Document:

Exhibit 10.100

 

 

SMITH & WOLLENSKY RESTAURANT
GROUP. 

1114 First. Avenue, 6th Floor 

New York. NY 10021

 

 

April 26, 2005

 

 

Morgan
Stanley Dean Witter 

Commercial Financial Services, Inc. 

2000 Westchester Avenue, 2 NE 
Purchase,
New York
10577

 

Ladies
and Gentlemen:

 

Reference is made to (1) the Term Loan Agreement
dated August 23, 2002 (‘First Loan Agreement”), among S&W of Las Vegas, LLC (“Borrower”),
Smith & Wollensky Restaurant Group. Inc. (“Company’) and Morgan Stanley Dean,
Witter Commercial Financial Services, Inc. (“Lender”), (2) the Term Loan Agreement
dated December 24, 2002 (“Second Loan Agreement”; and together with the First
Loan Agreement., the “Term Loan Agreements’), among Borrower, Company, Dallas
S&W, L.P. (“DaI1as”) and Lender, (3) a secured Line of Credit Agreement dated January
30, 2004 among Borrower, Company and Lender and a secured Line of Credit Agreement, dated January 30 2004 among Borrower, Company, Smith & Wollensky of
Boston. LLC and Lender (col1ectively, the “Line of Credit Agreements”
and together with the Term Loan Agreements, the “Loan Agreements’),
and (4) a certain Covenants Agreement and Amendment
to Term Loan Agreements dated as of January
30, 2004, among Borrower’, Company, Dallas and Lender, as amended by a certain
First Amendment to Covenants Agreement dated as of September 26, 2004 (“First Amendment”) among
Borrower, Company, Dallas and Lender (as so amended, the “Covenants Agreement”),
pursuant to which Covenants Agreement, the financial covenants with respect to the
loans advanced pursuant
to the
Loan Agreements are now set forth.

 

A. Borrower and Company hereby represents to Lender
the following: 

1)              On April 20, 2005, after
addressing the views expressed by the Office of the Chief Accountant of the Securities and
Exchange Commission

 

 

(“SEC”) in a letter issued
in February 2005 to the American Institute of Certified Public Accountants regarding
certain operating lease accounting issues and their application under generally
accepted accounting principles, it was determined that the accounting treatment
for leases was inaccurately reflected in the Company’s financial statements from fiscal 1988 through fiscal 2004 and that certain
restatements would be necessary for these periods. The total cumulative impact
to the Company’s statement of operations from fiscal 1998 to fiscal 2004
relating to these restatements is as follows (collectively, the “Lease
Accounting Adjustments”):

 

	
  •Increase in Rent Expense

  	
   

  	
  $

  	
  149,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  •Increase in Deprecation Expense

  	
   

  	
  94,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  •Increase in Real Estate Tax Expense

  	
   

  	
  30,975

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  •Decrease in Management Fee Income

  	
   

  	
  118,210

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total ‘Lease Accounting Adjustments’

  	
   

  	
  $

  	
  392,185

  	
   

  

 

2)              The restatement is a
non-cash accounting adjustment that had no impact on the cash flow of Borrower
or the Company.

 

3)              It was further determined on
April 20, 2005 that the Company had incorrectly accounted for gift certificates
for the fiscal years ended December 31,2001, December 30, 2002, December 29,
2003 and January 3, 2005.  As a result,
the Company is restating results for the fiscal years ended December 31, 2001,
December 30, 2002, and December 29, 2003, and correcting its accounting for
gift certificates for the year ended January 3, 2005. The impacts on the fiscal
years ended January 1, 2001, December 31, 2001, December 30, 2002 and December
29,2003 are increases to the previously reported not losses of $450,000,
$140,000, $66,446 and $83,073, respectively.

 

B.
In reliance upon the foregoing, Borrower and Company request that Lender confirm
the following with reference to the financial covenants of Borrower and Company
set forth in the Covenants Agreement:

 

a. The Lease Accounting
Adjustments may be excluded from the calculations of (i) EBITDA in determining
the Debt Service Coverage Ratio and (ii) EBITDA for purposes of determining the
Senior Leverage Ratio; and (iii) EBIT in determining the Interest Coverage
Ratio, all as set forth in Paragraph 2 of the Covenants Agreement (as so
amended by the First Amendment).

 

 

b. The restatement for gift
certificate accounting may be excluded from the calculations of (i) EBITDA in
determining the Debt Service Coverage Ratio, and (ii) EBITDA for purposes of
determining the Senior Leverage Coverage Ratio; and (iii) EBITDA in determining
the Interest Coverage Ratio, all as set forth in Paragraph 2 of the Covenants
Agreement (as so amended by the First Amendment).

 

c. Neither Borrower nor
Company shall be deemed to be out of compliance with any of the financial
covenants set forth in paragraph B) (a) above for the quarterly periods ended
June 30, 2003, September 29, 2003, December 29, 2003, March 29, 2004, June 28,
2004, September 27, 2004 and January 3, 2005 by reason of the Lease Accounting
Restatements and gift certificate restatements prior to its exclusion from the
calculation of such financial covenants.

 

 

Please
confirm our understanding with regard to the foregoing by signing a counterpart
of this letter and returning it to the undersigned.

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  /S/
  Alan Mandel

  	
   

  
	
   

  	
   

  
	
   

  	
  Alan
  Mandel

  
	
   

  	
   

  
	
   

  	
  Chief
  Financial Officer

  

 

 

In
reliance upon the representations set forth in paragraph A above, Lender
confirms its agreement as described in paragraph B above:

 

 

MORGAN
STANLEY DEAN WITTER

 

COMMERCIAL FINANCIAL SERVICES, INC.

 

 

	
  By:

  	
  /S/
  Christopher Mayrose

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:
  Christopher Mayrose

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:
  Executive Director BusinesScapeExhibit 10.101
 
Letter from The Smith & Wollensky Restaurant Group, Inc. to Alan M. Mandel dated as of June 20, 2000.
 

	
  May 30, 2000

  	
   

  	
  Via Facsimile

  
	
   

  	
   

  	
  (248) 372-2114

  

Mr. Alan Mandel

 

Dear Alan:

 

It gives me great pleasure to offer you the position of Chief Financial
Officer for The Smith & Wollensky Restaurant Group, Inc. The following
points lay out the terms of the position, as we discussed:

 

•                  Base
salary $200,000

•                  Bonus
potential: A minimum of $20,000 based on year 2000 EBITDA of $8.2 million: with
an increase potential of up to $40,000 based on company financial results.
(This is based on the same plan as the President’s.)

•                  Stock
options: 25,000 initially, vesting over 5 years with an additional minimum of
5,000 per year.

•                  Full
medical coverage, as per our existing executive plan.

•                  401K
package as per our existing executive plan.

•                  Vacation:
3 weeks per year.

•                  Company
car, with gasoline, insurance, parking and tolls provided.

•                  Dining
allowance: $5,000.00 per year for R&D:

•                  Comprehensive
relocation package, based on three bids from nationally known and reputable
companies.

 

In addition, should you decide not to relocate to the New York area
until summer, 2001 the company will provide the following terms:

 

•                  A
corporate apartment.

•                  Weekly
flight to and from your Michigan home.

•                  Four-day
work week, Monday through Thursday.

 

We look forward to having you on board, I know you will be a tremendous
asset to the company, and I hope we have a long and fruitful relationship. I
look forward to your response.

 

 

Sincerely,

	
  /S/ Jim Dunn

  	
   

  

Jim Dunn

President

 

 

	
  June 20, 2000

  	
   

  	
  Via Facsimile

  
	
   

  	
   

  	
  (248) 372-2114

  

Mr. Alan Mandel

 

Dear Alan:

 

The following is a summary of our discussion regarding the two
remaining points of the terms of your employment with The Smith & Wollensky
Restaurant Group, Inc. (SWRG):

 

•                  If
you do not relocate to the New York-area, SWRG will provide $2,500 per month in
housing reimbursement for a period of one year from the effective date of your
employment.  This housing reimbursement
will cease should you relocate to the New York-area prior to the end of the one
year period.

 

•                  If
there is a change in control of the company where your services would no longer
be required, you will receive a severance package equivalent to one year’s
salary, with medical insurance coverage for one year.

 

Please let me know if the foregoing reflects your understanding of these
points of the agreement.

 

 

Sincerely,

	
  /S/ Jim Dunn

  	
   

  

Jim Dunn

PresidentExhibit 10.03

 

2005 Directors’ Compensation and Retirement
Program

 

In April 2005, an external compensation
consultant reviewed the total compensation for directors.  Specifically, retainer fees, meeting fees,
insurance and stock-based long-term incentives were reviewed using, as the
competitive benchmark, levels of total compensation paid to directors of 30
energy companies 29 of which constitute the peer group used for the company’s
executive performance incentive program, 20 general industry companies of
comparable revenue and capitalization size and 13 companies located in the
company’s geographic area or of other relevance.  Set forth below is the compensation for
non-employee directors.  No compensation
is paid to employee directors for their service as directors.

 

Cash Compensation

 

•        An annual cash retainer of $24,000 is paid to
non-employee directors on a quarterly basis. 
This level of retainer was found to be competitive and no changes were
made in 2005 to this compensation component.

 

•         The cash meeting fee is $1,500 for each Board and
Committee meeting attended.  If a
non-employee director participates in a meeting by telephone, the meeting fee
is $750.  An additional $1,000 is paid to
the Audit Committee Chair and $500 is paid to each other Committee Chair, for
each Committee meeting attended.  This
level of meeting fee was found to be competitive and no changes were made in
2005 to this compensation component.

 

Equity-Based Compensation

 

•        A grant of 1,000 vested deferred phantom stock
units was awarded to each director.  This
grant had approximately the same economic value as the 2004 grant of 1,320
vested deferred phantom stock units because of the increase in the market price
of the company’s common stock.  Dividends
will be credited quarterly in the form of additional stock units.  The value of the stock units will be paid in
cash on the earlier of the director’s death or retirement from the Board in
accordance with the election made under the Directors’ Deferred Compensation
Plan.  The number of phantom stock units,
options, or other stock-based awards, granted in future years will be based on
competitive practices as determined by a nationally recognized external
consultant.

 

•        The non-employee directors are subject to stock
ownership guidelines, which require them to hold shares, including share
equivalent units, in an amount equal to two times the annual cash
retainer.  Under the guidelines,
directors have up to two years to acquire a sufficient number of shares to meet
this requirement.  All directors
currently satisfy this ownership guideline.

 

Deferred Compensation

 

•        In connection with the enactment of the American
Jobs Creation Act of 2004, the company suspended, effective December 31, 2004,
the Directors’ Deferred Compensation Plan and adopted, effective January 1,
2005, the 2005 Directors’ Deferred Compensation Plan.  The Directors’ Deferred Compensation Plan
continues to operate for the sole purpose of administering vested amounts under
the plan on or prior to December 31, 2004.

 

•        Non-employee directors’ retainer and fees may be
deferred under the 2005 Directors’ Deferred Compensation Plan until Board
service ends or a later time, as the director may elect.

 

•        In May 1999, the directors’ retirement plan was
curtailed and the accrued benefit of each active director was converted to a
stock account administered under the Directors’ Deferred Compensation
Plan.  Imputed dividends are credited to
the account as additional shares.  All
participants are vested upon death or termination of service as a
director.  Dr. Domm and Messrs. McConomy,
Rohr and Shapira are the only active directors eligible for benefits under the
retirement plan.  Directors elected after
May 1999 are not eligible to participate in the retirement plan.

 

 

Insurance

 

•        The company also provides non-employee directors
with $20,000 of life insurance, $20,000 of accidental death and dismemberment
insurance and $250,000 of travel accident insurance while traveling on business
for Equitable Resources.

 

•        Non-employee directors who joined the Board prior
to May 25, 1999 may designate a civic, charitable or educational organization
as beneficiary of a $500,000 gift funded by a life insurance policy purchased
by Equitable Resources.

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