splits, stock dividends and other recapitalizations subsequent to the
date hereof).
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"Permitted Transferee" has the meaning set forth in the
Stockholders Agreement.
"Person" means any natural person, corporation, partnership,
limited liability company, trust, unincorporated organization or other entity.
"Plan" means that certain Roma Restaurant Holdings, Inc. 1998
Stock Option Plan.
"Pro Rata Share" means, with respect to each Investor, the
quotient determined by dividing (i) the total number of Investor Shares held by
such Investor, by (ii) the total number of Investor Shares held by all
Investors.
"Public Sale" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" has the meaning set forth in the
Stockholders Agreement.
"Recapitalization Agreement" means that certain
Recapitalization Agreement, dated as of April 24, 1998, by and among the Company
and certain other parties thereto, as amended.
"Sale of the Company" means the first to occur of any
transaction (i) following which there has been a Change of Ownership, or (ii)
involving the sale of substantially all of the Company's assets determined on a
consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Sentinel" means Sentinel Capital Partners, L.P., a Delaware
limited partnership.
"Stockholders Agreement" means that certain Stockholders
Agreement dated as of the date hereof, by and among the Company and the
Company's stockholders.
"Subsidiary" means any corporation, partnership, association
or other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by the
Company or (ii) if a partnership, association or other business entity, a
majority of the partnership or other similar ownership interests thereof is at
the time owned or controlled, directly or indirectly, by the Company. For
purposes hereof, the Company shall be deemed to have a majority ownership
interest in a partnership, association or other business entity if the Company,
directly or indirectly, is allocated a majority of partnership, association, or
other business entity gains or losses, or is or controls the managing director
or general partner (or Person having like authority) of such partnership,
association or other business entity.
"Termination Date" has the meaning set forth in Section 2(e).
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15. Notices. Any notice provided for in this Agreement must be in writing and
must be either personally delivered, mailed by first class mail (postage prepaid
and return receipt requested) or sent by reputable overnight courier service
(charges prepaid) to the Investors at the addresses indicated in the Company's
records and to the other recipients at the address indicated below:
If to Executive: Xxxxxx Xxxx
0000 Xxxxxxx
Xxxxx, XX 00000
If to the Company: Roma Restaurant Holdings, Inc.
c/o Sentinel Capital Partners, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Xxxx X. XxXxxxxxx
Xxxx X. Xxxxxx
with a copy to: Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx, Esquire
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Xxxxx Xxxxx
Romacorp, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
16. General Provisions.
(a) Executive Acknowledgment. The Executive acknowledges that he/she
shall not be entitled to any salary, bonuses, benefits or options granted
hereunder unless and until the stockholders of the Company approve such rights
in compliance with the requirements of Section 280G(b) (5)(B) of the Internal
Revenue Code and proposed Treasury Regulation Section 1.280G-1, Q&A 7.
(b) Transfers in Violation of Agreement. Any transfer or attempted
transfer of any Executive Securities in violation of any provision of this
Agreement shall be void, and the Company
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shall not record such transfer on its books or treat any purported transferee of
such Executive Securities as the owner of such stock for any purpose.
(c) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Securities); provided that
the rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive
Securities hereunder.
(g) Choice of Law. The corporate law of the State of Delaware shall
govern all questions concerning the relative rights of the Company, Executive
and the Investors. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of New York, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
(h) Remedies. Each of the parties to this Agreement (including the
Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
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(i) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive. The provisions of SECTION 3 may be amended and waived only with the
prior written consent of the Investors.
(j) Third-Party Beneficiaries. The parties hereto acknowledge and agree
that the Investors are third party beneficiaries of this Agreement. This
Agreement will inure to the benefit of and be enforceable by the Investors and
their successors and assigns.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
ROMA RESTAURANT HOLDINGS,
INC.
By:
--------------------------
Its:
--------------------------
-----------------------------
Xxxxxx X. Page
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SCHEDULE 1
Sentinel Capital Partners, L.P.
Sentinel Capital Partners II, L.P.
Omega Partners, L.P.
The Provident Bank
Travelers Casualty and Surety Company
The Travelers Insurance Company
The Travelers Life and Annuity Company
The Phoenix Insurance Company
NPC Restaurant Holdings, Inc.
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