As filed with the Securities and Exchange Commission on October 1, 2004
Registration No. 333-115259
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 7
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
TEXAS ROADHOUSE, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 5812 | 20-1083890 | ||
|
(State or Other Jurisdiction of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
6040 Dutchmans Lane, Suite 400
Louisville, Kentucky 40205
(502) 426-9984
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
G.J. Hart
Chief Executive Officer
Texas Roadhouse, Inc.
6040 Dutchmans Lane, Suite 400
Louisville, Kentucky 40205
(502) 426-9984
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
| Copies to: | ||
|
William G. Strench
James A. Giesel Frost Brown Todd LLC 400 West Market Street, Suite 3200 Louisville, Kentucky 40202 |
Christopher C. Paci
John P. Berkery Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022-6069 |
|
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table shows the costs and expenses, other than underwriting discounts and commissions, payable in connection with the sale and distribution of the securities being registered. The registrant will pay all of these amounts. All amounts except the SEC registration fee are estimated.
| SEC Registration Fee | $ | 29,141 | |
| Accounting Fees and Expenses | 300,000 | ||
| Legal Fees and Expenses (excluding Blue Sky) | 475,000 | ||
| Printing and Engraving Fees and Expenses | 300,000 | ||
| Blue Sky Fees and Expenses | 20,000 | ||
| Transfer Agent and Registrar Fees and Expenses | 20,000 | ||
| Nasdaq National Market Listing Fee | 125,000 | ||
| NASD Filing Fee | 23,500 | ||
| Director and Officer Liability Insurance | 500,000 | ||
| Miscellaneous | 207,359 | ||
|
|
|||
| Total | $ | 2,000,000 | |
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law permits a corporation to include in its charter documents, and in agreements between the corporation and its directors and officers, provisions expanding the scope of indemnification beyond that specifically provided by the current law.
The Certificate of Incorporation and Bylaws of the registrant provide that the registrant shall indemnify our directors and officers, and may indemnify its employees and agents, to the fullest extent permitted by Delaware law.
Section 102(b)(7) of the Delaware General Corporation Law permits corporations to eliminate or limit the personal liability of their directors by adding to the certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director for (a) any breach of any director's duty of loyalty to the corporation or its stockholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) payment of dividends or repurchases or redemptions of stock other than from lawfully available funds, or (d) any transaction from which the director derived an improper personal benefit.
Article VI of the registrant's Certificate of Incorporation provides that:
"[n]o director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or limit the liability of a director (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (c) under Section 174 of the General Corporation Law of the State of Delaware; or (d) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of the State of Delaware shall be amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended. Any repeal or modification of
II-1
this Article VI by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omission occurring prior to, such repeal or modification."
In addition, the registrant intends to enter into indemnification agreements with each of its directors and executive officers. These indemnification agreements will provide for the indemnification of directors and executive officers of the registrant to the fullest extent permitted by Delaware law, whether or not expressly provided for in our Bylaws, and set forth the process by which claims for indemnification are considered.
Reference is also made to Section 8 of the Underwriting Agreement contained in Exhibit 1.1 hereto, indemnifying officers and directors against certain liabilities.
Item 15. Recent Sales of Unregistered Securities
Except as set forth below, in the three years preceding the filing of this registration statement, the registrant has not issued any securities that were not registered under the Securities Act.
In May 2004, upon the incorporation of the registrant, the registrant issued 1,000 shares of Class A common stock to W. Kent Taylor in exchange for $1,000.
In May 2004, the registrant issued 150,000 shares of Class A common stock and 2,217,000 shares of Class B common stock to Mr. Taylor in connection with the merger of WKT Restaurant Corp. into the registrant. The registrant cancelled Mr. Taylor's initial 1,000 shares of Class A common stock upon the consummation of this merger.
In September 2004, the registrant issued 28,125 shares of Class A common stock and 415,688 shares of Class B common stock as share dividends.
Upon the consummation of the acquisitions, which will take place immediately before the closing of the offering contemplated by this registration statement:
The foregoing sales of securities were made, or will be made, in reliance upon the exemption from the registration provisions of the Securities Act provided for by Section 4(2) thereof for transactions not involving a public offering or with respect to the stock dividends, on the basis that no "sale" of securities occurred for purposes of the Act. All of the foregoing securities are deemed restricted securities for the purposes of the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
The Exhibit Index filed herewith is incorporated herein by reference.
None.
II-2
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-3
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Louisville, Commonwealth of Kentucky, on October 1, 2004.
| TEXAS ROADHOUSE, INC. | ||||
|
|
|
By: |
|
/s/ G. J. HART G. J. Hart Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities on October 1, 2004.
|
Signature
|
Title
|
|
|---|---|---|
|
|
|
|
|
*
W. Kent Taylor |
Chairman of the Company and Board | |
|
/s/ G. J. HART G. J. Hart |
|
Chief Executive Officer (Principal Executive Officer) |
|
* Scott M. Colosi |
|
Chief Financial Officer (Principal Financial Officer) |
|
* Tonya Robinson |
|
Controller (Principal Accounting Officer) |
| By: |
/s/
G. J. HART
G. J. Hart Attorney-in-Fact |
II-4
|
Exhibit No.
|
Description
|
|
|---|---|---|
|
|
|
|
|
1.1 |
|
Form of Underwriting Agreement. |
|
3.1 |
|
Certificate of Incorporation of the Registrant.** |
|
3.2 |
|
Form of Amended and Restated Certificate of Incorporation of Registrant to be filed prior to the closing of the Offering. |
|
3.3 |
|
Bylaws of the Registrant.** |
|
4.1 |
|
Master Transaction Agreement, dated as of May 7, 2004, among Registrant and others |
|
4.2 |
|
Form of specimen certificate representing Class A common stock of Registrant. |
|
4.3 |
|
Registration Rights Agreement, dated as of May 7, 2004, among Registrant and others. |
|
5.1 |
|
Opinion of Frost Brown Todd LLC as to the legality of the securities being registered. |
|
10.1 |
|
Amended and Restated Office Lease Agreement (One Paragon Centre), dated as of August 15, 2003, by and between Paragon Centre Associates, LLC and Texas Roadhouse Holdings LLC, as amended.** |
|
10.2 |
|
Amended and Restated Office Lease Agreement (Two Paragon Centre), dated as of August 15, 2003, by and between Paragon Centre Associates, LLC and Texas Roadhouse Holdings LLC, as amended.** |
|
10.3 |
|
Credit Agreement, dated as of July 16, 2003 among Texas Roadhouse Holdings LLC, Bank of America, N.A., for itself as a lender and as an agent for the benefit of the other lenders, Bank of America Securities LLC, as Co-Lead Arranger for the lenders and itself as a lender, and National City Bank of Kentucky, as Co-Lead Arranger and as Syndication Agent, and the other financial institutions as lenders.** |
|
10.4 |
|
Employment Agreement between Registrant and G.J. Hart. |
|
10.5 |
|
Employment Agreement between Registrant and Scott M. Colosi. |
|
10.6 |
|
Employment Agreement between Registrant and Steven L. Ortiz. |
|
10.7 |
|
Employment Agreement between Registrant and W. Kent Taylor. |
|
10.8 |
|
Employment Agreement between Registrant and Sheila C. Brown. |
|
10.9 |
|
Form of Director and Executive Officer Indemnification Agreement. |
|
10.10 |
|
Form of Limited Partnership Agreement and Operating Agreement for company-managed Texas Roadhouse restaurants, including schedule of the owners of such restaurants and the interests held by directors, executive officers and 5% stockholders who are parties to such an agreement.** |
|
10.11 |
|
2004 Equity Incentive Plan. |
|
10.12 |
|
Lease Agreement dated as of April 1, 1997, by and between Texas Roadhouse of Elizabethtown, LLC and Texas Roadhouse Holdings LLC** |
|
10.13 |
|
Lease Agreement dated as of November 1999, by and between TEAS II, LLC and Texas Roadhouse Holdings LLC** |
|
10.14 |
|
Form of Franchise Agreement and Preliminary Agreement for a Texas Roadhouse Restaurant Franchise, including schedule of directors, executive officers and 5% stockholders which have entered into either agreement.** |
|
21.1 |
|
List of Subsidiaries. |
|
23.1 |
|
Consent of Frost Brown Todd LLC (included in Exhibit 5.1). |
|
23.2 |
|
Consent of KPMG LLP.** |
|
24.1 |
|
Power of Attorney (included on signature page).** |
|
99.1 |
|
Consent of James R. Ramsey** |
|
99.2 |
|
Consent of James R. Zarley** |
|
99.3 |
|
Consent of Martin T. Hart** |
|
99.4 |
|
Consent of James F. Parker** |
Exhibit 1.1
TEXAS ROADHOUSE, INC.
[___] Shares
Class A Common Stock
UNDERWRITING AGREEMENT
dated [___], 2004
BANC OF AMERICA SECURITIES LLC
WACHOVIA CAPITAL MARKETS, LLC
RBC CAPITAL MARKETS CORPORATION
SG COWEN & CO., LLC
UNDERWRITING AGREEMENT
[Date]
Banc of America Securities LLC
As Lead Representative of the several Underwriters
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
SG Cowen & Co., LLC
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, NY 10019
Ladies and Gentlemen:
INTRODUCTORY. Texas Roadhouse, Inc., a Delaware corporation (the "COMPANY"), proposes to issue and sell to the several underwriters named in Schedule A hereto (the "UNDERWRITERS") an aggregate of [___] shares of its Class A Common Stock, par value $0.001 per share (the "CLASS A COMMON STOCK"); and W. Kent Taylor, the founder of the Company (the "PRIMARY SELLING STOCKHOLDER"), proposes to sell to the Underwriters an aggregate of [___] shares of Class A Common Stock. The [___] shares of Class A Common Stock to be sold by the Company and the [___] shares of Class A Common Stock to be sold by the Primary Selling Stockholder are collectively called the "FIRM COMMON SHARES". In addition, certain other selling stockholders set forth in Schedule B hereto (the "SECONDARY SELLING SHAREHOLDERS" and together with the Primary Selling Stockholder, the "SELLING STOCKHOLDERS") have granted to the Underwriters an option to purchase up to an additional [___] shares of Class A Common Stock up to the amount set forth opposite the Selling Stockholder's name in Schedule B, all as provided in Section 2. The additional [___] shares of Class A Common Stock to be sold by the Selling Stockholders pursuant to such option are collectively called the "OPTIONAL COMMON SHARES". The Firm Common Shares and, if and to the extent such option is exercised, the Optional Common Shares are collectively called the "COMMON SHARES". Banc of America Securities LLC ("BAS"), Wachovia Capital Markets, LLC, RBC Capital Markets Corporation, and SG Cowen & Co., LLC have agreed to act as representatives of the several Underwriters (in such capacity, the "REPRESENTATIVES" and BAS in such capacity, the "LEAD REPRESENTATIVE") in connection with the offering and sale of the Common Shares. The Class A Common Stock and the Company's Class B Common Stock, par value $0.001 per share (the "CLASS B COMMON STOCK") are referred to herein as the "COMMON STOCK".
The Company and the Underwriters agree that up to [___] of the Firm Common Shares to be purchased by the Underwriters (the "DIRECTED SHARES") shall be reserved for sale by the Underwriters to certain eligible directors, officers and employees of the Company and the TR Entities (as defined below) and persons having business relationships with the Company and the TR Entities (collectively, the "PARTICIPANTS"), as part of the distribution of the Common Shares by the Underwriters (the "DIRECTED SHARE PROGRAM") subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the National Association of Securities Dealers, Inc. (the "NASD") and all other applicable laws, rules and regulations. BAS (in such capacity, the "DESIGNATED UNDERWRITER") has been selected by the Company to process the sales to the Participants under the Directed Share Program. To the extent that such Directed Shares are not orally confirmed for purchase by the Participants by the end of the first business day after the date of this Agreement, such Directed Shares may be offered to the public as part of the public offering contemplated hereby.
The Company has prepared and filed with the Securities and Exchange Commission (the "COMMISSION") a registration statement on Form S-1 (File No. 333-115259), which contains a form of prospectus to be used in connection with the public offering and sale of the Common Shares. Such registration statement, as amended, including the financial statements, exhibits and schedules thereto, in the form in which it was declared effective by the Commission under the Securities Act of 1933 and the rules and regulations promulgated thereunder (collectively, the "SECURITIES ACT"), including any information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act, is called the "REGISTRATION STATEMENT". Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the "RULE 462(b) REGISTRATION STATEMENT", and from and after the date and time of filing of the Rule 462(b) Registration Statement the term "Registration Statement" shall include the Rule 462(b) Registration Statement. Such prospectus, in the form first used by the Underwriters to confirm sales of the Common Shares, is called the "PROSPECTUS"; PROVIDED, HOWEVER, if the Company has, with the consent of BAS, elected to rely upon Rule 434 under the Securities Act, the term "Prospectus" shall mean the Company's prospectus subject to completion (each, a "PRELIMINARY PROSPECTUS") dated [___] (such preliminary prospectus is called the "RULE 434 PRELIMINARY PROSPECTUS"), together with the applicable term sheet (the "TERM SHEET") prepared and filed by the Company with the Commission under Rules 434 and 424(b) under the Securities Act and all references in this Agreement to the date of the Prospectus shall mean the date of the Term Sheet. All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System ("EDGAR").
The Company and the Selling Stockholders hereby confirm their engagement of SG Cowen & Co., LLC as, and SG Cowen & Co., LLC hereby confirms its agreement with the Company and the Selling Stockholders to render services as, a "qualified independent underwriter", within the meaning of Section (b)(15) of Rule 2720 of the NASD with respect to the offering and sale of the Shares. SG Cowen & Co., LLC, solely in its capacity as the qualified independent underwriter and not otherwise, is referred to herein as the "QIU". The price at which the Shares will be sold to the public shall not be higher than the maximum price recommended by the QIU.
As described in more detail in the Prospectus, immediately prior to the sale of the Common Shares to the Underwriters as contemplated by this Agreement, the Company and the TR Entities will undertake a corporate reorganization whereby:
(i) pursuant to the Master Transaction Agreement dated as of May 7, 2004 (the "MASTER TRANSACTION AGREEMENT") among the Company Texas Roadhouse Management Corp. ("TR MANAGEMENT"), Texas Roadhouse Holdings LLC ("TR HOLDINGS"), Texas Roadhouse Development Corporation ("TR DEVELOPMENT"), each of the other entities identified in the Master Transaction Agreement that own a direct interest in TR Holdings (the "TR HOLDING COMPANIES") or a direct interest in an entity that owns and operate a Texas Roadhouse restaurant (the "TR RESTAURANT ENTITIES"), and the other persons identified in the Master Transaction Agreement, TR Management will merge with Texas Roadhouse Management Interim LLC with TR Management being the surviving entity and thereby becoming a wholly-owned subsidiary of the Company and, in consideration therefore, the holders of non-voting common shares of TR Management will receive shares of Class A Common Stock;
(ii) pursuant to the Master Transaction Agreement, TR Development will be merged with Texas Roadhouse Development Interim LLC with TR Development being the surviving entity and thereby becoming a wholly-owned subsidiary of the Company and, in consideration therefore, the shareholders of TR Development will receive shares of Class A Common Stock;
(iii) pursuant to the Master Transaction Agreement, TR Holdings will be merged with Texas Roadhouse Holdings Interim LLC with TR Holdings being the surviving entity and thereby becoming a subsidiary of the Company and, in consideration therefore, the equity holders of TR Holdings will receive shares of Class A Common Stock; and
(iv) pursuant to the Master Transaction Agreement, direct or indirect subsidiaries of the Company will merge with each of the TR Holding Companies and the TR Restaurant Entities as described in the Master Transaction Agreement thereby resulting in each TR Holding Company and TR Restaurant Entity becoming a direct or indirect wholly-owned subsidiary of the Company, and, in consideration therefore, the shareholders of the TR Holding Companies, and the minority equity holders in the TR Restaurant Entities, will receive shares of Class A Common Stock.
Each of the agreements referred to in the preceding clauses (i) through (iv), and any agreements entered into in connection therewith, are collectively referred to herein as the "REORGANIZATION AGREEMENTS"). The foregoing transactions described in clauses (i) through (iv) and as contemplated by the Reorganization Agreements are collectively referred to herein as the "REORGANIZATION." TR Management, TR Development, TR Holdings, the TR Holding Companies and the TR Restaurant Entities and the other entities listed on Exhibit 21 to the Registration Statement are referred to herein collectively as the "TR ENTITIES".
References in this Agreement to "the Company's knowledge" means to the knowledge of each "named executive officer" of the Company in the Prospectus.
The Company and the Selling Stockholders hereby confirm their respective agreements with the Underwriters and the QIU as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents, warrants and covenants to each Underwriter and the QIU as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration Statement and any Rule 462(b) Registration Statement have been declared effective by the Commission under the Securities Act. The Company has complied to the Commission's satisfaction with all requests of the Commission for additional or supplemental information. No stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in all material respects with the Securities Act and, if filed by electronic transmission pursuant to EDGAR (except as may be permitted by Regulation S-T under the Securities Act), was identical to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Common Shares. Each of the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment thereto, at the time it became effective and at all subsequent times, complied and will comply in all material respects with the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus (including any Prospectus wrapper), as amended or supplemented, as of its date and at all subsequent times, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by the Representatives expressly for use therein. There are no contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has delivered to each Representative one complete manually signed copy of the Registration Statement and of each consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits) and preliminary prospectuses and the Prospectus, as amended or supplemented, in such quantities and at such places as the Representatives have reasonably requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL. None of the Company or any TR Entity has distributed or will distribute, prior to the later of the Second Closing Date (as defined below) and the completion of the Underwriters' distribution of the Common Shares, any offering material in connection with the offering and sale of the Common Shares other than a preliminary prospectus, the Prospectus or the Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of the Company enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(e) AUTHORIZATION OF THE COMMON SHARES. The Common Shares to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered by the Company and paid for by the Underwriters pursuant to this Agreement, will be validly issued, fully paid and nonassessable. The Common Shares to be purchased by the Underwriters from the Selling Stockholders were validly issued and fully paid and are nonassessable.
(f) AUTHORIZATION OF THE REORGANIZATION. The Company and each of the TR Entities that is a party to any of the Reorganization Agreements (collectively, the "TR REORGANIZATION PARTIES") and, to the Company's knowledge, the other parties to the Reorganization Agreements, have all requisite power and authority to enter into, perform their obligations under and to consummate the transactions contemplated by each of the Reorganization Agreements to which they are a party. Each of the Reorganization Agreements (i) has been duly authorized, executed and delivered by each TR Reorganization Party to which it is a party and, to the Company's knowledge, by each other party thereto and (ii) constitutes a legal, valid and binding agreement enforceable in accordance with its terms, except as such enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors generally or by general equitable principles (regardless of whether enforceability is considered in a proceeding at law or in equity).
(g) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. Other than the Selling Stockholders, there are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement that have not been waived.
(h) NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed in the Prospectus, subsequent to the respective dates as of which information is given in the Prospectus: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and the TR Entities, considered as one entity (any such change is called a "MATERIAL ADVERSE CHANGE"); (ii) the Company and the TR Entities, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or any TR Entity,
or repurchase or redemption by the Company or any TR Entity of any class of
capital stock, except for (a) dividends paid to the Company or any TR Entity and
(b) distributions or dividends made or paid to the equity owners of the TR
Entities related to the undistributed net income of such entities for periods
prior to the consummation of the Reorganization and, in each case, as described
in or otherwise contemplated by the Prospectus.
(i) INDEPENDENT ACCOUNTANTS. KPMG LLP, who have expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules filed with the Commission as a part of the Registration Statement and included in the Prospectus, are independent certified public accountants as required by the Securities Act.
(j) PREPARATION OF THE FINANCIAL STATEMENTS. The financial statements filed with the Commission as a part of the Registration Statement and included in the Prospectus present fairly the combined financial position of TR Holdings and the entities under common control therewith as described in such financial statements (the "COMBINED ENTITIES") as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included in the Registration Statement. The historical financial data set forth in the Prospectus under the captions "Summary Historical and Pro Forma Combined Financial and Operating Data", "Capitalization" and "Selected Historical and Pro Forma Combined Financial and Operating Data" fairly present the information set forth therein on a basis consistent with that of the audited financial statements contained in the Registration Statement. The condensed pro forma combined financial statements of the Combined Entities and the related notes thereto included in the prospectus under the caption "Unaudited Condensed Pro Forma Combined Financial Statements" present fairly the information contained therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly presented on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. The pro forma financial data set forth in the Prospectus under the captions "Summary Historical Pro Forma Combined Financial Statements", "Capitalization" and "Selected Historical and Pro Forma Combined Financial and Operating Data" fairly present the information set forth therein on a basis consistent with that of the condensed audited combined financial statements contained in the Registration Statement.
(k) INCORPORATION AND GOOD STANDING. Each of the Company and the TR Entities has been duly incorporated or validly formed and is validly existing as a corporation, limited liability company or limited partnership under the laws of the jurisdiction of its incorporation or formation and has the power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and, in the case of the Company, to enter into and perform its obligations under this Agreement. Each of the Company and the TR Entities is duly qualified as a foreign corporation, limited liability company or limited partnership to transact
business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, result in a Material Adverse Change. Upon consummation of the Reorganization prior to sale of the shares of Common Stock to the Underwriters pursuant to this Agreement, all of the issued and outstanding capital stock or equity interests of each subsidiary of the Company will have been duly authorized, validly issued, fully paid and nonassessable and will be owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim (except for any security interest, mortgage, pledge, lien, encumbrance or claim securing the Company's obligations under the New Credit Agreement). Upon consummation of the Reorganization prior to sale of the shares of Common Stock to the Underwriters pursuant to this Agreement, the Company will not own or control, directly or indirectly, any corporation, association or other entity other than the TR Entities.
(l) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus under the caption "Capitalization" (other than for subsequent issuances, if any, upon exercise of outstanding options described in the Prospectus). The Common Stock (including the Common Shares) conforms in all material respects to the description thereof contained in the Prospectus. Upon consummation of the Reorganization prior to sale of the shares of Class A Common Stock to the Underwriters pursuant to this Agreement, all of the issued and outstanding shares of Common Stock (including the shares of Class A Common Stock owned by the Selling Stockholders and the shares of Common Stock to be issued in connection with the Reorganization) will have been duly authorized and validly issued, fully paid and nonassessable and will have been issued in compliance with federal and state securities laws. None of the outstanding shares of Class A Common Stock were or will be issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no and, upon consummation of the Reorganization prior to sale of the shares of Class A Common Stock to the Underwriters pursuant to this Agreement, there will be no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those accurately described in the Prospectus. The description of the Company's stock equity plan, and the options granted thereunder, set forth in the Prospectus accurately and fairly presents the information required to be shown with respect to such plan.
(m) QUOTATION. The Common Shares have been approved for inclusion on the Nasdaq National Market, subject only to official notice of issuance.
(n) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER AUTHORIZATIONS OR APPROVALS REQUIRED. None of the Company or the TR Entities is in violation of its charter, by-laws or other organizational documents or is in default (or, with the giving of notice or lapse of time, would be in default) ("DEFAULT") under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which it or any of them is a party or by which it or any of them may be bound, or to which any of the property or assets of it or any of them is subject (each, an "EXISTING INSTRUMENT"), except for such Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change. (1) The execution, delivery and performance of this Agreement by the Company and consummation of the transactions contemplated hereby and by the Prospectus, (2) the execution, delivery and performance of the Reorganization Agreements by the TR Reorganization Parties and the consummation of the Reorganization, and (3) the execution, delivery and performance of the New Credit Agreement by the TR Credit Agreement Parties and incurrence of indebtedness under the New Credit Agreement as of the Closing Date as described in the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter, by-laws or organizational documents of the Company or any TR Entity, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any TR Entity pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, result in a Material Adverse Change and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or any TR Entity. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for (w) the execution, delivery and performance of this Agreement by the Company and consummation of the transactions contemplated hereby and by the Prospectus, (x) the execution, delivery and performance of the Reorganization Agreements by the TR Reorganization Parties and the consummation of the Reorganization, and (y) the execution, delivery and performance of the New Credit Agreement by the TR Credit Agreement Parties and incurrence of indebtedness under the New Credit Agreement as of the Closing Date as described in the Prospectus, except (A) with respect to clauses (w) and (x) such as have been obtained or made by the Company and are in full force and effect under the Securities Act, applicable state securities or blue sky laws and from the NASD and (B) with respect to clause (x), filings of articles of merger with the Secretaries of State of the Commonwealth of Kentucky.
(o) NO MATERIAL ACTIONS OR PROCEEDINGS. There are no legal or governmental
actions, suits or proceedings pending or, to the Company's knowledge, threatened
(i) against or affecting the Company or any TR Entity, (ii) which has as the
subject thereof any officer or director of, or property owned or leased by, the
Company or any TR Entity or (iii) relating to environmental or discrimination
matters, where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company or any
TR Entity and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company or any TR
Entity, or with the employees of any principal supplier of the Company or any TR
Entity, exists or, to the Company's knowledge, is threatened or imminent.
(p) INTELLECTUAL PROPERTY RIGHTS. The Company and the TR Entities own or possess sufficient trademarks, trade names, patent rights, copyrights, domain names, licenses, approvals, trade secrets and other similar rights (collectively, "INTELLECTUAL PROPERTY RIGHTS") reasonably necessary to conduct their businesses as now conducted; and the expected expiration of any of such Intellectual Property Rights would not result in a Material Adverse Change. None of the Company or any TR Entity has received any notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an
unfavorable decision, would result in a Material Adverse Change. None of the Company or any TR Entity is a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Prospectus and are not described in all material respects. None of the technology employed by the Company or any TR Entity has been obtained or is being used by the Company or any TR Entity in violation of any contractual obligation binding on any of them or, to the Company's knowledge, any of their officers, directors or employees or otherwise in violation of the rights of any persons.
(q) ALL NECESSARY PERMITS, ETC. The Company and the TR Entities possess such valid and current certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses, and none of the Company or any TR Entity has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could result in a Material Adverse Change.
(r) TITLE TO PROPERTIES. Each TR Entity has good and marketable title to all the properties and assets reflected as owned in the financial statements referred to in Section 1(A) (k) above (or elsewhere in the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, except such as do not materially and adversely affect the value (except as such value may be impacted by the amount of the indebtedness relating to liens that secure the Company's existing credit agreement and other loans and mortgages at various restaurant sites) of such property and do not materially interfere with the use currently made or proposed to be made of such property by such TR Entity. The real property, improvements, equipment and personal property held under lease by each TR Entity are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by each TR Entity.
(s) TAX LAW COMPLIANCE. The Company and the TR Entities have filed all
necessary federal, state and foreign income and franchise tax returns or have
properly requested extensions thereof and have paid all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them except as may be being contested in
good faith and by appropriate proceedings. Except as disclosed in the Prospectus
with respect to the Company's recording of a cumulative net deferred tax
liability upon becoming a "C" corporation, adequate charges, accruals and
reserves have been made in the applicable financial statements referred to in
Section 1(A)(k) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Combined
Entities has not been finally determined.
(t) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"). The Company is not, and after receipt of payment for the Common Shares and the consummation of the Reorganization will not be, an "investment company" within the meaning of Investment Company Act and will conduct its business in a manner so that it will not become subject to the Investment Company Act.
(u) INSURANCE. The Company and the TR Entities are insured by recognized, financially sound and reputable institutions with policies in such amounts and with such deductibles and covering such risks as are generally deemed adequate and customary for their businesses including, but not limited to, policies covering real and personal property owned or leased by the Company and the TR Entities against theft, damage, destruction, acts of vandalism and, if located in an earthquake zone, earthquakes. The Company has no reason to believe that the Company or any TR Entity will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change. None of the Company or any TR Entity has been denied any insurance coverage which it has sought or for which it has applied.
(v) NO PRICE STABILIZATION OR MANIPULATION. None of the Company or the TR Entities has taken and will take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Common Shares. The Company acknowledges that the Underwriters may engage in passive market making transactions in the Common Shares on the Nasdaq National Market in accordance with Regulation M under the Exchange Act.
(w) RELATED PARTY TRANSACTIONS. There are no business relationships or related-party transactions involving the Company, any TR Entity, any Selling Stockholder or any other person required to be described in the Prospectus which have not been described as required.
(x) DISCLOSURE CONTROLS AND PROCEDURES. TR Holdings has established and maintains and the Company will continue to establish and maintain disclosure controls and procedures (as such term is defined in Rule 13a-14 under the Exchange Act), which (i) are designed to ensure that material information relating to it, including its consolidated subsidiaries, is made known to its principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared, (ii) have been evaluated for effectiveness as of a date within 90 days prior to the date hereof and (iii) are effective in all material respects to perform the functions for which they were established. Based on the evaluation of the disclosure controls and procedures described above, the Company is not aware of (a) any significant deficiency or material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in TR Holdings and the Company's internal controls over financial reporting. Since the most recent evaluation of TR Holdings' disclosure controls and procedures described above, there have been no significant changes in internal control over financial reporting or in other factors that are reasonably likely to significantly affect internal control over financial reporting.
(y) COMPANY'S ACCOUNTING SYSTEM. TR Holdings maintains and the Company will continue to maintain a system of accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(z) ERISA COMPLIANCE. The Company, the TR Entities and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, any TR Entity
or their "ERISA Affiliates" (as defined below) are in compliance in all material
respects with ERISA. "ERISA AFFILIATE" means, with respect to the Company, any
TR Entity, any member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (the "CODE") of which the
Company or any TR Entity is a member. No "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to any
"employee benefit plan" established or maintained by the Company, any TR Entity
or any of their ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company, any TR Entity or any of their ERISA Affiliates, if
such "employee benefit plan" were terminated, would have any "amount of unfunded
benefit liabilities" (as defined under ERISA). None of the Company, any TR
Entity or any of their ERISA Affiliates has incurred or reasonably expects to
incur any liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975
or 4980B of the Code. Each "employee benefit plan" established or maintained by
the Company, any TR Entity or any of their ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification.
(aa) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed in the Prospectus or as would not, individually or in the aggregate, result in a Material Adverse Change (i) none of the Company or any TR Entity is in violation of any federal, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, "MATERIALS OF ENVIRONMENTAL CONCERN"), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environment Concern (collectively, "ENVIRONMENTAL LAWS"), which violation includes, but is not limited to, noncompliance with any permits or other governmental authorizations required for the operation of their respective businesses under applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the Company or any TR Entity received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that any of them is in violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which the Company or any TR Entity has received written notice, and no written notice by any person or entity, alleging potential liability for investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys' fees or penalties arising out of, based on or resulting from the presence, or release into
the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or any TR Entity, now or in the past (collectively, "ENVIRONMENTAL CLAIMS"), pending or, to the best of the Company's knowledge, threatened against the Company or any TR Entity or any person or entity whose liability for any Environmental Claim the Company or any TR Entity has retained or assumed either contractually or by operation of law; and (iii) to the best of the Company's knowledge, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that reasonably could result in a violation of any Environmental Law or form the basis of a potential Environmental Claim against the Company or any TR Entity or, to the Company's knowledge, against any person or entity whose liability for any Environmental Claim the Company or any TR Entity has retained or assumed either contractually or by operation of law.
(bb) BROKERS. There is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder's fee or other fee or commission as a result of any transactions contemplated by this Agreement.
(cc) NO OUTSTANDING LOANS OR OTHER INDEBTEDNESS. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company or any TR Entity to or for the benefit of any of the officers or directors of the Company or any TR Entity or any of the members of any of them, except as disclosed in the Prospectus.
(dd) COMPLIANCE WITH LAWS. None of the Company or any TR Entity has been advised, and has no reason to believe, that it and each of its subsidiaries are not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except where failure to be so in compliance would not result in a Material Adverse Change.
(ee) DIRECTED SHARE PROGRAM. (i) The Company has not offered, or caused the Underwriters to offer, any Common Shares to any person pursuant to the Directed Share Program with the intent to unlawfully influence (i) a customer or supplier of the Company or any TR Entity to alter the customer's or supplier's level or type of business with the Company or any TR Entity or (ii) a trade journalist or publication to write or publish favorable information about the Company or any TR Entity or their products and services. The Company acknowledges that the Directed Share Program shall not be offered to persons resident outside of the United States.
Any certificate signed by an officer of the Company or any TR Entity and delivered to the Representatives or to counsel for the Underwriters pursuant to this Agreement shall be deemed to be a representation and warranty by the Company or such TR Entity, as the case may be, to each Underwriter as to the matters set forth therein.
The Company acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel to the Company and the Selling Stockholders and counsel to the Underwriters, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each Selling Stockholder severally, and not jointly, represents, warrants and covenants to each Underwriter and the QIU as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly authorized, executed and delivered by or on behalf of such Selling Stockholder and is a valid and binding agreement of such Selling Stockholder, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(b) THE CUSTODY AGREEMENTS AND THE POWERS OF ATTORNEY. Each of the (i) Custody Agreement signed by the Committee (as defined therein) or each of them on behalf of such Selling Stockholder and [___], as custodian (the "CUSTODIAN"), relating to the deposit of the Common Shares to be sold by such Selling Stockholder (a "CUSTODY AGREEMENT") and (ii) Power of Attorney appointing certain individuals named therein as such Selling Stockholder's attorneys-in-fact (each, an "ATTORNEY-IN-FACT") to the extent set forth therein relating to the transactions contemplated hereby and by the Prospectus (a "POWER OF ATTORNEY"), of such Selling Stockholder has been duly authorized, executed and delivered by such Selling Stockholder and is a valid and binding agreement of the Selling Stockholder, enforceable in accordance with its terms, except as rights to indemnification thereunder may be limited by applicable law and except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(c) TITLE TO COMMON SHARES TO BE SOLD; ALL AUTHORIZATIONS OBTAINED. The
Common Shares to be sold by such Selling Stockholder pursuant to this Agreement
are certificated securities in registered form and are not held in any
securities account or by or through any securities intermediary within the
meaning of the Uniform Commercial Code as in effect in the State of
[__________](1). Upon the consummation of the Reorganization and on the
applicable Closing Date, such Selling Stockholder will have, good and valid
title to all of the Common Shares which may be sold by such Selling Stockholder
pursuant to this Agreement on such date such Selling Stockholder has the legal
right and power, and all authorizations and approvals required by law to enter
into this Agreement and its Custody Agreement (through one or more
Attorneys-in-Fact) and its Power of Attorney, to sell, transfer and deliver all
of the Common Shares which may be sold by such Selling Stockholder pursuant to
this Agreement and to comply with its other obligations hereunder and
thereunder. Upon the Underwriters' acquiring possession of such Common Shares
(or an agent's acquiring possession of such Common Shares on the Underwriters'
behalf) and paying the purchase price therefor as herein contemplated, the
Underwriters will acquire their respective interests in such Common Shares
(including, without limitation, all rights that such Selling Shareholder had or
has the power to transfer in such Securities) free of any adverse claim.
(d) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all of the Common Shares to be sold by such Selling Shareholder pursuant to this Agreement, in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, with signatures guaranteed, will be placed in custody with the custodian under its Power of Attorney and its Custody Agreement with irrevocable conditional instructions to deliver such Common Shares to the Underwriters pursuant to this Agreement upon consummation of the Reorganization.
(e) DELIVERY OF THE COMMON SHARES TO BE SOLD. Delivery of the Common Shares which are sold by such Selling Stockholder pursuant to this Agreement will pass good and valid title to such Common Shares, free and clear of any security interest, mortgage, pledge, lien, encumbrance or other claim.
(f) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS REQUIRED. The execution and delivery by such Selling Stockholder of, and the performance by such Selling Stockholder of its obligations under, this Agreement, its Custody Agreement (through one or more Attorneys-in-Fact) and its Power of Attorney will not contravene or conflict with, result in a breach of, or constitute a Default under, or require the consent of any other party to any agreement or instrument to which such Selling Stockholder is a party or by which it is bound or under which it is entitled to any right or benefit, any provision of applicable law or any judgment, order, decree or regulation applicable to such Selling Stockholder of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over such Selling Stockholder. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental authority or agency, is required for the consummation by such Selling Stockholder of the transactions contemplated in this Agreement, except such as have been obtained or made and are in full force and effect under the Securities Act, applicable state securities or blue sky laws and from the NASD.
(g) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling Stockholder does not have any registration or other similar rights to have any other equity or debt securities registered for sale by the Company under the Registration Statement or included in the offering contemplated by this Agreement.
(h) NO FURTHER CONSENTS. No consent, approval or waiver is required under any instrument or agreement to which such Selling Stockholder is a party or by which it is bound or under which it is entitled to any right or benefit, in connection with the offering, sale or purchase by the Underwriters of any of the Common Shares which may be sold by such Selling Stockholder under this Agreement or the consummation by such Selling Stockholder of any of the other transactions contemplated hereby.
(i) DISCLOSURE MADE BY THE SELLING STOCKHOLDER IN THE PROSPECTUS. All information furnished by or on behalf of such Selling Stockholder expressly for use in the Registration Statement and Prospectus is, and on the applicable Closing Date on which the Common Shares of such Selling Stockholder are sold pursuant to this Agreement will be, true, correct, and complete in all material respects, and does not, and such Closing Date will not, contain any untrue statement of a material fact or omit to state any material fact necessary to make such information not misleading. Such Selling Stockholder confirms as accurate the number of shares
of Common Stock set forth opposite such Selling Stockholder's name in the Prospectus under the caption "Principal and Selling Stockholders" (both prior to and after giving effect to the sale of the Common Shares).
(j) NO PRICE STABILIZATION OR MANIPULATION. Such Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Common Stock or any other security of the Company to facilitate the sale or resale of the Common Shares.
(k) CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES BY CERTAIN SELLING STOCKHOLDERS. Each Selling Stockholder (i) has no reason to believe that the representations and warranties of the Company contained in Section 1(A) hereof are not true and correct, (ii) is familiar with the Registration Statement and the Prospectus and has no knowledge of any material fact, condition or information not disclosed in the Registration Statement or the Prospectus which has had or may have a Material Adverse Change and (iii) is not prompted to sell shares of Common Stock by any information concerning the Company which is not set forth in the Registration Statement and the Prospectus; provided however that, clauses (i) and (ii) of this paragraph (k) shall not apply to any Selling Stockholder who is not a "named executive officer" of the Company in the Prospectus (each, an "OTHER SELLING STOCKHOLDER" and together, the "OTHER SELLING STOCKHOLDERS").
(l) DISTRIBUTION OF OFFERING MATERIAL. Such Selling Stockholder and its affiliates have not distributed and will not distribute, prior to the later of the Second Closing Date (as defined below) and the completion of the Underwriters' distribution of the Common Shares, any offering material in connection with the offering and sale of the Common Shares other than a preliminary prospectus, the Prospectus or the Registration Statement.
Any certificate signed by or on behalf of any Selling Stockholder and delivered to the Representatives or to counsel for the Underwriters pursuant to this Agreement shall be deemed to be a representation and warranty by such Selling Stockholder to each Underwriter as to the matters covered thereby.
Such Selling Stockholder acknowledges that the Underwriters and, for purposes of the opinion to be delivered pursuant to Section 5 hereof, counsel to the Company and counsel to such Selling Stockholder, and counsel to the Underwriters, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) THE FIRM COMMON SHARES. Upon the terms herein set forth, (i) the
Company agrees to issue and sell to the several Underwriters an aggregate of
[___] Firm Common Shares and (ii) the Primary Selling Stockholder agrees to sell
to the several Underwriters an aggregate of [___] Firm Common Shares. On the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Underwriters
agree, severally and not jointly, to purchase from the Company and the Primary
Selling Stockholder the respective number of Firm Common Shares set forth
opposite their names on
Schedule A. The purchase price per Firm Common Share to be paid by the several Underwriters to the Company and the Primary Selling Stockholder shall be $[___] per share.
(b) THE FIRST CLOSING DATE. Delivery of certificates for the Firm Common Shares to be purchased by the Underwriters and payment therefor shall be made at the offices of Frost Brown Todd LLC, 400 West Market Street, Louisville, Kentucky (or such other place as may be agreed to by the Company and the Lead Representative) at 9:00 a.m., Louisville time, on [___], 2004, or such other time and date not later than 1:30 p.m., Louisville time, on [___], 2004(2) as the Lead Representative shall designate by notice to the Company (the time and date of such closing are called the "FIRST CLOSING DATE"). The Company and the Primary Selling Stockholder hereby acknowledge that circumstances under which the Representatives may provide notice to postpone the First Closing Date as originally scheduled include, but are in no way limited to, any determination by the Company, the Primary Selling Stockholder or the Representatives to recirculate to the public copies of an amended or supplemented Prospectus or a delay as contemplated by the provisions of Section 10.
(c) THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Selling
Stockholders hereby grant, severally and not jointly, an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of [___]
Optional Common Shares from the Selling Stockholders at the purchase price per
share to be paid by the Underwriters for the Firm Common Shares. The option
granted hereunder is for use by the Underwriters solely in covering any
over-allotments in connection with the sale and distribution of the Firm Common
Shares. The option granted hereunder may be exercised at any time (but not more
than once) upon notice by the Lead Representative to the Selling Stockholders or
the Custodian of any Selling Stockholder designated in its Custody Agreement and
its Power of Attorney (with a copy to the Company), which notice may be given at
any time within 30 days from the date of this Agreement. Such notice shall set
forth (i) the aggregate number of Optional Common Shares as to which the
Underwriters are exercising the option, (ii) the names and denominations in
which the certificates for the Optional Common Shares are to be registered and
(iii) the time, date and place at which such certificates will be delivered
(which time and date may be simultaneous with, but not earlier than, the First
Closing Date; and in such case the term "FIRST CLOSING DATE" shall refer to the
time and date of delivery of certificates for the Firm Common Shares and the
Optional Common Shares). Such time and date of delivery, if subsequent to the
First Closing Date, is called the "SECOND CLOSING DATE" (and each of the First
Closing Date and the Second Closing Date is referred to herein generically as a
"CLOSING DATE") and shall be determined by the Lead Representative and shall not
be earlier than three nor later than five full business days after delivery of
such notice of exercise. If any Optional Common Shares are to be purchased, (a)
each Underwriter agrees, severally and not jointly, to purchase the number of
Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Lead Representative may determine) that bears the same proportion
to the total number of Optional Common Shares to be purchased as the number of
Firm Common Shares set forth on Schedule A opposite the name of such Underwriter
bears to the total number of Firm
Common Shares and (b) each Selling Stockholder agrees, severally and not jointly, to sell the number of Optional Common Shares (subject to such adjustments to eliminate fractional shares as the Lead Representative may determine) that bears the same proportion to the total number of Optional Common Shares to be sold as the number of Optional Common Shares set forth in Schedule B opposite the name of such Selling Stockholder bears to the total number of Optional Common Shares. The Lead Representative may cancel the option at any time prior to its expiration by giving written notice of such cancellation to such Selling Stockholders (with a copy to the Company).
(d) PUBLIC OFFERING OF THE COMMON SHARES. The Representatives hereby advise the Company and the Selling Stockholders that the Underwriters intend to offer for sale to the public, as described in the Prospectus, their respective portions of the Common Shares as soon after this Agreement has been executed and the Registration Statement has been declared effective as the Representatives, in their sole judgment, have determined is advisable and practicable.
(e) PAYMENT FOR THE COMMON SHARES. Payment for the Common Shares to be sold by the Company shall be made at the First Closing Date by wire transfer of immediately available funds to the order of the Company. Payment for the Common Shares to be sold by the Selling Stockholders shall be made at the Second Closing Date by wire transfer of immediately available funds to the order of the Custodian.
It is understood that the Lead Representative has been authorized, for its own account and the accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of the purchase price for, the Firm Common Shares and any Optional Common Shares the Underwriters have agreed to purchase. BAS, individually and not as the Lead Representative or Representative of the Underwriters, may (but shall not be obligated to) make payment for any Common Shares to be purchased by any Underwriter whose funds shall not have been received by the Lead Representative by the First Closing Date or the Second Closing Date, as the case may be, for the account of such Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all stock transfer taxes, stamp duties and other similar taxes, if any, payable upon the sale or delivery of the Common Shares to be sold by such Selling Stockholder to the several Underwriters, or otherwise in connection with the performance of such Selling Stockholder's obligations hereunder and (ii) the Custodian is authorized to deduct for such payment any such amounts from the proceeds to such Selling Stockholder hereunder and to hold such amounts for the account of such Selling Stockholder with the Custodian under its Custody Agreement.
(f) DELIVERY OF THE COMMON SHARES. The Company and the Primary Selling Stockholder shall deliver, or cause to be delivered, to the Lead Representative for the accounts of the several Underwriters certificates for the Firm Common Shares to be sold by them at the First Closing Date, against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor. The Selling Stockholders shall also deliver, or cause to be delivered, to the Lead Representative for the accounts of the several Underwriters, certificates for the Optional Common Shares the Underwriters have agreed to purchase from them at the
Second Closing Date against the irrevocable release of a wire transfer of immediately available funds for the amount of the purchase price therefor. The certificates for the Common Shares shall be in definitive form and registered in such names and denominations as the Lead Representative shall have requested at least two full business days prior to the First Closing Date (or the Second Closing Date, as the case may be) and shall be made available for inspection on the business day preceding the First Closing Date (or the Second Closing Date, as the case may be) at a location in New York City as the Lead Representative may designate. Time shall be of the essence, and delivery at the time and place specified in this Agreement is a further condition to the obligations of the Underwriters.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00 p.m. on the second business day following the date the Common Shares are first released by the Underwriters for sale to the public, the Company shall deliver or cause to be delivered, copies of the Prospectus in such quantities and at such places as the Representatives shall request.
SECTION 3. ADDITIONAL COVENANTS.
A. COVENANTS OF THE COMPANY. The Company further covenants and agrees with each Underwriter and the QIU as follows:
(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS. During such period beginning on the date hereof and ending on the later of the First Closing Date or such date, as in the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to be delivered in connection with sales by an Underwriter or dealer (the "PROSPECTUS DELIVERY PERIOD"), prior to amending or supplementing the Registration Statement (including any registration statement filed under Rule 462(b) under the Securities Act) or the Prospectus, the Company shall furnish to the Representatives for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Representatives reasonably object.
(b) SECURITIES ACT COMPLIANCE. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or, during the Prospectus Delivery Period, of any
proceedings to remove, suspend or terminate from listing or quotation the Common
Stock from any securities exchange upon which it is listed for trading or
included or designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. If the Commission shall enter any such
stop order at any time, the Company will use its best efforts to obtain the
lifting of such order at the earliest possible moment. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b), 430A and 434,
as applicable, under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under such Rule 424(b) were
received in a timely manner by the Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES ACT MATTERS. If, during the Prospectus Delivery Period, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if in the opinion of the Representatives or counsel for the Underwriters it is otherwise necessary to amend or supplement the Prospectus to comply with law, the Company agrees to promptly prepare (subject to Section 3(A)(a) hereof), file with the Commission and furnish at its own expense to the Underwriters and to dealers, amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The Company agrees to furnish the Representatives, without charge, during the Prospectus Delivery Period, as many copies of the Prospectus and any amendments and supplements thereto as the Representatives may request.
(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the Representatives and counsel for the Underwriters to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the state securities or blue sky laws of those jurisdictions designated by the Representatives, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Representatives promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.
(f) USE OF PROCEEDS. The Company shall apply the net proceeds from the sale of the Common Shares sold by it in the manner described under the caption "Use of Proceeds" in the Prospectus.
(g) TRANSFER AGENT. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.
(h) EARNINGS STATEMENT. As soon as practicable, the Company will make generally available to its security holders and to the Representatives an earnings statement (which need not be audited) covering the twelve-month period ending [___](3) that satisfies the provisions of Section 11(a) of the Securities Act.
(i) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery Period the Company shall file, on a timely basis, with the Commission and the Nasdaq National Market all reports and documents required to be filed under the Exchange Act. Additionally, the Company shall report the use of proceeds from the issuance of the Common Shares as may be required under Rule 463 under the Securities Act.
(j) COMPANY TO PROVIDE INTERIM FINANCIAL STATEMENTS. Prior to any Closing Date, the Company will furnish the Underwriters, as soon as they have been prepared by or are available to the Company, a copy of any unaudited interim financial statements of the Company or any TR Entity for any period subsequent to the period covered by the most recent financial statements appearing in the Registration Statement and the Prospectus.
(k) QUOTATION. The Company will use its best efforts to include, subject to notice of issuance, the Common Shares on the Nasdaq National Market.
(l) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. During the period commencing on the date hereof and ending on the 180th day following the date of the Prospectus, the Company will not, without the prior written consent of BAS and Wachovia Capital Markets, LLC (which consent may be withheld at their sole discretion), directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any registration statement under the Securities Act in respect of, any shares of Common Stock, options or warrants to acquire shares of the Common Stock or securities exchangeable or exercisable for or convertible into shares of Common Stock (other than as contemplated by this Agreement with respect to the Common Shares or with respect to shares of Common Stock issued pursuant to the Reorganization); PROVIDED, HOWEVER, that the Company may issue shares of its Common Stock or options to purchase its Common Stock, or Common Stock upon exercise of options, pursuant to any stock option, stock bonus or other stock plan or arrangement described in the Prospectus. Notwithstanding the foregoing, if (x) during the last 17 days of the 180-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or (y) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day period, the restrictions imposed in this clause shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
(m) FUTURE REPORTS TO THE REPRESENTATIVES. During the period of five years hereafter the Company will furnish to BAS at 9 West 57th Street, New York, NY 10022 Attention:[___] (i) as soon as practicable after the end of each fiscal year and public disclosure thereof, copies of the Annual Report of the Company containing the consolidated balance sheet of the Company as of the close of such fiscal year and consolidated statements of income, stockholders' equity and cash flows for the year then ended and the opinion thereon of the Company's independent public or certified public accountants; (ii) as soon as practicable after the filing thereof, to the extent not available on EDGAR, copies of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report filed by the Company with the Commission, the NASD or any securities exchange; and (iii) as soon as available, copies of any report or communication of the Company mailed generally to holders of its capital stock.
(n) INVESTMENT LIMITATION. The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Common Shares in such a manner as would require the Company or any of its subsidiaries to register as an investment company under the Investment Company Act.
(o) NO MANIPULATION OF PRICE. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.
(p) EXISTING LOCK-UP AGREEMENT. The Company will enforce all existing agreements between the Company and any of its security holders that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company's securities in connection with the Company's initial public offering. In addition, the Company will direct the transfer agent to place stop transfer restrictions upon any such securities of the Company that are bound by such existing "lock-up" agreements for the duration of the periods contemplated in such agreements.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder further covenants and agrees with each Underwriter and the QIU:
(a) LOCK-UP AGREEMENT. On or prior to the date hereof, such Selling Stockholder shall have furnished to the Representatives an agreement in the form of Exhibit C hereto.
(b) DELIVERY OF FORM W-9. To deliver to the Representatives prior to the applicable Closing Date on which the Common Shares of such Selling Stockholder will be sold to the Underwriters pursuant to this Agreement, a properly completed and executed United States Treasury Department Form W-9.
The Lead Representative, on behalf of the several Underwriters, may, in its sole discretion, waive in writing the performance by the Company or any Selling Stockholder of any one or more of the foregoing covenants or extend the time for their performance. Notwithstanding the foregoing, the Lead Representative, for the benefit of the other Representatives, agrees not to consent to any action proposed to be taken by the Company, any Selling Stockholder or any other holder of the Company's securities that would otherwise be prohibited by, or to waive compliance by the Company, any Selling Stockholder or any such other security holder with the provisions of, Section 3A(l) or 3B(a) above or any lock-up agreement delivered pursuant to Section 6(k) below without giving the other Representatives at least 17 days prior notice (or such shorter notice as the other Representative may deem acceptable to permit compliance with applicable provisions of NASD Conduct Rule 2711(f) restricting publication and distribution of research and public appearances by research analysts before and after the expiration, waiver or termination of a lock-up agreement).
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its and the Selling Stockholder's obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and delivery of the Common Shares (including all printing and engraving costs), (ii) all fees and expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel, independent certified
public accountants and other advisors and the counsel for all of the Selling
Stockholders, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state securities or blue sky laws, and, if requested by the
Representatives, preparing and printing a "Blue Sky Survey" or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in connection with,
the NASD's review and approval of the Underwriters' participation in the
offering and distribution of the Common Shares, (viii) the fees and expenses
associated with including the Common Stock on the Nasdaq National Market, (ix)
fees and expenses of the Custodian, (x) all other fees, costs and expenses
referred to in Item 13 of Part II of the Registration Statement, (xi) all costs
and expenses of the QIU in connection with its performance of the role of
qualified independent underwriter and (xii) all costs and expenses of the
Underwriters, including the fees and disbursements of counsel for the
Underwriters, in connection with matters related to the Directed Shares which
are designated by the Company for sale to Participants. Except as provided in
this Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters
shall pay their own expenses, including the fees and disbursements of their
counsel.
Each Selling Stockholder further agrees with each Underwriter to pay (directly or by reimbursement) all fees and expenses incident to the performance of its obligations under this Agreement which are not otherwise specifically provided for herein, including but not limited to (i) fees and expenses of counsel and other advisors for the Selling Stockholder and (ii) expenses and taxes incident to the sale and delivery of the Common Shares to be sold by the Selling Stockholder to the Underwriters hereunder (which taxes, if any, may be deducted by the Custodian under the provisions of Section 2 of this Agreement).
This Section 4 shall not affect or modify any separate, valid agreement relating to the allocation of payment of expenses between the Company, on the one hand, and the Selling Stockholders, on the other hand.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the several Underwriters to purchase and pay for the Firm Common Shares as provided herein on the First Closing Date and, with respect to the Optional Common Shares, the Second Closing Date, shall be subject to the accuracy of the representations and warranties on the part of the Company and the Selling Stockholders set forth in Sections 1(A) and 1(B) hereof as of the date hereof and as of the First Closing Date as though then made and, with respect to the Optional Common Shares, as of the Second Closing Date as though then made, to the timely performance by the Company and the Selling Stockholders of their respective covenants and other obligations hereunder, and to each of the following additional conditions:
(a) ACCOUNTANTS' COMFORT LETTER. On the date hereof, the Representatives shall have received from KPMG LLP, independent certified public accountants for the Company, a letter dated the date hereof addressed to the Underwriters, in form and substance satisfactory to the Representatives, containing statements and information of the type ordinarily included in accountant's "comfort letters" to underwriters, delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and certain financial information contained in the Registration Statement and the Prospectus (and the Representatives shall have received an additional four conformed copies of such accountants' letter for each of the several Underwriters).
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO OBJECTION FROM NASD. For the period from and after effectiveness of this Agreement and prior to the First Closing Date and, with respect to the Optional Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective; or, if the Company elected to rely upon Rule 434 under the Securities Act and obtained the Representatives' consent thereto, the Company shall have filed a Term Sheet with the Commission in the manner and within the time period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.
(c) NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE. For the period from and after the date of this Agreement and prior to the First Closing Date and, with respect to the Optional Common Shares, the Second Closing Date:
(i) in the judgment of the Representatives there shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities of the Company or any of its subsidiaries by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) OPINION OF COUNSEL FOR THE COMPANY. On each of the First Closing Date and the Second Closing Date the Representatives shall have received the favorable opinion of Frost
Brown Todd LLC, counsel for the Company, dated as of such Closing Date, the form of which is attached hereto as Exhibit A (and the Representatives shall have received an additional four conformed copies of each such counsel's legal opinion for each of the several Underwriters).
(e) OPINION OF COUNSEL FOR THE UNDERWRITERS. On each of the First Closing Date and the Second Closing Date, the Representatives shall have received the favorable opinion of Shearman & Sterling LLP, counsel for the Underwriters, dated as of such Closing Date.
(f) OFFICERS' CERTIFICATE. On each of the First Closing Date and the Second Closing Date the Representatives shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of such Closing Date, to the effect set forth in subsections (b)(ii) and (c)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and prior to such Closing Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in Section 1 of this Agreement are true and correct with the same force and effect as though expressly made on and as of such Closing Date; and
(iii) the Company has complied with all the agreements hereunder and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date.
(g) BRING-DOWN COMFORT LETTER. On each of the First Closing Date and the Second Closing Date, the Representatives shall have received from KPMG LLP, independent certified public accountants for the Company, a letter dated such date, in form and substance satisfactory to the Representatives, to the effect that they reaffirm the statements made in the letter furnished by them pursuant to subsection (a) of this Section 5, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to the First Closing Date or Second Closing Date, as the case may be (and the Representatives shall have received an additional four conformed copies of such accountants' letter for each of the several Underwriters).
(h) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS. On each of the First Closing Date and the Second Closing Date the Representatives shall have received the favorable opinion of counsel for each Selling Stockholder, dated as of such Closing Date, the form of which is attached as Exhibit B (and the Representatives shall have received an additional four conformed copies of such counsel's legal opinion for each of the several Underwriters).
(i) SELLING STOCKHOLDER'S CERTIFICATE. On each of the First Closing Date and the Second Closing Date, the Representatives shall receive a written certificate executed by each Selling Stockholder, dated as of such Closing Date, to the effect that:
(i) the representations, warranties and covenants of such Selling Stockholder set forth in Sections 1(B) of this Agreement are true and correct with the same force and
effect as though expressly made by such Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to such Closing Date.
(j) SELLING STOCKHOLDER'S DOCUMENTS. On the date hereof, the Company and the Selling Stockholder shall have furnished for review by the Representatives copies of the Powers of Attorney and the Custody Agreements executed by the Selling Stockholders and such further information, certificates and documents as the Representatives may reasonably request.
(k) LOCK-UP AGREEMENT FROM CERTAIN SECURITYHOLDERS OF THE COMPANY OTHER THAN SELLING STOCKHOLDERS. On or prior to the date hereof, the Company shall have furnished to the Representatives an agreement in the form of Exhibit C hereto from each director, officer and each beneficial owner of Common Stock (as defined and determined according to Rule 13d-3 under the Exchange Act, except that a one hundred eighty day period shall be used rather than the sixty day period set forth therein) listed on Schedule C hereto, and such agreement shall be in full force and effect on each of the First Closing Date and the Second Closing Date.
(l) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all of the Common Shares to be sold by the Selling Stockholders pursuant to this Agreement, in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, with signatures guaranteed, shall have been placed in custody with the Custodian under the Powers of Attorney and the Custody Agreements with irrevocable conditional instructions to deliver such Common Shares to the Underwriters pursuant to this Agreement.
(m) REORGANIZATION; ACQUISITION. The Reorganization shall have been completed.
(n) ADDITIONAL DOCUMENTS. On or before each of the First Closing Date and the Second Closing Date, the Representatives and counsel for the Underwriters shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Common Shares as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Representatives by notice to the Company and the Selling Stockholders at any time on or prior to the First Closing Date and, with respect to the Optional Common Shares, at any time prior to the Second Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 4, Section 6, Section 8 and Section 9 shall at all times be effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, Section 10,
Section 11 or Section 17, or if the sale to the Underwriters of the Common
Shares on the First Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company or the Selling Stockholders to
perform any agreement herein or to comply with any provision hereof,
the Company and any defaulting Selling Stockholder, jointly and severally, agree to reimburse the Representatives and the other Underwriters (or such Underwriters as have terminated this Agreement with respect to themselves), severally, upon demand for all out-of-pocket expenses that shall have been reasonably incurred by the Representatives and the Underwriters in connection with the proposed purchase and the offering and sale of the Common Shares, including but not limited to fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges; PROVIDED, HOWEVER, in the event this Agreement is terminated pursuant to Section 10 hereof, the Company shall not be required to reimburse any defaulting Underwriter pursuant to this Section 6.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall not become effective until the later of (i) the execution and delivery of this Agreement by the parties hereto and (ii) notification by the Commission to the Company and the Representatives of the effectiveness of the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any party by notice to each of the other parties hereto, and any such termination shall be without liability on the part of (a) the Company or the Selling Stockholders to any Underwriter, except that the Company and the Selling Stockholders shall be obligated to reimburse the expenses of the Representatives and the Underwriters pursuant to Section 4 and 6 hereof, (b) any Underwriter to the Company or the Selling Stockholders, or (c) any party hereto to any other party except that the provisions of Section 8 and Section 9 shall at all times be effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS BY THE COMPANY AND THE MANAGEMENT
SELLING STOCKHOLDERS. The Company and each of the Selling Stockholders who is a
"named executive officer" of the Company in the Prospectus (a "MANAGEMENT
SELLING STOCKHOLDER), jointly and severally, agree to indemnify and hold
harmless each Underwriter, its officers and employees, and each person, if any,
who controls any Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject, under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or any prospectus wrapper material distributed
in Canada or any other foreign jurisdiction or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading; or
(iii) in whole or in part upon any inaccuracy in the representations and
warranties of the Company or the Management Selling Stockholders contained
herein; or (iv) in whole or in
part upon any failure of the Company or the Management Selling Stockholders to perform their respective obligations hereunder or under law; or (v) any act or failure to act or any alleged act or failure to act by any Underwriter in connection with, or relating in any manner to, the Common Stock or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) or (ii) above, PROVIDED that the Company and the Management Selling Stockholders shall not be liable under this clause (v) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its bad faith or willful misconduct; and to reimburse each Underwriter and each such controlling person for any and all expenses (including the fees and disbursements of counsel chosen by BAS) as such expenses are reasonably incurred by such Underwriter or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Representatives expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and PROVIDED, FURTHER, that with respect to any preliminary prospectus, the foregoing indemnity agreement shall not inure to the benefit of any Underwriter from whom the person asserting any loss, claim, damage, liability or expense purchased Common Shares, or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Common Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or expense. The indemnity agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company and the Management Selling Stockholders may otherwise have. Notwithstanding the provisions of this Section 8(a), the indemnification obligations of each Management Selling Stockholder pursuant to this Section 8(a) and to Section 8(f) shall be limited in the aggregate to the total net proceeds received by such Management Selling Stockholder from the offering of the Common Shares pursuant to this Agreement.
(b) INDEMNIFICATION BY OTHER SELLING STOCKHOLDERS. Each Other Selling Stockholder, severally and not jointly, agrees to indemnify and hold harmless each Underwriter, its officers and employees, and each person, if any, who controls any Underwriter within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter or such controlling person may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Other Selling Stockholder), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the Securities Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (iii) in whole or in part upon any inaccuracy in the representations and warranties of such Other Selling Stockholder contained herein; or (iv) in whole or in part upon any failure of such Other Selling Stockholder to perform its respective obligations hereunder or under law; or (v) any act or failure to act or any alleged act or failure to act by any Underwriter in connection with, or relating in any manner to, the Common Stock or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) or (ii) above, PROVIDED that the such Other Selling Stockholder shall not be liable under this clause (v) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its bad faith or willful misconduct; and to reimburse each Underwriter and each such controlling person for any and all expenses (including the fees and disbursements of counsel chosen by BAS) as such expenses are reasonably incurred by such Underwriter or such controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that, notwithstanding anything to the contrary above, the liability of each Other Selling Stockholders under the foregoing indemnity pursuant to clauses (i), (ii) and (v) of this paragraph 8(b) shall be limited to losses, claims, damages, liability or expenses arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to such Other Selling Stockholder furnished to the Company by or with the approval of such Selling Stockholder specifically for use in the Registration Statement (or any amendment thereto), including any information deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the Securities Act, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and PROVIDED, FURTHER, that with respect to any preliminary prospectus, the foregoing indemnity agreement shall not inure to the benefit of any Underwriter from whom the person asserting any loss, claim, damage, liability or expense purchased Common Shares, or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Common Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or expense. Each Underwriter hereby acknowledges that the only information that the Other Selling Stockholders have furnished to the Company expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) is the information relating to such Selling Stockholder set forth in the table under the caption "Principal and Selling Stockholders" in the Prospectus. The indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that the Other Selling Stockholders may otherwise have. Notwithstanding the
provisions of this Section 8(b), the indemnification obligations of each Other Selling Stockholder pursuant to this Section 8(b) shall be limited to the total net proceeds received by such Other Selling Stockholder from the offering of the Common Shares pursuant to this Agreement.
(c) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS AND THE
SELLING STOCKHOLDERS. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Selling Stockholders and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject,
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use therein; and
to reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Company
and each of the Selling Stockholder hereby acknowledges that the only
information that the Underwriters have furnished to the Company expressly for
use in the Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) are the statements set forth (A) in the
table in the first paragraph under the caption "Underwriting" in the Prospectus,
(B) in the second and third sentence of the fourth paragraph under the caption
"Underwriting" in the Prospectus, (C) the sixth (Availability of Prospectus
Online) paragraph under the caption "Underwriting" in the Prospectus, (D) in the
tenth, eleventh, twelfth and thirteenth paragraphs under the caption
"Underwriting--Stabilization" in the prospectus; and the Underwriters confirm
that such statements are correct. The indemnity agreement set forth in this
Section 8(c) shall be in addition to any liabilities that each Underwriter may
otherwise have.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 8 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), approved by the indemnifying party (BAS in the case of Section 8(c) and Section 9), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this Section 8 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 8(d) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party is required to so reimburse the indemnified party pursuant to this Section 8 and shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding.
(f) INDEMNIFICATION OF THE QIU. Without limitation and in addition to its obligation under the other subsections of this Section 8, the Company and the Management Selling Stockholders, jointly and severally, agree to indemnify and hold harmless the QIU, its directors, officers, employees, members, representatives and agents and each person, if any, who controls the QIU within the meaning of the Securities Act or the Exchange Act from and against any loss, claim, damage, liabilities or expense, as incurred, arising out of or based upon the QIU's acting as a "qualified independent underwriter" (within the meaning of Rule 2720 to the NASD's Conduct Rules) in connection with the offering contemplated by this Agreement, and agrees to reimburse each such indemnified person promptly upon demand for any legal or other expense reasonably incurred by them in connection with investigating, preparing to defend, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the Company and the Management Selling Stockholders shall not be liable in any such case to the extent that it is judicially determined in a final judgment by a court of competent jurisdiction that any such loss, claim, damage, liability or expense resulted directly from the gross negligence or willful misconduct of the QIU. Notwithstanding the provisions of this Section 8(f), the indemnification obligations of each Management Selling Stockholder pursuant to this Section 8(f) and to Section 8(a) shall be limited in the aggregate to the total net proceeds received by such Management Selling Stockholder from the offering of the Common Shares pursuant to this Agreement.
(g) INDEMNIFICATION FOR DIRECTED SHARES. In connection with the offer and
sale of the Directed Shares, the Company agrees, promptly upon a request in
writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of the Participants to pay for and accept delivery of
Directed Shares which, by the end of the first business day following the date
of this Agreement, were subject to a properly confirmed agreement to purchase.
The Company agrees to indemnify and hold harmless the Designated Underwriter,
its officers and employees, and each person, if any, who controls the Designated
Underwriter within the meaning of the Securities Act or the Exchange Act against
any loss, claim, damage, liability or expense, as incurred, to which such
Designated Underwriter or such controlling person may become subject, which is
(i) caused by any untrue statement or alleged untrue statement of a material
fact contained in any material prepared by or with the consent of the Company
for distribution to Participants in connection with the Directed Share Program
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) caused by the failure of any Participant to pay for and accept
delivery of Directed Shares that such Participant agreed to purchase; or (iii)
related to, arising out of, or in connection with the Directed Share Program.
The indemnity agreement set forth in this paragraph shall be in addition to any
liabilities that the Company may otherwise have.
SECTION 9. CONTRIBUTION. If the indemnification provided for in Section 8 is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders, on the one hand, and the Underwriters, on the other
hand, from the offering of the Common Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Selling Stockholders, on the one hand, and the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholders, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Common Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Common Shares pursuant to this Agreement (before deducting expenses) received by the Company and the Selling Stockholders, and the total underwriting discount received by the Underwriters, in each case as set forth on the front cover page of the Prospectus (or, if Rule 434 under the Securities Act is used, the corresponding location on the Term Sheet) bear to the aggregate initial public offering price of the Common Shares as set forth on such cover. The relative fault of the Company and the Selling Stockholders, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company or the Selling Stockholders, on the one hand, or the Underwriters, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 8(d), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 8(d) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 9; PROVIDED, HOWEVER, that no additional notice shall be required with respect to any action for which notice has been given under Section 8(d) for purposes of indemnification.
The Company, the Selling Stockholder and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public and (ii) no Selling Stockholder shall be
required to contribute any amount in excess of the total net proceeds from the
offering of the Common Shares pursuant to this Agreement that are received by
the Selling Stockholder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule A. For purposes of this Section 9, each officer and employee of an Underwriter and each person, if any, who controls an Underwriter within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company with the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on the First Closing Date or the Second Closing Date, as the case may be, any one or more of the several Underwriters shall fail or refuse to purchase Common Shares that it or they have agreed to purchase hereunder on such date, and the aggregate number of Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number of the Common Shares to be purchased on such date, the other Underwriters shall be obligated, severally, in the proportions that the number of Firm Common Shares set forth opposite their respective names on Schedule A bears to the aggregate number of Firm Common Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as may be specified by the Lead Representative with the consent of the non-defaulting Underwriters, to purchase the Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the First Closing Date or the Second Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Common Shares and the aggregate number of Common Shares with respect to which such default occurs exceeds 10% of the aggregate number of Common Shares to be purchased on such date, and arrangements satisfactory to the Lead Representative, the Company and the Primary Selling Stockholder for the purchase of such Common Shares are not made within 48 hours after such default, this Agreement shall terminate without liability of any party to any other party except that the provisions of Section 4, Section 6 Section 8 and Section 9 shall at all times be effective and shall survive such termination. In any such case either the Lead Representative or the Company shall have the right to postpone the First Closing Date and either the Lead Representative or the Other Selling Stockholders shall have the right to postpone the Second Closing Date, as the case may be, but in no event for longer than seven days in order that the required changes, if any, to the Registration Statement and the Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "UNDERWRITER" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First Closing Date this Agreement may be terminated by the Lead Representative by notice given to the Company and the Selling Stockholders if at any time (i) trading or quotation in any of the Company's securities shall have been suspended or limited by the Commission or by the Nasdaq National Market, or trading in securities generally on either the Nasdaq Stock Market or the New York Stock Exchange shall have been suspended or limited, or minimum or maximum prices shall have been generally established on any of such stock exchanges by the Commission or the NASD; (ii) a general banking moratorium shall have been declared by any federal or New York authorities;
(iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States' or international political, financial or economic conditions, as in the judgment of the Lead Representative is material and adverse and makes it impracticable to market the Common Shares in the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities; (iv) in the judgment of the Lead Representative there shall have occurred any Material Adverse Change; or (v) the Company or any TR Entity shall have sustained a loss by strike, fire, flood, earthquake, accident or other calamity of such character as in the judgment of the Lead Representative may interfere materially with the conduct of the business and operations of the Company and the TR Entities, considered as one entity, regardless of whether or not such loss shall have been insured. Any termination pursuant to this Section 11 shall be without liability on the part of (a) the Company or the Selling Stockholders to any Underwriter, except that the Company and the Selling Stockholders shall be obligated to reimburse the expenses of the Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company or the Selling Stockholders, or (c) of any party hereto to any other party except that the provisions of Section 8 and Section 9 shall at all times be effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective indemnities, agreements, representations, warranties and other statements of the Company, of its officers, of the Selling Stockholder and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of its or their partners, officers or directors or any controlling person, or the Selling Stockholder, as the case may be, and will survive delivery of and payment for the Common Shares sold hereunder and any termination of this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
Banc of America Securities LLC
9 West 57th Street
New York, NY 10019
Facsimile: (212)
Attention: Thomas M. Morrison
with a copy to:
Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Facsimile: (212) 583-8567
Attention: Legal Department
and
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7179
Attention: Christopher C. Paci, Esq.
If to the Company:
Texas Roadhouse, Inc.
6040 Dutchmans Lane
Suite 400
Louisville, Kentucky 40205
Facsimile: [___]
Attention: Sheila C. Brown, Esq.
with a copy to:
Frost Brown Todd LLC
400 West Market Street
Louisville, Kentucky 40202
Facsimile: (502) 581-1087
Attention: William Strench, Esq.
If to the Selling Stockholders:
[Custodian]
[address]
Facsimile: [___]
Attention: [___]
Any party hereto may change the address for receipt of communications by giving written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 10 hereof, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 8 and Section 9, and in each case their respective successors and personal representatives, and no other person will have any right or obligation hereunder. The term "successors" shall not include any purchaser of the Common Shares as such from any of the Underwriters merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("RELATED PROCEEDINGS") may be instituted in the federal courts of the United States of America located in the City and County of New York or the courts of the State of New York in each case located in the City and County of New York (collectively, the "SPECIFIED COURTS"), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a "RELATED JUDGMENT"), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 17. FAILURE OF THE SELLING STOCKHOLDERS TO SELL AND DELIVER COMMON SHARES. If the Primary Selling Stockholder shall fail to sell and deliver to the Underwriters the Firm Common Shares to be sold and delivered by the Primary Selling Stockholder at the First Closing Date pursuant to this Agreement, then the Underwriters may at their option, by written notice from the Lead Representative to the Company and the Selling Stockholders, either (i) terminate this Agreement without any liability on the part of any Underwriter or, except as provided in Sections 4, 6, 8 and 9 hereof, the Company or the Selling Stockholders, or (ii) purchase the Firm Common Shares which the Company has agreed to sell and deliver in accordance with the terms hereof. If any Selling Stockholder shall fail to sell and deliver to the Underwriters the Optional Common Shares to be sold and delivered by such Selling Stockholder at the Second Closing Date pursuant to this Agreement, then the Underwriters may at their option, by written notice from the Lead Representative to the Company and the Selling Stockholders, either (i) terminate this Agreement with respect to such Optional Common Shares without any liability on the part of any Underwriter or, except as provided in Sections 4, 6, 8 and 9 hereof, the Company or the Selling Stockholders, or (ii) purchase the Optional Common Shares which the other Selling Stockholders have agreed to sell and deliver in accordance with the terms hereof and, if the Primary Selling Stockholder is not a defaulting Selling Stockholder, at the Underwriters' option, purchase from the Primary Selling Stockholder the number of Optional Common Shares which any such defaulting Selling Stockholder has agreed to sell and deliver in accordance with the terms hereof. If the Underwriters elect to purchase from the Primary Selling Stockholder the number of Optional Common Shares which any defaulting Selling Stockholder had agreed to sell and deliver in accordance with the terms hereof, the Primary Selling Stockholder shall be
obligated to sell and deliver such additional number of Optional Common Shares. If any Selling Stockholder shall fail to sell and deliver to the Underwriters the Common Shares to be sold and delivered by such Selling Stockholder pursuant to this Agreement at the First Closing Date or the Second Closing Date, then the Underwriters shall have the right, by written notice from the Lead Representative to the Company and the Selling Stockholders, to postpone the First Closing Date or the Second Closing Date, but in no event for longer than seven days, in order that the required changes, if any, to the Registration Statement and the Prospectus or any other documents or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The Table of Contents and the Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification provisions of Section 8 and the contribution provisions of Section 9, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.
The respective indemnities, contribution agreements, representations, warranties and other statements of the Company, the Selling Stockholders and the several Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the QIU, the officers or employees of any Underwriter, the QIU, any person controlling any Underwriter, the QIU, the Company, the officers or employees of the Company, any person controlling the Company, any Selling Stockholder or any person controlling such Selling Stockholder (ii) acceptance of the Shares and payment for them hereunder and (iii) termination of this Agreement.
Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Selling Stockholders, the Underwriters, the Underwriters' officers and employees, the QIU, the QIU officers and employees, any controlling persons referred to herein, the Company's directors and the Company's officers who sign the Registration Statement and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Common Shares from any of the several Underwriters merely because of such purchase.
[Signatures follow.]
If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company and the Attorneys-in-Fact on behalf of the Selling Stockholders the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours,
TEXAS ROADHOUSE, INC.
Title:
MANAGEMENT SELLING
STOCKHOLDERS
OTHER SELLING STOCKHOLDERS
LISTED ON SCHEDULE B
Title: Attorney-in-fact
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives in New York, New York as of the date first above written.
BANC OF AMERICA SECURITIES LLC
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
SG Cowen & Co., LLC
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By:Banc of America Securities LLC
SCHEDULE A
NUMBER OF
FIRM
COMMON
SHARES TO BE
UNDERWRITERS PURCHASED
------------------------------------------------------------ ------------
Banc of America Securities LLC.............................. [___]
Wachovia Capital Markets, LLC............................... [___]
RBC Capital Markets Corporation............................. [___]
SG Cowen & Co., LLC......................................... [___]
Total.............................................. [___]
|
SCHEDULE B
MAXIMUM
NUMBER OF
NUMBER OF OPTIONAL
FIRM COMMON COMMON
SHARES TO BE SHARES TO BE
SOLD SOLD
------------ ------------
PRIMARY SELLING STOCKHOLDER:
W. Kent Taylor
[Address]................................................. [___] [___]
OTHER SELLING STOCKHOLDERS:
[Name]
[Address].................................................
Total................................................. [___] [___]
|
SCHEDULE C
BENEFICIAL OWNERS REQUIRED TO DELIVER LOCK-UP AGREEMENTS
PURSUANT TO SECTION 6(k)
[Names]
EXHIBIT A
THE FINAL OPINION IN DRAFT FORM SHOULD BE ATTACHED AS EXHIBIT A AT THE
TIME THIS AGREEMENT IS EXECUTED.
Opinion of counsel for the Company to be delivered pursuant to Section 5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, result in a Material Adverse Change.
(iv) Each significant subsidiary of the Company (as defined in Rule 405 under the Securities Act) has been duly incorporated or formed and is validly existing as a corporation or company under the laws of the jurisdiction of its incorporation or formation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and, to the best knowledge of such counsel, is duly qualified as a foreign corporation or company to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, result in a Material Adverse Change.
(v) All of the issued and outstanding capital stock or equity interests of each such significant subsidiary of the Company has been duly authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance (except for any security interest, mortgage, pledge, lien or encumbrance securing the Company's obligations under the New Credit Agreement) or, to the best knowledge of such counsel, any pending or threatened claim.
(vi) The authorized, issued and outstanding capital stock of the Company (including the Common Stock) conform to the descriptions thereof set forth in the Prospectus. All of the outstanding shares of Common Stock (including the shares of Common Stock owned by Selling Stockholders and the shares of Common Stock issued in connection with the Reorganization) have been duly authorized and validly issued, are fully paid and nonassessable and, to the best of
such counsel's knowledge, have been issued in compliance with the registration and qualification requirements of federal securities laws. The form of certificate used to evidence the Common Stock is in due and proper form and complies with all applicable requirements of the charter and by-laws of the Company and the General Corporation Law of the State of Delaware. The description of the Company's stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted and exercised thereunder, set forth in the Prospectus accurately and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights.
(vii) No stockholder of the Company or any other person has any preemptive right, right of first refusal or other similar right to subscribe for or purchase securities of the Company arising (i) by operation of the charter or by-laws of the Company or the General Corporation Law of the State of Delaware or (ii) to the best knowledge of such counsel, otherwise.
(viii) The Underwriting Agreement has been duly authorized, executed and delivered by the Company.
(ix) The Common Shares to be purchased by the Underwriters from the Company have been duly authorized for issuance and sale pursuant to the Underwriting Agreement and, when issued and delivered by the Company pursuant to the Underwriting Agreement against payment of the consideration set forth therein, will be validly issued, fully paid and nonassessable.
(x) [Each of] The Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the Commission
under the Securities Act. To the best knowledge of such counsel, no stop order
suspending the effectiveness of either of the Registration Statement or the Rule
462(b) Registration Statement, if any, has been issued under the Securities Act
and no proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b).
(xi) The Registration Statement, including any Rule 462(b) Registration Statement, the Prospectus, and each amendment or supplement to the Registration Statement and the Prospectus, as of their respective effective or issue dates (other than the financial statements and supporting schedules included therein or in exhibits to or excluded from the Registration Statement, as to which no opinion need be rendered) comply as to form in all material respects with the applicable requirements of the Securities Act.
(xii) The Common Shares have been approved for listing on the Nasdaq National Market.
(xiii) The statements (i) in the Prospectus under the captions "Description of Capital Stock", "Summary--Background to the Offering", "Business--Litigation", "Business--Intellectual Property", "Certain Relationships and Related Transactions", "Shares Eligible for Future Sale", "Material U.S. Federal Tax Considerations for Non-U.S. Holders of Our Class A Common Stock" and "Underwriting" and (ii) in Item 14 and Item 15 of the Registration Statement, insofar as such statements constitute matters of law, summaries of legal matters, the
Company's charter or by-law provisions, documents or legal proceedings, or legal conclusions, has been reviewed by such counsel and fairly present and summarize, in all material respects, the matters referred to therein.
(xiv) To the best knowledge of such counsel, there are no legal or governmental actions, suits or proceedings pending or threatened which are required to be disclosed in the Registration Statement, other than those disclosed therein.
(xv) To the best knowledge of such counsel, there are no Existing Instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto; and the descriptions thereof and references thereto are correct in all material respects.
(xvi) No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental authority or agency, is required for the Company's execution, delivery and performance of the Underwriting Agreement and consummation of the transactions contemplated thereby and by the Prospectus, except as required under the Securities Act, applicable state securities or blue sky laws and from the NASD.
(xvii) The execution and delivery of each of the Reorganization Agreements by the Company and the performance by each TR Reorganization Party of its obligations thereunder (i) have been duly authorized by all necessary entity action on the part of the TR Reorganization Parties (ii) will not result in any violation of the provisions of the charter, by-laws or formation documents of the Company, TR Holdings or any of their subsidiaries; (iii) will not constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company, TR Holdings or any of their subsidiaries pursuant to, (A) the New Credit Agreement, or (B) to the best knowledge of such counsel, any other material Existing Instrument; or (iv) to the best knowledge of such counsel, will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company, TR Holdings or any of their subsidiaries.
(xviii) The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder (other
than performance by the Company of its obligations under the indemnification
section of the Underwriting Agreement, as to which no opinion need be rendered)
(i) have been duly authorized by all necessary corporate action on the part of
the Company (ii) will not result in any violation of the provisions of the
charter, by-laws or formation documents of the Company, TR Holdings or any of
their subsidiaries; (iii) will not constitute a breach of, or Default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company, TR Holdings or any of their subsidiaries
pursuant to, (A) the New Credit Agreement, or (B) to the best knowledge of such
counsel, any other material Existing Instrument; or (iv) to the best knowledge
of such counsel, will not result in any violation of any law, administrative
regulation or administrative or court decree applicable to the Company, TR
Holdings or any of their subsidiaries.
(xix) The Company is not, and after receipt of payment for the Common Shares will not be, an "investment company" within the meaning of Investment Company Act.
(xx) To the best knowledge of such counsel, there are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by the Underwriting Agreement, other than the Selling Stockholders.
(xxi) To the best knowledge of such counsel, neither the Company nor any subsidiary is in violation of its charter, by-laws or formation documents or any law, administrative regulation or administrative or court decree applicable to the Company or any subsidiary or is in Default in the performance or observance of any obligation, agreement, covenant or condition contained in any material Existing Instrument, except in each such case for such violations or Defaults as would not, individually or in the aggregate, result in a Material Adverse Change.
(xxii) The Reorganization as described in the Underwriting Agreement and the Prospectus has been completed in accordance with the terms of the Reorganization Agreements and applicable state and federal law.
In addition, such counsel shall state that they have participated in conferences with officers and other representatives of the Company, representatives of the independent certified public accountants for the Company and with representatives of the Underwriters at which the contents of the Registration Statement and the Prospectus, and any supplements or amendments thereto, and related matters were discussed and, although such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (other than as specified above), and any supplements or amendments thereto, on the basis of the foregoing, nothing has come to their attention which would lead them to believe that either the Registration Statement or any amendments thereto, at the time the Registration Statement or such amendments became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of its date or at the First Closing Date or the Second Closing Date, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements or schedules or other financial or statistical data derived therefrom, included in the Registration Statement or the Prospectus or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the General Corporation Law of the State of Delaware, the General Corporation Law of the Commonwealth of Kentucky or the federal law of the United States, to the extent they deem proper and specified in such opinion, upon the opinion (which shall be dated the First Closing Date or the Second Closing Date, as the case may be, shall be satisfactory in form and substance to the Underwriters, shall expressly state that the Underwriters may rely on such opinion as if it were addressed to them and shall be furnished to the Representatives) of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Underwriters; PROVIDED, HOWEVER, that such counsel shall further state that they believe that they and the Underwriters are justified in relying upon such
opinion of other counsel, and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials.
EXHIBIT B
THE FINAL OPINION IN DRAFT FORM RELATING TO EACH OR ALL OF THE SELLING STOCKHOLDER SHOULD BE ATTACHED AS EXHIBIT B AT THE TIME THIS AGREEMENT IS EXECUTED.
The opinion of such counsel pursuant to Section 5(h) shall be rendered to the Representatives at the request of the Company and shall so state therein. References to the Prospectus in this Exhibit B include any supplements thereto at the Closing Date.
(i) The Underwriting Agreement has been duly authorized, executed and delivered by or on behalf of the Selling Stockholder.
(ii) The execution and delivery by the Selling Stockholder of, and the performance by the Selling Stockholder of its obligations under, the Underwriting Agreement and its Custody Agreement and its Power of Attorney will not contravene or conflict with, result in a breach of, or constitute a default under, the charter, by-laws, partnership agreement, trust agreement or other organizational documents, as the case may be, of the Selling Stockholder.
(iii) The Selling Stockholder has good and valid title to all of the Common Shares which may be sold by the Selling Stockholder under the Underwriting Agreement and has the legal right and power, and all authorizations and approvals required to enter into the Underwriting Agreement and its Custody Agreement and its Power of Attorney, to sell, transfer and deliver all of the Common Shares which may sold by the Selling Stockholder under the Underwriting Agreement and to comply with its other obligations under the Underwriting Agreement, its Custody Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and the Power of Attorney of the Selling Stockholder has been duly authorized, executed and delivered by the Selling Stockholder and is a valid and binding agreement of the Selling Stockholder, enforceable in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles.
(v) Assuming that (i) the certificate or certificates representing the
Common Shares to be sold by the Selling Stockholder pursuant to the Underwriting
Agreement have been effectively indorsed in blank in accordance with [State] UCC
Article 8 and (ii) neither the Underwriters, nor the agents acquiring possession
of such Common Shares on their behalf, have notice of any adverse claim to such
Common Shares, then, upon the Underwriters' acquiring possession of such
certificate or certificates for such Common Shares (or the agent's acquiring
possession of such certificate or certificates for such Common Shares on the
Underwriters' behalf) and paying the purchase price therefore pursuant to the
Underwriting Agreement, each Underwriter will be a "protected purchaser" of such
Common Shares to be purchased by it (within the meaning of Section 8-303 of the
[State] UCC) and will acquire its interest in such Common Shares (including,
without limitation, all rights that the Selling Stockholder had or has the power
to
transfer in such Common Shares) with good and valid title and free and clear of any security interest, mortgage, pledge, lieu encumbrance or any adverse or other claim.(4)
(vi) To the best of such counsel's knowledge, no consent, approval, authorization or other order of, or registration or filing with, any court or governmental authority or agency, is required for the consummation by the Selling Stockholder of the transactions contemplated in the Underwriting Agreement, except as required under the Securities Act, applicable state securities or blue sky laws, and from the NASD.
In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the General Corporation Law of the State of Delaware, the General Corporation Law of the Commonwealth of Kentucky or the federal law of the United States, to the extent they deem proper and specified in such opinion, upon the opinion (which shall be dated the First Closing Date or the Second Closing Date, as the case may be, shall be satisfactory in form and substance to the Underwriters, shall expressly state that the Underwriters may rely on such opinion as if it were addressed to them and shall be furnished to the Representatives) of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Underwriters; PROVIDED, HOWEVER, that such counsel shall further state that they believe that they and the Underwriters are justified in relying upon such opinion of other counsel, and (B) as to matters of fact, to the extent they deem proper, on certificates of the Selling Stockholders (or any of them) and public officials.
EXHIBIT C
LOCK-UP LETTER AGREEMENT
Banc of America Securities LLC
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
SG Cowen & Co., LLC
As Representatives of the several Underwriters
c/o Banc of America Securities LLC
9 West 57th Street
New York, NY ,10019
RE: TEXAS ROADHOUSE, INC. (THE "COMPANY")
Ladies and Gentlemen:
The undersigned (the "UNDERSIGNED") understands that the Company proposes to carry out a public offering (the "OFFERING") of shares of Class A Common Stock (the "COMMON STOCK") for which you will act as the representatives of the underwriters of the Offering. Prior to the Offering, the Company will undertake a corporate reorganization (the "REORGANIZATION") pursuant to which certain Texas Roadhouse entities (the "EXISTING TEXAS ROADHOUSE ENTITIES") will be merged into subsidiaries of the Company. The Undersigned is the owner of record or beneficially of certain equity interests, or options to acquire such equity interests, in one or more of the Existing Texas Roadhouse Entities (the "EXISTING TR EQUITY INTERESTS"). Upon completion of the Reorganization, the Undersigned will receive, and will become the record or beneficial owner of, shares of Common Stock or options to acquire Common Stock in exchange for the Existing TR Equity Interests.
The Undersigned recognizes that the Offering will be of benefit to the Undersigned and will benefit the Company. The Undersigned acknowledges that you and the other underwriters are relying on the representations and agreements of the Undersigned contained in this Lock-Up Letter Agreement in carrying out the Offering and in entering into underwriting arrangement with the Company with respect to the Offering.
In consideration of the foregoing, the Undersigned hereby agrees that the Undersigned will not, (and will cause any spouse or immediate family member of the spouse or the Undersigned living in the Undersigned's household not to), without the prior written consent of Banc of America Securities LLC and Wachovia Capital Markets, LLC, as the lead representatives of the underwriters (which consent may be withheld in their sole discretion), directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or otherwise dispose of, its Existing TR Equity Interests (other than in connection with the Reorganization) or any shares of Common Stock or options to acquire shares of Common Stock or securities exchangeable or exercisable for or convertible into shares of Common Stock, currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the Undersigned (or such spouse or family member), or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date 180 days after the date of the Prospectus. In addition, if (i) the Company issues an earnings release or material news, or a material event relating to the Company occurs, during the last 17 days of the lock-up period, or (ii) prior to the expiration of the lock-up period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the lock-up period, the restrictions imposed by this Lock-Up Letter Agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. The Undersigned understands that the Company or the underwriters will notify the Undersigned of any such extension of the lock-up period.
The foregoing paragraph shall not apply to (i) any shares of Common Stock to be sold in the Offering, (ii) any shares of Common Stock or other securities acquired in open market transactions after completion of the Offering, (iii) bona fide gifts, (iv) the exercise of any options to acquire shares of Common Stock, but not the sale or other transfer of the shares of Common Stock issued in connection with such exercise, (v) sales or other dispositions of shares of Common Stock or other securities, in each case, that are made for estate planning purposes exclusively and are between or among the Undersigned, members of the Undersigned's immediate family or affiliates (as defined in Rule 144(a)(i) of the Securities Act of 1933, as amended) of the Undersigned (including family trusts, family corporations, family limited liability companies or family partnerships); PROVIDED, HOWEVER, that it shall be a condition to any transfer made pursuant to clause (iii), (iv) or (v) that the transferee executes and delivers to Banc of America Securities LLC an agreement stating that the transferee is receiving and holding the Common Stock or other securities subject to the provisions of this Lock-Up Letter Agreement, and there shall be no further transfer of such Common Stock or other securities except in accordance with this Lock-Up Letter Agreement.
The Undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the Undersigned except in compliance with the foregoing restrictions.
With respect to the Offering only, the Undersigned waives any registration rights relating to registration under the Securities Act of any Common Stock to be owned either of record or beneficially by the Undersigned, including any rights to receive notice of the Offering.
It is understood that, if the Company notifies you that it does not intend to proceed with the Offering, or if the underwriting agreement between the Company and you (the "UNDERWRITING AGREEMENT") does not become effective or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the shares of Common Stock, or if the completion of the Offering shall not have occurred prior to December 31, 2004, the Undersigned will be released from its obligations under this Lock-Up Letter Agreement.
This Lock-Up Letter Agreement terminates and supercedes any prior agreements between the Undersigned and any Existing Texas Roadhouse Entity that would otherwise restrict the disposition of the shares of Common Stock after the date of the final prospectus relating to the Offering.
The Undersigned hereby represents and warrants that the Undersigned has full power and authority to enter into this Lock-Up Letter Agreement and that, upon request, the Undersigned will execute any additional documents necessary in connection with the enforcement hereof. This Lock-Up Letter Agreement is irrevocable and will be binding on the Undersigned and the respective successors, heirs, personal representatives, and assigns of the Undersigned.
Signature
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf of an
entity)
EXHIBIT 3.2
FORM
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TEXAS ROADHOUSE, INC.,
A DELAWARE CORPORATION
The undersigned, Sheila C. Brown, hereby certifies that:
ONE: She is the duly elected and acting Secretary of Texas Roadhouse, Inc., a corporation duly organized and existing under and by virtue of the General Corporation Law of Delaware (the "Corporation").
TWO: The original Certificate of Incorporation of the Corporation (the "Original Certificate")was filed with the Delaware Secretary of State on May 5, 2004.
THREE: The Original Certificate was amended and restated by that certain Amended and Restated Certificate of Incorporation (the "First Amended Certificate") which was filed with the Delaware Secretary of State on May 28, 2004.
FOUR: That this second Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Section 242 and Section 245 of the General Corporation Law of Delaware by obtaining a majority vote of the outstanding stock of each class entitled to vote thereon, in favor of said amendment and restatement, in the manner set forth in Sections 222 or 228 of the General Corporation Law of Delaware.
The Original Certificate, as amended and restated by the First Amended Certificate, is hereby amended and restated to read, in full, as follows:
ARTICLE I
NAME
The name of the corporation is Texas Roadhouse, Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of Delaware is 9 East Loockerman Street, Suite 1B, Dover, Kent County, Delaware 19901. The name of its registered agent at such address is National Registered Agents, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
CAPITAL STOCK
The Corporation shall have the authority to issue One Hundred Million (100,000,000) shares of $0.001 par value Class A Common Stock (the "Class A Common Stock"), Eight Million (8,000,000) shares of $0.001 par value Class B Common Stock (the "Class B Common Stock," and together with the Class A Common Stock, the "Common Stock"), and One Million (1,000,000) shares of $0.001 par value Preferred Stock (the "Preferred Stock"). The number of authorized shares of any class or classes of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the stock of the corporation entitled to vote, irrespective of Del. Code Ann. tit. 8, Section 242(b)(2).
A statement of the designations of each class and the powers, preferences and rights, and qualifications, limitations or restrictions thereof is as follows:
A. CLASS A COMMON STOCK
(1) DIVIDENDS. The holders of the Class A Common Stock shall be entitled to receive, share for share with the holders of shares of Class B Common Stock, such dividends if, as and when declared from time to time by the Board of Directors. In the event that such dividend is paid in the form of shares of Common Stock, holders of Class A Common Stock shall receive Class A Common Stock and holders of Class B Common Stock shall receive Class B Common Stock.
(2) LIQUIDATION. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, the holders of the Class A Common Stock shall be entitled to receive, share for share with the holders of shares of Class B Common Stock, all the assets of the Corporation of whatever kind available for distribution to stockholders, after the rights of the holders of the Preferred Stock have been satisfied.
(3) VOTING. Each holder of Class A Common Stock shall be entitled to one vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation. Except as otherwise provided herein or by the General Corporation Law of the State of Delaware, the holders of Class A Common Stock and the holders of Class B Common Stock shall at all times vote on all matters (including the election of directors) together as one class.
(4) REDESIGNATION. Upon the conversion of all of the outstanding Class B Common Stock into shares of Class A Common Stock, the Class A Common Stock shall be automatically redesignated as "Common Stock."
B. CLASS B COMMON STOCK
(1) DIVIDENDS. The holders of the Class B Common Stock shall be entitled to receive, share for share with the holders of shares of Class A Common Stock, such dividends if,
as and when declared from time to time by the Board of Directors. In the event that such dividend is paid in the form of shares of Common Stock, holders of Class A Common Stock shall receive Class A Common Stock and holders of Class B Common Stock shall receive Class B Common Stock.
(2) LIQUIDATION. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, the holders of the Class B Common Stock shall be entitled to receive, share for share with the holders of shares of Class A Common Stock, all the assets of the Corporation of whatever kind available for distribution to stockholders, after the rights of the holders of the Preferred Stock have been satisfied.
(3) VOTING. Each holder of Class B Common Stock shall be entitled to ten votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation. Except as otherwise provided herein or by the General Corporation Law of the State of Delaware, the holders of Class A Common Stock and the holders of Class B Common Stock shall at all times vote on all matters (including the election of directors) together as one class.
(4) CONVERSION.
(a) Each share of Class B Common Stock shall be convertible into one fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof at any time.
(b) Each share of Class B Common Stock shall automatically be converted into one fully paid and nonassessable share of Class A Common Stock upon the earliest of (i) the date such shares cease to be beneficially owned (as such term is defined under Section 13(d) of the Securities Exchange Act of 1934, as amended ("Section 13(d)") by W. Kent Taylor, (ii) the date that W. Kent Taylor ceases to beneficially own (as such term is defined under Section 13(d)) at least 20% of the outstanding shares of Common Stock of the Company, (iii) the death or "permanent and total disability" of W. Kent Taylor within the meaning of 26 CFR 7.105-1, or (iv) September 30, 2009.
(c) The one-to-one conversion ratio for the conversion of the Class B Common Stock into Class A Common Stock in accordance with Section 4(a) and 4(b) of this Article IV shall in all events be equitably adjusted in the event of any recapitalization of the Corporation by means of a stock dividend on, or a stock split or combination of, outstanding Class A Common Stock or Class B Common Stock, or in the event of any merger, consolidation or other reorganization of the Corporation with another corporation.
(d) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock.
(e) If any shares of Class B Common Stock shall be converted pursuant to this Section 4, the shares so converted shall be retired and returned to the authorized but unissued shares of Class B Common Stock.
C. OTHER MATTERS AFFECTING SHAREHOLDERS OF CLASS A COMMON STOCK AND
CLASS B COMMON STOCK
In no event shall any stock dividends or stock splits or combinations of stock be declared or made on Class A Common Stock or Class B Common Stock unless the shares of Class A Common Stock and Class B Common Stock at the time outstanding are treated equally and identically, except that such dividends or stock splits or combinations shall be made in respect of shares of Class A Common Stock and Class B Common Stock in the form of shares of Class A Common Stock or Class B Common Stock, respectively.
D. PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is expressly authorized, by resolution adopted and filed in accordance with law, and with the consent of the holders of a majority of the outstanding shares of Class B Common Stock, to fix the number of shares in each series, the designation thereof, the powers (including voting powers, full or limited, if any), the preferences and relative participating, optional or other special rights thereof, and the qualifications or restrictions thereon, of each series and the variations in such voting powers (if any) and preferences and rights as between series. Any shares of any class or series of Preferred Stock purchased, exchanged, converted or otherwise acquired by the Corporation, in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, without designation as to series, and may be reissued as part of any series of Preferred Stock created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth in this Certificate of Incorporation or in such resolution or resolutions.
ARTICLE V
BOARD OF DIRECTORS
The number of directors of the Corporation from time to time shall be as fixed by, or in the manner provided in, the bylaws of the Corporation. Effective upon the date of the closing of the Corporation's initial public offering (the "Effective Date"), the directors shall be divided into 3 classes, with the initial term of office of the first class to expire at the first annual meeting of stockholders held after the Effective Date; the initial term of office of the second class to expire at the second annual meeting of stockholders held after the Effective Date; and the initial term of office of the third class to expire at the third annual meeting of stockholders held after the Effective Date. At each annual meeting of stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of the stockholders after their election, and shall continue to hold office until their respective successors are elected and qualified, except in case of the death, resignation, or removal of any director. In the event of any increase in the number of directors fixed by the Board of Directors, the
additional directors shall be classified so that all classes of directors have as nearly equal numbers of directors as may be possible. In the event of any decrease in the number of directors, all classes of directors shall be decreased equally as nearly as may be possible. Except as may be provided by the terms of any series of Preferred Stock, each director of the Corporation shall be entitled to one vote on each matter voted or acted upon by the Board of Directors.
ARTICLE VI
LIMITATION OF LIABILITY
No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or limit the liability of a director (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (c) under Section 174 of the General Corporation Law of the State of Delaware; or (d) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of the State of Delaware shall be amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended. Any repeal or modification of this Article VI by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omission occurring prior to, such repeal or modification.
ARTICLE VII
BYLAWS
The Board of Directors is expressly authorized to adopt, alter, amend or repeal the Bylaws of the Corporation by affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present. Any Bylaws made by the directors under the powers conferred hereby may be altered, amended or repealed by the directors or by the stockholders acting in accordance with the terms hereof or thereof. Notwithstanding the foregoing and anything contained in this Certificate of Incorporation to the contrary, Sections 3, 9, 10 and 13 of Article II and Sections 2, 3 and 5 of Article III of the Bylaws shall not be altered, amended or repealed and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least a majority of the voting power of the shares of capital stock of the Corporation issued and outstanding and entitled to vote, voting together as a single class.
ARTICLE VIII
REMOVAL OF A DIRECTOR
A director may be removed, at any time, either with or without cause, by the affirmative vote of holders of a majority of the voting power of shares of stock then entitled to vote with respect to the election of such director.
ARTICLE IX
DURATION
The Corporation is to have perpetual existence.
ARTICLE X
INDEMNIFICATION
The Corporation may indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director, officer or employee of the Corporation or any predecessor of the Corporation or serves or served at any other enterprise as a director, officer or employee at the request of the Corporation or any predecessor to the Corporation.
ARTICLE XI
MEETINGS OF STOCKHOLDERS
Meetings of stockholders may be held within or without the State of Delaware, as determined by the Board of Directors. The books of the Corporation may be kept (subject to any provision contained in the Delaware General Corporation Law) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
ARTICLE XII
RESERVATION OF RIGHTS
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation above, provided that the rights of the Class B Common Stock may not be amended, altered, changed or repealed without the approval of the holders of a majority of the outstanding shares of Class B Common Stock.
* * * * *
IN WITNESS WHEREOF, the undersigned, Sheila C. Brown, being the Secretary of the Corporation, does hereby further certify that the facts hereinabove stated are truly set forth and, accordingly, I have hereunto set my hand this __ day of October, 2004.
Exhibit 4.1
MASTER TRANSACTION AGREEMENT
This is a Master Transaction Agreement dated as of May 7, 2004, among (i) Texas Roadhouse, Inc. (the "COMPANY"), a Delaware corporation, (ii) W. Kent Taylor ("TAYLOR"), (iii) Texas Roadhouse Holdings LLC ("HOLDINGS"), a Kentucky limited liability company, (iv) Texas Roadhouse Development Corporation ("DEVELOPMENT"), a Kentucky corporation, (v) Texas Roadhouse Management Corp. ("MANAGEMENT"), a Kentucky corporation, (vi) Aspen Steaks, Ltd., a Kentucky corporation ("ASPEN"), (viii) Texas Roadhouse of Gainesville Inc., I, a Kentucky corporation ("GAINESVILLE"), (viii) Texas Roadhouse of Texas, LLC ("TEXAS"), a Kentucky limited liability company, and (ix) each of the entities listed on Schedule A hereto (the "CONSTITUENT RESTAURANT ENTITIES").
RECITALS
A. The parties to this Agreement are involved in the ownership and operation of Texas Roadhouse restaurants.
B. Pursuant to the terms of this Agreement, the Company will acquire the equity interests or assets of certain parties to this Agreement (each a "COMBINATION TRANSACTION" and collectively, the "COMBINATION TRANSACTIONS") through merger or share exchange transactions between each such party and the Company or one of its directly or indirectly held wholly-owned corporate or limited liability company subsidiaries, and immediately thereafter consummate an initial public offering (the "INITIAL PUBLIC OFFERING") of its Class A common stock, $0.001 par value ("CLASS A COMMON STOCK"), pursuant to an Underwriting Agreement among the Company, each of Banc of America Securities LLC, RBC Capital Markets Corporation, S.G. Cowen & Co., LLC and Wachovia Capital Markets, Inc. (collectively, the "UNDERWRITERS") and the other parties names therein (the "UNDERWRITING AGREEMENT").
C. The Combination Transactions and the Initial Public Offering together will constitute a single tax-free exchange of property for stock of the Company under IRC Section 351 (the "ROADHOUSE EXCHANGE"). Certain Combination Transactions will constitute tax-free reorganizations under IRC Section 368.
D. Prior to consummation of the Combination Transactions, the Company will form Texas Roadhouse Property Holdings LLC ("PROPERTY") as a wholly-owned limited liability company subsidiary to participate in certain of the Combination Transactions described below
E. Prior to the consummation of the Combination Transactions, in transaction not conditioned upon the consummation of the Combination Transactions and intended to result in the operation of WKT Restaurant Corp.'s business in a Delaware corporation, the Company will merge with WKT Restaurant Corp. ("WKT"), with the Company as the surviving corporation in the merger. In the merger of WKT and the Company, Taylor, as the sole shareholder of WKT, will be entitled to receive 2,217,000 shares of Class B Common Stock, $0.001 par value ("CLASS B COMMON STOCK") of the Company and 150,000 shares of Class A Common Stock in exchange for his 1,000 Common Shares of WKT. Upon consummation of the merger between the Company and WKT (the "WKT MERGER"), the only assets and liabilities of WKT that the Company will succeed to are 150,000 Common Shares of Holdings and WKT's right to receive a one percent (1%) distribution on all sales of Company-owned or licensed Texas Roadhouse restaurants.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
1. INDEMNIFICATION BY TAYLOR. Taylor agrees to indemnify, defend and hold the Company harmless from and against, and reimburse the Company on demand for, any damage, loss, cost or expense (including reasonable attorneys' fees) incurred by the Company as a result of the Company being the successor by merger to any liabilities or obligations of WKT.
2. THE COMBINATION TRANSACTIONS. The parties acknowledge and agree that the following Combination Transactions shall occur at the Closing (as defined below):
2.1 HOLDINGS. Holdings and Texas Roadhouse Holdings Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of the Company, shall merge, with Holdings being the surviving limited liability company in the merger. Each holder of Common Shares of Holdings other than the Company shall receive (a) one share of Class A Common Stock in the merger for each Common Share of Holdings so held (as adjusted to reflect any subsequent stock dividends, stock splits or recapitalizations by the Company occurring after the date hereof, as so adjusted, the "EXCHANGE RATIO"), except that membership interests held by Aspen, Gainesville and Management Corp. will be cancelled, and (b) Preferred Shares of Holdings, with the number of Preferred Shares determined by multiplying $1.00 times each respective holder's share of Holdings' authorized and accrued profits distributions, as determined and set forth in Written Action by Sole Manager of Holdings entered into prior to the consummation of the Combination Transactions. Holdings and the Company acknowledge and agree that, as a result of the merger, Holdings shall become a wholly-owned limited liability company subsidiary of the Company. Each Common Share of Holdings held by the Company immediately prior to consummation of the merger shall be cancelled in the merger. Holdings and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.2 DEVELOPMENT. Development and Texas Roadhouse Development Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of the Company, shall merge, with Development being the surviving business entity in the merger. The holders of Common Shares of Development shall receive 3,283.333 shares of Class A Common Stock in the merger for each Common Share of Development so held (as adjusted to reflect any subsequent stock dividends, stock splits or recapitalizations occurring after the date hereof). As a result of the merger, Development shall become a wholly-owned corporate subsidiary of the Company. Development and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.3 MANAGEMENT.
(a) Management and Texas Roadhouse Management Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of the Company, shall merge, with Management being the surviving business entity in the merger. The holders of Non-Voting Common Shares of Management shall receive one share of Class A Common Stock in the merger for each Common Share of Management so held (as adjusted to reflect any subsequent stock dividends, stock splits or recapitalizations involving either the Company or Management occurring after the date hereof). Each Voting Common Share of Management shall be cancelled
in the merger. Each Common Share of Holdings held by Management immediately prior to consummation of the merger shall be cancelled in the merger.
(b) Effective as of the Closing, the Stock Option Plan of Management (the "EXISTING OPTION PLAN") and each option granted thereunder that is outstanding immediately prior to the Closing (an "EXISTING OPTION"), whether or not then exercisable or vested, shall be assumed by the Company. As of the Closing, each Existing Option shall cease to represent a right to acquire Non-Voting Common Shares of Management and shall be converted automatically into an option to purchase shares of Class A Common Stock in an amount, at an exercise price and subject to such terms and conditions determined as provided below. Each Existing Option so assumed by the Company shall be subject to, and exercisable and vested upon, the same terms and conditions as under the Existing Plan and the applicable option and other related agreements issued thereunder, including the maximum term of the Existing Option and the provisions regarding termination of the Existing Option following a termination of employment, except that (1) each assumed Existing Option shall be exercisable for, and represent the right to acquire, that number of shares of Class A Common Stock (rounded down to the nearest whole share) equal to (i) the number of Non-Voting Common Shares of Management subject to such Existing Option immediately prior to the Closing multiplied by (ii) the Exchange Ratio; and (B) the exercise price per share of Class A Common Stock subject to each assumed Existing Option shall be an amount equal to (i) the exercise price per Non-Voting Common Share of Management subject to such Existing Option in effect immediately prior to the Closing divided by (ii) the Exchange Ratio (rounded up to the nearest whole cent).
(c) The Company's Board of Directors, or its duly
appointed committee to administer the 2004 Equity Incentive Plan of the Company,
shall adopt resolutions and take such other actions as may be necessary,
effective contingent upon the consummation of the transactions contemplated
hereby, immediately prior to the Closing, to provide for the application of this
Section 2.3 to the Existing Option Plan and the Existing Options that are
outstanding as of immediately prior to the Closing.
(d) The conversion of Existing Options provided for in this Section 2.3 shall, with respect to any options which qualified as "incentive stock options" (as defined in Section 422 of the Code immediately prior to the Closing), be effected in a manner consistent with Section 424(a) of the Code.
2.4 ASPEN. Aspen and Aspen Steaks Exchange Subsidiary Inc., a
wholly-owned Kentucky corporate subsidiary of the Company, shall engage in a
statutory share exchange. The holders of Common Stock of Aspen shall receive
three shares of Class A Common Stock in the share exchange for each share of
Common Stock of Aspen so held (as adjusted to reflect subsequent stock
dividends, stock splits or recapitalizations by either the Company of Aspen
occurring after the date hereof). Aspen and the Company acknowledge and agree
that the share exchange shall constitute a tax-free reorganization under IRC
Section 368.
2.5 AMARILLO. Texas Roadhouse of Amarillo, Ltd. ("AMARILLO") and Texas Roadhouse of Amarillo Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Amarillo being the surviving business entity in the merger. The holders of limited partner interests of Amarillo other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99%
limited partner interest in Amarillo and Holdings shall hold a 1% general partner interest in Amarillo. Amarillo, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.6 BOISE. Texas Roadhouse of Boise, LLC ("BOISE") and Boise Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Boise being the surviving limited liability company in the merger. The holders of membership interests of Boise other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Boise shall become a wholly-owned limited liability company subsidiary of Property. Boise and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.7 CEDAR FALLS. Texas Roadhouse of Cedar Falls, LLC ("CEDAR FALLS") and Cedar Falls Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Cedar Falls being the surviving limited liability company in the merger. The holders of membership interests of Cedar Falls other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Cedar Falls shall become a wholly-owned limited liability company subsidiary of Property. Cedar Falls and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.8 CHEYENNE. Texas Roadhouse of Cheyenne, LLC ("CHEYENNE") and Cheyenne Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Cheyenne being the surviving in the merger. The holders of membership interests of Cheyenne other than Holdings shall receive Class A Common Stock in the merger. As a result of the merger, Cheyenne shall become a wholly-owned limited liability company subsidiary of Property. Cheyenne and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.9 COLLEGE STATION. Texas Roadhouse of College Station, Ltd. ("COLLEGE STATION") and Texas Roadhouse of College Station Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with College Station being the surviving business entity in the merger. The holders of limited partner interests of College Station other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in College Station and Holdings shall hold a 1% general partner interest in College Station. College Station, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.10 CONROE. Texas Roadhouse of Conroe, Ltd. ("CONROE") and Texas Roadhouse of Conroe Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Conroe being the surviving business entity in the merger. The holders of limited partner interests of Conroe other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Conroe and Holdings shall hold a 1% general partner interest in Conroe. Conroe, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.11 CORPUS CHRISTI. Texas Roadhouse of Corpus Christi, Ltd. ("CORPUS CHRISTI") and Texas Roadhouse of Corpus Christi Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Corpus Christi being the surviving business entity in the merger. The holders of limited partner interests of Corpus Christi other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Corpus Christi and Holdings shall hold a 1% general partner interest in Corpus Christi. Corpus Christi, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.12 DECATUR. Texas Roadhouse of Decatur, LLC ("DECATUR") and
Decatur Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company
subsidiary of Property, shall merge, with Decatur being the surviving limited
liability company in the merger. The holders of membership interests of Decatur
other than Holdings shall receive shares of Class A Common Stock in the merger.
As a result of the merger, Decatur shall become a wholly-owned limited liability
company subsidiary of Property. Decatur and the Company acknowledge and agree
that the merger shall constitute a part of the Roadhouse Exchange under IRC
Section 351.
2.13 DENTON. Texas Roadhouse of Denton, Ltd. ("DENTON") and Texas Roadhouse of Denton Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Denton being the surviving business entity in the merger. The holders of limited partner interests of Denton other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Denton and Holdings shall hold a 1% general partner interest in Denton. Denton, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.14 DIXIE HIGHWAY. Texas Roadhouse of Dixie Highway, LLC ("DIXIE HIGHWAY") and Dixie Highway Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Dixie Highway being the surviving limited liability company in the merger. The holders of membership interests of Dixie Highway other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Dixie Highway shall become a wholly-owned limited liability company subsidiary of Property. Dixie Highway and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.15 EAST PEORIA. Texas Roadhouse of East Peoria, LLC ("EAST PEORIA") and East Peoria Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with East Peoria being the surviving limited liability company in the merger. The holders of membership interests of East Peoria other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, East Peoria shall become a wholly-owned limited liability company subsidiary of Property. East Peoria and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.16 ELKHART. Texas Roadhouse of Elkhart, LLC ("ELKHART") and Elkhart Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Elkhart being the surviving limited liability company in the merger. The holders of membership interests of Elkhart other than Holdings shall receive shares of Class
A Common Stock in the merger. As a result of the merger, Elkhart shall become a wholly-owned limited liability company subsidiary of Property. Elkhart and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.17 ELYRIA. Texas Roadhouse of Elyria, LLC ("ELYRIA") and
Elyria Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company
subsidiary of Property, shall merge, with Elyria being the surviving limited
liability company in the merger. The holders of membership interests of Elyria
other than Holdings shall receive shares of Class A Common Stock in the merger.
As a result of the merger, Elyria shall become a wholly-owned limited liability
company subsidiary of Property. Elyria and the Company acknowledge and agree
that the merger shall constitute a part of the Roadhouse Exchange under IRC
Section 351.
2.18 FORT WAYNE. Texas Roadhouse of Fort Wayne, LLC ("FORT WAYNE") and Fort Wayne Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Fort Wayne being the surviving limited liability company in the merger. The holders of membership interests of Fort Wayne other than Holdings shall receive Class A Common Stock in the merger. As a result of the merger, Fort Wayne shall become a wholly-owned limited liability company subsidiary of Property. Fort Wayne and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.19 FRIENDSWOOD. Texas Roadhouse of Friendswood, Ltd. ("FRIENDSWOOD") and Texas Roadhouse of Friendswood Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Friendswood being the surviving business entity in the merger. The holders of limited partner interests of Friendswood other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Friendswood and Holdings shall hold a 1% general partner interest in Friendswood. Friendswood, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.20 GAINESVILLE. Gainesville and Texas Roadhouse of
Gainesville Interim LLC, a wholly-owned Kentucky limited liability company
subsidiary of the Company, shall merge, with Gainesville being the surviving
corporation in the merger. The shareholders of Gainesville shall receive three
shares of Class A Common Stock in the merger for each Common Share of
Gainesville so held (as adjusted to reflect any subsequent stock dividends,
stock splits or recapitalizations involving either the Company or Gainesville
occurring after the date hereof). Gainesville and the Company acknowledge and
agree that the merger shall constitute a tax-free reorganization under IRC
Section 368(a)(1)(A) and/or a part of the Roadhouse Exchange under IRC Section
351.
2.21 GRAND JUNCTION. Texas Roadhouse of Grand Junction, LLC ("GRAND JUNCTION") and Grand Junction Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Grand Junction being the surviving limited liability company in the merger. The holders of membership interests of Grand Junction other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Grand Junction shall become a wholly-owned limited liability company subsidiary of Property. Grand Junction and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.22 GRAND PRAIRIE. Texas Roadhouse of Grand Prairie, Ltd. ("GRAND PRAIRIE") and Texas Roadhouse of Grand Prairie Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Grand Prairie being the surviving business entity in the merger. The holders of limited partner interests of Grand Prairie other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Grand Prairie and Holdings shall hold a 1% general partner interest in Grand Prairie. Grand Prairie, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.23 HOUSTON. Texas Roadhouse of Houston, Ltd. ("HOUSTON") and Texas Roadhouse of Houston Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Houston being the surviving business entity in the merger. The holders of limited partner interests of Houston other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Houston and Holdings shall hold a 1% general partner interest in Houston. Houston, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.24 LANCASTER. Texas Roadhouse of Lancaster, LLC ("LANCASTER") and Lancaster Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Lancaster being the surviving limited liability company in the merger. The holders of membership interests of Lancaster other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Lancaster shall become a wholly-owned limited liability company subsidiary of Property. Lancaster and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.25 LANSING. Texas Roadhouse of Lansing, LLC ("LANSING") and
Lansing Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company
subsidiary of Property, shall merge, with Lansing being the surviving limited
liability company in the merger. The holders of membership interests of Lansing
other than Holdings shall receive shares of Class A Common Stock in the merger.
As a result of the merger, Lansing shall become a wholly-owned limited liability
company subsidiary of Property. Lansing and the Company acknowledge and agree
that the merger shall constitute a part of the Roadhouse Exchange under IRC
Section 351.
2.26 LIVE OAK. Texas Roadhouse of Live Oak, Ltd. ("LIVE OAK") and Texas Roadhouse of Live Oak Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Live Oak being the surviving business entity in the merger. The holders of limited partner interests of Live Oak other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Live Oak and Holdings shall hold a 1% general partner interest in Live Oak. Live Oak, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.27 LONGVIEW. Longview Roadhouse II, Ltd. ("LONGVIEW") and Texas Roadhouse of Longview Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Longview being the surviving business entity in the merger. The holders of limited partner interests of Longview other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a
99% limited partner interest in Longview and Holdings shall hold a 1% general partner interest in Longview. Longview, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.28 LUBBOCK. Texas Roadhouse of Lubbock, Ltd. ("LUBBOCK") and Texas Roadhouse of Lubbock Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Lubbock being the surviving business entity in the merger. The holders of limited partner interests of Lubbock other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Lubbock and Holdings shall hold a 1% general partner interest in Lubbock. Lubbock, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.29 LYNCHBURG. Texas Roadhouse of Lynchburg, LLC ("LYNCHBURG") and Lynchburg Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Lynchburg being the surviving limited liability company in the merger. The holders of membership interests of Lynchburg other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Lynchburg shall become a wholly-owned limited liability company subsidiary of Property. Lynchburg and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.30 MESQUITE. Texas Roadhouse of Mesquite, Ltd. ("MESQUITE") and Texas Roadhouse of Mesquite Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Mesquite being the surviving business entity in the merger. The holders of limited partner interests of Mesquite other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Mesquite and Holdings shall hold a 1% general partner interest in Mesquite. Mesquite, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.31 NEW PHILADELPHIA. Texas Roadhouse of New Philadelphia, LLC ("NEW
PHILADELPHIA") and New Philadelphia Merger Subsidiary LLC, a wholly-owned
Kentucky limited liability company subsidiary of Property, shall merge, with New
Philadelphia being the surviving limited liability company in the merger. The
holders of membership interests of New Philadelphia other than Holdings shall
receive shares of Class A Common Stock in the merger. As a result of the merger,
New Philadelphia shall become a wholly-owned limited liability company
subsidiary of Property. New Philadelphia and the Company acknowledge and agree
that the merger shall constitute a part of the Roadhouse Exchange under IRC
Section 351.
2.32 PASADENA. Texas Roadhouse of Pasadena, Ltd. ("PASADENA") and Texas Roadhouse of Pasadena Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Pasadena being the surviving business entity in the merger. The holders of limited partner interests of Pasadena other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Pasadena and Holdings shall hold a 1% general partner interest in Pasadena. Pasadena, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.33 RICHMOND. Texas Roadhouse of Richmond, LLC ("RICHMOND") and Richmond Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Richmond being the surviving limited liability company in the merger. The holders of membership interests of Richmond other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Richmond shall become a wholly-owned limited liability company subsidiary of Property. Richmond and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.34 ROSEVILLE. Texas Roadhouse of Roseville, LLC ("ROSEVILLE") and Roseville Merger Subsidiary LLC, a wholly-owned Kentucky limited liability company subsidiary of Property, shall merge, with Roseville being the surviving limited liability company in the merger. The holders of membership interests of Roseville other than Holdings shall receive shares of Class A Common Stock in the merger. As a result of the merger, Roseville shall become a wholly-owned limited liability company subsidiary of Property. Roseville and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.35 TEXARKANA. Texas Roadhouse of Texarkana, Ltd. ("TEXARKANA") and
Texas Roadhouse of Texarkana Interim LLC, a wholly-owned Kentucky limited
liability company subsidiary of Texas, shall merge, with Texarkana being the
surviving business entity in the merger. The holders of limited partner
interests of Texarkana other than Texas shall receive shares of Class A Common
Stock in the merger. As a result of the merger, Texas shall hold a 99% limited
partner interest in Texarkana and Holdings shall hold a 1% general partner
interest in Texarkana. Texarkana, Texas and the Company acknowledge and agree
that the merger shall constitute a part of the Roadhouse Exchange under IRC
Section 351.
2.36 TYLER. Texas Roadhouse of Tyler, Ltd. ("TYLER") and Texas Roadhouse of Tyler Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Tyler being the surviving business entity in the merger. The holders of limited partner interests of Tyler other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Tyler and Holdings shall hold a 1% general partner interest in Tyler. Tyler, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
2.37 WACO. Texas Roadhouse of Waco, Ltd. ("WACO") and Texas Roadhouse of Waco Interim LLC, a wholly-owned Kentucky limited liability company subsidiary of Texas, shall merge, with Waco being the surviving business entity in the merger. The holders of limited partner interests of Waco other than Texas shall receive shares of Class A Common Stock in the merger. As a result of the merger, Texas shall hold a 99% limited partner interest in Waco and Holdings shall hold a 1% general partner interest in Waco. Waco, Texas and the Company acknowledge and agree that the merger shall constitute a part of the Roadhouse Exchange under IRC Section 351.
3. CLOSING. The closing (the "CLOSING") of the transactions set forth in Section 2 shall occur immediately prior to the sale of shares of Class A Common Stock pursuant to the Underwriting Agreement on the First Closing Date (as defined in the Underwriting Agreement).
4. COMBINATION TRANSACTION CONSIDERATION.
(a) The equity holders of each Constituent Restaurant Entity shall receive the number of shares of Class A Common Stock determined by the Company in accordance with the applicable provisions regarding such consideration that are set forth in such Constituent Restaurant Entity's limited partnership agreement, operating agreement or franchise agreement (which determination shall be binding on all parties hereto absent manifest error) with such shares to be distributed among each Constituent Restaurant Entity's equity owners as provided for in such Constituent Restaurant Entity's organizational documents. The number of shares of Class A Common Stock, as so determined shall be set forth on Schedule B hereto which shall be attached to this Agreement on or prior to the closing. The shares of Class A Common Stock to be issued to the equity owners (collectively, the "EQUITY OWNERS") of Holdings, Development, Management, Aspen, Gainesville, and each Constituent Restaurant Entity (collectively, the "COMBINED ENTITIES") shall be delivered to the Custodian (as defined in the Underwriting Agreement) for distribution to the Equity Owners or for sale pursuant to the Underwriting Agreement.
(b) The parties acknowledge that the Company will be a C corporation for federal income tax purposes upon consummation of the Combination Transactions.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents, warrants and agrees to the other parties to this Agreement that as of the date of this Agreement and as of the date of the Closing as follows:
5.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to own its property, conduct its business as now being conducted and as contemplated to be conducted after the consummation of the transactions contemplated by this Agreement, and to enter into and carry out the provisions of this Agreement applicable to it.
5.2 CAPITAL STOCK; ISSUANCE AND VALIDITY OF SHARES. As of the date hereof, the Company has an authorized capitalization consisting of 1,000 shares of Class A Common Stock, 1,000 shares of Class B Common Stock, and 1,000 shares of $0.001 par value Preferred Stock (the "PREFERRED STOCK"), of which 1,000 shares of Class A Common Stock and no shares of Class B Common Stock or Preferred Stock are issued and outstanding as of the date hereof. Prior to the consummation of the Combination Transactions, the Company will amend its Certificate of Incorporation to increase the number of authorized shares of Class A Common Stock and Class B Common Stock (collectively, the "COMMON STOCK") to an amount in excess of the number of shares required to be issued in the Combination Transactions and the Initial Public Offering. The shares of Common Stock to be issued pursuant to this Agreement in the Combination Transactions by the Company will, when so issued, be validly authorized and issued, fully paid and nonassessable.
5.3 RESTRICTIVE DOCUMENTS. Neither this Agreement nor the consummation of the transactions herein contemplated, will violate the terms of the organizational documents of the Company, or of any mortgage, lien, lease, agreement, contract, instrument, law, rule, regulation, order, judgment or decree, to which the Company is subject or is a party, and which would preclude the Company from (i) consummating the transactions contemplated by this Agreement or (ii) complying with the terms, conditions and provisions of this Agreement.
5.4 AUTHORIZATION FOR AGREEMENT. The execution, delivery and performance of this Agreement, and the consummation of transactions contemplated by this Agreement, have been duly and validly approved and authorized by the Board of Directors of the Company; and this Agreement is the valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of creditors, and subject to the further qualification that the remedy of specific performance or injunctive relief is discretionary with the court before which any proceeding therefor may be brought.
5.5 NO REQUIRED APPROVALS. The execution, delivery and performance of this Agreement by the Company does not require the Company to give any notification to or receive any approval from any governmental authority other than filings with the Secretary of State of the State of Delaware and with the Secretary of State of the Commonwealth of Kentucky in connection with the Combination Transactions.
6. REPRESENTATIONS AND WARRANTIES OF COMBINED PARTIES. Each of the Combined Entities severally represents and warrants to the Company as of the date of this Agreement and as of the date of Closing as follows:
6.1 ORGANIZATION AND VALID EXISTENCE. Each Combined Entity is an entity duly organized and validly existing under the laws of the Commonwealth of Kentucky. Each Combined Entity has the requisite entity power and authority to own its property, conduct its business as now being conducted and as contemplated to be conducted after the consummation of the transactions contemplated by this Agreement, and to enter into and carry out the provisions of this Agreement applicable to it.
6.2 RESTRICTIVE DOCUMENTS. Neither this Agreement nor the consummation of the transactions herein contemplated, will violate the terms of the organizational documents of the Combined Party, or of any mortgage, lien, lease, agreement, contract, instrument, law, rule, regulation, order, judgment or decree, to which the Combined Party is subject or is a party, and which would preclude the Combined Party from (i) consummating the transactions contemplated by this Agreement or (ii) complying with the terms, conditions and provisions of this Agreement, except for consents that will be obtained prior to the Closing.
6.3 AUTHORIZATION FOR AGREEMENT. The execution, delivery and performance of this Agreement, and the consummation of transactions contemplated by this Agreement, have been duly and validly approved and authorized by necessary action on the part of such Combined Party; and this Agreement is the valid and binding obligation of the Combined Party and is enforceable against the Combined Party in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of creditors, and subject to the further qualification that the remedy of specific performance or injunctive relief is discretionary with the court before which any proceeding therefor may be brought.
6.4 NO REQUIRED APPROVALS. The execution, delivery and performance of this Agreement by the Combined Party does not require the Combined Party to give any notification to or receive any approval from any governmental authority other than filings with the Secretary of State of the Commonwealth of Kentucky in connection with the Combination Transactions.
7. COVENANTS OF THE PARTIES.
7.1 CONDUCT OF BUSINESS. From the date of this Agreement until the Closing, each Combined Party agrees to operate its business only in the ordinary course of business, and in substantial compliance with all statutory and regulatory requirements of any applicable federal, state or local authority, and agrees to enter into no material contract or other transaction relating to the business other than in the ordinary course of business without the prior written consent of the Company. Between the date hereof and the Closing, each Combined Party agrees to use its best efforts to preserve the goodwill and business of its customers, suppliers, and others having business relations with it, and further agrees to conduct the financial operations of its business in accordance with its existing business practices.
7.2 DISTRIBUTIONS. Prior to the Closing, each of the Combined Entities shall only make dividends or distributions to its equity owners to the extent described in the Registration Statement (as defined in the Underwriting Agreement).
7.3 NOTICE. Each of the parties agrees to immediate notify the other parties in writing if such party should become aware prior to the Closing that its representations and warranties are untrue at any time prior to the Closing.
7.4 INDEMNIFICATION.
(a) The Company will indemnify each Equity Owner who elects to sell any shares of Class A Class Common pursuant to the Underwriting Agreement (a "SELLING STOCKHOLDER"), and each person controlling such Selling Stockholder within the meaning of Section 15 of the Securities Act of 1933, as amended (the "SECURITIES ACT"), against all expenses, claims, losses, damages or liabilities, joint or several (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to the Initial Public Offering, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act of 1934, as amended, or any state or federal securities law, or any rule or regulation promulgated under such Acts or law applicable to the Company in connection with the Initial Public Offering, and the Company will reimburse each such Selling Stockholder and each person controlling such Selling Stockholder, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information regarding a Selling Stockholder furnished to the Company by an instrument duly executed by such Selling Stockholder or controlling person and stated to be specifically for use
therein. If the Selling Stockholders are represented by counsel other than counsel for the Company, the Company will not be obligated under this Section 7.4(a) to reimburse legal fees and expenses of more than one separate counsel for all Selling Stockholders.
(b) Each party entitled to indemnification under this Section
7.4 (the "INDEMNIFIED PARTY") shall give notice to the Company promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Company to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Company, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Company of its
obligations under this Section 7.4 unless the failure to give such notice is
materially prejudicial to an Company's ability to defend such action and
provided further, that the Company shall not assume the defense for matters as
to which there is a conflict of interest or separate and different defenses. The
Company, in the defense of any such claim or litigation, shall not, except with
the consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
(c) If the indemnification provided for in this Section 7.4 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the Company, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations, provided that in no event shall any contribution by a Selling Stockholder under this Section 7.4(c) exceed the public offering price of shares sold by such Selling Stockholder, except in the case of willful misconduct by such Selling Stockholder. The relative fault of the Company and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Company or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company to consummate the transactions contemplated in Section 1 and Section 2 is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Combined Entities, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties in Section 6 shall have been accurate in all material respects as of the date of this Agreement, and shall be accurate in all material respects as of the time of the Closing as if then made.
8.2 PERFORMANCE BY THE COMBINED PARTIES. All of the covenants and obligations that the Combined Parties are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing shall have been duly performed and complied with in all material respects.
8.3 REGISTRATION STATEMENT. The Registration Statement shall have become effective in accordance with Section 8(a) of the Securities Act.
9. CONDITIONS TO THE COMBINED PARTIES' OBLIGATIONS. The obligation of the Combined Parties to consummate the transactions contemplated in Section 1 and Section 2 is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Company, in whole or in part):
9.1 ACCURACY OF REPRESENTATIONS. All of the representations and warranties in Section 5 shall have been accurate in all material respects as of the date of this Agreement, and shall be accurate in all material respects as of the time of the Closing as if then made.
9.2 PERFORMANCE BY THE COMPANY. All of the covenants and obligations that Roadhouse is required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been duly performed and complied with in all material respects.
9.3 REGISTRATION STATEMENT. The Registration Statement shall have become effective in accordance with Section 8(a) of the Securities Act.
9.4 AMENDMENT TO HOLDINGS OPERATING AGREEMENT. Amendment No. 2 to the Amended and Restated Operating Agreement of Holdings, substantially in the form of Exhibit A hereto, shall be adopted by the Company as the Manager of Holdings.
9.5 WKT MERGER. The WKT Merger shall have been consummated.
10. TERMINATION OF THE AGREEMENT. This Agreement and the transactions contemplated hereby may be terminated or abandoned at any time before the Closing:
(a) by mutual consent of the Company, the Combined Parties and the Underwriters; or
(b) by any party, if Closing does not occur on or before March 31, 2005.
11. SURVIVAL. The representations and warranties of the parties to this Agreement shall terminate as of the Closing.
12. EXPENSES. Holdings shall pay all expenses incurred by any of the parties hereto in connection with (a) the consummation of the negotiation and preparation of this Agreement and the related documents, and the consummation of the transactions contemplated hereby, and (b) all expenses incurred by the parties hereto in connection with the Initial Public Offering, including, without limitation, those described in Item 13 of Part II of the Registration Statement.
13. FURTHER ASSURANCES. Prior to, and following the Closing, parties agree to execute and deliver any and all papers and documents which may be reasonably necessary to carry out the terms of this Agreement.
14. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the Schedules
and Exhibit hereto, contain the entire agreement between the parties and there are no agreements, representations, or warranties which are not set forth herein. This Agreement may not be amended or revised except by a writing signed by each of the parties to this Agreement and by the Underwriters.
15. BINDING EFFECT. This Agreement is binding upon and inures to the benefit of the parties and their respective successors and assigns. Other than the parties to this Agreement and the Underwriters, who shall be third party beneficiaries of this Agreement, this Agreement is not intended and must not be construed to create any rights in any parties, including without limitation, the Equity Owners, and no person may assert any rights as a third party beneficiary.
16. SEVERABILITY. The provisions of this Agreement are severable, and the invalidity of any provision will not affect the validity of any other provision.
17. GOVERNING LAW. The execution, interpretation, and performance of this Agreement will be governed by the laws of the Commonwealth of Kentucky, without regard to or application of its conflicts of law principles.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
TEXAS ROADHOUSE, INC.
By: /S/ W. KENT TAYLOR
---------------------------------------
W. Kent Taylor, Chairman
/S/ W. KENT TAYLOR
---------------------------------------
W. Kent Taylor, individually
|
TEXAS ROADHOUSE HOLDINGS LLC
By: WKT RESTAURANT CORP.,
as Manager
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, Chief Executive
Officer
|
TEXAS ROADHOUSE DEVELOPMENT
CORPORATION
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, Chief Executive
Officer
|
TEXAS ROADHOUSE MANAGEMENT CORP.
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, Chief Executive
Officer
|
ASPEN STEAKS, LTD.
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, President
|
TEXAS ROADHOUSE OF GAINESVILLE INC., I
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, President
|
TEXAS ROADHOUSE OF TEXAS, LLC
By: TEXAS ROADHOUSE HOLDINGS LLC,
as Manager
By: WKT RESTAURANT CORP.,
as Manager
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, Chief Executive
Officer
|
EACH OF THE CONSTITUENT ENTITIES LISTED ON
PART I OF SCHEDULE A
By: TEXAS ROADHOUSE HOLDINGS LLC,
as Manager
By: WKT RESTAURANT CORP.,
as Manager
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, Chief Executive
Officer
|
EACH OF THE CONSTITUENT ENTITIES LISTED ON
PART II OF SCHEDULE A
By: TEXAS ROADHOUSE HOLDINGS LLC,
as General Partner
By: WKT RESTAURANT CORP.,
as Manager
By: /S/ W. KENT TAYLOR
----------------------------------
W. Kent Taylor, Chief Executive
Officer
|
LONGVIEW ROADHOUSE II, LTD.
By: TEAS III, INC.,
as General Partner
By: /S/ STEVEN L. ORTIZ
----------------------------------
Steven L. Ortiz, President
|
SCHEDULE A
TO
MASTER TRANSACTION AGREEMENT
PART I
Name of Constituent Restaurant Entity Form of Entity
------------------------------------- --------------
Texas Roadhouse of Boise, LLC Kentucky limited liability company
Texas Roadhouse of Cedar Falls, LLC Kentucky limited liability company
Texas Roadhouse of Cheyenne, LLC Kentucky limited liability company
Texas Roadhouse of Decatur, LLC Kentucky limited liability company
Texas Roadhouse of Dixie Highway, LLC Kentucky limited liability company
Texas Roadhouse of East Peoria, LLC Kentucky limited liability company
Texas Roadhouse of Elkhart, LLC Kentucky limited liability company
Texas Roadhouse of Elyria, LLC Kentucky limited liability company
Texas Roadhouse of Fort Wayne, LLC Kentucky limited liability company
Texas Roadhouse of Grand Junction, LLC Kentucky limited liability company
Texas Roadhouse of Lancaster, LLC Kentucky limited liability company
Texas Roadhouse of Lansing, LLC Kentucky limited liability company
Texas Roadhouse of Lynchburg, LLC Kentucky limited liability company
Texas Roadhouse of New Philadelphia, LLC Kentucky limited liability company
Texas Roadhouse of Richmond, LLC Kentucky limited liability company
Texas Roadhouse of Roseville, LLC Kentucky limited liability company
|
PART II
Name of Constituent Restaurant Entity Form of Entity
------------------------------------- --------------
Texas Roadhouse of Amarillo, Ltd. Kentucky limited partnership
Texas Roadhouse of College Station, Ltd. Kentucky limited partnership
Texas Roadhouse of Conroe, Ltd. Kentucky limited partnership
Texas Roadhouse of Corpus Christi, Ltd. Kentucky limited partnership
Texas Roadhouse of Denton, Ltd. Kentucky limited partnership
Texas Roadhouse of Friendswood, Ltd. Kentucky limited partnership
Texas Roadhouse of Grand Prairie, Ltd. Kentucky limited partnership
Texas Roadhouse of Houston, Ltd. Kentucky limited partnership
Texas Roadhouse of Live Oak, Ltd. Kentucky limited partnership
Texas Roadhouse of Lubbock, Ltd. Kentucky limited partnership
Texas Roadhouse of Mesquite, Ltd. Kentucky limited partnership
Texas Roadhouse of Pasadena, Ltd. Kentucky limited partnership
Texas Roadhouse of Texarkana, Ltd. Kentucky limited partnership
Texas Roadhouse of Tyler, Ltd. Kentucky limited partnership
Texas Roadhouse of Waco, Ltd. Kentucky limited partnership
|
PART III
Name of Constituent Restaurant Entity Form of Entity
------------------------------------- --------------
Longview Roadhouse II, Ltd. Kentucky limited partnership
|
SCHEDULE B
TO
MASTER TRANSACTION AGREEMENT
Combination Transaction Consideration
AMENDMENT NO. 2
TO
AMENDED AND RESTATED OPERATING AGREEMENT
OF
TEXAS ROADHOUSE HOLDINGS LLC
Dated _________, 2004
This is Amendment No. 2 (this "AMENDMENT") to the Amended and Restated Operating Agreement of Texas Roadhouse Holdings LLC ("HOLDINGS") dated as of July 12, 2001, as adopted by Texas Roadhouse, Inc. as Manager of the Company.
Recitals
A. The Amended and Restated Operating Agreement (the "OPERATING AGREEMENT") of Holdings was entered into on July 12, 2001.
B. Amendment No. 1 ("AMENDMENT NO. 1") to the Operating Agreement was entered into as of November 8, 2002.
C. Holdings has entered into a Master Transaction Agreement dated May 7, 2004 with Texas Roadhouse, Inc. and certain other parties named therein (the "MASTER TRANSACTION AGREEMENT").
D. It is a condition to the obligations of the parties to the Master Transaction Agreement other than Texas Roadhouse, Inc., that the Operating Agreement, as amended by Amendment No. 1, be further amended as contemplated hereby (as so amended, the "AMENDED OPERATING AGREEMENT").
NOW THEREFORE, the Manager hereby adopts the following amendments to the Operating Agreement, as amended:
1. An additional class of interests of Holdings referred to as "Preferred Shares" is hereby created.
2. Holdings will have ___________* authorized Preferred Shares.
3. The rights and preferences of Preferred Shares are as follows:
(a) Each Preferred Share, when issued, shall represent an amount equal to $1.00 of the holder's Capital Account balance in Holdings as of the Closing (as defined in the Master Transaction Agreement), [and correspondingly shall represent an amount equal to $1.00 of the holder's tax basis in the holder's membership interest.] Upon issuance of the Preferred Shares, the membership interests of Holdings shall be deemed to be "recapitalized" as provided for in this Section 3.
(b) Holders of the Preferred Shares shall have no right to share in distributions under Article 11 of the Amended Operating Agreement, or share in allocations of Taxable Income and Tax Losses pursuant to Article 12 of the Amended Operating Agreement.
(c) Unless redeemed prior to such date, each Preferred Share shall entitle the holder to an amount equal to $1.00 in distributions in connection with the liquidation and winding up of Holdings pursuant to Article 20 of the Amended Operating Agreement. Liquidation payments to the holders of Preferred Shares shall take priority over distributions to holders of Common Shares.
(d) Preferred Shares shall be subject to the same restrictions on transfer that apply to Common Shares pursuant to Article 18 of the Amended Operating Agreement.
(e) The Company shall have the right at any time to redeem the Preferred Shares at a redemption price equal to $1.00 per Preferred Share and upon the giving of notice and tendering of the redemption price to holders of record of the Preferred Shares as of the date of such notice, and with no further action on the part of the holder thereof, such Preferred Shares shall be deemed to be redeemed.
(f) The Company shall have the obligation to redeem the Preferred Shares on or before December 31, 2005 at a redemption price equal to $1.00 per Preferred Share and upon the giving of notice and tendering of the redemption price to holders of record as of the date of such notice, and with no further action on the part of the holder thereof, such Preferred Shares shall be deemed to be redeemed.
(g) Preferred Shares shall not be represented by certificates.
(h) Holders of Preferred Shares shall be deemed to be "Members" for purposes of the Amended Operating Agreement and the Kentucky Limited Liability Company Act, subject to the rights and preferences of holders of Preferred Shares set forth in the Amended Operating Agreement.
(i) Preferred Shares shall be nonvoting.
4. Except as otherwise modified herein, the Operating Agreement, as amended by Amendment No. 1, shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date set forth above.
TEXAS ROADHOUSE, INC.,
Manager
Exhibit 4.2
COMMON STOCK COMMON STOCK
[TEXAS ROADHOUSE LOGO]
[GRAPHIC] [GRAPHIC]
NUMBER SHARES
TXRH
THIS CERTIFICATE IS TRANSFERABLE TEXAS ROADHOUSE, INC. SEE REVERSE FOR CERTAIN DEFINITIONS
IN THE CITY OF NEW YORK OR IN
CLEVELAND, OHIO INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE CUSIP 882681 10 9
--------------------------------------------------------------------------------------------------------------------------
THIS CERTIFIES THAT
is the record holder of
--------------------------------------------------------------------------------------------------------------------------
FULLY PAID AND NONASSESSABLE SHARES OF CLASS A COMMON STOCK, $0.001 PAR VALUE, OF
------------------------------------------------- TEXAS ROADHOUSE, INC. --------------------------------------------------
transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
DATED:
/s/ Sheila C. Brown [TEXAS ROADHOUSE, INC. /s/ Gerard J. Hart
CORPORATE SEAL 2004
CORPORATE SECRETARY DELAWARE] PRESIDENT AND CHIEF EXECUTIVE OFFICER
Countersigned and Registered:
NATIONAL CITY BANK
(CLEVELAND, OHIO)
By Transfer Agent and Registrar
Authorized Signature
|
TEXAS ROADHOUSE, INC.
The Corporation will furnish without charge to each stockholder who so requests a statement of the powers, designations,
preferences and relative, participating, optional or other special rights of each class of stock of the Corporation or series
thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Such requests shall be made to the
Corporation's Secretary at the principal office of the Corporation.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS
A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT- Custodian
--------------------- -----------------------
TEN ENT - as tenants by the entireties (Cust) (Minor)
under Uniform Gifts to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants Act
in common --------------------------------------------------
(State)
UNIF TRF MIN ACT- Custodian (until age ___)
---------------------
(Cust)
under Uniform Transfers
---------------------
(Minor)
to Minors Act
---------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------------------
------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
of the Class A common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
Attorney to
--------------------------------------------------------------------------------------------------------
transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.
Dated
------------------------
X
-------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By
------------------------------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C.
RULE 17Ad-15.
|
Exhibit 4.3
TEXAS ROADHOUSE, INC.
REGISTRATION RIGHTS AGREEMENT
MAY 7, 2004
TABLE OF CONTENTS
SECTION 1 DEFINITIONS........................................................1
SECTION 2 REGISTRATION RIGHTS................................................2
2.1 Requested Registration.............................................2
2.2 Company Registration...............................................4
2.3 Registration on Form S-3...........................................6
2.4 Limitations on Subsequent Registration Rights......................6
2.5 Expenses of Registration...........................................7
2.6 Registration Procedures............................................7
2.7 Indemnification....................................................9
2.8 Information by Holder.............................................11
2.9 Rule 144 Reporting................................................11
2.10 Transfer of Registration Rights...................................11
2.11 Termination.......................................................12
2.12 Lock-up Agreement.................................................12
SECTION 3 MISCELLANEOUS.....................................................12
3.1 Governing Law.....................................................12
3.2 Entire Agreement; Amendment.......................................12
3.3 Notices, etc......................................................13
3.4 Severability......................................................13
3.5 Counterparts......................................................13
|
TEXAS ROADHOUSE, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made as of May 7, 2004, by and among Texas Roadhouse, Inc., a Delaware corporation (the "COMPANY"), and the Eligible Equity Owners (as defined below).
RECITALS
A. The Company is a party to that certain Master Transaction Agreement dated as of May 7, 2004 (the "MASTER TRANSACTION AGREEMENT"), by and among the Company, W. Kent Taylor, Texas Roadhouse of Texas, LLC and the Combined Entities (as defined in the Master Transaction Agreement).
B. It is a condition to the obligations of the Combined Entities under the Master Transaction Agreement that the Company enter into this Agreement.
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following respective meanings:
1.1 "COMMISSION" shall mean the Securities and Exchange Commission or any other U. S. federal agency at the time administering the Securities Act.
1.2 "COMMON STOCK" shall mean shares of the Company's Class A Common Stock, par value $0.001 per share.
1.3 "ELIGIBLE EQUITY OWNERS" shall mean those Equity Owners (as defined in the Master Transaction Agreement) who have executed a counterpart of this Agreement.
1.4 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
1.5 "HOLDER OR HOLDERS" shall mean each of the Eligible Equity Owners (and their transferees as permitted by Section 2.10) holding Registrable Securities.
1.6 "INITIATING HOLDERS" shall mean Holders who in the aggregate hold greater than fifty percent (50%) of the Registrable Securities. "OTHER HOLDERS" shall mean holders of Company securities, other than the Holders, proposing to distribute their securities pursuant to a registration under Section 2 of this Agreement.
1.7 "INITIAL PUBLIC OFFERING" shall have the meaning set forth in the Master Transaction Agreement.
1.8 "REGISTRABLE SECURITIES" shall mean (i) shares of Common Stock issued pursuant to the Master Agreement to the Eligible Equity Owners; (ii) shares of Common Stock issued upon the conversion of any shares of Class B Common Stock, par value $0.001 per share, of the Company; (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such Common Stock, excluding in all cases, however, any Registrable Securities that have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or which have been sold in a private transaction in which the transferor's rights under this Agreement are not assigned.
1.9 The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "REGISTRATION EXPENSES" shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 2.1, 2.2 and 2.3 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company (and fees and disbursements of one special counsel for Holders, if any), accounting fees, blue sky fees and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).
1.10 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any similar United States federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
1.11 "SELLING EXPENSES" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders.
SECTION 2
REGISTRATION RIGHTS
2.1 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to not less than 500,000 Registrable Securities (as equitably adjusted for any stock splits, stock dividends, combinations or recapitalizations occurring after the date hereof (each a "RECAPITALIZATION")) the Company will:
(i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within ten (10) days after receipt of such written notice from the Company or such later date as agreed to by the Company;
PROVIDED, HOWEVER, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.1:
(A) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
(B) Prior to the 180th day following the effective date of the Initial Public Offering;
(C) During the period starting with the date sixty (60) days prior to the Company's estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company sold by the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;
(D) After the Company has effected two (2)
registrations pursuant to this Section 2.1, and such registrations have been
declared or ordered effective, provided that all Registrable Securities
requested to be included in each such registration(s) were in fact included in
the registration; or
(E) If the Company shall furnish to such Holders a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 2 shall be deferred for a period not to exceed ninety (90) days from the date of receipt of written request from the Initiating Holders, provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period.
Subject to the foregoing clauses (A) through (E), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable, after receipt of the request or requests of the Initiating Holders.
(b) UNDERWRITING. In the event that a registration pursuant to
Section 2.1 is for a registered public offering involving an underwriting, the
Initiating Holders will so advise the Company as part of the written request
given by such Initiating Holders pursuant to Section 2.1(a), and the Company
shall in turn advise the Holders as part of the notice given pursuant to Section
2.1(a)(i). In such event, the right of any Holder to registration pursuant to
Section 2.1 shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 2.1, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to distribute their securities through such underwriting and the Other Holders, if any) enter into an underwriting agreement in customary form with the managing underwriter(s) selected for such underwriting by the majority in interest of the Initiating Holders, but subject to the reasonable approval of the Company. Notwithstanding any other provision of this Section 2.1, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders and Other Holders, and the number of shares that may be included in the registration and underwriting shall be allocated first among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement and second among the Other Holders in proportion to the number of shares proposed to be included in such registration by such Other Holders. No shares proposed to be included in such registration by any of the Other Holders shall be included in such registration unless all shares requested to be included by the Initiating Holders are included in such registration. No Registrable Securities or other securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any holder to the nearest one hundred (100) shares.
If any Holder of Registrable Securities or Other Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration.
2.2 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to
employee benefit plans or (ii) a registration relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) if requested by Initiating Holders, include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made, within ten (10) days after receipt of such written notice from the Company or such later date as agreed to by the Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.2(a). In such event the right of any Holder to registration pursuant to Section 2.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall, together with the Company and the Other Holders, if any, enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 2.2, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of shares of Registrable Securities to be included in such registration without requiring any limitation in the number of shares to be registered on behalf of the Company, provided that if such underwriting is other than the Initial Public Offering, the number of shares of Registrable Securities to be included in such registration shall not be limited to less than twenty-five percent (25%) of the total number of shares to be included in such registration. The Company shall so advise all Holders and Other Holders and the number of shares that may be included in the registration and underwriting by all Holders and Other Holders shall be allocated among them, as nearly as practicable, first, to the Company, second, among the Holders of Registrable Securities in proportion to the respective amounts of Registrable Securities held by such Holders at the time of filing of the registration statement, and, third, among the Other Holders in proportion to the number of shares proposed to be included in such registration by such Other Holders. No shares proposed to be included in such registration by any of the Other Holders shall be included in such registration unless all shares requested to be included by the Holders are included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or Other Holder to the nearest one hundred (100) shares. If any Holder or Other Holder disapproves of the terms of any such underwriting, such holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.2 prior to the
effectiveness of such registration whether or not any Holder has elected to include Registrable Securities in such registration.
2.3 REGISTRATION ON FORM S-3.
(a) REQUEST FOR REGISTRATION. If Initiating Holders request that the Company file a registration statement on Form S-3 under the Securities Act (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities the reasonably anticipated aggregate price to the public of which would exceed $1,000,000 (before deducting the underwriters' discounts and commissions), and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as the Holder or Holders may reasonably request. The substantive provisions of Section 2.1(b) shall be applicable to each registration initiated under this Section 2.3.
(b) LIMITATIONS. Notwithstanding the foregoing, the Company shall
not be obligated to take any action pursuant to this Section 2.3: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act; (ii)
during the period starting with the date sixty (60) days prior to the Company's
estimated date of filing of, and ending on the date six (6) months immediately
following, the effective date of any registration statement pertaining to
securities of the Company (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; (iii) if the Company shall furnish
to such Holder a certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Company for registration statements to be
filed in the near future, then the Company's obligation to use its best efforts
to file a registration statement shall be deferred for a period not to exceed
ninety (90) days from the receipt of the request to file such registration by
such Holder, provided, however, that the Company shall not utilize this right
more than once in any twelve (12) month period; or (iv) for any particular
Holder, after the Company has effected two (2) registrations pursuant to this
Section 2.3, and such registrations have been declared or ordered effective.
2.4 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Company will not, without the prior written consent of holders
of a majority of the voting power of the then outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which grants such holder or prospective holder of
(a) to include such securities in any registration filed under Section 2.1 or
2.2 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the
amount of the Registrable Securities of the Holders which is included or (b) to make a demand registration which could result in such registration statement being declared effective within one hundred twenty (120) days of the effective date of any registration effected pursuant to Section 2.2.
2.5 EXPENSES OF REGISTRATION.
(a) REGISTRATION EXPENSES. The Company shall bear all Registration Expenses incurred in connection with all registrations pursuant to Section 2.1 and Section 2.2. The Holders of the Registrable Securities shall bear all Registration Expenses in connection with all registrations pursuant to Section 2.3.
(b) SELLING EXPENSES. Unless otherwise stated in Section 2.5(a), all Selling Expenses and Registration Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders pro rata on the basis of the number of shares so registered.
2.6 REGISTRATION PROCEDURES. In the case of each registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will:
(a) keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof;
(b) as soon as practicable, prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective until the
earlier of (i) one hundred twenty (120) days or (ii) the distribution described
in the Registration Statement has been completed; provided, however, that (i)
such 120-day period shall be extended for a period of time equal to the period
the Holder refrains from selling any securities included in such registration at
the request of the managing underwriter; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 120-day period shall be extended,
if necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and, provided further, that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a)(3) of the Securities Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement;
(c) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents
as such underwriters may reasonably request in order to facilitate the public offering of such securities;
(d) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;
(e) in the event of an underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement;
(f) use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;
(g) cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed;
(h) use its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 2, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 2, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities;
(i) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein not misleading in the light of the circumstances then existing; and
(j) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.
2.7 INDEMNIFICATION.
(a) BY COMPANY. The Company will indemnify each Holder and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities, joint or several, (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act or any state or federal securities law, or any rule or regulation promulgated under such Acts or law applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information regarding a Holder furnished to the Company by an instrument duly executed by such Holder, underwriter or controlling person and stated to be specifically for use therein. If the Holders are represented by counsel other than counsel for the Company, the Company will not be obligated under this Section 2.7(a) to reimburse legal fees and expenses of more than one separate counsel for all Holders.
(b) BY HOLDERS. Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, each of its officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons, underwriters or controlling persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information regarding a Holder furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited in an amount equal to the public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful misconduct by such Holder.
(c) PROCEDURES. Each party entitled to indemnification under this
Section 2.7 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 2.7 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations, provided that in no event shall any contribution by a Holder
under this Section 2.7(d) exceed the public offering price of shares sold by
such Holder, except in the case of willful misconduct by such Holder. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e) CONTROLLING AGREEMENT. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions of this Section 2.7, the provisions in the underwriting agreement shall control.
2.8 INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by them as the Company may request in writing and only as shall be necessary to enable the Company to comply with the provisions hereof in connection with any registration, qualification or compliance referred to in this Agreement.
2.9 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Securities Exchange Act of 1934, as amended and for so long as the Company remains subject to the periodic reporting requirements under Section 13 or 15(d) of the Exchange Act.
(b) Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements).
(c) Furnish to any Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.
2.10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to register securities granted Holders under Sections 2.1, 2.2 and 2.3 may be transferred in connection with any transfer by a Holder of Registrable Securities provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws, (ii) such
transfer is effected in compliance with the restrictions on transfer contained in this Agreement and in any other agreement between the Company and the Holder, and (iii) such transferee is an affiliate of a Stockholder or acquires (I) at least 50,000 shares of Registrable Securities (as equitably adjusted for Recapitalizations) or (II) all shares of Registrable Securities held by a Stockholder if transferred to a single transferee. No transfer will divest a Holder or any subsequent owner of such rights and powers unless all Registrable Securities are transferred or assigned.
2.11 TERMINATION. The rights granted pursuant to this Section 2 shall terminate as to any Holder at the later of (i) five years after the Initial Public Offering, or (ii) at such time as such Holder may sell under Rule 144, or a successor rule, in a three month period all Registrable Securities then held by such Holder.
2.12 LOCK-UP AGREEMENT. If, in connection with the public offering of the Company's securities, the Company or the underwriters managing the offering so request, each Holder shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for (i) 180 days from the effective date of such registration in the case of the Company's initial public offering and (ii) 90 days from the effective date of such registration in the case of any other public offering of the Company's securities.
SECTION 3
MISCELLANEOUS
3.1 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the Commonwealth of Kentucky as applied to contracts made and to be fully performed entirely within that state between residents of that state. All disputes arising out of this Agreement shall be subject to the exclusive jurisdiction and venue of the Kentucky state courts of Jefferson County, Kentucky, (or, if there is exclusive federal jurisdiction, the United States District Court for the Western District of Kentucky) and the parties consent to the personal and exclusive jurisdiction and venue of these courts.
3.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof. This Agreement or any term hereof may be amended, waived, discharged or terminated by a written instrument signed by the Company and the Holders holding a majority of the Registrable Securities then outstanding; provided, however, that if any amendment or waiver shall affect any Holder materially differently and adversely than other Holders, then such amendment or waiver shall require the consent of the Holder(s) so materially differently and adversely affected. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each party to the Agreement, whether or not such party has signed such amendment or waiver, each future Holder, and the Company.
3.3 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be deemed given if in writing and mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to an Eligible Equity Owner, at such address as such Eligible Equity Owner shall have furnished to the Company in writing, or (b) if to any other Holder, at such address as such Holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last Holder of such Registrable Securities who has so furnished an address to the Company, or (c) if to the Company, at the address of its principal offices and addressed to the attention of the Corporate Secretary and with a copy to Frost Brown Todd LLC, 400 West Market Street, 32nd Floor, Louisville, Kentucky 40202-3363, Attention: William G. Strench, Esq. or at such other address as the Company shall have furnished to the Holders.
3.4 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
3.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.
"COMPANY"
TEXAS ROADHOUSE, INC., a
Delaware corporation
By:/S/ G. J. HART ------------------------------------- G. J. Hart, Chief Executive Officer /S/ W. KENT TAYLOR ---------------------------------------- W. Kent Taylor |
OTHER ELIGIBLE EQUITY OWNERS
/S/ W. KENT TAYLOR ---------------------------------------- W. Kent Taylor, Power of Attorney |
Exhibit 5.1
[FROST BROWN TODD LETTERHEAD]
October 4, 2004
Texas Roadhouse, Inc.
6040 Dutchmans Lane, Suite 400
Louisville, Kentucky 40205
RE: REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (Registration No. 333-115259) filed by you with the Securities and Exchange Commission on May 7, 2004, as amended (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of up to 10,062,500 shares of your Class A common stock (the "Shares"). The Shares include an over-allotment option granted to the underwriters of the offering to purchase 1,312,500 shares of Class A common stock. We understand that the Shares are to be sold to the underwriters for resale to the public as described in the Registration Statement and pursuant to the Underwriting Agreement filed as an exhibit thereto. As your legal counsel, we have examined the proceedings taken and are familiar with the proceedings proposed to be taken by you in connection with the sale and issuance of the Shares.
It is our opinion that the Shares, when issued and sold in the manner described in the Registration Statement, will be validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration Statement, and we consent to the reference of our name under the caption "Legal Matters" in the prospectus forming part of the Registration Statement.
Very truly yours,
FROST BROWN TODD LLC
By: /S/ WILLIAM G. STRENCH
------------------------------
William G. Strench, Member
|
Exhibit 10.4
EMPLOYMENT AGREEMENT
(GERARD J. HART)
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of May 5, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "COMPANY"), and GERARD J. HART, a resident of the Commonwealth of Kentucky ("EXECUTIVE").
RECITALS
A. The Company is preparing for an initial public offering (the "IPO") of its shares of Class A Common Stock, $0.001 par value ("CLASS A COMMON STOCK"), and has filed a Registration Statement on Form S-1 (the "REGISTRATION STATEMENT") with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
B. Texas Roadhouse Management Corp., a Kentucky corporation ("MANAGEMENT CORP."), has entered into an agreement to merge with a wholly-owned subsidiary of the Company effective immediately prior to the closing of the IPO.
C. Executive is currently employed by Management Corp. as its President, pursuant to an Employment Agreement dated March 15, 2000, between Management Corp. and Executive (the "PRIOR EMPLOYMENT AGREEMENT").
D. Executive has been appointed as the Chief Executive Officer of the Company.
E. The Company desires that the employment of Executive, and Executive wishes such employment, as Chief Executive Officer of the Company following the IPO, to be governed by the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:
1. EFFECTIVE DATE. The terms and conditions of Executive's employment hereunder shall become effective upon completion and closing of the IPO (the "EFFECTIVE DATE"). Notwithstanding the preceding sentence, the terms and conditions of Executive's employment hereunder shall not become effective and this Agreement shall immediately terminate if, prior to the Effective Date, any of the following shall occur: (a) Executive resigns from his employment with Management Corp., (b) the death or Disability (as defined in Section 10 hereof) of Executive, (c) the withdrawal of the Registration Statement prior to its effectiveness, (d) if the IPO does not close on or prior to December 31, 2004, or (e) Executive's employment is terminated by Management Corp. Neither Executive nor the Company may revoke or cancel this Agreement prior to the Effective Date without written agreement of the other party.
2. EMPLOYMENT. Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on the last day of the twelfth full fiscal quarter following the Effective Date (the "THIRD ANNIVERSARY DATE"), which initial twelve fiscal quarter term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of four fiscal quarters thereafter (which initial twelve fiscal quarter term together with any such extensions, if any, the "TERM"), unless the Executive's employment terminates earlier in accordance with Section 9 hereof. Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.
3. POSITION AND DUTIES.
(a) EMPLOYMENT WITH THE COMPANY. While Executive is employed by the Company during the Term, Executive shall be employed as the Chief Executive Officer of the Company, and such other titles as the Company may designate, and shall perform such duties and responsibilities as the Company shall assign to him from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.
(b) PERFORMANCE OF DUTIES AND RESPONSIBILITIES. Executive shall serve the Company faithfully and to the best of his ability and shall devote his full working time, attention and efforts to the business of the Company during his employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Chairman of the Company or to such other person as designated by the Board of Directors of the Company (the "BOARD"). Executive hereby represents and confirms that he is under no contractual or legal commitments that would prevent him from fulfilling his duties and responsibilities as set forth in this Agreement. During his employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and he may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of his duties and responsibilities hereunder.
4. COMPENSATION.
(a) BASE SALARY. While Executive is employed by the Company during the Term, the Company shall pay to Executive a base salary at the rate of Five Hundred Thousand and no/100 Dollars ($500,000.00) per fiscal year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. The Executive's base salary may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(b) INCENTIVE BONUS. Commencing with the first full fiscal quarter following the Effective Date and for each full fiscal quarter thereafter that Executive is employed by the Company during the Term, Executive shall be eligible for a quarterly incentive bonus in an amount up to Seventy Five Thousand and no/100 Dollars ($75,000.00), based upon achievement of defined goals established by the Compensation Committee of the Board and in accordance with the terms of any incentive plan of the Company in effect from time to time (the "INCENTIVE BONUS"). The level of achievement of the objectives each fiscal quarter and the amount payable as Incentive Bonus shall be determined in good faith by the Compensation Committee. Any Incentive Bonus earned for a fiscal quarter shall be paid to Executive on or before the 90th day following the last day of such fiscal quarter. The amount of the Executive's quarterly incentive bonus may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(c) STOCK OPTIONS.
(i) Pursuant to the 2004 Equity Incentive Plan of the Company, as of the Effective Date, Executive shall be granted options (the "Options") to purchase 165,000 shares of Class A Common Stock at an exercise price equal to the price per share at which shares of Class A Common Stock are offered to the public in the IPO.
(ii) The Options shall vest in accordance with the following schedule:
DATE AMOUNT VESTING
---- --------------
First Anniversary of the Effective Date 24,000 shares
Second Anniversary of Effective Date 24,000 shares
Third Anniversary of Effective Date 117,000 shares
|
(iii) If a share dividend, share split or share combination shall occur with respect to the Common Shares of Texas Roadhouse Holdings LLC, a Kentucky limited liability company, shall occur prior to the closing of the IPO, or such Common Shares are exchanged for shares of Class A Common Stock in connection with the IPO on a basis other than one-to-one, the amounts set forth in this Section 4(c) shall be correspondingly adjusted.
(iv) In the event of a termination of Executive's Employment
other than for Cause (as defined below) or termination by Executive
for Good Reason (as defined below) within 12 months following a Change
of Control (as defined below), or prior to a Change of Control at the
direction of a person who has entered into an agreement with the
Company, the consummation of which will constitute a Change of
Control, and contingent upon Executive's compliance with Section
10(g), the Options and all other options granted under any stock
option and stock incentive plans of the Company that are outstanding
as of the
date of termination shall become immediately exercisable in full and shall remain exercisable until the earlier of (A) two years after termination of Executive's employment by the Company or (B) the option expiration date as set forth in the applicable option agreement.
(v) A "CHANGE OF CONTROL" shall mean that one of the following events has taken place at any time during the Term:
(A) The stockholders of the Company approve one of the following:
(I) Any merger or statutory plan of exchange involving the Company ("MERGER") in which the Company is not the continuing or surviving corporation or pursuant to which the Common Stock, $0.001 par value ("COMMON STOCK") would be converted into cash, securities or other property, other than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger have substantially the same proportionate ownership of common stock of the surviving corporation after the Merger; or
(II) Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or the adoption of any plan or proposal for the liquidation or dissolution;
B) During any period of 12 months or less, individuals who at the beginning of such period constituted a majority of the Board of Directors cease for any reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period; or
C) A tender or exchange offer, other than one made by:
(I) the Company, or by
(II) W. Kent Taylor or any corporation, limited
liability company, partnership, or other entity in which W.
Kent Taylor (x) owns a direct or indirect ownership of 50%
or more or (y) controls 50% or more of the voting power
(collectively, the "TAYLOR PARTIES")
is made for the Common Stock (or securities convertible into
Common Stock) and such offer results in a portion of those
securities being purchased and the offeror after the consummation
of the offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE Act")),
directly or indirectly, of securities representing at least 20 percent of the voting power of outstanding securities of the Company; or
(D) the Company receives a report on Schedule 13D of the Exchange Act reporting the beneficial ownership by any person other than a Taylor Party of securities representing 20 percent or more of the voting power of outstanding securities of the Company, except that if such receipt shall occur during a tender offer or exchange offer described in (C) above, a Change of Control shall not take place until the conclusion of such offer.
Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of the Company.
vi) A termination by Executive for "Good Reason" shall mean a termination based on:
(A) the assignment of Executive a different title or job responsibilities that result in a substantial decrease in the level of responsibility from those in effect immediately prior to the Change of Control;
(B) a reduction by the Company or the surviving company in Executive's base pay as in effect immediately prior to the Change of Control;
(C) a significant reduction by the Company or the surviving company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control;
(D) the requirement by the Company or the surviving company that Executive be based more than 50 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company prior to the Change of Control; or
(E) the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company ("SUCCESSOR") the assent to this Agreement contemplated by Section 13(g) hereof.
(d) BENEFITS. While Executive is employed by the Company during the Term, Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.
(e) EXPENSES. While Executive is employed by the Company during the Term, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by him in the performance of his duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expense verification and documentation.
(f) VACATIONS AND HOLIDAYS. Executive shall be entitled to be absent from his duties for the Company by reason of vacation for a period of four weeks per calendar year. Executive shall coordinate his vacation schedule with the Company so as not to impose an undue burden on the Company. In addition, Executive shall be entitled to such national and religious holidays as the Board shall approve for all of its employees from time to time.
5. AFFILIATED ENTITIES. As used in Sections 6, 7 and 8 of this Agreement, "COMPANY" shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common control with the Company (in each case "control" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).
6. CONFIDENTIAL INFORMATION. Except as required in the performance of Executive's duties as an employee of the Company or as authorized in writing by the Board, Executive shall not, either during Executive's employment with the Company or at any time thereafter, use, disclose or make accessible to any person any confidential information for any purpose. "CONFIDENTIAL INFORMATION" means information proprietary to the Company or its suppliers or prospective suppliers and not generally known (including trade secret information) about the Company's suppliers, products, services, personnel, customers, recipes, pricing, sales strategies, technology, computer software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, and plans. All information disclosed to Executive or to which Executive obtains access, whether originated by Executive or by others, during the period of Executive's employment by the Company (whether before, during, or after the Term), shall be presumed to be Confidential Information if it is treated by the Company as being Confidential Information or if Executive has a reasonable basis to believe it to be Confidential Information. Executive acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. During
Executive's employment with the Company, Executive shall refrain from committing any acts that would materially reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently becomes generally publicly known, or (ii) is required to be disclosed by law or legal process, other than as a direct or indirect result of the breach of this Agreement by Executive. Executive acknowledges that the obligations imposed by this Section 6 are in addition to, and not in place of, any obligations imposed by applicable statutory or common law.
7. NONCOMPETITION COVENANT.
(a) AGREEMENT NOT TO COMPETE. During Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period (as defined below), Executive shall not, directly or indirectly, on his own behalf or on behalf of any person or entity other than the Company, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, engage in any business that is directly competitive with the business of the Company, including without limitation any business that operates one or more full-service, casual dining steakhouse restaurants. The provisions of this Section 7(a) shall also apply to any business which is directly competitive with any other business which the Company acquires or develops during Executive's employment with the Company.
(b) AGREEMENT NOT TO HIRE. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, hire, engage or solicit or induce or attempt to induce to cease working for the Company, any person who is then an employee of the Company or who was an employee of the Company during the six (6) month period immediately preceding Executive's termination of employment with the Company.
(c) AGREEMENT NOT TO SOLICIT. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, solicit, request, advise, induce or attempt to induce any vendor, supplier or other business contact of the Company to cancel, curtail, cease doing business with, or otherwise adversely change its relationship with the Company.
(d) RESTRICTED PERIOD. "RESTRICTED PERIOD" hereunder means the period commencing on the last day of Executive's employment with the Company and ending on the date that is two years following the last day of the Term.
(e) ACKNOWLEDGMENT. Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary to protect the legitimate interests of the Company and that any violation of this Section 7 by Executive shall cause
substantial and irreparable harm to the Company to such an extent that monetary damages alone would be an inadequate remedy therefor. Therefore, in the event that Executive violates any provision of this Section 7, the Company shall be entitled to an injunction, in addition to all the other remedies it may have, restraining Executive from violating or continuing to violate such provision.
(f) BLUE PENCIL DOCTRINE. If the duration of, the scope of or any business activity covered by any provision of this Section 7 is in excess of what is determined to be valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that is determined to be valid and enforceable. Executive hereby acknowledges that this Section 7 shall be given the construction that renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.
(g) PERMITTED EQUITY OWNERSHIP. Ownership by Executive, as a passive investment, of less than 2.5% of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7.
8. INTELLECTUAL PROPERTY.
(a) DISCLOSURE AND ASSIGNMENT. As of the Effective Date, Executive hereby transfers and assigns to the Company (or its designee) all right, title, and interest of Executive in and to every idea, concept, invention, and improvement (whether patented, patentable or not) conceived or reduced to practice by Executive whether solely or in collaboration with others while he is employed by the Company, and all copyrighted or copyrightable matter created by Executive whether solely or in collaboration with others while he is employed by the Company that relates to the Company's business (collectively, "CREATIONS"). Executive shall communicate promptly and disclose to the Company, in such form as the Company may request, all information, details, and data pertaining to each Creation. Every copyrightable Creation, regardless of whether copyright protection is sought or preserved by the Company, shall be a "work made for hire" as defined in 17 U.S.C. ss. 101, and the Company shall own all rights in and to such matter throughout the world, without the payment of any royalty or other consideration to Executive or anyone claiming through Executive.
(b) TRADEMARKS. All right, title, and interest in and to any and all trademarks, trade names, service marks, and logos adopted, used, or considered for use by the Company during Executive's employment (whether or not developed by Executive) to identify the Company's business or other goods or services (collectively, the "MARKS"), together with the goodwill appurtenant thereto, and all other materials, ideas, or other property conceived, created, developed, adopted, or improved by Executive solely or jointly during Executive's employment by the Company and relating to its business shall be owned exclusively by the Company. Executive shall not have, and will not claim to have, any right, title, or interest of any kind in or to the Marks or such other property.
(c) DOCUMENTATION. Executive shall execute and deliver to the Company such formal transfers and assignments and such other documents as the Company may request to permit the Company (or its designee) to file and prosecute such registration applications and other documents it deems useful to protect or enforce its rights hereunder. Any idea, invention, copyrightable matter, or other property relating to the Company's business and disclosed by Executive prior to the first anniversary of the effective date of Executive's termination of employment shall be deemed to be governed by the terms of this Section 8 unless proven by Executive to have been first conceived and made after such termination date.
(d) NON-APPLICABILITY. Executive is hereby notified that this
Section 8 does not apply to any invention for which no equipment, supplies,
facility, Confidential Information, or other trade secret information of
the Company was used and which was developed entirely on Executive's own
time, unless (i) the invention relates (A) directly to the business of the
Company or (B) to the Company's actual or demonstrably anticipated research
or development, or (ii) the invention results from any work performed by
Executive for the Company.
9. TERMINATION OF EMPLOYMENT.
(a) Executive's employment with the Company shall terminate immediately upon:
(i) Executive's receipt of written notice from the Company of the termination of his employment;
(ii) the Company's receipt of Executive's written resignation from the Company;
(iii) Executive's Disability (as defined below); or
(iv) Executive's death.
(b) The date upon which Executive's termination of employment with the Company occurs shall be the "TERMINATION DATE."
10. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If Executive's employment with the Company is terminated by reason of:
(i) Executive's abandonment of his employment or Executive's resignation for any reason (whether or not such resignation is set forth in writing or otherwise communicated to the Company);
(ii) termination of Executive's employment by the Company for Cause (as defined below); or
(iii) termination of Executive's employment by the Company without Cause following expiration of the Term; or
the Company shall pay to Executive his then-current base salary through the Termination Date.
(b) If Executive's employment with the Company is terminated by the Company effective prior to the expiration of the Term for any reason other than for Cause (as defined below), then the Company shall pay to Executive, subject to Section 10(i) of this Agreement:
(i) his then-current base salary through the Termination Date;
(ii) any earned and unpaid annual Incentive Bonus for the fiscal quarter immediately preceding the fiscal quarter in which the Termination Date occurs; and
(iii) a crisp $100 bill from W. Kent Taylor.
Any amount payable to Executive pursuant to Section 10(b)(ii) shall be paid to Executive by the Company in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company, but no earlier than the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law.
(c) If Executive's employment with the Company is terminated effective prior to the expiration of the Term by reason of Executive's death or Disability, the Company shall pay to Executive or his beneficiary or his estate, as the case may be, his then-current base salary through the Termination Date, any earned and unpaid quarterly Incentive Bonus for the fiscal quarter preceding the fiscal quarter in which the Termination Date occurs and a pro-rated portion of any quarterly Incentive Bonus for the fiscal quarter in which the Termination Date occurs, based on the number of days during such fiscal quarter that Executive was employed by the Company, payable in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company.
(d) Cause. "CAUSE" hereunder shall mean:
(i) an act or acts of dishonesty undertaken by Executive and intended to result in substantial gain or personal enrichment of Executive at the expense of the Company;
(ii) unlawful conduct or gross misconduct that is willful and deliberate on Executive's part and that, in either event, is materially injurious to the Company;
(iii) the conviction of Executive of a felony;
(iv) material and deliberate failure of Executive to perform his duties and responsibilities hereunder or to satisfy his obligations as an officer or employee of the Company, which failure has not been cured by Executive within ten days after written notice thereof to Executive from the Company; or
(v) material breach of any terms and conditions of this Agreement by Executive not caused by the Company, which breach has not been cured by Executive within ten days after written notice thereof to Executive from the Company.
(e) "DISABILITY" hereunder shall mean the inability of Executive to perform on a full-time basis the duties and responsibilities of his employment with the Company by reason of his illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of 45 days or more during any 360-day period. A period of inability shall be "uninterrupted" unless and until Executive returns to full-time work for a continuous period of at least 30 days.
(f) In the event of termination of Executive's employment, the sole obligation of the Company hereunder shall be its obligation to make the payments called for by Sections 10(a), 10(b), or 10(c) hereof, as the case may be, and the Company shall have no other obligation to Executive or to his beneficiary or his estate, except as otherwise provided by law.
(g) Notwithstanding any other provision hereof, the Company shall not be obligated to make any payments under Section 10(b)(ii) or (iii) of this Agreement unless Executive has signed a full release of claims against the Company, in a form and scope to be prescribed by the Board, all applicable consideration periods and rescission periods provided by law shall have expired, and Executive is in strict compliance with the terms of this Agreement as of the dates of the payments.
11. RETURN OF PROPERTY. Upon termination of Executive's employment with the Company, Executive shall deliver promptly to the Company all records, files, manuals, books, forms, documents, letters, memoranda, data, customer lists, tables, photographs, video tapes, audio tapes, computer disks and other computer storage media, and copies thereof, that are the property of the Company, or that relate in any way to the business, products, services, personnel, customers, prospective customers, suppliers, practices, or techniques of the Company, and all other property of the Company (such as, for example, computers, cellular telephones, pagers, credit cards, and keys), whether or not containing Confidential Information, that are in Executive's possession or under Executive's control.
12. REMEDIES. Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by him of the provisions of Sections 6, 7, and 8 hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, subject to, and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Agreement shall only be brought in a court of competent jurisdiction in the Commonwealth of Kentucky, and the parties consent to the jurisdiction, venue and convenience of such courts.
(b) JURISDICTION AND LAW. Executive and the Company consent to jurisdiction of the courts of the Commonwealth of Kentucky and/or the federal district courts, Western District of Kentucky, for the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement. Any action involving claims of a breach of this Agreement shall be brought in such courts. Each party consents to personal jurisdiction over such party in the state and/or federal courts of Kentucky and hereby waives any defense of lack of personal jurisdiction or FORUM NON CONVENIENS. Venue, for the purpose of all such suits, shall be in Jefferson County, Commonwealth of Kentucky.
(c) ENTIRE AGREEMENT. Except for any written stock option agreement and related agreements between Executive and the Company, this Agreement contains the entire agreement of the parties relating to Executive's employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter including without limitation the Prior Employment Agreement, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein. As of the Effective Date, the Prior Employment Agreement shall terminate and be of no further force or effect; provided, however, any obligations of Executive or the Company arising under the Prior Employment Agreement prior to the Effective Date shall survive such termination.
(d) NO VIOLATION OF OTHER AGREEMENTS. Executive hereby represents and agrees that neither (i) Executive's entering into this Agreement, (ii) Executive's employment with the Company, nor (iii) Executive's carrying out the provisions of this Agreement, will violate any other agreement (oral, written or other) to which Executive is a party or by which Executive is bound.
(e) AMENDMENTS. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.
(f) NO WAIVER. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(g) ASSIGNMENT. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement (i) to any entity with which the Company may merge or consolidate, or (ii) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets. Upon Executive's written request, the Company will seek to have any Successor by agreement assent to the fulfillment by the Company of its obligations under this Agreement. After any assignment by the Company pursuant to this Section 13(g), the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the "Company" for purposes of all terms and conditions of this Agreement, including this Section 13.
(h) COUNTERPARTS. This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
(i) SEVERABILITY. Subject to Section 7(f) hereof, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
(j) SURVIVAL. The terms and conditions set forth in Sections 5, 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other provision that continues by its terms, shall survive expiration of the Term or termination of Executive's employment for any reason.
(k) CAPTIONS AND HEADINGS. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.
(l) NOTICES. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and either delivered in person or sent by first class certified or registered mail, postage prepaid, if to the Company, at the Company's principal place of business, and if to Executive, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto.
* * * * *
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph.
TEXAS ROADHOUSE, INC.
By: /S/ W. KENT TAYLOR
------------------------------
W. Kent Taylor, Chairman
|
GERARD J. HART
/S/ GERARD J. HART ---------------------------------- |
Exhibit 10.5
EMPLOYMENT AGREEMENT
(SCOTT M. COLOSI)
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of May 5, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "COMPANY"), and SCOTT M. COLOSI, a resident of the Commonwealth of Kentucky ("EXECUTIVE").
RECITALS
A. The Company is preparing for an initial public offering (the "IPO") of its shares of Class A Common Stock, $0.001 par value ("CLASS A COMMON STOCK"), and has filed a Registration Statement on Form S-1 (the "REGISTRATION STATEMENT") with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
B. The Company has entered into an agreement to merge with Texas Roadhouse Management Corp., a Kentucky corporation ("MANAGEMENT CORP."), has entered into an agreement to merge with a wholly-owned subsidiary of the Company effective immediately prior to the closing of the IPO.
C. Executive is currently employed by Management Corp. as its Chief Financial Officer, pursuant to an Employment Agreement dated November 2002, between Management Corp. and Executive (the "PRIOR EMPLOYMENT AGREEMENT").
D. Executive has been appointed as the Chief Financial Officer of the Company.
E. The Company desires that the employment of Executive, and Executive wishes such employment, as Chief Financial Officer of the Company following the IPO, to be governed by the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:
1. EFFECTIVE DATE. The terms and conditions of Executive's employment hereunder shall become effective upon completion and closing of the IPO (the "EFFECTIVE DATE"). Notwithstanding the preceding sentence, the terms and conditions of Executive's employment hereunder shall not become effective and this Agreement shall immediately terminate if, prior to the Effective Date, any of the following shall occur: (a) Executive resigns from his employment with Management Corp., (b) the death or Disability (as defined in Section 10 hereof) of Executive, (c) the withdrawal of the Registration Statement prior to its effectiveness, (d) if the IPO does not close on or prior to December 31, 2004, or (e) Executive's employment is terminated by Management Corp. Neither Executive nor the Company may revoke or cancel this Agreement prior to the Effective Date without written agreement of the other party.
2. EMPLOYMENT. Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on the last day of the twelfth full fiscal quarter following the Effective Date (the "THIRD ANNIVERSARY DATE"), which initial twelve fiscal quarter term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of four fiscal quarters thereafter (which initial twelve fiscal quarter term together with any such extensions, if any, the "TERM"), unless the Executive's employment terminates earlier in accordance with Section 9 hereof. Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.
3. POSITION AND DUTIES.
(a) EMPLOYMENT WITH THE COMPANY. While Executive is employed by the Company during the Term, Executive shall be employed as the Chief Financial Officer of the Company, and such other titles as the Company may designate, and shall perform such duties and responsibilities as the Company shall assign to him from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.
(b) PERFORMANCE OF DUTIES AND RESPONSIBILITIES. Executive shall serve the Company faithfully and to the best of his ability and shall devote his full working time, attention and efforts to the business of the Company during his employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Chief Executive Officer of the Company or to such other person as designated by the Board of Directors of the Company (the "BOARD"). Executive hereby represents and confirms that he is under no contractual or legal commitments that would prevent him from fulfilling his duties and responsibilities as set forth in this Agreement. During his employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and he may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of his duties and responsibilities hereunder.
4. COMPENSATION.
(a) BASE SALARY. While Executive is employed by the Company during the Term, the Company shall pay to Executive a base salary at the rate of Two Hundred Ten Thousand and no/100 Dollars ($210,000.00) per fiscal year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. The Executive's base salary may be reviewed by the
Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(b) INCENTIVE BONUS. Commencing with the first full fiscal quarter following the Effective Date and for each full fiscal quarter thereafter that Executive is employed by the Company during the Term, Executive shall be eligible for a quarterly incentive bonus in an amount up to Twenty Eight Thousand Seven Hundred Fifty and no/100 Dollars ($28,750.00), based upon achievement of defined goals established by the Compensation Committee of the Board and in accordance with the terms of any incentive plan of the Company in effect from time to time (the "INCENTIVE BONUS"). The level of achievement of the objectives each fiscal quarter and the amount payable as Incentive Bonus shall be determined in good faith by the Compensation Committee. Any Incentive Bonus earned for a fiscal quarter shall be paid to Executive on or before the 90th day following the last day of such fiscal quarter. The amount of the Executive's quarterly incentive bonus may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(c) STOCK OPTIONS.
(i) Pursuant to the 2004 Equity Incentive Plan of the Company, as of the Effective Date, Executive shall be granted options (the "OPTIONS") to purchase 50,000 shares of Class A Common Stock at an exercise price equal to the price per share at which shares of Class A Common Stock are offered to the public in the IPO.
(ii) The Options shall vest in accordance with the following schedule:
DATE AMOUNT VESTING ----- -------------- First Anniversary of the Effective Date.. None Second Anniversary of Effective Date .... 10,000 shares Third Anniversary of Effective Date ..... 40,000 shares |
(iii) If a share dividend, share split or share combination shall occur with respect to the Common Shares of Texas Roadhouse Holdings LLC, a Kentucky limited liability company, shall occur prior to the closing of the IPO, or such Common Shares are exchanged for shares of Class A Common Stock in connection with the IPO on a basis other than one-to-one, the amounts set forth in this Section 4(c) shall be correspondingly adjusted.
(iv) In the event of a termination of Executive's Employment other than for Cause (as defined below) or termination by Executive for Good Reason (as defined below) within 12 months following a Change of Control (as defined below), or prior to a Change of Control at the direction of a person who
has entered into an agreement with the Company, the consummation of which will constitute a Change of Control, and contingent upon Executive's compliance with Section 10(g), the Options and all other options granted under any stock option and stock incentive plans of the Company that are outstanding as of the date of termination shall become immediately exercisable in full and shall remain exercisable until the earlier of (A) two years after termination of Executive's employment by the Company or (B) the option expiration date as set forth in the applicable option agreement.
(v) A "CHANGE OF CONTROL" shall mean that one of the following events has taken place at any time during the Term:
(A) The stockholders of the Company approve one of the following:
(I) Any merger or statutory plan of exchange involving the Company ("MERGER") in which the Company is not the continuing or surviving corporation or pursuant to which the Common Stock, $0.001 par value ("COMMON STOCK") would be converted into cash, securities or other property, other than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger have substantially the same proportionate ownership of common stock of the surviving corporation after the Merger; or
(II) Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or the adoption of any plan or proposal for the liquidation or dissolution;
B) During any period of 12 months or less, individuals who at the beginning of such period constituted a majority of the Board of Directors cease for any reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period; or
C) A tender or exchange offer, other than one made by:
(I) the Company, or by
(II) W. Kent Taylor or any corporation, limited
liability company, partnership, or other entity in which W.
Kent Taylor (x) owns a direct or indirect ownership of 50%
or more or (y) controls 50% or more of the voting power
(collectively, the "TAYLOR PARTIES")
is made for the Common Stock (or securities convertible into
Common Stock) and such offer results in a portion of those
securities being purchased and the offeror after the consummation
of the offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT")), directly or indirectly, of securities
representing at least 20 percent of the voting power of
outstanding securities of the Company; or
(D) the Company receives a report on Schedule 13D of the Exchange Act reporting the beneficial ownership by any person other than a Taylor Party of securities representing 20 percent or more of the voting power of outstanding securities of the Company, except that if such receipt shall occur during a tender offer or exchange offer described in (C) above, a Change of Control shall not take place until the conclusion of such offer.
Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of the Company.
vi) A termination by Executive for "Good Reason" shall mean a termination based on:
(A) the assignment of Executive a different title or job responsibilities that result in a substantial decrease in the level of responsibility from those in effect immediately prior to the Change of Control;
(B) a reduction by the Company or the surviving company in Executive's base pay as in effect immediately prior to the Change of Control;
(C) a significant reduction by the Company or the surviving company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control;
(D) the requirement by the Company or the surviving company that Executive be based more than 50 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company prior to the Change of Control; or
(E) the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company ("SUCCESSOR") the assent to this Agreement contemplated by Section 13(g) hereof.
(d) BENEFITS. While Executive is employed by the Company during the Term, Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.
(e) EXPENSES. While Executive is employed by the Company during the Term, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by him in the performance of his duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expense verification and documentation.
(f) VACATIONS AND HOLIDAYS. Executive shall be entitled to be absent from his duties for the Company by reason of vacation for a period of three weeks per calendar year. Executive shall coordinate his vacation schedule with the Company so as not to impose an undue burden on the Company. In addition, Executive shall be entitled to such national and religious holidays as the Board shall approve for all of its employees from time to time.
5. AFFILIATED ENTITIES. As used in Sections 6, 7 and 8 of this Agreement, "COMPANY" shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common control with the Company (in each case "control" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).
6. CONFIDENTIAL INFORMATION. Except as required in the performance of Executive's duties as an employee of the Company or as authorized in writing by the Board, Executive shall not, either during Executive's employment with the Company or at any time thereafter, use, disclose or make accessible to any person any confidential information for any purpose. "CONFIDENTIAL INFORMATION" means information proprietary to the Company or its suppliers or prospective suppliers and not generally known (including trade secret information) about the Company's suppliers, products, services, personnel, customers, recipes, pricing, sales strategies, technology, computer software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, and plans. All information disclosed to Executive or to which Executive obtains access, whether originated by Executive or by others, during the period of Executive's employment by the Company (whether before, during, or after the Term), shall be presumed to be Confidential Information if it is treated by the Company as being
Confidential Information or if Executive has a reasonable basis to believe it to be Confidential Information. Executive acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. During Executive's employment with the Company, Executive shall refrain from committing any acts that would materially reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently becomes generally publicly known, or (ii) is required to be disclosed by law or legal process, other than as a direct or indirect result of the breach of this Agreement by Executive. Executive acknowledges that the obligations imposed by this Section 6 are in addition to, and not in place of, any obligations imposed by applicable statutory or common law.
7. NONCOMPETITION COVENANT.
(a) AGREEMENT NOT TO COMPETE. During Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period (as defined below), Executive shall not, directly or indirectly, on his own behalf or on behalf of any person or entity other than the Company, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, engage in any business that is directly competitive with the business of the Company, including without limitation any business that operates one or more full-service, casual dining steakhouse restaurants. The provisions of this Section 7(a) shall also apply to any business which is directly competitive with any other business which the Company acquires or develops during Executive's employment with the Company.
(b) AGREEMENT NOT TO HIRE. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, hire, engage or solicit or induce or attempt to induce to cease working for the Company, any person who is then an employee of the Company or who was an employee of the Company during the six (6) month period immediately preceding Executive's termination of employment with the Company.
(c) AGREEMENT NOT TO SOLICIT. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, solicit, request, advise, induce or attempt to induce any vendor, supplier or other business contact of the Company to cancel, curtail, cease doing business with, or otherwise adversely change its relationship with the Company.
(d) RESTRICTED PERIOD. "RESTRICTED PERIOD" hereunder means the period commencing on the last day of Executive's employment with the Company and ending on the date that is two years following the last day of the Term.
(e) ACKNOWLEDGMENT. Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary to protect the legitimate interests of the Company and that any violation of this Section 7 by Executive shall cause substantial and irreparable harm to the Company to such an extent that monetary damages alone would be an inadequate remedy therefor. Therefore, in the event that Executive violates any provision of this Section 7, the Company shall be entitled to an injunction, in addition to all the other remedies it may have, restraining Executive from violating or continuing to violate such provision.
(f) BLUE PENCIL DOCTRINE. If the duration of, the scope of or any business activity covered by any provision of this Section 7 is in excess of what is determined to be valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that is determined to be valid and enforceable. Executive hereby acknowledges that this Section 7 shall be given the construction that renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.
(g) PERMITTED EQUITY OWNERSHIP. Ownership by Executive, as a passive
investment, of less than 2.5% of the outstanding shares of capital stock of
any corporation listed on a national securities exchange or publicly traded
in the over-the-counter market shall not constitute a breach of this
Section 7.
8. INTELLECTUAL PROPERTY.
(a) DISCLOSURE AND ASSIGNMENT. As of the Effective Date, Executive hereby transfers and assigns to the Company (or its designee) all right, title, and interest of Executive in and to every idea, concept, invention, and improvement (whether patented, patentable or not) conceived or reduced to practice by Executive whether solely or in collaboration with others while he is employed by the Company, and all copyrighted or copyrightable matter created by Executive whether solely or in collaboration with others while he is employed by the Company that relates to the Company's business (collectively, "CREATIONS"). Executive shall communicate promptly and disclose to the Company, in such form as the Company may request, all information, details, and data pertaining to each Creation. Every copyrightable Creation, regardless of whether copyright protection is sought or preserved by the Company, shall be a "work made for hire" as defined in 17 U.S.C. Section 101, and the Company shall own all rights in and to such matter throughout the world, without the payment of any royalty or other consideration to Executive or anyone claiming through Executive.
(b) TRADEMARKS. All right, title, and interest in and to any and all trademarks, trade names, service marks, and logos adopted, used, or considered for use by the Company during Executive's employment (whether or not developed by
Executive) to identify the Company's business or other goods or services (collectively, the "MARKS"), together with the goodwill appurtenant thereto, and all other materials, ideas, or other property conceived, created, developed, adopted, or improved by Executive solely or jointly during Executive's employment by the Company and relating to its business shall be owned exclusively by the Company. Executive shall not have, and will not claim to have, any right, title, or interest of any kind in or to the Marks or such other property.
(c) DOCUMENTATION. Executive shall execute and deliver to the Company such formal transfers and assignments and such other documents as the Company may request to permit the Company (or its designee) to file and prosecute such registration applications and other documents it deems useful to protect or enforce its rights hereunder. Any idea, invention, copyrightable matter, or other property relating to the Company's business and disclosed by Executive prior to the first anniversary of the effective date of Executive's termination of employment shall be deemed to be governed by the terms of this Section 8 unless proven by Executive to have been first conceived and made after such termination date.
(d) NON-APPLICABILITY. Executive is hereby notified that this Section 8 does not apply to any invention for which no equipment, supplies, facility, Confidential Information, or other trade secret information of the Company was used and which was developed entirely on Executive's own time, unless (i) the invention relates (A) directly to the business of the Company or (B) to the Company's actual or demonstrably anticipated research or development, or (ii) the invention results from any work performed by Executive for the Company.
9. TERMINATION OF EMPLOYMENT.
(a) Executive's employment with the Company shall terminate immediately upon:
(i) Executive's receipt of written notice from the Company of the termination of his employment;
(ii) the Company's receipt of Executive's written resignation from the Company;
(iii) Executive's Disability (as defined below); or
(iv) Executive's death.
(b) The date upon which Executive's termination of employment with the Company occurs shall be the "TERMINATION DATE."
10. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If Executive's employment with the Company is terminated by reason of:
(i) Executive's abandonment of his employment or Executive's resignation for any reason (whether or not such resignation is set forth in writing or otherwise communicated to the Company);
(ii) termination of Executive's employment by the Company for Cause (as defined below); or
(iii) termination of Executive's employment by the Company without Cause following expiration of the Term; or
the Company shall pay to Executive his then-current base salary through the Termination Date.
(b) If Executive's employment with the Company is terminated by the Company effective prior to the expiration of the Term for any reason other than for Cause (as defined below), then the Company shall pay to Executive, subject to Section 10(i) of this Agreement:
(i) his then-current base salary through the Termination Date;
(ii) any earned and unpaid annual Incentive Bonus for the fiscal quarter immediately preceding the fiscal quarter in which the Termination Date occurs;
(iii) the amount of his then current base salary that Executive would have received from the Termination Date through the earlier of (A) 180 days following such Termination Date and (B) the Third Anniversary Date if his employment with the Company had not been terminated; and
(iv) 50% of the aggregate quarterly Incentive Bonus earned by Executive for the last four full fiscal quarters immediately preceding the fiscal quarter in which the Termination Date occurs, provided, however, if the Termination Date occurs during the fiscal quarter ending on the Third Anniversary Date, the amount payable pursuant to this Section 10(b)(iv) shall be reduced by a fraction, the numerator of which is the number of days during such fiscal quarter that Executive was employed by the Company and the denominator of which is the number of days in such fiscal quarter.
Any amount payable to Executive pursuant to Section 10(b)(iii) shall be
subject to deductions and withholdings and shall be paid to Executive by
the Company in the same periodic installments in accordance with the
Company's regular payroll practices commencing on the first normal payroll
date of the Company following the expiration of all applicable rescission
periods provided by law. Any amount payable to Executive pursuant to
Section 10(b)(ii) shall be paid to Executive by the Company in the same
manner and at the same time that Incentive Bonus payments are made to
current employees of the Company, but no earlier than the first normal
payroll date of the Company following the expiration of all applicable
rescission periods provided by law. Any amount payable to Executive
pursuant to Section 10(b)(iv) shall be paid to Executive by the Company on
the same date as any payment would be made pursuant to Section 10(b)(ii) if
Executive were entitled to such payment.
(c) If Executive's employment with the Company is terminated effective prior to the expiration of the Term by reason of Executive's death or Disability, the Company shall pay to Executive or his beneficiary or his estate, as the case may be, his then-current base salary through the Termination Date, any earned and unpaid quarterly Incentive Bonus for the fiscal quarter preceding the fiscal quarter in which the Termination Date occurs and a pro-rated portion of any quarterly Incentive Bonus for the fiscal quarter in which the Termination Date occurs, based on the number of days during such fiscal quarter that Executive was employed by the Company, payable in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company.
(d) Cause. "CAUSE" hereunder shall mean:
(i) an act or acts of dishonesty undertaken by Executive and intended to result in substantial gain or personal enrichment of Executive at the expense of the Company;
(ii) unlawful conduct or gross misconduct that is willful and deliberate on Executive's part and that, in either event, is materially injurious to the Company;
(iii) the conviction of Executive of a felony;
(iv) material and deliberate failure of Executive to perform his duties and responsibilities hereunder or to satisfy his obligations as an officer or employee of the Company, which failure has not been cured by Executive within ten days after written notice thereof to Executive from the Company; or
(v) material breach of any terms and conditions of this Agreement by Executive not caused by the Company, which breach has not been cured by Executive within ten days after written notice thereof to Executive from the Company.
(e) "DISABILITY" hereunder shall mean the inability of Executive to perform on a full-time basis the duties and responsibilities of his employment with the Company by reason of his illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of 45 days or more during any 360-day period. A period of inability shall be "uninterrupted" unless and until Executive returns to full-time work for a continuous period of at least 30 days.
(f) In the event of termination of Executive's employment, the sole obligation of the Company hereunder shall be its obligation to make the payments called for by Sections 10(a), 10(b), or 10(c) hereof, as the case may be, and the Company shall have no other obligation to Executive or to his beneficiary or his estate, except as otherwise provided by law.
(g) Notwithstanding any other provision hereof, the Company shall not be obligated to make any payments under Section 10(b)(ii), (iii) or (iv) of this Agreement unless Executive has signed a full release of claims against the Company, in a form and scope to be prescribed by the Board, all applicable consideration periods and rescission periods provided by law shall have expired, and Executive is in strict compliance with the terms of this Agreement as of the dates of the payments.
11. RETURN OF PROPERTY. Upon termination of Executive's employment with the Company, Executive shall deliver promptly to the Company all records, files, manuals, books, forms, documents, letters, memoranda, data, customer lists, tables, photographs, video tapes, audio tapes, computer disks and other computer storage media, and copies thereof, that are the property of the Company, or that relate in any way to the business, products, services, personnel, customers, prospective customers, suppliers, practices, or techniques of the Company, and all other property of the Company (such as, for example, computers, cellular telephones, pagers, credit cards, and keys), whether or not containing Confidential Information, that are in Executive's possession or under Executive's control.
12. REMEDIES. Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by him of the provisions of Sections 6, 7, and 8 hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, subject to, and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Agreement shall only be brought in a court of competent jurisdiction in the Commonwealth of Kentucky, and the parties consent to the jurisdiction, venue and convenience of such courts.
(b) JURISDICTION AND LAW. Executive and the Company consent to jurisdiction of the courts of the Commonwealth of Kentucky and/or the federal district courts, Western District of Kentucky, for the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement. Any action involving claims of a breach of this Agreement shall be brought in such courts. Each party consents to personal jurisdiction over such party in the state and/or federal courts of Kentucky and hereby waives any defense of lack of personal jurisdiction or FORUM NON CONVENIENS. Venue, for the purpose of all such suits, shall be in Jefferson County, Commonwealth of Kentucky.
(c) ENTIRE AGREEMENT. Except for any written stock option agreement and related agreements between Executive and the Company, this Agreement contains the entire agreement of the parties relating to Executive's employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter including without limitation the Prior Employment Agreement, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein. As of the Effective Date, the Prior Employment Agreement shall terminate and be of no further force or effect; provided, however, any obligations of Executive or the Company arising under the Prior Employment Agreement prior to the Effective Date shall survive such termination.
(d) NO VIOLATION OF OTHER AGREEMENTS. Executive hereby represents and agrees that neither (i) Executive's entering into this Agreement, (ii) Executive's employment with the Company, nor (iii) Executive's carrying out the provisions of this Agreement, will violate any other agreement (oral, written or other) to which Executive is a party or by which Executive is bound.
(e) AMENDMENTS. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.
(f) NO WAIVER. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(g) ASSIGNMENT. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the
Company may, without the consent of Executive, assign its rights and obligations under this Agreement (i) to any entity with which the Company may merge or consolidate, or (ii) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets. Upon Executive's written request, the Company will seek to have any Successor by agreement assent to the fulfillment by the Company of its obligations under this Agreement. After any assignment by the Company pursuant to this Section 13(g), the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the "Company" for purposes of all terms and conditions of this Agreement, including this Section 13.
(h) COUNTERPARTS. This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
(i) SEVERABILITY. Subject to Section 7(f) hereof, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
(j) SURVIVAL. The terms and conditions set forth in Sections 5, 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other provision that continues by its terms, shall survive expiration of the Term or termination of Executive's employment for any reason.
(k) CAPTIONS AND HEADINGS. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.
(l) NOTICES. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and either delivered in person or sent by first class certified or registered mail, postage prepaid, if to the Company, at the Company's principal place of business, and if to Executive, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto.
* * * * *
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph.
TEXAS ROADHOUSE, INC.
By: /S/ GERARD J. HART
----------------------------------------
Gerard J. Hart, Chief Executive Officer
|
SCOTT M. COLOSI
/S/ SCOTT M. COLOSI ---------------------------------------- |
Exhibit 10.6
EMPLOYMENT AGREEMENT
(STEVEN L. ORTIZ)
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of May 5, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "Company"), and STEVEN L. ORTIZ, a resident of the State of Texas ("Executive").
RECITALS
A. The Company is preparing for an initial public offering (the "IPO") of its shares of Class A Common Stock, $0.001 par value ("CLASS A COMMON STOCK"), and has filed a Registration Statement on Form S-1 (the "REGISTRATION STATEMENT") with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
B. Texas Roadhouse Management Corp., a Kentucky corporation ("MANAGEMENT CORP."), has entered into an agreement to merge with a wholly-owned subsidiary of the Company effective immediately prior to the closing of the IPO.
C. Executive is currently employed by Management Corp. as its Executive Vice President of Operations, pursuant to an Employment Agreement dated January 1, 1999, between Management Corp. and Executive (the "PRIOR EMPLOYMENT AGREEMENT").
D. Executive has been appointed as the Chief Operating Officer of the Company.
E. The Company desires that the employment of Executive, and Executive wishes such employment, as Chief Operating Officer of the Company following the IPO, to be governed by the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:
1. EFFECTIVE DATE. The terms and conditions of Executive's
employment hereunder shall become effective upon completion and closing
of the IPO (the "EFFECTIVE DATE"). Notwithstanding the preceding
sentence, the terms and conditions of Executive's employment hereunder
shall not become effective and this Agreement shall immediately
terminate if, prior to the Effective Date, any of the following shall
occur: (a) Executive resigns from his employment with Management Corp.,
(b) the death or Disability (as defined in Section 10 hereof) of
Executive, (c) the withdrawal of the Registration Statement prior to
its effectiveness, (d) if the IPO does not close on or prior to
December 31, 2004, or (e) Executive's employment is terminated by
Management Corp. Neither Executive nor the Company may revoke or cancel
this Agreement prior to the Effective Date without written agreement of
the other party.
2. EMPLOYMENT. Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on the last day of the twelfth full fiscal quarter following the Effective Date (the "THIRD ANNIVERSARY DATE"), which initial twelve fiscal quarter term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of four fiscal quarters thereafter (which initial twelve fiscal quarter term together with any such extensions, if any, the "TERM"), unless the Executive's employment terminates earlier in accordance with Section 9 hereof. Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.
3. POSITION AND DUTIES.
(a) EMPLOYMENT WITH THE COMPANY. While Executive is employed by the Company during the Term, Executive shall be employed as the Chief Operating Officer of the Company, and such other titles as the Company may designate, and shall perform such duties and responsibilities as the Company shall assign to him from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.
(b) PERFORMANCE OF DUTIES AND RESPONSIBILITIES. Executive shall serve the Company faithfully and to the best of his ability and shall devote his full working time, attention and efforts to the business of the Company during his employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Chief Executive Officer of the Company or to such other person as designated by the Board of Directors of the Company (the "BOARD"). Executive hereby represents and confirms that he is under no contractual or legal commitments that would prevent him from fulfilling his duties and responsibilities as set forth in this Agreement. During his employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and he may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of his duties and responsibilities hereunder.
4. COMPENSATION.
(a) BASE SALARY. While Executive is employed by the Company during the Term, the Company shall pay to Executive a base salary at the rate of Four Hundred Thousand and no/100 Dollars ($400,000.00) per fiscal year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. The Executive's base salary may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(b) INCENTIVE BONUS. Commencing with the first full fiscal quarter following the Effective Date and for each full fiscal quarter thereafter that Executive is employed by the Company during the Term, Executive shall be eligible for a quarterly incentive bonus in an amount up to Fifty Thousand and no/100 Dollars ($50,000.00), based upon achievement of defined goals established by the Compensation Committee of the Board and in accordance with the terms of any incentive plan of the Company in effect from time to time (the "INCENTIVE BONUS"). The level of achievement of the objectives each fiscal quarter and the amount payable as Incentive Bonus shall be determined in good faith by the Compensation Committee. Any Incentive Bonus earned for a fiscal quarter shall be paid to Executive on or before the 90th day following the last day of such fiscal quarter. The amount of the Executive's quarterly incentive bonus may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(c) STOCK OPTIONS.
(i) Pursuant to the 2004 Equity Incentive Plan of the Company, as of the Effective Date, Executive shall be granted options (the "OPTIONS") to purchase 120,000 shares of Class A Common Stock at an exercise price equal to the price per share at which shares of Class A Common Stock are offered to the public in the IPO.
(ii) The Options shall vest in accordance with the following schedule:
DATE AMOUNT VESTING
---- --------------
First Anniversary of the Effective Date 24,000 shares
Second Anniversary of Effective Date 24,000 shares
Third Anniversary of Effective Date 72,000 shares
|
(iii) If a share dividend, share split or share combination shall occur with respect to the Common Shares of Texas Roadhouse Holdings LLC, a Kentucky limited liability company, shall occur prior to the closing of the IPO, or such Common Shares are exchanged for shares of Class A Common Stock in connection with the IPO on a basis other than one-to-one, the amounts set forth in this Section 4(c) shall be correspondingly adjusted.
iv) In the event of a termination of Executive's Employment other than for Cause (as defined below) or termination by Executive for Good Reason (as defined below) within 12 months following a Change of Control (as defined below), or prior to a Change of Control at the direction of a person who has entered into an agreement with the Company, the consummation of which will constitute a Change of Control, and contingent upon Executive's compliance with Section 10(g), the Options and all other options granted under any stock option and stock incentive plans of the Company that are outstanding as of the
date of termination shall become immediately exercisable in full and shall remain exercisable until the earlier of (A) two years after termination of Executive's employment by the Company or (B) the option expiration date as set forth in the applicable option agreement.
(v) A "CHANGE OF CONTROL" shall mean that one of the following events has taken place at any time during the Term:
(A) The stockholders of the Company approve one of the following:
(I) Any merger or statutory plan of exchange involving the Company ("MERGER") in which the Company is not the continuing or surviving corporation or pursuant to which the Common Stock, $0.001 par value ("COMMON STOCK") would be converted into cash, securities or other property, other than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger have substantially the same proportionate ownership of common stock of the surviving corporation after the Merger; or
(II) Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or the adoption of any plan or proposal for the liquidation or dissolution;
B) During any period of 12 months or less, individuals who at the beginning of such period constituted a majority of the Board of Directors cease for any reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period; or
C) A tender or exchange offer, other than one made by:
(I) the Company, or by
(II) W. Kent Taylor or any corporation, limited liability company, partnership, or other entity in which W. Kent Taylor owns (x) a direct or indirect ownership of 50% or more or (y) controls 50% or more of the voting power (collectively, the "TAYLOR PARTIES")
is made for the Common Stock (or securities
convertible into Common Stock) and such offer results
in a portion of those securities being purchased and
the offeror after the consummation of the offer is
the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE Act")),
directly or indirectly, of securities representing at least 20 percent of the voting power of outstanding securities of the Company; or
(D) the Company receives a report on
Schedule 13D of the Exchange Act reporting the
beneficial ownership by any person other than a
Taylor Party of securities representing 20 percent or
more of the voting power of outstanding securities of
the Company, except that if such receipt shall occur
during a tender offer or exchange offer described in
(C) above, a Change of Control shall not take place
until the conclusion of such offer.
Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of the Company.
vi) A termination by Executive for "Good Reason" shall mean a termination based on:
(A) the assignment of Executive a different title or job responsibilities that result in a substantial decrease in the level of responsibility from those in effect immediately prior to the Change of Control;
(B) a reduction by the Company or the surviving company in Executive's base pay as in effect immediately prior to the Change of Control;
(C) a significant reduction by the Company or the surviving company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control;
(D) the requirement by the Company or the surviving company that Executive be based more than 50 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company prior to the Change of Control; or
(E) the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company ("Successor") the assent to this Agreement contemplated by Section 13(g) hereof.
(d) BENEFITS. While Executive is employed by the Company during the Term, Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.
(e) EXPENSES. While Executive is employed by the Company during the Term, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by him in the performance of his duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expense verification and documentation.
(f) VACATIONS AND HOLIDAYS. Executive shall be entitled to be absent from his duties for the Company by reason of vacation for a period of four weeks per calendar year. Executive shall coordinate his vacation schedule with the Company so as not to impose an undue burden on the Company. In addition, Executive shall be entitled to such national and religious holidays as the Board shall approve for all of its employees from time to time.
5. AFFILIATED ENTITIES. As used in Sections 6, 7 and 8 of this Agreement, "COMPANY" shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common control with the Company (in each case "control" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).
6. CONFIDENTIAL INFORMATION. Except as required in the performance of Executive's duties as an employee of the Company or as authorized in writing by the Board, Executive shall not, either during Executive's employment with the Company or at any time thereafter, use, disclose or make accessible to any person any confidential information for any purpose. "Confidential Information" means information proprietary to the Company or its suppliers or prospective suppliers and not generally known (including trade secret information) about the Company's suppliers, products, services, personnel, customers, recipes, pricing, sales strategies, technology, computer software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, and plans. All information disclosed to Executive or to which Executive obtains access, whether originated by Executive or by others, during the period of Executive's employment by the Company (whether before, during, or after the Term), shall be presumed to be Confidential Information if it is treated by the Company as being Confidential Information or if Executive has a reasonable basis to believe it to be Confidential Information. Executive acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the
Company would be wrongful and would cause irreparable harm to the Company. During Executive's employment with the Company, Executive shall refrain from committing any acts that would materially reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently becomes generally publicly known, or (ii) is required to be disclosed by law or legal process, other than as a direct or indirect result of the breach of this Agreement by Executive. Executive acknowledges that the obligations imposed by this Section 6 are in addition to, and not in place of, any obligations imposed by applicable statutory or common law.
7. NONCOMPETITION COVENANT.
(a) AGREEMENT NOT TO COMPETE. During Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period (as defined below), Executive shall not, directly or indirectly, on his own behalf or on behalf of any person or entity other than the Company, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, engage in any business that is directly competitive with the business of the Company, including without limitation any business that operates one or more full-service, casual dining steakhouse restaurants. The provisions of this Section 7(a) shall also apply to any business which is directly competitive with any other business which the Company acquires or develops during Executive's employment with the Company.
(b) AGREEMENT NOT TO HIRE. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, hire, engage or solicit or induce or attempt to induce to cease working for the Company, any person who is then an employee of the Company or who was an employee of the Company during the six (6) month period immediately preceding Executive's termination of employment with the Company.
(c) AGREEMENT NOT TO SOLICIT. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, solicit, request, advise, induce or attempt to induce any vendor, supplier or other business contact of the Company to cancel, curtail, cease doing business with, or otherwise adversely change its relationship with the Company.
(d) RESTRICTED PERIOD. "RESTRICTED PERIOD" hereunder means the period commencing on the last day of Executive's employment with the Company and ending on the date that is two years following the last day of the Term.
(e) ACKNOWLEDGMENT. Executive hereby acknowledges that the
provisions of this Section 7 are reasonable and necessary to protect
the legitimate interests of the Company and that any violation of this
Section 7 by Executive shall cause substantial and irreparable harm to
the Company to such an extent that monetary damages alone would be an
inadequate remedy therefor. Therefore, in the event that Executive
violates any provision of this Section 7, the Company shall be entitled
to an injunction, in addition to all the other remedies it may have,
restraining Executive from violating or continuing to violate such
provision.
(f) BLUE PENCIL DOCTRINE. If the duration of, the scope of or any business activity covered by any provision of this Section 7 is in excess of what is determined to be valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that is determined to be valid and enforceable. Executive hereby acknowledges that this Section 7 shall be given the construction that renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.
(g) PERMITTED EQUITY OWNERSHIP. Ownership by Executive, as a passive investment, of less than 2.5% of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7.
8. INTELLECTUAL PROPERTY.
(a) DISCLOSURE AND ASSIGNMENT. As of the Effective Date, Executive hereby transfers and assigns to the Company (or its designee) all right, title, and interest of Executive in and to every idea, concept, invention, and improvement (whether patented, patentable or not) conceived or reduced to practice by Executive whether solely or in collaboration with others while he is employed by the Company, and all copyrighted or copyrightable matter created by Executive whether solely or in collaboration with others while he is employed by the Company that relates to the Company's business (collectively, "CREATIONS"). Executive shall communicate promptly and disclose to the Company, in such form as the Company may request, all information, details, and data pertaining to each Creation. Every copyrightable Creation, regardless of whether copyright protection is sought or preserved by the Company, shall be a "work made for hire" as defined in 17 U.S.C. Section 101, and the Company shall own all rights in and to such matter throughout the world, without the payment of any royalty or other consideration to Executive or anyone claiming through Executive.
(b) TRADEMARKS. All right, title, and interest in and to any and all trademarks, trade names, service marks, and logos adopted, used, or considered for use by the Company during Executive's employment (whether or not developed by Executive) to identify the Company's business or other goods or services (collectively, the "MARKS"), together with the goodwill appurtenant thereto, and all other materials, ideas, or other property conceived, created, developed, adopted, or improved by Executive solely or jointly during Executive's employment by the Company and relating
to its business shall be owned exclusively by the Company. Executive shall not have, and will not claim to have, any right, title, or interest of any kind in or to the Marks or such other property.
(c) DOCUMENTATION. Executive shall execute and deliver to the Company such formal transfers and assignments and such other documents as the Company may request to permit the Company (or its designee) to file and prosecute such registration applications and other documents it deems useful to protect or enforce its rights hereunder. Any idea, invention, copyrightable matter, or other property relating to the Company's business and disclosed by Executive prior to the first anniversary of the effective date of Executive's termination of employment shall be deemed to be governed by the terms of this Section 8 unless proven by Executive to have been first conceived and made after such termination date.
(d) NON-APPLICABILITY. Executive is hereby notified that this
Section 8 does not apply to any invention for which no equipment,
supplies, facility, Confidential Information, or other trade secret
information of the Company was used and which was developed entirely on
Executive's own time, unless (i) the invention relates (A) directly to
the business of the Company or (B) to the Company's actual or
demonstrably anticipated research or development, or (ii) the invention
results from any work performed by Executive for the Company.
9. TERMINATION OF EMPLOYMENT.
(a) Executive's employment with the Company shall terminate immediately upon:
(i) Executive's receipt of written notice from the Company of the termination of his employment;
(ii) the Company's receipt of Executive's written resignation from the Company;
(iii) Executive's Disability (as defined below); or
(iv) Executive's death.
(b) The date upon which Executive's termination of employment with the Company occurs shall be the "TERMINATION DATE."
10. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If Executive's employment with the Company is terminated by reason of:
(i) Executive's abandonment of his employment or Executive's resignation for any reason (whether or not such resignation is set forth in writing or otherwise communicated to the Company);
(ii) termination of Executive's employment by the Company for Cause (as defined below); or
(iii) termination of Executive's employment by the Company without Cause following expiration of the Term; or
the Company shall pay to Executive his then-current base salary through the Termination Date.
(b) If Executive's employment with the Company is terminated by the Company effective prior to the expiration of the Term for any reason other than for Cause (as defined below), then the Company shall pay to Executive, subject to Section 10(i) of this Agreement:
(i) his then-current base salary through the Termination Date;
(ii) any earned and unpaid annual Incentive Bonus for the fiscal quarter immediately preceding the fiscal quarter in which the Termination Date occurs; and
(iii) a crisp $100 bill from W. Kent Taylor.
Any amount payable to Executive pursuant to Section 10(b)(ii) shall be paid to Executive by the Company in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company, but no earlier than the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law.
(c) If Executive's employment with the Company is terminated effective prior to the expiration of the Term by reason of Executive's death or Disability, the Company shall pay to Executive or his beneficiary or his estate, as the case may be, his then-current base salary through the Termination Date, any earned and unpaid quarterly Incentive Bonus for the fiscal quarter preceding the fiscal quarter in which the Termination Date occurs and a pro-rated portion of any quarterly Incentive Bonus for the fiscal quarter in which the Termination Date occurs, based on the number of days during such fiscal quarter that Executive was employed by the Company, payable in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company.
(d) Cause. "CAUSE" hereunder shall mean:
(i) an act or acts of dishonesty undertaken by Executive and intended to result in substantial gain or personal enrichment of Executive at the expense of the Company;
(ii) unlawful conduct or gross misconduct that is willful and deliberate on Executive's part and that, in either event, is materially injurious to the Company;
(iii) the conviction of Executive of a felony;
(iv) material and deliberate failure of Executive to perform his duties and responsibilities hereunder or to satisfy his obligations as an officer or employee of the Company, which failure has not been cured by Executive within ten days after written notice thereof to Executive from the Company; or
(v) material breach of any terms and conditions of this Agreement by Executive not caused by the Company, which breach has not been cured by Executive within ten days after written notice thereof to Executive from the Company.
(e) "DISABILITY" hereunder shall mean the inability of Executive to perform on a full-time basis the duties and responsibilities of his employment with the Company by reason of his illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of 45 days or more during any 360-day period. A period of inability shall be "uninterrupted" unless and until Executive returns to full-time work for a continuous period of at least 30 days.
(f) In the event of termination of Executive's employment, the sole obligation of the Company hereunder shall be its obligation to make the payments called for by Sections 10(a), 10(b), or 10(c) hereof, as the case may be, and the Company shall have no other obligation to Executive or to his beneficiary or his estate, except as otherwise provided by law.
(g) Notwithstanding any other provision hereof, the Company
shall not be obligated to make any payments under Section 10(b)(ii) or
(iii) of this Agreement unless Executive has signed a full release of
claims against the Company, in a form and scope to be prescribed by the
Board, all applicable consideration periods and rescission periods
provided by law shall have expired, and Executive is in strict
compliance with the terms of this Agreement as of the dates of the
payments.
11. RETURN OF PROPERTY. Upon termination of Executive's employment with the Company, Executive shall deliver promptly to the Company all records, files, manuals, books, forms, documents, letters, memoranda, data, customer lists, tables, photographs,
video tapes, audio tapes, computer disks and other computer storage media, and copies thereof, that are the property of the Company, or that relate in any way to the business, products, services, personnel, customers, prospective customers, suppliers, practices, or techniques of the Company, and all other property of the Company (such as, for example, computers, cellular telephones, pagers, credit cards, and keys), whether or not containing Confidential Information, that are in Executive's possession or under Executive's control.
12. REMEDIES. Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by him of the provisions of Sections 6, 7, and 8 hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, subject to, and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Agreement shall only be brought in a court of competent jurisdiction in the Commonwealth of Kentucky, and the parties consent to the jurisdiction, venue and convenience of such courts.
(b) JURISDICTION AND LAW. Executive and the Company consent to jurisdiction of the courts of the Commonwealth of Kentucky and/or the federal district courts, Western District of Kentucky, for the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement. Any action involving claims of a breach of this Agreement shall be brought in such courts. Each party consents to personal jurisdiction over such party in the state and/or federal courts of Kentucky and hereby waives any defense of lack of personal jurisdiction or FORUM NON CONVENIENS. Venue, for the purpose of all such suits, shall be in Jefferson County, Commonwealth of Kentucky.
(c) ENTIRE AGREEMENT. Except for any written stock option agreement and related agreements between Executive and the Company, this Agreement contains the entire agreement of the parties relating to Executive's employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter including without limitation the Prior Employment Agreement, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein. As of the Effective Date, the Prior Employment Agreement shall terminate and be of no further force or effect; provided, however, any obligations of Executive or the Company arising under the Prior Employment Agreement prior to the Effective Date shall survive such termination.
(d) NO VIOLATION OF OTHER AGREEMENTS. Executive hereby represents and agrees that neither (i) Executive's entering into this Agreement, (ii) Executive's
employment with the Company, nor (iii) Executive's carrying out the provisions of this Agreement, will violate any other agreement (oral, written or other) to which Executive is a party or by which Executive is bound.
(e) AMENDMENTS. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.
(f) NO WAIVER. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(g) ASSIGNMENT. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement (i) to any entity with which the Company may merge or consolidate, or (ii) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets. Upon Executive's written request, the Company will seek to have any Successor by agreement assent to the fulfillment by the Company of its obligations under this Agreement. After any assignment by the Company pursuant to this Section 13(g), the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the "Company" for purposes of all terms and conditions of this Agreement, including this Section 13.
(h) COUNTERPARTS. This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
(i) SEVERABILITY. Subject to Section 7(f) hereof, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
(j) SURVIVAL. The terms and conditions set forth in Sections 5, 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other provision that continues by its terms, shall survive expiration of the Term or termination of Executive's employment for any reason.
(k) CAPTIONS AND HEADINGS. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.
(l) NOTICES. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and either delivered in person or sent by first class certified or registered mail, postage prepaid, if to the Company, at the Company's principal place of business, and if to Executive, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto.
* * * * *
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph.
TEXAS ROADHOUSE, INC.
By: /S/ GERARD J. HART
-----------------------------------------
Gerard J. Hart, Chief Executive Officer
|
STEVEN L. ORTIZ
/S/ STEVEN L. ORTIZ --------------------------------------------- |
Exhibit 10.7
EMPLOYMENT AGREEMENT
(W. KENT TAYLOR)
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of May 5, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "COMPANY"), and W. KENT TAYLOR, a resident of the Commonwealth of Kentucky ("EXECUTIVE").
RECITALS
A. The Company is preparing for an initial public offering (the "IPO") of its shares of Class A Common Stock, $0.001 par value ("CLASS A COMMON STOCK"), and has filed a Registration Statement on Form S-1 (the "REGISTRATION STATEMENT") with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
B. Executive has been appointed as Chairman of the Company.
C. The Company desires that the employment of Executive, and Executive wishes such employment, as Chairman of the Company following the IPO, to be governed by the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:
1. EFFECTIVE DATE. The terms and conditions of Executive's
employment hereunder shall become effective upon completion and closing
of the IPO (the "EFFECTIVE DATE"). Notwithstanding the preceding
sentence, the terms and conditions of Executive's employment hereunder
shall not become effective and this Agreement shall immediately
terminate if, prior to the Effective Date, any of the following shall
occur: (a) Executive resigns from his employment with the Company, (b)
the death or Disability (as defined in Section 10 hereof) of Executive,
(c) the withdrawal of the Registration Statement prior to its
effectiveness, (d) if the IPO does not close on or prior to December
31, 2004, or (e) Executive's employment is terminated by the Company.
Neither Executive nor the Company may revoke or cancel this Agreement
prior to the Effective Date without written agreement of the other
party.
2. EMPLOYMENT. Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on the last day of the twelfth full fiscal quarter following the Effective Date (the "THIRD ANNIVERSARY DATE"), which initial twelve fiscal quarter term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of four fiscal quarters thereafter (which initial twelve fiscal quarter term together with any such extensions, if any, the "TERM"), unless the Executive's employment terminates
earlier in accordance with Section 9 hereof. Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.
3. POSITION AND DUTIES.
(a) EMPLOYMENT WITH THE COMPANY. While Executive is employed by the Company during the Term, Executive shall be employed as Chairman of the Company, and such other titles as the Company may designate, and shall perform such duties and responsibilities as the Company shall assign to him from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.
(b) PERFORMANCE OF DUTIES AND RESPONSIBILITIES. Executive shall serve the Company faithfully and to the best of his ability and shall devote his full working time, attention and efforts to the business of the Company during his employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Board of Directors of the Company (the "BOARD"). Executive hereby represents and confirms that he is under no contractual or legal commitments that would prevent him from fulfilling his duties and responsibilities as set forth in this Agreement. During his employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and he may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of his duties and responsibilities hereunder.
4. COMPENSATION.
(a) BASE SALARY. While Executive is employed by the Company during the Term, the Company shall pay to Executive a base salary at the rate of Three Hundred Thousand and no/100 Dollars ($300,000.00) per fiscal year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. The Executive's base salary may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(b) INCENTIVE BONUS. Commencing with the first full fiscal quarter following the Effective Date and for each full fiscal quarter thereafter that Executive is employed by the Company during the Term, Executive shall be eligible for a quarterly incentive bonus in an amount up to Fifty Thousand and no/100 Dollars ($50,000), based upon achievement of defined goals established by the Compensation Committee of the Board and in accordance with the terms of any incentive plan of the Company in effect from time to time (the "INCENTIVE BONUS"). The level of achievement of the objectives
each fiscal quarter and the amount payable as Incentive Bonus shall be determined in good faith by the Compensation Committee. Any Incentive Bonus earned for a fiscal quarter shall be paid to Executive on or before the 90th day following the last day of such fiscal quarter. The amount of the Executive's quarterly incentive bonus may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(c) BENEFITS. While Executive is employed by the Company during the Term, Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.
(d) EXPENSES. While Executive is employed by the Company during the Term, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by him in the performance of his duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expense verification and documentation.
5. AFFILIATED ENTITIES. As used in Sections 6, 7 and 8 of this Agreement, "COMPANY" shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common control with the Company (in each case "CONTROL" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).
6. CONFIDENTIAL INFORMATION. Except as required in the performance of Executive's duties as an employee of the Company or as authorized in writing by the Board, Executive shall not, either during Executive's employment with the Company or at any time thereafter, use, disclose or make accessible to any person any confidential information for any purpose. "CONFIDENTIAL INFORMATION" means information proprietary to the Company or its suppliers or prospective suppliers and not generally known (including trade secret information) about the Company's suppliers, products, services, personnel, customers, recipes, pricing, sales strategies, technology, computer software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, and plans. All information disclosed to Executive or to which Executive obtains access, whether originated by Executive or by others, during the period of Executive's employment by the Company (whether before, during, or after the Term), shall be presumed to be Confidential Information if it is treated by the Company as being Confidential Information or if Executive has a reasonable basis to believe it to be Confidential Information. Executive acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. During
Executive's employment with the Company, Executive shall refrain from
committing any acts that would materially reduce the value of such
knowledge or information to the Company. The foregoing obligations of
confidentiality shall not apply to any knowledge or information that
(i) is now or subsequently becomes generally publicly known, or (ii) is
required to be disclosed by law or legal process, other than as a
direct or indirect result of the breach of this Agreement by Executive.
Executive acknowledges that the obligations imposed by this Section 6
are in addition to, and not in place of, any obligations imposed by
applicable statutory or common law.
7. NONCOMPETITION COVENANT.
(a) AGREEMENT NOT TO COMPETE. During Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period (as defined below), Executive shall not, directly or indirectly, on his own behalf or on behalf of any person or entity other than the Company, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, engage in any business that is directly competitive with the business of the Company, including without limitation any business that operates one or more full-service, casual dining steakhouse restaurants. The provisions of this section 7(a) shall also apply to any business which is directly competitive with any other business which the Company acquires or develops during Executive's employment with the Company.
(b) AGREEMENT NOT TO HIRE. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, hire, engage or solicit or induce or attempt to induce to cease working for the Company, any person who is then an employee of the Company or who was an employee of the Company during the six (6) month period immediately preceding Executive's termination of employment with the Company.
(c) AGREEMENT NOT TO SOLICIT. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, solicit, request, advise, induce or attempt to induce any vendor, supplier or other business contact of the Company to cancel, curtail, cease doing business with, or otherwise adversely change its relationship with the Company.
(d) RESTRICTED PERIOD. "RESTRICTED PERIOD" hereunder means the period commencing on the last day of Executive's employment with the Company and ending on the date that is two years following the last day of the Term.
(e) ACKNOWLEDGMENT. Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary to protect the legitimate
interests of the Company and that any violation of this Section 7 by Executive shall cause substantial and irreparable harm to the Company to such an extent that monetary damages alone would be an inadequate remedy therefor. Therefore, in the event that Executive violates any provision of this Section 7, the Company shall be entitled to an injunction, in addition to all the other remedies it may have, restraining Executive from violating or continuing to violate such provision.
(f) BLUE PENCIL DOCTRINE. If the duration of, the
scope of or any business activity covered by any provision of this
Section 7 is in excess of what is determined to be valid and
enforceable under applicable law, such provision shall be construed to
cover only that duration, scope or activity that is determined to be
valid and enforceable. Executive hereby acknowledges that this Section
7 shall be given the construction that renders its provisions valid and
enforceable to the maximum extent, not exceeding its express terms,
possible under applicable law.
(g) PERMITTED EQUITY OWNERSHIP. Ownership by Executive, as a passive investment, of less than 2.5% of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7.
8. INTELLECTUAL PROPERTY.
(a) DISCLOSURE AND ASSIGNMENT. As of the Effective Date, Executive hereby transfers and assigns to the Company (or its designee) all right, title, and interest of Executive in and to every idea, concept, invention, and improvement (whether patented, patentable or not) conceived or reduced to practice by Executive whether solely or in collaboration with others while he is employed by the Company, and all copyrighted or copyrightable matter created by Executive whether solely or in collaboration with others while he is employed by the Company that relates to the Company's business (collectively, "CREATIONS"). Executive shall communicate promptly and disclose to the Company, in such form as the Company may request, all information, details, and data pertaining to each Creation. Every copyrightable Creation, regardless of whether copyright protection is sought or preserved by the Company, shall be a "work made for hire" as defined in 17 U.S.C. Section 101, and the Company shall own all rights in and to such matter throughout the world, without the payment of any royalty or other consideration to Executive or anyone claiming through Executive.
(b) TRADEMARKS. All right, title, and interest in and to any and all trademarks, trade names, service marks, and logos adopted, used, or considered for use by the Company during Executive's employment (whether or not developed by Executive) to identify the Company's business or other goods or services (collectively, the "MARKS"), together with the goodwill appurtenant thereto, and all other materials, ideas, or other property conceived, created, developed, adopted, or improved by Executive solely or jointly during Executive's employment by the Company and relating to its business shall be owned exclusively by the Company. Executive shall not have, and
will not claim to have, any right, title, or interest of any kind in or to the Marks or such other property.
(c) DOCUMENTATION. Executive shall execute and
deliver to the Company such formal transfers and assignments and such
other documents as the Company may request to permit the Company (or
its designee) to file and prosecute such registration applications and
other documents it deems useful to protect or enforce its rights
hereunder. Any idea, invention, copyrightable matter, or other property
relating to the Company's business and disclosed by Executive prior to
the first anniversary of the effective date of Executive's termination
of employment shall be deemed to be governed by the terms of this
Section 8 unless proven by Executive to have been first conceived and
made after such termination date.
(d) NON-APPLICABILITY. Executive is hereby notified that this Section 8 does not apply to any invention for which no equipment, supplies, facility, Confidential Information, or other trade secret information of the Company was used and which was developed entirely on Executive's own time, unless (i) the invention relates (A) directly to the business of the Company or (B) to the Company's actual or demonstrably anticipated research or development, or (ii) the invention results from any work performed by Executive for the Company.
9. TERMINATION OF EMPLOYMENT.
(a) Executive's employment with the Company shall terminate immediately upon:
(i) Executive's receipt of written notice from the Company of the termination of his employment;
(ii) the Company's receipt of Executive's written resignation from the Company;
(iii) Executive's Disability (as defined below); or
(iv) Executive's death.
(b) The date upon which Executive's termination of employment with the Company occurs shall be the "TERMINATION DATE."
10. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If Executive's employment with the Company is terminated by reason of:
(i) Executive's abandonment of his employment or Executive's resignation for any reason (whether or not such
resignation is set forth in writing or otherwise communicated to the Company);
(ii) termination of Executive's employment by the Company for Cause (as defined below); or
(iii) termination of Executive's employment by the Company without Cause following expiration of the Term; or
the Company shall pay to Executive his then-current base salary through the Termination Date.
(b) If Executive's employment with the Company is terminated by the Company effective prior to the expiration of the Term for any reason other than for Cause (as defined below), then the Company shall pay to Executive, subject to Section 10(i) of this Agreement:
(i) his then-current base salary through the Termination Date;
(ii) any earned and unpaid annual Incentive Bonus for the fiscal quarter immediately preceding the fiscal quarter in which the Termination Date occurs; and
(iii) a crisp $100 bill from the Board.
Any amount payable to Executive pursuant to Section 10(b)(ii) shall be paid to Executive by the Company in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company, but no earlier than the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law.
(c) If Executive's employment with the Company is terminated effective prior to the expiration of the Term by reason of Executive's death or Disability, the Company shall pay to Executive or his beneficiary or his estate, as the case may be, his then-current base salary through the Termination Date, any earned and unpaid quarterly Incentive Bonus for the fiscal quarter preceding the fiscal quarter in which the Termination Date occurs and a pro-rated portion of any quarterly Incentive Bonus for the fiscal quarter in which the Termination Date occurs, based on the number of days during such fiscal quarter that Executive was employed by the Company, payable in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company.
(d) Cause. "CAUSE" hereunder shall mean:
(i) an act or acts of dishonesty undertaken by Executive and intended to result in substantial gain or personal enrichment of Executive at the expense of the Company;
(ii) unlawful conduct or gross misconduct that is willful and deliberate on Executive's part and that, in either event, is materially injurious to the Company;
(iii) the conviction of Executive of a felony;
(iv) material and deliberate failure of Executive to perform his duties and responsibilities hereunder or to satisfy his obligations as an officer or employee of the Company, which failure has not been cured by Executive within ten days after written notice thereof to Executive from the Company; or
(v) material breach of any terms and conditions of this Agreement by Executive not caused by the Company, which breach has not been cured by Executive within ten days after written notice thereof to Executive from the Company.
(e) "DISABILITY" hereunder shall mean the inability of Executive to perform on a full-time basis the duties and responsibilities of his employment with the Company by reason of his illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of 45 days or more during any 360-day period. A period of inability shall be "uninterrupted" unless and until Executive returns to full-time work for a continuous period of at least 30 days.
(f) In the event of termination of Executive's employment, the sole obligation of the Company hereunder shall be its obligation to make the payments called for by Sections 10(a), 10(b), or 10(c) hereof, as the case may be, and the Company shall have no other obligation to Executive or to his beneficiary or his estate, except as otherwise provided by law.
(g) Notwithstanding any other provision hereof, the Company shall not be obligated to make any payments under Section 10(b)(ii) or (iii) of this Agreement unless Executive has signed a full release of claims against the Company, in a form and scope to be prescribed by the Board, all applicable consideration periods and rescission periods provided by law shall have expired, and Executive is in strict compliance with the terms of this Agreement as of the dates of the payments.
11. RETURN OF PROPERTY. Upon termination of Executive's employment with the Company, Executive shall deliver promptly to the Company all records, files, manuals, books, forms, documents, letters, memoranda, data, customer lists, tables, photographs,
video tapes, audio tapes, computer disks and other computer storage media, and copies thereof, that are the property of the Company, or that relate in any way to the business, products, services, personnel, customers, prospective customers, suppliers, practices, or techniques of the Company, and all other property of the Company (such as, for example, computers, cellular telephones, pagers, credit cards, and keys), whether or not containing Confidential Information, that are in Executive's possession or under Executive's control.
12. REMEDIES. Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by him of the provisions of Sections 6, 7, and 8 hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, subject to, and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Agreement shall only be brought in a court of competent jurisdiction in the Commonwealth of Kentucky, and the parties consent to the jurisdiction, venue and convenience of such courts.
(b) JURISDICTION AND LAW. Executive and the Company consent to jurisdiction of the courts of the Commonwealth of Kentucky and/or the federal district courts, Western District of Kentucky, for the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement. Any action involving claims of a breach of this Agreement shall be brought in such courts. Each party consents to personal jurisdiction over such party in the state and/or federal courts of Kentucky and hereby waives any defense of lack of personal jurisdiction or FORUM NON CONVENIENS. Venue, for the purpose of all such suits, shall be in Jefferson County, Commonwealth of Kentucky.
(c) ENTIRE AGREEMENT. Except for any written stock option agreement and related agreements between Executive and the Company, this Agreement contains the entire agreement of the parties relating to Executive's employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein.
(d) NO VIOLATION OF OTHER AGREEMENTS. Executive hereby represents and agrees that neither (i) Executive's entering into this Agreement, (ii) Executive's employment with the Company, nor (iii) Executive's carrying out the provisions of this Agreement, will violate any other agreement (oral, written or other) to which Executive is a party or by which Executive is bound.
(e) AMENDMENTS. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.
(f) NO WAIVER. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(g) ASSIGNMENT. This Agreement shall not be
assignable, in whole or in part, by either party without the prior
written consent of the other party, except that the Company may,
without the consent of Executive, assign its rights and obligations
under this Agreement (i) to any entity with which the Company may merge
or consolidate, or (ii) to any corporation or other person or business
entity to which the Company may sell or transfer all or substantially
all of its assets. After any such assignment by the Company, the
Company shall be discharged from all further liability hereunder and
such assignee shall thereafter be deemed to be the "Company" for
purposes of all terms and conditions of this Agreement, including this
Section 13.
(h) COUNTERPARTS. This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
(i) SEVERABILITY. Subject to Section 7(f) hereof, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
(j) SURVIVAL. The terms and conditions set forth in Sections 5, 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other provision that continues by its terms, shall survive expiration of the Term or termination of Executive's employment for any reason.
(k) CAPTIONS AND HEADINGS. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.
(l) NOTICES. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and either delivered in person or sent by first class certified or registered mail, postage prepaid, if to the Company, at the Company's principal place of business, and if to Executive, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto. * * * * *
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph.
TEXAS ROADHOUSE, INC.
By: /S/ GERARD J. HART
-------------------------------------------
Gerard J. Hart, Chief Executive Officer
|
W. KENT TAYLOR
/S/ W. KENT TAYLOR ----------------------------------------------- |
Exhibit 10.8
EMPLOYMENT AGREEMENT
(SHEILA C. BROWN)
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of May 5, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "COMPANY"), and SHEILA C. BROWN, a resident of the Commonwealth of Kentucky ("EXECUTIVE").
RECITALS
A. The Company is preparing for an initial public offering (the "IPO") of its shares of Class A Common Stock, $0.001 par value ("CLASS A COMMON STOCK"), and has filed a Registration Statement on Form S-1 (the "REGISTRATION STATEMENT") with the Securities and Exchange Commission under the Securities Act of 1933, as amended.
B. Executive has been appointed as the General Counsel of the Company.
C. The Company desires that the employment of Executive, and Executive wishes such employment, as General Counsel of the Company following the IPO, to be governed by the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:
1. EFFECTIVE DATE. The terms and conditions of Executive's employment hereunder shall become effective upon completion and closing of the IPO (the "EFFECTIVE DATE"). Notwithstanding the preceding sentence, the terms and conditions of Executive's employment hereunder shall not become effective and this Agreement shall immediately terminate if, prior to the Effective Date, any of the following shall occur: (a) Executive resigns from her employment with Texas Roadhouse Management Corp., a Kentucky corporation ("MANAGEMENT CORP"), (b) the death or Disability (as defined in Section 10 hereof) of Executive, (c) the withdrawal of the Registration Statement prior to its effectiveness, (d) if the IPO does not close on or prior to December 31, 2004, or (e) Executive's employment is terminated by Management Corp. Neither Executive nor the Company may revoke or cancel this Agreement prior to the Effective Date without written agreement of the other party.
2. EMPLOYMENT. Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on the last day of the twelfth full fiscal quarter following the Effective Date (the "THIRD ANNIVERSARY DATE"), which initial twelve fiscal quarter term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of four fiscal quarters thereafter (which initial twelve fiscal quarter term together with any such
extensions, if any, the "TERM"), unless the Executive's employment terminates earlier in accordance with Section 9 hereof. Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.
3. POSITION AND DUTIES.
(a) EMPLOYMENT WITH THE COMPANY. While Executive is employed by the Company during the Term, Executive shall be employed as the General Counsel of the Company, and such other titles as the Company may designate, and shall perform such duties and responsibilities as the Company shall assign to her from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.
(b) PERFORMANCE OF DUTIES AND RESPONSIBILITIES. Executive shall serve the Company faithfully and to the best of her ability and shall devote her full working time, attention and efforts to the business of the Company during her employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Chief Executive Officer of the Company or to such other person as designated by the Board of Directors of the Company (the "BOARD"). Executive hereby represents and confirms that she is under no contractual or legal commitments that would prevent her from fulfilling her duties and responsibilities as set forth in this Agreement. During her employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and she may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of her duties and responsibilities hereunder.
4. COMPENSATION.
(a) BASE SALARY. While Executive is employed by the Company during the Term, the Company shall pay to Executive a base salary at the rate of One Hundred Twenty Thousand and no/100 Dollars ($120,000.00) per fiscal year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. The Executive's base salary may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(b) INCENTIVE BONUS. Commencing with the first full fiscal quarter following the Effective Date and for each full fiscal quarter thereafter that Executive is employed by the Company during the Term, Executive shall be eligible for a quarterly incentive bonus in an amount up to Ten Thousand and no/100 Dollars ($10,000.00), based upon achievement of defined goals established by the Compensation Committee of the Board and in accordance with the terms of any incentive plan of the Company in
effect from time to time (the "INCENTIVE BONUS"). The level of achievement of the objectives each fiscal quarter and the amount payable as Incentive Bonus shall be determined in good faith by the Compensation Committee. Any Incentive Bonus earned for a fiscal quarter shall be paid to Executive on or before the 90th day following the last day of such fiscal quarter. The amount of the Executive's quarterly incentive bonus may be reviewed by the Compensation Committee of the Board on or after September 30, 2005, and annually thereafter, to determine whether it should be increased.
(c) STOCK OPTIONS.
(i) In the event of a termination of Executive's Employment other than for Cause (as defined below) or termination by Executive for Good Reason (as defined below) within 12 months following a Change of Control (as defined below), or prior to a Change of Control at the direction of a person who has entered into an agreement with the Company, the consummation of which will constitute a Change of Control, and contingent upon Executive's compliance with Section 10(g), all options granted under any stock option and stock incentive plans of the Company that are outstanding as of the date of termination shall become immediately exercisable in full and shall remain exercisable until the earlier of (A) two years after termination of Executive's employment by the Company or (B) the option expiration date as set forth in the applicable option agreement.
(ii) A "CHANGE OF CONTROL" shall mean that one of the following events has taken place at any time during the Term:
(A) The stockholders of the Company approve one of the following:
(I) Any merger or statutory plan of exchange involving the Company ("MERGER") in which the Company is not the continuing or surviving corporation or pursuant to which the Common Stock, $0.001 par value ("COMMON STOCK") would be converted into cash, securities or other property, other than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger have substantially the same proportionate ownership of common stock of the surviving corporation after the Merger; or
(II) Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or the adoption of any plan or proposal for the liquidation or dissolution;
B) During any period of 12 months or less, individuals who at the beginning of such period constituted a majority of the Board of Directors cease for any reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period; or
C) A tender or exchange offer, other than one made by:
(I) the Company, or by
(II) W. Kent Taylor or any
corporation, limited liability
company, partnership, or other
entity in which W. Kent Taylor (x)
owns a direct or indirect ownership
of 50% or more or (y) controls 50%
or more of the voting power
(collectively, the "TAYLOR PARTIES")
is made for the Common Stock (or securities
convertible into Common Stock) and such offer results
in a portion of those securities being purchased and
the offeror after the consummation of the offer is
the beneficial owner (as determined pursuant to
Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT")), directly or
indirectly, of securities representing at least 20
percent of the voting power of outstanding securities
of the Company; or
(D) the Company receives a report on
Schedule 13D of the Exchange Act reporting the
beneficial ownership by any person other than a
Taylor Party of securities representing 20 percent or
more of the voting power of outstanding securities of
the Company, except that if such receipt shall occur
during a tender offer or exchange offer described in
(C) above, a Change of Control shall not take place
until the conclusion of such offer.
Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of the Company.
iii) A termination by Executive for "Good Reason" shall mean a termination based on:
(A) the assignment of Executive a different title or job responsibilities that result in a substantial decrease in the level of responsibility from those in effect immediately prior to the Change of Control;
(B) a reduction by the Company or the surviving company in Executive's base pay as in effect immediately prior to the Change of Control;
(C) a significant reduction by the Company or the surviving company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control;
(D) the requirement by the Company or the surviving company that Executive be based more than 50 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company prior to the Change of Control; or
(E) the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company ("SUCCESSOR") the assent to this Agreement contemplated by Section 13(g) hereof.
(d) BENEFITS. While Executive is employed by the Company during the Term, Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.
(e) EXPENSES. While Executive is employed by the Company during the Term, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by her in the performance of her duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expense verification and documentation.
(f) VACATIONS AND HOLIDAYS. Executive shall be entitled to be absent from her duties for the Company by reason of vacation for a period of three weeks per calendar year. Executive shall coordinate her vacation schedule with the Company so as not to impose an undue burden on the Company. In addition, Executive shall be entitled to such national and religious holidays as the Board shall approve for all of its employees from time to time.
5. AFFILIATED ENTITIES. As used in Sections 6, 7 and 8 of this Agreement, "COMPANY" shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common
control with the Company (in each case "control" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).
6. CONFIDENTIAL INFORMATION. Except as required in the performance of Executive's duties as an employee of the Company or as authorized in writing by the Board, Executive shall not, either during Executive's employment with the Company or at any time thereafter, use, disclose or make accessible to any person any confidential information for any purpose. "CONFIDENTIAL INFORMATION" means information proprietary to the Company or its suppliers or prospective suppliers and not generally known (including trade secret information) about the Company's suppliers, products, services, personnel, customers, recipes, pricing, sales strategies, technology, computer software code, methods, processes, designs, research, development systems, techniques, finances, accounting, purchasing, and plans. All information disclosed to Executive or to which Executive obtains access, whether originated by Executive or by others, during the period of Executive's employment by the Company (whether before, during, or after the Term), shall be presumed to be Confidential Information if it is treated by the Company as being Confidential Information or if Executive has a reasonable basis to believe it to be Confidential Information. Executive acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. During Executive's employment with the Company, Executive shall refrain from committing any acts that would materially reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently becomes generally publicly known, or (ii) is required to be disclosed by law or legal process, other than as a direct or indirect result of the breach of this Agreement by Executive. Executive acknowledges that the obligations imposed by this Section 6 are in addition to, and not in place of, any obligations imposed by applicable statutory or common law.
7. NONCOMPETITION COVENANT.
(a) AGREEMENT NOT TO COMPETE. During Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period (as defined below), Executive shall not, directly or indirectly, on her own behalf or on behalf of any person or entity other than the Company, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, engage in any business that is directly competitive with the business of the Company, including without limitation any business that operates one or more full-service, casual dining steakhouse restaurants. The provisions of this Section 7(a) shall also apply to any business which is directly competitive with any other business which the Company acquires or develops during Executive's employment with the Company.
(b) AGREEMENT NOT TO HIRE. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, hire, engage or solicit or induce or attempt to induce to cease working for the Company, any person who is then an employee of the Company or who was an employee of the Company during the six (6) month period immediately preceding Executive's termination of employment with the Company.
(c) AGREEMENT NOT TO SOLICIT. Except as required in the performance of Executive's duties as an employee of the Company, during Executive's employment with the Company (whether before, during, or after the Term) and during the Restricted Period, Executive shall not, directly or indirectly, solicit, request, advise, induce or attempt to induce any vendor, supplier or other business contact of the Company to cancel, curtail, cease doing business with, or otherwise adversely change its relationship with the Company.
(d) RESTRICTED PERIOD. "RESTRICTED PERIOD" hereunder means the period commencing on the last day of Executive's employment with the Company and ending on the date that is two years following the last day of the Term.
(e) ACKNOWLEDGMENT. Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary to protect the legitimate interests of the Company and that any violation of this Section 7 by Executive shall cause substantial and irreparable harm to the Company to such an extent that monetary damages alone would be an inadequate remedy therefor. Therefore, in the event that Executive violates any provision of this Section 7, the Company shall be entitled to an injunction, in addition to all the other remedies it may have, restraining Executive from violating or continuing to violate such provision.
(f) BLUE PENCIL DOCTRINE. If the duration of, the
scope of or any business activity covered by any provision of this
Section 7 is in excess of what is determined to be valid and
enforceable under applicable law, such provision shall be construed to
cover only that duration, scope or activity that is determined to be
valid and enforceable. Executive hereby acknowledges that this Section
7 shall be given the construction that renders its provisions valid and
enforceable to the maximum extent, not exceeding its express terms,
possible under applicable law.
(g) PERMITTED EQUITY OWNERSHIP. Ownership by Executive, as a passive investment, of less than 2.5% of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 7.
8. INTELLECTUAL PROPERTY.
(a) DISCLOSURE AND ASSIGNMENT. As of the Effective Date, Executive hereby transfers and assigns to the Company (or its designee) all right, title, and interest of Executive in and to every idea, concept, invention, and improvement (whether patented, patentable or not) conceived or reduced to practice by Executive whether solely or in collaboration with others while she is employed by the Company, and all copyrighted or copyrightable matter created by Executive whether solely or in collaboration with others while she is employed by the Company that relates to the Company's business (collectively, "CREATIONS"). Executive shall communicate promptly and disclose to the Company, in such form as the Company may request, all information, details, and data pertaining to each Creation. Every copyrightable Creation, regardless of whether copyright protection is sought or preserved by the Company, shall be a "work made for hire" as defined in 17 U.S.C. Section 101, and the Company shall own all rights in and to such matter throughout the world, without the payment of any royalty or other consideration to Executive or anyone claiming through Executive.
(b) TRADEMARKS. All right, title, and interest in and to any and all trademarks, trade names, service marks, and logos adopted, used, or considered for use by the Company during Executive's employment (whether or not developed by Executive) to identify the Company's business or other goods or services (collectively, the "MARKS"), together with the goodwill appurtenant thereto, and all other materials, ideas, or other property conceived, created, developed, adopted, or improved by Executive solely or jointly during Executive's employment by the Company and relating to its business shall be owned exclusively by the Company. Executive shall not have, and will not claim to have, any right, title, or interest of any kind in or to the Marks or such other property.
(c) DOCUMENTATION. Executive shall execute and
deliver to the Company such formal transfers and assignments and such
other documents as the Company may request to permit the Company (or
its designee) to file and prosecute such registration applications and
other documents it deems useful to protect or enforce its rights
hereunder. Any idea, invention, copyrightable matter, or other property
relating to the Company's business and disclosed by Executive prior to
the first anniversary of the effective date of Executive's termination
of employment shall be deemed to be governed by the terms of this
Section 8 unless proven by Executive to have been first conceived and
made after such termination date.
(d) NON-APPLICABILITY. Executive is hereby notified that this Section 8 does not apply to any invention for which no equipment, supplies, facility, Confidential Information, or other trade secret information of the Company was used and which was developed entirely on Executive's own time, unless (i) the invention relates (A) directly to the business of the Company or (B) to the Company's actual or demonstrably anticipated research or development, or (ii) the invention results from any work performed by Executive for the Company.
9. TERMINATION OF EMPLOYMENT.
(a) Executive's employment with the Company shall terminate immediately upon:
(i) Executive's receipt of written notice from the Company of the termination of her employment;
(ii) the Company's receipt of Executive's written resignation from the Company;
(iii) Executive's Disability (as defined below); or
(iv) Executive's death.
(b) The date upon which Executive's termination of employment with the Company occurs shall be the "TERMINATION DATE."
10. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) If Executive's employment with the Company is terminated by reason of:
(i) Executive's abandonment of her employment or Executive's resignation for any reason (whether or not such resignation is set forth in writing or otherwise communicated to the Company);
(ii) termination of Executive's employment by the Company for Cause (as defined below); or
(iii) termination of Executive's employment by the Company without Cause following expiration of the Term; or
the Company shall pay to Executive her then-current base salary through the Termination Date.
(b) If Executive's employment with the Company is terminated by the Company effective prior to the expiration of the Term for any reason other than for Cause (as defined below), then the Company shall pay to Executive, subject to Section 10(i) of this Agreement:
(i) her then-current base salary through the Termination Date;
(ii) any earned and unpaid annual Incentive Bonus for the fiscal quarter immediately preceding the fiscal quarter in which the Termination Date occurs;
(iii) the amount of her then current base salary that Executive would have received from the Termination Date through the earlier of (A) 180 days following such Termination Date and (B) the Third Anniversary Date if her employment with the Company had not been terminated; and
(iv) 50% of the aggregate quarterly Incentive Bonus earned by Executive for the last four full fiscal quarters immediately preceding the fiscal quarter in which the Termination Date occurs, provided, however, if the Termination Date occurs during the fiscal quarter ending on the Third Anniversary Date, the amount payable pursuant to this Section 10(b)(iv) shall be reduced by a fraction, the numerator of which is the number of days during such fiscal quarter that Executive was employed by the Company and the denominator of which is the number of days in such fiscal quarter.
Any amount payable to Executive pursuant to Section 10(b)(iii) shall be subject to deductions and withholdings and shall be paid to Executive by the Company in the same periodic installments in accordance with the Company's regular payroll practices commencing on the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law. Any amount payable to Executive pursuant to Section 10(b)(ii) shall be paid to Executive by the Company in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company, but no earlier than the first normal payroll date of the Company following the expiration of all applicable rescission periods provided by law. Any amount payable to Executive pursuant to Section 10(b)(iv) shall be paid to Executive by the Company on the same date as any payment would be made pursuant to Section 10(b)(ii) if Executive were entitled to such payment.
(c) If Executive's employment with the Company is terminated effective prior to the expiration of the Term by reason of Executive's death or Disability, the Company shall pay to Executive or her beneficiary or her estate, as the case may be, her then-current base salary through the Termination Date, any earned and unpaid quarterly Incentive Bonus for the fiscal quarter preceding the fiscal quarter in which the Termination Date occurs and a pro-rated portion of any quarterly Incentive Bonus for the fiscal quarter in which the Termination Date occurs, based on the number of days during such fiscal quarter that Executive was employed by the Company, payable in the same manner and at the same time that Incentive Bonus payments are made to current employees of the Company.
(d) Cause. "CAUSE" hereunder shall mean:
(i) an act or acts of dishonesty undertaken by Executive and intended to result in substantial gain or personal enrichment of Executive at the expense of the Company;
(ii) unlawful conduct or gross misconduct that is willful and deliberate on Executive's part and that, in either event, is materially injurious to the Company;
(iii) the conviction of Executive of a felony;
(iv) material and deliberate failure of Executive to perform her duties and responsibilities hereunder or to satisfy her obligations as an officer or employee of the Company, which failure has not been cured by Executive within ten days after written notice thereof to Executive from the Company; or
(v) material breach of any terms and conditions of this Agreement by Executive not caused by the Company, which breach has not been cured by Executive within ten days after written notice thereof to Executive from the Company.
(e) "DISABILITY" hereunder shall mean the inability of Executive to perform on a full-time basis the duties and responsibilities of her employment with the Company by reason of her illness or other physical or mental impairment or condition, if such inability continues for an uninterrupted period of 45 days or more during any 360-day period. A period of inability shall be "uninterrupted" unless and until Executive returns to full-time work for a continuous period of at least 30 days.
(f) In the event of termination of Executive's employment, the sole obligation of the Company hereunder shall be its obligation to make the payments called for by Sections 10(a), 10(b), or 10(c) hereof, as the case may be, and the Company shall have no other obligation to Executive or to her beneficiary or her estate, except as otherwise provided by law.
(g) Notwithstanding any other provision hereof, the
Company shall not be obligated to make any payments under Section
10(b)(ii), (iii) or (iv) of this Agreement unless Executive has signed
a full release of claims against the Company, in a form and scope to be
prescribed by the Board, all applicable consideration periods and
rescission periods provided by law shall have expired, and Executive is
in strict compliance with the terms of this Agreement as of the dates
of the payments.
11. RETURN OF PROPERTY. Upon termination of Executive's employment with the Company, Executive shall deliver promptly to the Company all records, files, manuals, books, forms, documents, letters, memoranda, data, customer lists, tables, photographs, video tapes, audio tapes, computer disks and other computer storage media, and copies thereof, that are the property of the Company, or that relate in any way to the business, products, services, personnel, customers, prospective customers, suppliers, practices, or techniques of the Company, and all other property of the Company (such as, for example, computers, cellular telephones, pagers, credit cards, and keys), whether or not containing Confidential Information, that are in Executive's possession or under Executive's control.
12. REMEDIES. Executive acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by her of the provisions of Sections 6, 7, and 8 hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, subject to, and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Agreement shall only be brought in a court of competent jurisdiction in the Commonwealth of Kentucky, and the parties consent to the jurisdiction, venue and convenience of such courts.
(b) JURISDICTION AND LAW. Executive and the Company consent to jurisdiction of the courts of the Commonwealth of Kentucky and/or the federal district courts, Western District of Kentucky, for the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this Agreement. Any action involving claims of a breach of this Agreement shall be brought in such courts. Each party consents to personal jurisdiction over such party in the state and/or federal courts of Kentucky and hereby waives any defense of lack of personal jurisdiction or FORUM NON CONVENIENS. Venue, for the purpose of all such suits, shall be in Jefferson County, Commonwealth of Kentucky.
(c) ENTIRE AGREEMENT. Except for any written stock option agreement and related agreements between Executive and the Company, this Agreement contains the entire agreement of the parties relating to Executive's employment with the Company and supersedes all prior agreements and understandings with respect to such subject matter, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein.
(d) NO VIOLATION OF OTHER AGREEMENTS. Executive hereby represents and agrees that neither (i) Executive's entering into this Agreement, (ii) Executive's employment with the Company, nor (iii) Executive's carrying out the provisions of this
Agreement, will violate any other agreement (oral, written or other) to which Executive is a party or by which Executive is bound.
(e) AMENDMENTS. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.
(f) NO WAIVER. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
(g) ASSIGNMENT. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Executive, assign its rights and obligations under this Agreement (i) to any entity with which the Company may merge or consolidate, or (ii) to any corporation or other person or business entity to which the Company may sell or transfer all or substantially all of its assets. Upon Executive's written request, the Company will seek to have any Successor by agreement assent to the fulfillment by the Company of its obligations under this Agreement. After any assignment by the Company pursuant to this Section 13(g), the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the "Company" for purposes of all terms and conditions of this Agreement, including this Section 13.
(h) COUNTERPARTS. This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
(i) SEVERABILITY. Subject to Section 7(f) hereof, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
(j) SURVIVAL. The terms and conditions set forth in Sections 5, 6, 7, 8, 9, 11, 12, and 13 of this Agreement, and any other provision that continues by its terms, shall survive expiration of the Term or termination of Executive's employment for any reason.
(k) CAPTIONS AND HEADINGS. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.
(l) NOTICES. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and either delivered in person or sent by first class certified or registered mail, postage prepaid, if to the Company, at the Company's principal place of business, and if to Executive, at her home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto.
IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set forth in the first paragraph.
TEXAS ROADHOUSE, INC.
By: /s/ GERARD J. HART
---------------------------------------
Gerard J. Hart, Chief Executive Officer
|
SHEILA C. BROWN
/s/ SHEILA C. BROWN ------------------------------------------- |
EXHIBIT 10.9
TEXAS ROADHOUSE, INC.
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("AGREEMENT") is made as of ______________, 2004 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "COMPANY"), and ________________________________________________________ ("INDEMNITEE").
WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining directors' and officers' liability insurance, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting officers and directors to expensive litigation risks at the same time as the coverage of liability insurance has been limited;
WHEREAS, Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee and other officers and directors of the Company may not be willing to continue to serve as officers and directors without additional protection; and
WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee if Indemnitee is or was or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or any alternative dispute resolution mechanism, or any hearing, inquiry or investigation, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, director nominee, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer, director or director nominee or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise, against any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that (i) Indemnitee did not act in good faith, (ii) Indemnitee did not act in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or (iii) with respect to any criminal action or proceeding, Indemnitee had no reasonable cause to believe that Indemnitee's conduct was unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, director nominee, officer, employee or agent of the Company, or any subsidiary of the Company, by reason of any action or inaction on the part of Indemnitee while an officer, director or director nominee or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) and, to the fullest extent permitted by law, amounts paid in settlement, in each case to the extent actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its stockholders, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company in the performance of Indemnitee's duty to the Company and its stockholders unless and only to the extent that the court in which such action or suit is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses and then only to the extent that the court shall determine.
(c) CHANGE IN CONTROL. The Company agrees that if there is a Change in Control (as defined in Section 11(c) hereof) of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately before such Change in Control) then, with respect to all matters thereafter arising concerning the rights of Indemnitees to payments of expenses and advancement of expenses under this Agreement or any other agreement or under the Company's Certificate of Incorporation or Bylaws as now or hereafter in effect, Independent Legal
Counsel (as defined in Section 11(d) hereof) shall be selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be permitted to be indemnified under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(d) MANDATORY PAYMENT OF EXPENSES. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Subsections (a) and (b) of this Section 1, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by Indemnitee in connection therewith.
2. AGREEMENT TO SERVE. In consideration of the protection afforded by this Agreement, if Indemnitee is a director of the Company, Indemnitee agrees to serve at least for 30 days after the effective date of this Agreement as a director and not to resign voluntarily during such period without the written consent of a majority of the Board of Directors. If Indemnitee is an officer of the Company not serving under an employment contract, Indemnitee agrees to serve in such capacity at least for 30 days and not to resign voluntarily during such period without the written consent of a majority of the Board of Directors. Following the applicable period set forth above, Indemnitee (who serves in a capacity other than as a director) agrees to continue to serve in such capacity at the will of the Company (or under separate agreement, if such agreement exists) so long as Indemnitee (who serves in a capacity other than as a director) is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws of the Company or any subsidiary of the Company or until such time as the Indemnitee tenders his or her resignation in writing. Nothing contained in this Agreement is intended to or shall create in Indemnitee any right to continued employment.
3. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) ADVANCEMENT OF EXPENSES. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil, criminal, administrative or investigative action, suit, proceeding or any alternative dispute resolution, or any hearing, inquiry or investigation referenced in Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby undertakes to repay such expenses advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby. The advances to be made hereunder shall be
paid by the Company to Indemnitee within twenty-five (25) days following delivery of a written request therefore by Indemnitee to the Company.
(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a condition precedent to Indemnitee's right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the Chief Executive Officer of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). Notice shall be deemed received three (3) business days after the date postmarked if sent by domestic certified or registered mail, properly addressed; otherwise notice shall be deemed received when such notice shall actually be received by the Company. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power.
(c) PROCEDURE. Any indemnification and advances provided for in
Section 1 and in this Section 3 shall be made no later than twenty-five (25)
days after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Company's
Certificate of Incorporation or Bylaws providing for indemnification, is not
paid in full by the Company within twenty-five (25) days after a written request
for payment thereof has first been received by the Company, Indemnitee may, but
need not, at any time thereafter submit Indemnitee's claim to arbitration as
described in Section 14 to recover the unpaid amount of the claim and, subject
to Section 15 of this Agreement, Indemnitee shall also be entitled to be paid
for the expenses (including attorneys' fees) of bringing such claim. It shall be
a defense to any such action (other than a claim brought for expenses incurred
in connection with any action or proceeding in advance of its final disposition)
that Indemnitee has not met the standards of conduct which make it permissible
under applicable law for the Company to indemnify Indemnitee for the amount
claimed, but the burden of proving such defense shall be on the Company, and
Indemnitee shall be entitled to receive interim payments of expenses pursuant to
Section 3(a) unless and until such defense may be finally adjudicated by court
order or judgment from which no further right of appeal exists or an arbitration
panel as described in Section 14. It is the parties' intention that if the
Company contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court or arbitration
panel to decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice of a claim pursuant to Section 3(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(e) SELECTION OF COUNSEL. If the Company shall be obligated under
Section 3(a) hereof to pay the expenses of any proceeding against Indemnitee,
the Company, if appropriate, shall be entitled to assume the defense of such
proceeding, with counsel approved by Indemnitee, which approval shall not be
unreasonably withheld, upon the delivery to Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same proceeding,
provided that (i) Indemnitee shall have the right to employ Indemnitee's own
counsel in any such proceeding at Indemnitee's expense; and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the
Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) SCOPE. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, such changes shall be, ipso facto, within the purview of Indemnitee's rights and Company's obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its Board of Directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties' rights and obligations hereunder.
(b) NONEXCLUSIVITY. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or otherwise, both as to action in Indemnitee's official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though Indemnitee may have ceased to serve in such capacity at the time of any action or other covered proceeding.
5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines, penalties or amounts paid in settlement actually or reasonably incurred by Indemnitee in the investigation, defense, appeal or settlement of civil, criminal, administrative or investigative action, suit, proceeding or any alternative dispute resolution, or any hearing, inquiry or investigation referenced in Section 1(a) or (b) hereof, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee.
7. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Company shall, from time to time, make a good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of directors' and officers' liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer; or of the Company's key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.
8. SEVERABILITY. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 8. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.
9. EXCEPTIONS. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
(a) EXCLUDED ACTS. To indemnify Indemnitee for any acts or omissions or transactions from which a director may not be indemnified under the Delaware General Corporation Law; or
(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors has approved the initiation or bringing of such claim; or
(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction or the arbitration panel determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or
(d) INSURED CLAIMS. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier under a policy of directors' and officers' liability insurance maintained by the Company; or
(e) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.
10. EFFECTIVENESS OF AGREEMENT. This Agreement shall be effective as of the date set forth on the first page and may apply to acts or omissions of Indemnitee which occurred prior to such date if Indemnitee was an officer, director, director nominee, employee or other agent of the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, at the time such act or omission occurred.
11. CONSTRUCTION OF CERTAIN PHRASES.
(a) For purposes of this Agreement, references to the "COMPANY" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "OTHER ENTERPRISES" shall include employee benefit plans; references to "FINES" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "SERVING AT THE REQUEST OF THE COMPANY" shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries.
(c) For purposes of this Agreement a "CHANGE IN CONTROL" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
(x) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company acting in such capacity, or (y) a corporation owned directly
or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, or (z) W. Kent Taylor
and his affiliates and associates becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 50% of the total voting power represented by
the Company's then outstanding Voting Securities (as defined below), (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least two-thirds of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company's assets.
(d) For purposes of this Agreement, "INDEPENDENT LEGAL COUNSEL" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 1(c) hereof, who shall not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).
(e) For purposes of this Agreement, "VOTING SECURITIES" shall mean any securities of the Company that vote generally in the election of directors.
12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
14. ARBITRATION. It is understood and agreed that the Company and Indemnitee shall carry out this Agreement in the spirit of mutual cooperation and good faith and that any differences, disputes or controversies shall be resolved and settled amicably among the parties hereto. If the dispute, controversy or difference is not so settled in the above manner within twenty-five (25) days, then the matter shall be exclusively submitted to arbitration in Jefferson County, Kentucky before three independent technically qualified arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association and under the laws of Delaware, without reference to conflict of laws principles. Subject to Sections 1(b) and 6, arbitration shall be the exclusive forum and the
decision and award by the arbitrator(s) shall be final and binding upon the parties concerned and may be entered in any state court of Kentucky having jurisdiction.
15. ATTORNEYS' FEES. If any action is instituted or claim is submitted to arbitration by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee with respect to such action or arbitration, unless as a part of such action, a court of competent jurisdiction or the arbitrator(s) determines that each of the material assertions made by Indemnitee as a basis for such claim were not made in good faith or were frivolous. In the event of an action instituted or a claim submitted to arbitration by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee in defense of such action or claim (including with respect to Indemnitee's counterclaims and cross-claims made in such action or arbitration), unless as a part of such action the court or the arbitrator(s) determines that each of Indemnitee's material defenses to such action or claim were made in bad faith or were frivolous.
16. NOTICE. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee, on the date of such receipt, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.
17. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the Commonwealth of Kentucky for all purposes in connection with any proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the Commonwealth of Kentucky in Jefferson County and that any arbitration proceeding which arises out of or relates to this Agreement shall be held in Jefferson County, Kentucky.
18. CHOICE OF LAW. This Agreement shall be governed by and its provisions construed in accordance with the laws of the State of Delaware as applied to contracts between Delaware residents entered into and performed entirely within Delaware.
19. SUBROGATION. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the corporation effectively to bring suit to enforce such rights.
20. CONTINUATION OF INDEMNIFICATION. All agreements and obligations of the Company contained herein shall continue during the period that Indemnitee is a director, director nominee, officer or agent of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that Indemnitee was serving in the capacity referred to herein.
21. AMENDMENT AND TERMINATION. Subject to Section 20, no amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.
22. INTEGRATION AND ENTIRE AGREEMENT. This Agreement (a) sets forth the entire understanding between the parties, (b) supersedes all previous written or oral negotiations, commitments, understandings and agreements relating to the subject matter hereof and (c) merges all prior and contemporaneous discussions between the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
TEXAS ROADHOUSE, INC.
Address:
6040 Dutchmans Lane, Suite 400
Louisville, KY 40205
AGREED TO AND ACCEPTED:
INDEMNITEE:
Exhibit 10.11
TEXAS ROADHOUSE, INC.
2004 EQUITY INCENTIVE PLAN
ADOPTED: MAY 7, 2004
APPROVED BY STOCKHOLDERS: MAY 7, 2004
TERMINATION DATE: MAY 6, 2014
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock Awards are the Employees, Directors and Consultants of the Company and its Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAPITALIZATION ADJUSTMENT" has the meaning ascribed to that term in Section 11(a).
(d) "CHANGE IN CONTROL" means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an institutional investor, any affiliate thereof or any other Exchange Act Person that acquires the Company's securities in a transaction or series of related transactions that are primarily a private financing transaction for the Company or (b) solely because the level of Ownership held by any
Exchange Act Person (the "Subject Person") exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur.
(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction;
(iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur;
(iv) there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the Company immediately prior to such sale, lease, license or other disposition; or
(v) individuals who, on the date this Plan is adopted by the Board, are members of the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the members of the Board; (provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the Incumbent Board).
Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such agreement (it being understood, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply).
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means a committee of one or more members of the Board appointed by the Board in accordance with Section 3(c).
(g) "COMMON STOCK" means the Class A Common Stock, $0.001 par value, of the Company.
(h) "COMPANY" means Texas Roadhouse, Inc., a Delaware corporation.
(i) "CONSULTANT" means any person, including an advisor, (i) engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or (ii) serving as a member of the Board of Directors of an Affiliate and who is compensated for such services. However, the term "Consultant" shall not include Directors who are not compensated by the Company for their services as Directors, and the payment of a director's fee by the Company for services as a Director shall not cause a Director to be considered a "Consultant" for purposes of the Plan.
(j) "CONTINUOUS SERVICE" means that the Participant's service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's service with the Company or an Affiliate, shall not terminate a Participant's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director shall not constitute an interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award only to such extent as may be provided in the Company's leave of absence policy or in the written terms of the Participant's leave of absence.
(k) "CORPORATE TRANSACTION" means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of more than 50% of the outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv) a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(l) "COVERED EMPLOYEE" means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162 (m) of the Code.
(m) "DIRECTOR" means a member of the Board.
(n) "DISABILITY" means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.
(o) "EMPLOYEE" means any person employed by the Company or an Affiliate. Service as a Director or payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate.
(p) "ENTITY" means a corporation, partnership or other entity.
(q) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(r) "EXCHANGE ACT PERSON" means any natural person, Entity or
"group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act),
except that "Exchange Act Person" shall not include (i) the Company or any
Subsidiary of the Company, (ii) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of the Company,
(iii) an underwriter temporarily holding securities pursuant to an offering of
such securities, or (iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company.
(s) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.
(t) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(u) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or a subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(v) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option.
(w) "OFFICER" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(x) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.
(y) "OPTION AGREEMENT" means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.
(z) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
(aa) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, was not an officer of the Company or an "affiliated corporation" at any time, and does not currently receive remuneration from the Company or an "affiliated corporation," either directly or indirectly, in any capacity other than as a Director or (ii) is otherwise considered an "outside director" for purposes of Section 162 (m) of the Code.
(bb) "OWN," "OWNED," "OWNER," "OWNERSHIP" A person or Entity shall be deemed to "Own," to have "Owned," to be the "Owner" of, or to have acquired "Ownership" of securities if such person or Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(cc) "PARTICIPANT" means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.
(dd) "PLAN" means this Texas Roadhouse, Inc. 2004 Equity Incentive Plan.
(ee) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
(ff) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(gg) "STOCK AWARD" means any right granted under the Plan, including an Option, a stock bonus and a right to acquire restricted stock.
(hh) "STOCK AWARD AGREEMENT" means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.
(ii) "SUBSIDIARY" means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the Board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%).
(jj) "TEN PERCENT STOCKHOLDER" means a person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (l0%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in Section 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.
(iii) To effect, at any time and from time to time, with the
consent of any adversely affected Optionholder, (A) the reduction of the
exercise price of any outstanding Option under the Plan, (B) the cancellation of
any outstanding Option under the Plan and the grant in substitution therefore of
(1) a new Option under the Plan covering the same or a different number of
shares of Common Stock, (2) a stock bonus, (3) the right to acquire restricted
stock, and/or (4) cash, or (C) any other action that is treated as a repricing
under generally accepted accounting principles.
(iv) To amend the Plan or a Stock Award as provided in
Section 12.
(v) To terminate or suspend the Plan as provided in
Section 13.
(vi) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan to a Committee or Committees of one (1) or more members of the Board, and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.
(ii) SECTION 162(m) AND RULE 16b-3 COMPLIANCE. In the discretion of the Board, the Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. In addition, the Board or the Committee may delegate to a committee of one or more members of the Board the authority to grant Stock Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award, (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code, or (c) not then subject to Section 16 of the Exchange Act.
(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, the shares of Common Stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate Eight Million
(8,000,000) shares of Common Stock, plus an annual increase to be added on the
first day of the fiscal year of the Company for a period of ten (10) years,
commencing on the first day of the fiscal year that begins on January 1, 2005
and ending on (and including) the first day of the fiscal year that begins on
January 1, 2014 (each such day, a "Calculation Date"), equal to the lesser of
(i) one percent (1%) of the shares of Common Stock outstanding on each such
Calculation Date (rounded down to the nearest whole share); or (ii) Five Hundred
Thousand (500,000) shares of Common Stock. Notwithstanding the foregoing, the
Board may act, prior to the first day of any fiscal year of the Company, to
increase the share reserve by such number of shares of Common Stock as the Board
shall determine, which number shall be less than each of (i) and (ii).
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without the full amount of shares of Common Stock issuable under such Stock Award having been issued (treating shares issued subject to repurchase, forfeiture or vesting as having been issued for this purpose), the shares of Common Stock not issued under such Stock Award shall revert to and again become available for issuance under the Plan.
(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise; provided, however, that this provision shall not be interpreted to permit the reversion to the share reserve specified in Section 4(a) of shares previously issued under the Plan to a Participant that are forfeited back to or reacquired by the Company because of or in connection with the failure to meet a contingency or condition required to vest such shares in the Participant.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants.
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION ON ANNUAL GRANTS. Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, no Employee shall be eligible to be granted
Options covering more than two million (2,000,000) shares of Common Stock during any calendar year.
(d) CONSULTANTS. A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-3 Registration Statement under the Securities Act ("Form S-3") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, because the Consultant is not a natural person, or because of any other rule governing the use of Form S-3, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued for shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, no Incentive Stock Option shall be exercisable after the expiration of ten (10) years from the date on which it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations and except
as otherwise limited in the Option Agreement, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option) (A) by delivery to the Company of other Common Stock, (B) according to a deferred payment or other similar arrangement with the Optionholder or (C) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option Agreement, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid (i) the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement and (ii) the treatment of the Option as a variable award for financial accounting purposes.
(e) DEPOSIT. The grant of an Option may be conditioned upon the receipt by the Company from the Optionholder of a deposit of all or a portion of the exercise price of the Option or any Option granted to the Optionholder in the future.
(f) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock Option shall be transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
(h) VESTING GENERALLY. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may
vary. The provisions of this Section 6(g) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.
(i) TERMINATION OF CONTINUOUS SERVICE. In the event that an Optionholder's Continuous Service terminates (other than upon the Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate.
(j) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder's Continuous Service (other than upon the Optionholder's death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 6(a) or (ii) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of such registration requirements.
(k) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's Continuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate.
(l) DEATH OF OPTIONHOLDER. In the event that (i) an Optionholder's Continuous Service terminates as a result of the Optionholder's death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death pursuant to Section 6(f) or 6(g), but only within the period ending on the earlier of (A) the date twelve (12) months following the date of death (or such longer or shorter period specified in the Option Agreement or (B) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.
(m) EARLY EXERCISE. The Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder's Continuous Service
terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. The Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of stock bonus agreements may change from time to time, and the terms and conditions of separate stock bonus agreements need not be identical, but each stock bonus agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i) A stock bonus may be awarded in consideration for past services actually rendered to the Company or an Affiliate for its benefit.
(ii) Shares of Common Stock awarded under the stock bonus agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.
(iii) In the event that a Participant's Continuous Service terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination under the terms of the stock bonus agreement. The Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a change to earnings for financial accounting purposes) have elapsed following receipt of the stock bonus unless otherwise specifically provided in the stock bonus agreement.
(iv) Rights to acquire shares of Common Stock under the stock bonus agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the stock bonus agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the stock bonus agreement remains subject to the terms of the stock bonus agreement.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of the restricted stock purchase agreements may change from time to time, and the terms and conditions of separate restricted stock purchase agreements need not be identical, but each restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
(i) The purchase price of restricted stock awards shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on the date such award is made or at the time the purchase is consummated.
(ii) The purchase price of Common Stock acquired pursuant to the restricted stock purchase agreement shall be paid either: (A) in cash at the time of purchase; (B) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant; or (C) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in Delaware, then payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment.
(iii) Shares of Common Stock acquired under the restricted stock purchase agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.
(iv) In the event that a Participant's Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination under the terms of the restricted stock purchase agreement. The Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following the purchase of the restricted stock unless otherwise provided in the restricted stock purchase agreement.
(v) Rights to acquire shares of Common Stock under the restricted stock purchase agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the restricted stock purchase agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the restricted stock purchase agreement remains subject to the terms of the restricted stock purchase agreement.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.
(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant's agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options, notwithstanding any contrary provision of any Stock Award Agreement.
(e) INVESTMENT ASSURANCES. The Company may require a Participant,
as a condition of exercising or acquiring Common Stock under any Stock Award,
(i) to give written assurances satisfactory to the Company as to the
Participant's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distribut-
ing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms
of a Stock Award Agreement, the Participant may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
Common Stock under a Stock Award by any of the following means (in addition to
the Company's right to withhold from any compensation paid to the Participant by
the Company) or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares of Common Stock from the shares
of Common Stock otherwise issuable to the Participant as a result of the
exercise or acquisition of Common Stock under the Stock Award; provided,
however, that no shares of Common Stock are withheld with a value exceeding the
minimum amount of tax required to be withheld by law (or such lesser amount as
may be necessary to avoid variable award accounting); or (iii) delivering to the
Company owned and unencumbered shares of Common Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in, or other event occurs with respect to, the Common Stock subject to the Plan or subject to any Stock Award without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company (each a "Capitalization Adjustment"), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum number of securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a transaction "without receipt of consideration" by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or liquidation of the Company, then all outstanding Options shall terminate immediately prior to the completion of such dissolution or liquidation, and shares of Common Stock subject to the Company's repurchase option may be repurchased by the Company notwithstanding the fact that the holder of such stock is still in Continuous Service.
(c) CORPORATE TRANSACTION. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation may assume or continue any or all Stock Awards outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan (it being understood that similar stock awards include, but are not limited to, awards to acquire the same consideration paid to the stockholders or the Company, as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be assigned by the Company to the successor of the Company (or the successor's parent company), if any, in connection with such Corporate Transaction. In the event that any surviving corporation or acquiring corporation does not assume or continue any or all such outstanding Stock Awards or substitute similar stock awards for such outstanding Stock Awards, then with respect to Stock Awards that have been not assumed, continued or substituted and that are held by Participants whose Continuous Service has not terminated prior to the effective time of the Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), the Stock Awards shall terminate if not exercised (if applicable) at or prior to such effective time, and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards held by Participants whose Continuous Service has not terminated shall (contingent upon the effectiveness of the Corporate Transaction) lapse. With respect to any other Stock Awards outstanding under the Plan that have not been assumed, continued or substituted, the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall not be accelerated, unless otherwise provided in a written agreement between the Company or any Affiliate and the holder of such Stock Award, and such Stock Awards shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction.
(d) CHANGE IN CONTROL.
(i) A Stock Award held by any Participant whose Continuous Service has not terminated prior to the effective time of a Change in Control may be subject to acceleration of vesting and exercisability upon or after such event as may be provided in the Stock Award Agreement for such Stock Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant.
(ii) If any payment or benefit a Participant would receive
hereunder pursuant to a Change in Control from the Company or otherwise
("Payment") would (A) constitute a "parachute payment" within the meaning of
Section 2809 of the Code, and (B) but for this sentence, be subject to the
excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then such
Payment shall be equal to the Reduced Amount. The "Reduced Amount" shall be
either (A) the largest portion of the Payment that would result in no portion of
the Payment being subject to the Excise Tax or (B) the largest portion, up to
and including the total, of the Payment, whichever amount, after taking into
account all applicable federal, state and local employment taxes, income taxes,
and the Excise Tax (all computed at the highest applicable marginal rate),
results in such Participant's receipt, on an after-tax basis, of the greater
amount, notwithstanding
that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits hereunder is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order unless the Participant elects in writing a different order (provided, however, that such election shall be subject to Company approval if made on or after the date on which the event that triggers the Payment occurs): (A) reduction in the acceleration of vesting of Stock Awards, and (B) forfeiture of Stock Awards. In the event that acceleration of vesting of Stock Awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of such Participant's Awards (i.e., vesting on the earliest granted Award cancelled last) unless such Participant elects in writing a different order for cancellation. In the event that Stock Awards are to be forfeited, such forfeiture shall occur in the reverse order of the date of grant of such Participant's Stock Awards (i.e., earliest granted Award forfeited last) unless such Participant elects in writing a different order for forfeiture.
The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to such Participant and the Company within fifteen (15) calendar days after the date on which such Participant's right to a Payment is triggered (if requested at that time by such Participant or the Company) or such other time as requested by such Participant or the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish such Participant and the Company with an opinion reasonably acceptable to such Participant that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon such Participant and the Company.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11(a) relating to Capitalization Adjustments, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy the requirements of Section 422 of the Code.
(b) STOCKHOLDER APPROVAL. The Board, in its sole discretion, may
submit any other amendment to the Plan for stockholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to Covered Employees.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from
time to time, may amend the terms of any one or more Stock Awards; provided,
however, that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.
15. CHOICE OF LAW.
The laws of the Commonwealth of Kentucky hall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state's conflict of laws rules.
TEXAS ROADHOUSE, INC.
STOCK OPTION GRANT NOTICE
(2004 EQUITY INCENTIVE PLAN)
TEXAS ROADHOUSE, INC. (the "Company"), pursuant to its 2004 Equity Incentive Plan (the "Plan"), hereby grants to Optionholder an option to purchase the number of shares of the Company's Class A Common Stock set forth below. This option is subject to all of the terms and conditions as set forth herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety.
Optionholder: _________________________________ Date of Grant: _________________________________ Vesting Commencement Date: _________________________________ Number of Shares Subject to Option: _________________________________ Exercise Price (Per Share): _________________________________ Total Exercise Price: _________________________________ Expiration Date: _________________________________ |
TYPE OF GRANT: [ ] Incentive Stock Option (1) [ ] Nonstatutory Stock Option
EXERCISE SCHEDULE: [ ] Same as Vesting Schedule [ ] Early Exercise Permitted
VESTING SCHEDULE: [ ] of the shares vest on the [ ] date of each month
beginning [ ], 200[ ]
PAYMENT: by one or a combination of the following items (described in
the Stock Option Agreement):
[ ] by cash or check
[ ] Pursuant to a Regulation T Program if the shares are
publicly traded
[ ] by delivery of already-owned shares if the shares are
publicly traded
[ ] by deferred payment
|
ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice, the
Stock Option Agreement and the Plan. Optionholder further acknowledges that as
of the Date of grant, this Stock Option Grant Notice, the Stock Option Agreement
and the Plan set forth the entire understanding between Optionholder and the
Company regarding the acquisition of stock in the Company and supersede all
prior oral and written agreements on that subject with the exception of (i)
options previously granted and delivered to Optionholder under the Plan, and
(ii) the following agreements only:
OTHER AGREEMENTS: ____________________________________
____________________________________
TEXAS ROADHOUSE, INC. OPTIONHOLDER:
By:
----------------------------------- ------------------------------------
Signature Signature
Title: Date:
-------------------------------- -------------------------------
Date:
--------------------------------
|
ATTACHMENTS: Stock Option Agreement, 2004 Equity Incentive Plan and Notice of Exercise
(1) If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option.
ATTACHMENT I
STOCK OPTION AGREEMENT
ATTACHMENT II
2004 EQUITY INCENTIVE PLAN
ATTACHMENT III
NOTICE OF EXERCISE
TEXAS ROADHOUSE, INC.
2004 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, Texas Roadhouse, Inc. (the "Company") has granted you an option under its 2004 Equity Incentive Plan (the "Plan") to purchase the number of shares of the Company's Common Stock indicated in your grant Notice at the exercise price indicated in your grant Notice. Defined terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your option will vest as provided in your grant Notice, provided that vesting will cease upon the termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock subject to your option and your exercise price per share referenced in your grant Notice may be adjusted from time to time for Capitalization Adjustments.
3. EXERCISE.
(A) You may exercise the vested portion of your option (and the unvested portion of your option if your grant Notice so permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require.
(B) By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such exercise.
(C) If your option is an Incentive Stock Option, by exercising
your option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your option that occurs within two (2) years after
the date of your option grant or within one (1) year after such shares of Common
Stock are transferred to you upon exercise of your option.
4. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of your option is permitted) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that have not vested as of the date of exercise shall be subject to the purchase option in favor of the Company as described in the Company's form of Early Exercise Stock Purchase Agreement; and
(c) you shall enter into the Company's form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred.
5. ISO EXERCISE LIMITATION.
(A) The aggregate Fair Market Value of the shares of Common Stock with respect to which you may exercise your option for the first time during any calendar year, when added to the aggregate Fair Market Value of the shares of Common Stock subject to any other options designated as Incentive Stock Options and granted to you under any stock option plan of the Company or an Affiliate prior to the Date of grant with respect to which such options are exercisable for the first time during the same calendar year, shall not exceed $100,000 (the "ISO Exercise Limitation") unless applicable law requires that your option be exercisable sooner. For purposes of this Section 5, your options designated as Incentive Stock Options shall be taken into account in the order in which they were granted to you, and the Fair Market Value of shares of Common Stock shall be determined as of the time the option with respect to such shares of Common Stock is granted. If Section 422 of the Code is amended to provide for a different limitation from that set forth in this provision, the ISO Exercise Limitation shall be deemed amended effective as of the date required or permitted by such amendment to the Code.
(B) [OPTIONAL: NOTWITHSTANDING THE PROVISIONS OF SECTION 5(a), IF THE ISO EXERCISE LIMITATION WOULD PREVENT YOU FROM EXERCISING YOUR OPTION AS TO VESTED SHARES, THEN THE ISO EXERCISE LIMITATION SHALL TERMINATE AS TO SUCH VESTED SHARES AS SUCH SHARES VEST, AND YOU MAY EXERCISE YOUR OPTION AS TO SUCH VESTED SHARES. UPON SUCH TERMINATION OF THE ISO EXERCISE LIMITATION, YOUR OPTION SHALL RE DEEMED A NONSTATUTORY STOCK OPTION TO THE EXTENT OF THE NUMBER OF VESTED SHARES OF COMMON STOCK SUBJECT TO YOUR OPTION THAT EXCEED THE ISO EXERCISE LIMITATION.]
(C) The ISO Exercise Limitation shall terminate, and you may fully exercise your option, as to all vested shares of Common Stock subject to your option, upon the earlier of the following events:
(I) the date of termination of your Continuous Service;
(II) the day immediately prior to the effective date of a Corporate Transaction; or
(III) the day that is ten (10) days prior to the Expiration Date of your option.
Upon such termination of the ISO Exercise Limitation, your option shall be deemed a Nonstatutory Stock Option to the extent of the number of shares of Common Stock subject to your option that exceed the ISO Exercise Limitation.
6. METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise of all or any part of your option. You may elect to make payment of the exercise price in cash or by check or in any other manner permitted by your grant notice, which may include one or more of the following:
(A) In the Company's sole discretion at the time your option is exercised and provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds.
(B) Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock either that you have held for the period required to avoid a charge to the Company's reported earnings (generally six (6) months) or that you did not acquire, directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion of the Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your option by tender to the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement restricting the redemption of the Company's stock.
(C) [OPTIONAL] Pursuant to the following deferred payment alternative (provided that this alternative shall not be available for executive officers or Directors of the Company, notwithstanding any Stock Option Grant Notice to the contrary):
(I) Not less than one hundred percent (100%) of the aggregate exercise price, plus accrued interest, shall be due four (4) years from date of exercise or, at the Company's election, upon termination of your Continuous Service.
(II) Interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid (1) the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement and (2) the treatment of the Option as a variable award for financial accounting purposes.
(III) At any time that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall be made in cash and not by deferred payment.
(IV) In order to elect the deferred payment alternative, you must, as a part of your written notice of exercise, give notice of the election of this payment alternative and, in order to secure the payment of the deferred exercise price to the Company hereunder, if the Company so requests, you must tender to the Company a promissory note and a pledge agreement covering the purchased shares of Common Stock, both in form and substance satisfactory to the Company, or such other or additional documentation as the Company may request.
7. WHOLE SHARES. You may exercise your option only for whole shares of Common Stock.
8. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, you may not exercise your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with other applicable laws and regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations.
9. TERM. You may not exercise your option before the commencement or after the expiration of its term. The term of your option commences on the Date of grant and expires upon the earliest of the following:
(A) three (3) months after the termination of your Continuous Service for any reason other than your Disability or death, provided that if during any part of such three (3) month period your option is not exercisable solely because of the condition set forth in Section 8, your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service;
(B) twelve (12) months after the termination of your Continuous Service due to your Disability;
(C) eighteen (12) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates;
(D) the Expiration Date indicated in your grant Notice; or
(E) the day before the tenth (10th) anniversary of the Date of grant.
(F) If your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the date of grant of your option and ending on the day three (3) months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates.
10. TRANSFERABILITY. Your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option.
11. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or service contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate.
12. WITHHOLDING OBLIGATIONS.
(A) At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the exercise of your option.
(B) Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the
exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid variable award accounting). If the date of determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the preceding sentence shall not be permitted unless you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option.
Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.
(C) You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein unless such obligations are satisfied.
13. NOTICES. Any notices provided for in your option or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.
14. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control.
Exhibit 21.1
LIST OF SUBSIDIARIES OF TEXAS ROADHOUSE, INC.
(Upon completion of the Initial Public Offering)
I. SUBSIDIARIES WHOLLY-OWNED BY TEXAS ROADHOUSE, INC.
NAME OF ENTITY FORM OF ENTITY Texas Roadhouse Development Corporation Kentucky corporation Texas Roadhouse Management Corp. Kentucky corporation Aspen Steaks Exchange Subsidiary Inc. Kentucky corporation Texas Roadhouse of Gainesville, Inc. Kentucky corporation Texas Roadhouse Property Holdings LLC Kentucky limited liability company Texas Roadhouse of Texas, LLC Kentucky limited liability company |
II. SUBSIDIARIES WHOLLY-OWNED BY TEXAS ROADHOUSE OF TEXAS, LLC AND TEXAS ROADHOUSE HOLDINGS LLC
NAME OF ENTITY FORM OF ENTITY Longview Roadhouse II, Ltd. Kentucky limited partnership Texas Roadhouse of Abilene, Ltd. Kentucky limited partnership Texas Roadhouse of Amarillo, Ltd. Kentucky limited partnership Texas Roadhouse of College Stations, Ltd. Kentucky limited partnership Texas Roadhouse of Conroe, Ltd. Kentucky limited partnership Texas Roadhouse of Corpus Christi, Ltd. Kentucky limited partnership Texas Roadhouse of Denton, Ltd. Kentucky limited partnership Texas Roadhouse of Fort Worth, Ltd. Kentucky limited partnership Texas Roadhouse of Friendswood, Ltd. Kentucky limited partnership Texas Roadhouse of Grand Prairie, Ltd. Kentucky limited partnership Texas Roadhouse of Houston, Ltd. Kentucky limited partnership Texas Roadhouse of Killeen, Ltd. Kentucky limited partnership Texas Roadhouse of Live Oak, Ltd. Kentucky limited partnership Texas Roadhouse of Lubbock, Ltd. Kentucky limited partnership Texas Roadhouse of McAllen, Ltd. Kentucky limited partnership Texas Roadhouse of Mesquite, Ltd. Kentucky limited partnership Texas Roadhouse of Pasadena, Ltd. Kentucky limited partnership Texas Roadhouse of San Antonio, Ltd. Kentucky limited partnership Texas Roadhouse of Texarkana, Ltd. Kentucky limited partnership Texas Roadhouse of Tyler, Ltd. Kentucky limited partnership Texas Roadhouse of Waco, Ltd. Kentucky limited partnership Texas Roadhouse of Wichita Falls, Ltd. Kentucky limited partnership |
III. SUBSIDIARIES WHOLLY-OWNED BY TEXAS ROADHOUSE PROPERTY HOLDINGS LLC
NAME OF ENTITY FORM OF ENTITY Texas Roadhouse of Boise, LLC Kentucky limited liability company Texas Roadhouse of Cedar Falls, LLC Kentucky limited liability company Texas Roadhouse of Cheyenne, LLC Kentucky limited liability company Texas Roadhouse of Decatur, LLC Kentucky limited liability company Texas Roadhouse of Dixie Highway, LLC Kentucky limited liability company Texas Roadhouse of East Peoria, LLC Kentucky limited liability company Texas Roadhouse of Elkhart, LLC Kentucky limited liability company Texas Roadhouse of Elyria, LLC Kentucky limited liability company Texas Roadhouse of Fort Wayne, LLC Kentucky limited liability company Texas Roadhouse of Grand Junction, LLC Kentucky limited liability company Texas Roadhouse of Lancaster, LLC Kentucky limited liability company Texas Roadhouse of Lansing, LLC Kentucky limited liability company Texas Roadhouse of Lynchburg, LLC Kentucky limited liability company Texas Roadhouse of New Philadelphia, LLC Kentucky limited liability company Texas Roadhouse of Richmond, LLC Kentucky limited liability company Texas Roadhouse of Roseville, LLC Kentucky limited liability company |
IV. OTHER INDIRECT WHOLLY-OWNED SUBSIDIARIES
NAME OF ENTITY FORM OF ENTITY Aspen Steaks, Ltd. (1) Kentucky corporation Texas Roadhouse Delaware, LLC (2) Kentucky limited liability company Texas Roadhouse Louisville I LLC (2) Kentucky limited liability company |
(1) Wholly-owned by Aspen Steaks Exchange Subsidiary Inc.
(2) Wholly-owned by Texas Roadhouse Holdings LLC
V. PARTIALLY-OWNED SUBSIDIARIES
NAME OF ENTITY FORM OF ENTITY Texas Roadhouse Holdings LLC (1) Kentucky limited liability company Texas Roadhouse of Austin, Ltd. (2) Kentucky limited partnership Texas Roadhouse of Jacksonville, NC, LLC (3) Kentucky limited liability company Texas Roadhouse of Parker, LLC (3) Kentucky limited liability company |
(1) Common Shares held by Texas Roadhouse, Inc. and Preferred Shares held by
former holders of Common Shares of Texas Roadhouse Holdings LLC
(2) Ownership Interests held by Texas Roadhouse of Texas, LLC and Texas
Roadhouse Holdings LLC
(3) Ownership Interests held by Texas Roadhouse Holdings LLC