-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BiP+jtbOCKmFjJD8s9jJpBzUFMadNrWlDfWgYfmQrNcDNWVvE0BoCbPh1kgAz1RC f0q9TxZV4ERG/KPXPM8+OA== 0000883976-03-000011.txt : 20030813 0000883976-03-000011.hdr.sgml : 20030813 20030813161857 ACCESSION NUMBER: 0000883976-03-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20030629 FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RARE HOSPITALITY INTERNATIONAL INC CENTRAL INDEX KEY: 0000883976 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 581498312 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19924 FILM NUMBER: 03841527 BUSINESS ADDRESS: STREET 1: 8215 ROSWELL RD STREET 2: BLDG 600 CITY: ATLANTA STATE: GA ZIP: 30350 BUSINESS PHONE: 7703999595 MAIL ADDRESS: STREET 1: 8215 ROSWELL ROAD STREET 2: BLDG 200 CITY: ATLANTA STATE: GA ZIP: 30350 FORMER COMPANY: FORMER CONFORMED NAME: LONGHORN STEAKS INC DATE OF NAME CHANGE: 19930328 10-Q 1 q2200310q.htm RARE HOSPITALITY 10-Q 06292003 10-q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Quarterly Period Ended June 29, 2003

Commission file number 0-19924

RARE Hospitality International, Inc.
(Exact name of registrant as specified in its charter)

Internal Revenue Service - Employer Identification No. 58-1498312

8215 Roswell Rd; Bldg. 600; Atlanta, GA 30350
(770) 399-9595
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

XX Yes No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

XX Yes No

As of August 8, 2003, there were 22,322,549 shares of common stock of the Registrant outstanding.

RARE Hospitality International, Inc. and Subsidiaries

Index

Part I - Financial Information                                                                 Page
                                                                                               ----
     Item 1. Consolidated Financial Statements:

                    Consolidated Balance Sheets as of
                    June 29, 2003 and December 29, 2002                                          1

                    Consolidated Statements of Earnings
                    for the quarters and six months ended
                    June 29, 2003 and June 30, 2002                                              2

                    Consolidated Statement of Shareholders' Equity
                    for the six months ended June 29, 2003                                       3

                    Condensed Consolidated Statements of Cash Flows
                    for the six months ended June 29, 2003
                    and June 30, 2002                                                            4

                    Notes to the Consolidated Financial Statements                              5-9

     Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of Operations                                  9-12

     Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                                                   12-13

     Item 4. Controls and Procedures                                                            13


Part II - Other Information

     Item 1. Legal Proceedings                                                                  13

     Item 2. Changes in Securities and Use of Proceeds                                          13

     Item 3. Defaults Upon Senior Securities                                                    13

     Item 4. Submission of Matters to a Vote of Securities
                 Holders                                                                       13-14

     Item 5. Other Information                                                                  14

     Item 6. Exhibits and Reports on Form 8-K                                                   14

     Signatures                                                                                 15

Part I. Financial Information
Item 1. Financial Statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)

                                                             June 29,               December 29,
Assets                                                         2003                     2002
                                                               ----                     ----
Current assets:
    Cash and cash equivalents                                $  9,973                $  13,732
    Short-term investments                                     22,963                   17,735
    Accounts receivable                                         7,202                    6,576
    Inventories                                                15,203                   14,309
    Prepaid expenses                                            3,533                    3,477
    Refundable income taxes                                     4,903                    4,124
    Deferred income taxes                                       4,281                    4,484
                                                             --------                 --------
        Total current assets                                   68,058                   64,437

Property & equipment, less accumulated
  depreciation                                                321,854                  299,773
Goodwill, net                                                  19,187                   19,187
Other                                                           4,145                    3,510
                                                             --------                 --------
        Total assets                                         $413,244                 $386,907
                                                             ========                 ========
Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                         $ 15,489                 $ 17,727
    Accrued expenses                                           43,004                   44,015
    Current installments of obligations under
        capital leases                                            111                       78
                                                             --------                 --------
        Total current liabilities                              58,604                   61,820

Deferred tax liability                                          4,363                    1,138
Obligations under capital leases, net
  of current installments                                      22,336                   22,406
                                                             --------                 --------
        Total liabilities                                      85,303                   85,364

Minority interest                                               1,419                    1,411

Shareholders' equity:
    Preferred stock                                                 -                        -
    Common stock                                              197,826                  191,174
    Unearned compensation-restricted stock                     (1,302)                  (1,124)
    Retained earnings                                         134,987                  112,446
    Treasury stock at cost; 195,000 and 95,000
     shares in 2003 and 2002, respectively                    (4,989)                  (2,364)
                                                             --------                 --------
        Total shareholders' equity                            326,522                  300,132
        Total liabilities and shareholders'                  --------                 --------
         equity                                              $413,244                 $386,907
                                                             ========                 ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share data)
(Unaudited)

                                                          Quarter Ended                Six months Ended
                                                          -------------                -----------------
Revenues:                                            June 29,       June 30,        June 29,       June 30,
                                                       2003           2002            2003           2002
   Restaurant sales:
     LongHorn Steakhouse                              $121,661      $104,559         $240,320       $208,944
     The Capital Grille                                 24,653        21,721           48,107         43,575
     Bugaboo Creek Steak House                          20,249        17,080           40,484         34,326
     Specialty concepts                                  1,959         1,938            3,669          3,666
        Total restaurant sales                         168,522       145,298          332,580        290,511
  Franchise revenues                                        98            88              189            173
        Total revenues                                 168,620       145,386          332,769        290,684
Costs and expenses:
   Cost of restaurant sales                             60,518        52,781          119,158        105,593
   Operating expenses - restaurants                     73,591        63,650          144,217        125,930
   Depreciation and amortization
     - restaurants                                       6,460         5,841           12,717         11,601
   Pre-opening expense                                   1,668           825            2,725          1,739
   General and administrative expenses                  10,024         8,312           19,895         16,685
        Total costs and expenses                       152,261       131,409          298,712        261,548
     Operating income                                   16,359        13,977           34,057         29,136
Interest expense, net                                      213           421              459            870
Minority interest                                           82           120              200            300
   Earnings before income taxes                         16,064        13,436           33,398         27,966
Income tax expense                                       5,224         4,295           10,857          9,090
        Net earnings                                   $10,840        $9,141          $22,541        $18,876

Basic earnings per common share                          $0.49         $0.42            $1.03          $0.87
Diluted earnings per common share                        $0.47         $0.40            $0.97          $0.83

Weighted average common shares outstanding:
   Basic                                                22,061        21,732           21,987         21,612
   Diluted                                              23,175        23,000           23,133         22,836

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statement of Shareholders' Equity
For the quarter ended June 29, 2003
(In thousands, unaudited)

                                     Common Stock                                              Total
                                   ----------------   Restricted    Retained     Treasury  Shareholders'
                                Shares       Amount      Stock      Earnings       Stock      Equity
                                ------       ------      -----      --------       -----     --------
Balance, December 29, 2002      22,066      $191,174   $(1,124)    $112,446     $  (2,364)   $300,132

Comprehensive income:

Net earnings                        --            --        --       22,541            --      22,541

                                                                                              -------
Total comprehensive income                                                                     22,541
                                                                                              -------
Amortization of restricted
   stock                            --            --        312          --            --         312
Purchase of common stock
   for treasury                     --            --         --          --        (2,625)     (2,625)
Issuance of shares pursuant
  to restricted stock award         18           490       (490)         --            --          --
Issuance of shares pursuant
  to exercise of stock
  options                          362         3,816         --          --            --       3,816
Tax benefit of stock options
  exercised                         --         2,346         --          --            --       2,346
                                ------      --------    -------    --------     ---------    --------
Balance, June 29, 2003          22,446      $197,826    $(1,302)   $134,987     $  (4,989)   $326,522
                                ======      ========    =======    ========     =========    ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)

                                                                                 Six Months Ended
                                                                                 -----------------
                                                                        June 29,                June 30,
                                                                          2003                    2002
                                                                          ----                    ----
Cash Flows from operating activities:
  Net earnings                                                         $  22,541                 $ 18,876
  Adjustments to reconcile net earnings to
    net cash provided by operating activities:
      Depreciation and amortization                                       13,494                   12,510
      Changes in working capital accounts                                 (5,580)                  (3,381)
      Minority interest                                                      200                      300
      Deferred tax (benefit) expense                                       3,428                   (2,063)

      Issuance of common stock to employee
        retirement plans                                                      --                      219
                                                                       ---------                 --------
  Net cash provided by operating activities                               34,083                   26,461
                                                                       ---------                 --------
Cash flows from investing activities:
  Purchase of property and equipment                                     (35,241)                 (19,959)
  Purchase of short-term investments                                      (5,228)                      --
                                                                       ---------                 --------
  Net cash used by investing activities                                  (40,469)                 (19,959)
                                                                       ---------                 --------
Cash flows from financing activities:
  Distributions to minority partners                                        (192)                    (282)
  Increase (decrease) in bank overdraft included in
    accounts payable                                                       1,665                   (2,881)
  Principal payments on capital leases                                       (37)                     (58)
  Purchase of common stock for treasury                                   (2,625)                      --
  Proceeds from exercise of stock options                                  3,816                    3,945
                                                                       ---------                 --------
  Net cash provided by financing activities                                2,627                      724
                                                                       ---------                 --------
Net (decrease) increase in cash and cash equivalents                      (3,759)                   7,226
Cash and cash equivalents, beginning of period                            13,732                   25,979
                                                                       ---------                 --------
Cash and cash equivalents, end of period                                $  9,973                 $ 33,205
                                                                       =========                 ========
Supplemental disclosure of cash flow information
  Cash paid for income taxes                                            $  6,285                 $  4,938
                                                                       =========                 ========
  Cash paid for interest                                                $    108                 $    600
                                                                       =========                 ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

The consolidated financial statements of RARE Hospitality International, Inc. and subsidiaries (the “Company”) as of June 29, 2003 and December 29, 2002 and for the quarters and six months ended June 29, 2003 and June 30, 2002 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 29, 2002.

The Company operates on a 52- or 53-week fiscal year ending on the last Sunday in each calendar year. Each of the four fiscal quarters is typically made up of 13 weeks. The fiscal quarters and year-to-date periods ended June 29, 2003 and June 30, 2002 each contained 13 weeks and 26 weeks, respectively.

On July 23, 2003, the Company’s Board of Directors approved a 3-for-2 stock split, which will be effected in the form of a 50% stock dividend to shareholders of record as of the close of business on August 12, 2003. The new stock certificates will be distributed on September 2, 2003. Although the financial statements and related footnotes included herein have not been adjusted to reflect the stock split, beginning in the third quarter of fiscal year 2003, operating results will be retroactively restated to give effect for the stock split for all periods presented.

The table below reflects the Company’s earnings per share on a comparative pre-split and post-split basis:

                                                  Quarter Ended                 Six Months Ended
                                            June 29,        June 30,         June 29,        June 30,
                                              2003            2002             2003            2002
Net earnings                                  ----            ----             ----            ----
  (in thousands)                              $10,840          $9,141         $22,541         $18,876

Earnings per share:

Basic - pre-split                             $  0.49         $  0.42         $  1.03         $  0.87
Basic - post-split                            $  0.33         $  0.28         $  0.68         $  0.58

Diluted - pre-split                           $  0.47         $  0.40         $  0.97         $  0.83
Diluted - post-split                          $  0.31         $  0.26         $  0.65         $  0.55

2. New Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections” (“SFAS 145”). SFAS Nos. 4 and 64 required gains and losses from extinguishment of debt to be classified as extraordinary items. SFAS 145 rescinds this requirement and stipulates that gains or losses on extinguishment of debt would have to meet the criteria of APB Opinion No. 30 to be classified as an extraordinary item. In addition, any extraordinary gains or losses on extinguishment of debt in prior periods presented would require reclassification. The Company adopted SFAS 145 as of the beginning of fiscal 2003. The initial adoption of SFAS 145 did not have an impact on the Company’s consolidated results of operations or financial position.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”). This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized only when the liability is incurred and measured at fair value. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The initial adoption of this statement did not have an impact on the Company’s consolidated results of operations or financial position.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34.” This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. Interpretation No. 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company adopted the provisions of Interpretation No. 45 as of the beginning of fiscal 2003. The Company does not have any guarantees that would require additional disclosure as required by Interpretation No. 45.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“SFAS 148”). SFAS 148 amends SFAS 123, “Accounting for Stock-Based Compensation”, and provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also amends the disclosure requirements of SFAS 123 to require more prominent and frequent disclosures in financial statements about the effects of stock-based compensation. The Company adopted the disclosure provisions of SFAS 148 as of the beginning of fiscal 2003.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies immediately to variable interests in variable interest entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31, 2003. The Interpretation requires certain disclosures in financial statements issued after January 31, 2003 if it is reasonably possible that the Company will consolidate or disclose information about variable interest entities when the Interpretation becomes effective. The Company does not have any interests that would change the current consolidated reporting entity or require additional disclosures required by Interpretation No. 46.

3. Shareholders' Equity and Stock Based Compensation

During the first quarter of 2003, the Company purchased 100,000 shares of its common stock for a total purchase price of approximately $2,625,000 (average price of $26.25 per share).

The Company has stock option plans that provide for the granting of incentive and non-qualified stock options to employees, officers, directors, consultants, and advisors. Under the plans, options are granted at an exercise price equal to the fair market value of the underlying common stock on the date of grant. The Company applies APB Opinion No. 25 and related interpretations in accounting for its stock option plans as permitted under SFAS 123 and SFAS 148. Accordingly, no compensation cost has been recognized for the Company’s stock option plans. Had the compensation cost for the Company’s stock option plans been determined based on the fair value at the grant dates for awards under those plans consistent with the fair value methodology of SFAS 123, the Company’s net income and earnings per share would have been as follows:

                                                             Quarter Ended             Six Months Ended
                                                         June 29,      June 30,       June 29,     June 30,
                                                           2003          2002           2003         2002
                                                           ----          ----           ----         ----
Net earnings, as reported                                 $10,840         $9,141       $22,541      $18,876
Stock-based compensation expense
  determined under fair value
  method for all awards, net of tax                           958            768         1,793        1,497
                                                         --------       --------      --------     --------
Proforma net earnings                                      $9,882         $8,373       $20,748      $17,379
                                                         ========       ========      ========     ========
Earnings per share:

Basic - as reported                                    $   0.49         $   0.42      $   1.03     $   0.87
                                                         ========       ========      ========     ========
Basic - proforma                                          $  0.45        $  0.39        $ 0.94       $ 0.80
                                                         ========       ========      ========     ========
Diluted - as reported                                    $   0.47       $   0.40      $   0.97     $   0.83
                                                         ========       ========      ========     ========
Diluted - proforma                                       $   0.43       $   0.36      $   0.90     $   0.76
                                                         ========       ========      ========     ========

4. Long-Term Debt

At June 29, 2003, no borrowings were outstanding under the Company’s $100.0 million revolving credit agreement, and the Company was in compliance with all of its compliance provisions.

5. Income Taxes

Income tax expense for the second quarter and first six months of 2003 has been provided for based on an estimated 32.5% effective tax rate expected to be applicable for the full 2003 fiscal year. The effective income tax rate differs from applying the statutory federal income tax rate of 35% to pre-tax earnings primarily due to employee FICA tip tax credits (a reduction in income tax expense) and work opportunity tax credits partially offset by state income taxes.

6. Earnings Per Share

Basic earnings per common share equals net earnings divided by the weighted average number of common shares outstanding and does not include the dilutive effect of stock options or restricted stock. Diluted earnings per common share equals net earnings divided by the weighted average number of common shares outstanding, after giving effect to dilutive stock options and restricted stock. A reconciliation between basic and diluted weighted average shares outstanding and the related earnings per share calculation is presented below (in thousands, except per share amounts):

                                                             Quarter Ended             Six months Ended
                                                         June 29,      June 30,       June 29,     June 30,
                                                           2003          2002           2003         2002
                                                           ----          ----           ----         ----
Basic weighted average shares outstanding                  22,061         21,732        21,987       21,612
Dilutive effect of stock options                            1,000          1,178         1,034        1,135
Dilutive effect of restricted stock                           114             90           112           89
                                                         --------       --------      --------     --------
Diluted weighted average shares outstanding                23,175         23,000        23,133       22,836
                                                         ========       ========      ========     ========
Net earnings                                             $ 10,840       $  9,141      $ 22,541     $ 18,876
                                                         ========       ========      ========     ========
Basic earnings per common share                          $   0.49       $   0.42      $   1.03     $   0.87
                                                         ========       ========      ========     ========
Diluted earnings per common share                        $   0.47       $   0.40      $   0.97     $   0.83
                                                         ========       ========      ========     ========

7. Derivative Instruments and Comprehensive Income

In 2002 and prior years, the Company used an interest rate swap agreement to effectively fix the interest rate on variable rate borrowings under the Company’s $100.0 million revolving credit facility. This interest rate swap agreement was classified as a hedge of a cash flow exposure and, accordingly, the initial fair value and subsequent changes therein were reported as a component of other comprehensive loss and subsequently reclassified into earnings when the forecasted cash flows affect earnings. Concurrent with the November 2002 amendment and extension of the Company’s $100.0 million revolving credit facility, all amounts outstanding under the credit facility were repaid and the interest rate swap agreement was terminated.

For the quarter and six months ended June 29, 2003, there was no difference between the Company’s net earnings and comprehensive income. A reconciliation of net earnings and total comprehensive income for the fiscal 2002 periods is as follows (in thousands):

                                                                       Quarter       Six Months
                                                                        Ended           Ended
                                                                       June 30,       June 30,
                                                                         2002           2002
                                                                         ----           ----
Net earnings                                                          $  9,141        $ 18,876
Change in unrealized loss from interest
  Rate swap                                                               (225)           (145)
                                                                      --------        --------
Total comprehensive income                                            $  8,916        $ 18,731
                                                                      ========        ========

8. Subsequent Events

On July 23, 2003, the Company’s Board of Directors approved a 3-for-2 stock split, which will be effected in the form of a 50% stock dividend to shareholders of record as of the close of business on August 12, 2003. The new stock certificates will be distributed on September 2, 2003. The financial statements and related footnotes included herein have been adjusted retroactively and restated to give effect for the stock split for all periods presented.

Additionally, on July 23, 2003, the Company’s Board of Directors authorized the Company to purchase up to an additional $25.0 million of its common stock from time-to-time through May 2005.

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations

Results of Operations

Revenues

The Company currently derives all of its revenues from restaurant sales and franchise revenues. Total revenues increased 16.0% and 14.5% for the quarter and six months ended June 29, 2003, respectively, as compared to the same periods of the prior fiscal year.

Same store sales comparisons for each of the Company’s restaurant concepts for the quarter ended June 29, 2003, consist of sales at restaurants opened prior to October 1, 2001.

LongHorn Steakhouse:

Sales in the LongHorn Steakhouse restaurants for the quarter and six months ended June 29, 2003 increased 16.4% and 15.0%, respectively, as compared to the same periods of the prior year. The increases reflect a 8.9% and 9.1% increase in restaurant operating weeks in the quarter and six months ended June 29, 2003, respectively, as compared to the same periods of the prior fiscal year, resulting from an increase in the restaurant base from 162 LongHorn Steakhouse restaurants at the end of the second quarter of 2002 to 177 at the end of the second quarter of 2003 and an increase in average weekly sales. Average weekly sales for all LongHorn Steakhouse restaurants in the second quarter of 2003 were approximately $53,500, a 6.8% increase over the comparable period in 2002. Same store sales for the comparable LongHorn Steakhouse restaurants increased 4.9% in the second quarter of 2003 as compared to the same period in 2002, due to approximately equal increases in customer counts and average check.

The Capital Grille:

Sales in The Capital Grille restaurants for the quarter and six months ended June 29, 2003, increased 13.5% and 10.4%, respectively, as compared to the same periods of the prior fiscal year. The increase reflects i) a 4.1% and 2.1% increase in restaurant operating weeks for the quarter and six months ended June 29, 2003, as compared to the same periods of the prior fiscal year, resulting from the opening of one The Capital Grille restaurant during the second quarter of 2003 and ii) an increase in average weekly sales. Average weekly sales for all The Capital Grille restaurants in the second quarter of 2003 were approximately $121,400, a 9.0% increase from the comparable period in 2002. Same store sales for the comparable The Capital Grille restaurants increased 10.2% in the second quarter of 2003, primarily due to an increase in customer counts.

Bugaboo Creek Steak House:

Sales in the Bugaboo Creek Steak House restaurants increased for the quarter and six months ended June 29, 2003, by 18.6% and 17.9%, respectively, as compared to the same periods of the prior fiscal year. The increase reflects i) a 14.6% and 15.2% increase in restaurant weeks in the quarter and six months ended June 29, 2003, respectively, as compared to the same periods of the prior fiscal year, resulting from an increase in the restaurant base from 20 Bugaboo Creek Steak House restaurants at the end of the second quarter of 2002 to 23 restaurants at the end of the second quarter of 2003 and ii) an increase in average weekly sales. Average weekly sales for all Bugaboo Creek Steak House restaurants in the second quarter of 2003 were approximately $69,600, a 3.5% increase from the comparable period for 2002. Same store sales for the comparable Bugaboo Creek Steak House restaurants in the second quarter of 2003 increased 3.7% as compared to the same period in 2002, due primarily to an increase in average check and, to a lesser extent, an increase in customer counts.

Franchise Revenue:

Franchise revenues increased to $98,000 for the second quarter of 2003, from $88,000 for the same period in 2002 due to sales increases at the three franchised LongHorn Steakhouse restaurants in Puerto Rico.

Costs and Expenses

Cost of restaurant sales as a percentage of restaurant sales decreased to 35.9% for the second quarter of 2003, from 36.3% for the second quarter of 2002, and decreased to 35.8% for the first six months of 2003 as compared to 36.3% during the same period of 2002. Favorable contract pricing on red meat more than offset higher seafood costs related to the LongHorn steak and lobster promotion. The Company is currently under fixed price contracts with respect to approximately 90% of its beef products and these contracts are in effect for the remainder of 2003.

Restaurant operating expense as a percentage of restaurant sales decreased slightly to 43.7% for the second quarter of 2003 from 43.8% for the second quarter of 2002 and increased slightly to 43.4% for the first six months of 2003, as compared to 43.3% for the same period of 2002. The fluctuations in restaurant operating expenses as a percentage of restaurant sales for the 2003 periods as compared to the prior year are primarily due to the favorable leveraging effect of increases in average weekly sales offset by higher utility costs.

Restaurant depreciation as a percentage of restaurant sales decreased to 3.8% for both the second quarter and first six months of 2003 as compared to 4.0% for the same periods of the prior fiscal year due to the favorable leveraging effect of higher average weekly sales.

Pre-opening expense for the second quarter of 2003 was $1,668,000, an increase of $843,000 from the same period of the prior year. This increase was due primarily to the five LongHorn Steakhouse restaurants, one Bugaboo Creek Steak House restaurant and one The Capital Grille restaurant opened during the second quarter of 2003 as compared to only four LongHorn Steakhouse restaurants opened in the same period of the prior year. The increase in pre-opening expense for the first six months of 2003 as compared to the same period of the prior year was primarily due to the accelerated expenditures in the second quarter of 2003.

General and administrative expenses, as a percentage of total revenues, increased to 5.9% for the second quarter of 2003 from 5.7% for the same period in 2002, and increased to 6.0% for the first six months of 2003 from 5.7% for the same period of 2002. These increases were principally due to the full period impact of new hires made in 2002 and full bonus accruals in the 2003 periods as compared to only partial bonus accruals in the 2002 periods, partially offset by greater leverage of fixed and semi-fixed general and administrative expenses resulting from higher average weekly sales volumes.

As a result of the relationships between revenues and expenses discussed above, the Company’s operating income increased to $16.4 million for the second quarter of 2003 and increased to $34.1 million for the first six months of 2003 as compared to $14.0 million and $29.1 million, respectively, for the same periods of the prior year.

Interest expense, net decreased to $213,000 in the second quarter of 2003, and $459,000 for the first six months of 2003, from $421,000 and $870,000 during the same periods of the prior year, due to the November 2002 repayment of the $10.0 million, then outstanding under the Company’s revolving credit facility during the 2002 periods. The Company had no amount outstanding under the revolving credit facility during 2003.

Minority interest expense decreased to $82,000 for the second quarter and $200,000 for the first six months of 2003, from $120,000 and $300,000 for the same periods of the prior year, primarily due to the Company’s acquisition of two joint venture restaurants from two joint venture partners in 2002.

Income tax expense for the second quarter and first six months of 2003 was 32.5% of earnings before income taxes, which reflects the effective tax rate expected to be applicable for the full 2003 fiscal year. These rates in 2003 compare to rates of 32.0% for the second quarter of 2002, which brought the effective income tax rate for the first six months of 2002 to 32.5%, which reflected the effective income tax rate then expected for the full 2002 fiscal year. The Company’s effective income tax rate differs from applying the statutory federal income tax rate of 35% to pre-tax income, primarily due to employee FICA tip tax credits and work opportunity tax credits partially offset by state income taxes.

Net earnings increased to $10.8 million for the second quarter of 2003 from net earnings of $9.1 million for the second quarter of 2002 and increased to $22.5 million for the six months ended June 29, 2003 from $18.9 million for the six months ended June 30, 2002, reflecting the net effect of the items discussed above.

Liquidity and Capital Resources:

The Company requires capital primarily for the development of new restaurants, selected acquisitions and the remodeling of existing restaurants. During the first six months of 2003 the Company’s principal sources of working capital were cash provided by operating activities ($34.1 million) and proceeds from the exercise of employee stock options ($3.8 million). For the first six months of 2003, the principal uses of working capital were capital expenditures ($35.2 million) for new and improved facilities, the purchase of short-term investments ($5.2 million) and the purchase of common stock for treasury ($2.6 million). As of June 29, 2003, the Company had no borrowings outstanding under the Company’s $100.0 million revolving credit facility.

The Company intends to open an aggregate 20-21 Company-owned LongHorn Steakhouse restaurants, three Bugaboo Creek Steak House restaurants and one or two The Capital Grille restaurants in fiscal year 2003. The Company estimates that its capital expenditures for fiscal year 2003 will be approximately $75-80 million. During the first six months of 2003, the Company opened 13 LongHorn Steakhouse restaurants, one The Capital Grille restaurant and one Bugaboo Creek Steak House restaurant. As of August 12, 2003, the Company has opened three additional LongHorn Steakhouse restaurants in the third quarter 2003. Management believes that available cash, cash provided by operations, and available borrowings under the Company’s $100.0 million revolving credit facility will provide sufficient funds to finance the Company’s expansion plans through the year 2005.

Since substantially all sales in the Company’s restaurants are for cash, and accounts payable are generally due in seven to 30 days, the Company operates with little or negative working capital.

Forward-Looking Statements

Statements contained in this Report concerning future results, performance or expectations are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements in this Report are made based upon management’s current expectations or beliefs, as well as assumptions made by, and information currently available to, the Company on the date of this Report. All forward-looking statements involve risks and uncertainties that could cause actual results, performance or developments to differ materially from those expressed or implied by those forward-looking statements, such as: the Company’s ability to open the anticipated number of new restaurants on time and within budget; the Company’s ability to continue to increase same-store sales at anticipated rates; a recession or other negative effect on business dining patterns, or some other negative effect on the economy in general; the effect upon dining patterns and the economy in general, of war, insurrection and/or terrorist attacks on United Sates soil; unexpected increases in cost of sales or other expenses; and the impact of any negative publicity or public attitudes related to the consumption of beef. Other risks and uncertainties include fluctuations in quarterly operating results, seasonality, guest trends, competition and risks associated with the development and management of new restaurant sites. More information about factors that potentially may affect the Company’s results, performance or development is included in the Company’s other filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 29, 2002, its quarterly report on Form 10-Q for the quarter ended March 30, 2003, and the Company’s press releases and other communications.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company may be exposed to market risk from changes in interest rates on debt.

As of June 29, 2003, the Company had no borrowings outstanding under its $100.0 million revolving credit facility. Amounts outstanding under such credit facility bear interest at LIBOR plus a margin of 1.25% to 2.0% (depending on the Company’s leverage ratio), or the administrative agent’s prime rate of interest plus a margin of 0% to 0.75% (depending on the Company’s leverage ratio) at the Company’s option. Accordingly, the Company may be exposed to the impact of interest rate fluctuations. To achieve the Company’s objective of managing its exposure to interest rate changes, the Company may from time to time use interest rate swaps.

Investment Portfolio

The Company invests portions of its excess cash, if any, in highly liquid investments. At June 29, 2003, the Company had $8.0 million invested in high-grade overnight repurchase agreements, and $23.0 million in short-term investments in the form of Federal, state and municipal bonds. As of June 29, 2003, the Company has classified all short-term investments as trading securities.

Item 4. Controls and Procedures

In accordance with the Securities Exchange Act Rules 13a-15 and 15d-15, the Company’s management, under the supervision of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Company concluded that the design and operation of its disclosure controls and procedures were effective. There have been no significant changes in internal controls over financial reporting or in other factors that could significantly affect internal controls over financial reporting subsequent to the date of such evaluation.

Part II - Other Information

Item 1. Legal Proceedings

None

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Securities Holders

The 2003 Annual Meeting of Shareholders of the Company was held on May 12, 2003 at which the following proposals were voted upon by the shareholders: (i) election of three Class II directors to serve until the 2006 Annual Meeting of Shareholders; (ii) approval of the RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan; and (iii) ratification of the selection of KPMG LLP as the Company’s independent auditors for the fiscal year ending December 28, 2003. Holders of 22,076,617 shares of the Company’s common stock were entitled to vote at that meeting. The shareholders elected three Class II directors with a term expiring at the 2006 Annual Meeting. As to each of the following named individuals, the holders of the indicated number of shares of the Company’s common stock voted for his election, and the holders of the indicated number of shares withheld authority to vote for election. There were no broker non-votes.

                               Shares Voting              Shares Withholding
                               for:                       Authority:
Carolyn H. Byrd                18,567,061                 1,145,845
Philip J. Hickey, Jr.          18,886,692                   826,214
Dick R. Holbrook               19,288,290                   424,616

Ronald W. San Martin, Eugene I. Lee, Jr., Don L. Chapman, Lewis H. Jordan and George W. McKerrow, Sr. continued their terms as directors. The RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan was approved as follows: 15,777,695 shares voted in favor of approval; 3,843,826,shares voted against approval; and 91,384 shares abstained. There were no broker non-votes. The selection of KPMG LLP as independent auditors for the Company for the fiscal year ending December 28, 2003 was ratified as follows: 19,277,127 shares voted in favor of ratification; 428,925 shares voted against the ratification; and 6,853 shares abstained. There were no broker non-votes.

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits Filed.
10.1 Employment Agreement dated April 28, 2003 between the Registrant and Philip J. Hickey, Jr.
10.2 Employment Agreement dated April 28, 2003 between the Registrant and Eugene I. Lee.
10.3 Employment Agreement dated April 28, 2003 between the Registrant and W. Douglas Benn.
10.4 Employment Agreement dated April 28, 2003 between the Registrant and Joia M. Johnson.
10.5 Employment Agreement dated April 28, 2003 between the Registrant and Thomas W. Gathers.
32.1 Written Statement of the Chief Executive Officer of RARE Hospitality International, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Written Statement of the Chief Financial Officer of RARE Hospitality International, Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

Reports filed on Form 8-K.
None

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                      /s/ Philip J. Hickey, Jr.
                      --------------------------
                      Philip J. Hickey, Jr.
                      Chairman of the Board and
                      Chief Executive Officer
                      (Principal Executive Officer)

                      /s/ W. Douglas Benn
                      ------------------------
                      W. Douglas Benn
                      Executive Vice President, Finance
                      and Chief Financial Officer
                      (Principal Financial and
                      Accounting Officer)


Date:   August 12, 2003

CERTIFICATIONS

I, Philip J. Hickey, Jr., certify that:

I have reviewed this quarterly report on Form 10-Q of RARE Hospitality International, Inc.;
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
3. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

August 12, 2003                      /s/ PHILIP J. HICKEY, JR.
                                     --------------------------
                                     Philip J. Hickey, Jr.
                                     Chairman of the Board and
                                     Chief Executive Officer

I, W. Douglas Benn, certify that:

I have reviewed this quarterly report on Form 10-Q of RARE Hospitality International, Inc.;
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
1. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
2. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
3. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
1. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
2. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

August 12, 2003                      /s/ W. DOUGLAS BENN
                                     --------------------
                                     W. Douglas Benn
                                     Executive Vice President, Finance and
                                     Chief Financial Officer

EX-10 4 exh101.htm HICKEY EMPLOYMENT AGREEMENT exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the 28th day of April, 2003, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the "Company"), and PHILIP J. HICKEY, JR., a resident of the State of Georgia (hereinafter referred to as the "Executive");

WITNESSETH:

The Company, its parent corporation and subsidiaries are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse®, The Capital Grille® and Bugaboo Creek Steak House®. The Company’s parent, RARE Hospitality International, Inc. (the “Parent”) entered into that certain Employment Agreement, dated September 30, 1997, between Executive and the Parent (the “First Agreement”), which was assigned to the Company as of December 30, 2000. The Company desires to continue the employment of Executive as Chairman of the Board of the Company and desires for Executive to continue to serve as Chairman of the Board and Chief Executive Officer of RARE Hospitality International, Inc. (the “Parent”). The Company desires to be assured of Executive’s continued employment on the terms and conditions set forth in this Agreement. Executive desires to accept such continued employment on such terms and conditions.

In the course of Executive’s employment, Executive has gained and will continue to gain knowledge of the business, affairs, customers, franchisees, plans and methods of the Company, its parent corporation and subsidiaries (collectively, “RARE”), has been and will be trained at the expense of RARE in the development, opening, operation and management of RARE’s restaurants through the use of techniques, systems, practices and methods used and devised by RARE, has had and will have access to information relating to RARE’s customers and their preferences and dining habits and has and will become personally known to and acquainted with RARE’s suppliers and managers in the Restricted Area (as defined in this Agreement), thereby establishing a personal relationship with such suppliers and managers for the benefit of RARE.

The Company would suffer irreparable harm if Executive were to use such knowledge, information and personal relationships related to RARE and its business that are obtained and developed in the course of Executive’s employment with the Company, other than in the proper performance of his duties for the Company.

In consideration of the sum of One Dollar ($1.00) in hand paid by the Company to Executive, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants and obligations contained herein, the Company and Executive hereby agree as follows:

1. Employment. The Company agrees to continue to employ Executive, and Executive hereby accepts such continued employment and agrees to perform his duties and responsibilities hereunder, in accordance with the terms and conditions hereinafter set forth.

1.1. Employment Term. The employment term of this Agreement shall commence on the date hereof (the "Commencement Date") and shall continue until and end on April 27, 2005, unless terminated prior thereto in accordance with Section 3 hereof. Unless renewed by mutual agreement of the Company and Executive, as expressed in writing signed by both parties on or before October 27, 2004 (the "Notice Date"), this Agreement shall terminate on April 27, 2005 (the "Expiration Date") with no renewal or extension; provided, however, that in the event the Company chooses not to renew the Agreement, the Executive will be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the Expiration Date, and the Company will be obligated to continue to pay Executive his Base Compensation (as defined below) as of the Expiration Date, for a period of twelve (12) months after the Expiration Date, and for such additional period of time beyond twelve (12) months, if any, equal to the period of time between the Notice Date and the date on which the Company provides Executive with written notice of non-renewal. Such payments of salary shall be made as and when salary would otherwise be payable to senior officers of the Company. The period from the Commencement Date until the employment term expires or is terminated by the Company or Executive is hereinafter referred to as the "Employment Term."

1.2 Duties of Executive. Executive agrees that during the Employment Term, he will devote his full professional and business-related time, skills and best efforts to the business of RARE, initially in the capacity of Chairman of the Board of the Company, Chairman of the Board and Chief Executive Officer of the Parent, and subsequently in such capacity or capacities as shall be determined by the Company or the Parent. Executive shall devote his full time and his best efforts in the performance of any other reasonable duties as may be assigned to him from time to time by the Company or the Parent; provided, that all such duties assigned to Executive shall be of a nature and type reasonably and customarily assigned by companies to employees holding the offices occupied by Executive. Executive shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of his full professional and business-related skills solely to the affairs of the Company, and shall not, during his employment, unless otherwise agreed to in advance in writing by the Company, seek or accept additional employment, become self-employed in any other capacity during the term of his employment, or engage in any activities which are detrimental to the business of the Company. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of his full-time employment duties under this Agreement.

1.3 Insurance/Bond. For so long as Executive serves as either an officer or director of the Company, the Company shall, at its sole cost and expense, (i) obtain and maintain Directors’ and Officers’ and Corporate Liability Insurance covering Executive and his acts and omissions and having coverage levels, terms, and conditions not substantially less favorable than those contained in such insurance currently maintained by the Company and (ii) obtain and post any bond other than fiduciary security (including without limitation any such items required under Section 6.8 of the Company’s By-Laws) required by the Company to be maintained by, in the name of or on behalf of Executive.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Four Hundred Fifty Thousand and 00/100 Dollars ($450,000.00) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its other senior officers (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive’s salary shall be prorated for any partial year during which this Agreement remains in effect.

2.2 Bonus Awards. In addition to the Base Compensation during the Employment Term, Executive shall be eligible for a bonus potential of not less than One Hundred percent (100%) of his Base Compensation. The actual bonus shall be determined and paid in accordance with the bonus program for executives of the Company, as approved by the Company from time to time. Unless otherwise set forth in this Agreement, Executive must be employed by the Company on the date the bonus is paid to executive employees generally in order to be entitled to a bonus for that year.

2.3 Stock Options. The Company acknowledges that it has caused the Parent to issue incentive stock options and non-qualified stock options (collectively with the incentive stock options, the “Options”) to Executive pursuant to the Company’s 1997 Long-Term Incentive Plan (the “1997 Plan”) and the Company’s Amended and Restated 2002 Long Term Incentive Plan (the “2002 Plan”). The Company represents and warrants to Executive that (i) during the Employment Term, the Company will cause Executive to be within the category of persons for which awards may be granted under the 1997 Plan and the 2002 Plan (collectively, the “Option Plans”); (ii) the Option Plans have been approved by the Parent’s Board of Directors and shareholders and all Options granted to Executive under the Option Plans are and shall remain in full force and effect as the legally binding obligation of the Company throughout the Employment Term, subject to the terms of the Option Plans and the stock option agreements executed in connection with the issuance of the Options; and (iii) the Parent has caused all shares of stock in the Parent that may be acquired by Executive through the exercise of any one or more of the Options to be registered and freely tradable, whether by means of the Parent’s filing of all necessary S-8 registrations or otherwise, subject to restriction on sale or transfer of such shares under applicable securities laws by virtue of Executive’s position with the Company or ownership of the Parent’s securities.

2.4 Life and Disability Insurance. During the Employment Term the Company shall provide for the benefit of Executive, and pay the premiums when and as due on, term life insurance on the life of Executive in the amount of One Million and 00/100 Dollars ($1,000,000.00). In addition, during the Employment Term the Company will arrange disability income insurance for Executive that will provide compensatory payments to Executive in an amount equal to sixty percent (60%) of Executive’s Base Compensation as of the date of his disability, for the period of his disability after ninety (90) days following the date of termination of the Employment Term and until he attains the age of 65. Executive will be entitled to purchase such insurance and pay the premiums through payroll deductions, which sums the Company shall forward to the insurer when and as due under the terms of the disability income policy. To the extent that the Company has not acquired the life insurance or arranged the disability income insurance as required by this Section 2.4 at the execution of this Agreement, the Company will use its commercially reasonably efforts to obtain or arrange such insurance as soon as practicable.

2.5 Other Benefits. In addition to all other compensation and benefits paid or payable from the Company to Executive hereunder during the Employment Term, Executive shall be entitled to participate in any supplemental life insurance plan maintained for senior executives, Executive and his or her family shall be entitled to participate in the Company’s health care benefit programs on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, and Executive will be entitled to participate in any and all other employee benefit programs maintained by the Company for the benefit of its executive employees generally, in accordance with and subject to the terms and conditions of such programs.

2.6 Expenses. In addition to the compensation described in this Agreement, the Company shall promptly reimburse Executive for all reasonable expenses incurred by him in the performance of his duties under this Agreement and vouched to the reasonable satisfaction of appropriate officers of the of the Company, pursuant to established procedures.

3. Termination; Effect of Termination.

3.1 Termination. Anything in this Agreement to the contrary notwithstanding, this Agreement, the Employment Term and the employment of Executive pursuant hereto shall terminate upon the first to occur of the following events:

(a) The death of Executive.

(b) The lapse of thirty (30) days following the date on which the Company shall give written notice to Executive of termination of his employment hereunder by reason of his "Disability." Executive shall be deemed to be "Disabled" for purposes of this Agreement if the Company determines that by reason of any physical or mental condition he has been unable, for a period of at least ninety (90) substantially continuous days, to perform the essential duties and responsibilities of his job, with or without reasonable accommodation. In the event that Executive disagrees with the Company's determination that he is disabled, he and the Company shall select an impartial and reputable physician to provide a second opinion. If Executive and the Company are unable to agree on a physician to provide a second opinion, each party shall select a physician and those physicians shall select another physician to provide the second medical opinion. The Company agrees that it shall pay the reasonable fees and expenses of any second medical opinion.

(c) The lapse of three (3) days following written notice by the Company to Executive of termination for "Cause" which notice shall reasonably describe the cause for which Executive's employment is being terminated. For purposes of this Agreement, "Cause" means:

(i) the Executive's breach of any material obligations under this Agreement; provided, however, that if such breach can be cured within a reasonable time, Executive shall have such reasonable time (having regard for the nature of the Cause) to cure such Cause, which time shall not exceed thirty (30) days following receipt from the Company of written notice of such breach, before said breach is deemed to constitute "Cause" for termination. Cure of any Cause with or without notice from the Company shall not relieve Executive of any obligations to the Company under this Agreement or otherwise and shall not affect the Company's rights upon the reoccurrence of the same, or the occurrence of any other, Cause. If such Cause shall not be cured within such reasonable time, the employment of Executive under this Agreement shall terminate upon the expiration of such reasonable time;

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse relating in material harm or actual or potential physical danger to RARE or its employees;

(iv) the commission by Executive of (x) a felony for which Executive is indicted or with respect to which Executive pleads nolo contendere (or any similar response), (y) any act of moral turpitude or (z) any fraud or embezzlement upon RARE;

(v) the engaging by the Executive in gross negligence or willful misconduct which causes material harm to RARE; or

(vi) any misrepresentation or breach by Executive of the warranty contained in Section 13 of this Agreement.

(d) The lapse of ten (10) days following written notice by the Company to Executive of termination other than for Cause.

(e) The lapse of thirty (30) days following written notice by Executive to the Company of his resignation from the Company; provided, however, that the Company, in its discretion, may cause such termination to be effective at any time during such thirty (30) day period.

3.2 Payment upon Termination.

(a) Upon termination of the Employment Term for Cause, or as a result of termination pursuant to Section 3.1(e), Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination and any additional compensation he may be entitled to receive under the terms of any employee benefit plan offered by the Company.

(b) Upon termination of the Employment Term by the death of Executive, Executive's estate shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of death; and (ii) a lump sum equal to Executive's pro-rata share (based on days worked before death) of the bonus to which he would have been entitled under Section 2.2 if he had been an employee on the date bonuses for the then-current fiscal year were distributed.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive's dependent family members, if any, with coverage under the Company's group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twenty-four (24) months from and after the date of Executive's termination of employment. From and after the expiration of such twenty-four (24) month period, all applicable laws shall continue to apply to any person's or persons' rights to continue such benefits.

Payments pursuant to this Section 3.2(b) shall be in addition to any insurance proceeds that may be payable to Executive's estate or beneficiaries.

(c) In the event that during the Employment Term Executive becomes Disabled (as defined in Section 3.1(b)) and the Company thereafter terminates Executive's employment during the continuation of such disability, Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination; (ii) a lump sum equal to Executive's pro rata share (based on days worked before he became disabled) of the bonus to which he would have been entitled under Section 2.2 if he had been an employee on the date bonuses for the then-current fiscal year were distributed; and (iii) continuation of Executive's Base Compensation as of the date of termination of the Employment Term for a period of ninety (90) days following the termination of the Employment Term, which shall be paid as and when salary payments would otherwise be made under Section 2 of this Agreement.

In addition to the foregoing, upon such termination of employment (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion or the Options that, but for such termination, would have vested within twenty-four (24) months following such termination; and (ii) the Company shall continue to provide and to pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and his dependent family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twenty-four (24) months from after the date of Executive’s termination of employment. From and after the expiration of such twenty-four (24) month period, all applicable laws shall continue to apply to any person’s or person’ rights to continue such benefits.

Payments pursuant to this Section 3.2 (c) shall be in addition to any disability insurance payments that may be payable to Executive.

(d) In the event that the Company terminates Executive's employment for any reason other than those set forth in subsections 3.1 (a), (b) or (c) above, except upon expiration of the Employment Term, or unless the provisions of Section 3.2(e) apply, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, and the Company will be obligated to pay Executive his Base Compensation, as of the date of termination, from the date of such termination for a period of eighteen (18) months. Executive shall also be entitled to receive his pro-rata share (based on days worked before termination) of the bonus to which he would have been entitled under Section 2.2 if he had been an employee on the date bonuses for the then-current fiscal year were distributed. Such payments of salary and bonus shall be made over an eighteen (18) month period as and when salary and bonuses would otherwise be payable under Section 2 of this Agreement.

In addition to the foregoing, upon such termination of employment, (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination , and (ii) the Company shall continue to provide and to pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program , on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twelve (12) months from and after the date of Executive’s termination of employment. From and after the expiration of such twelve (12) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

(e) In the event that (i) during the Employment Term a "Change in Control" shall occur and (ii) within eighteen (18) months following such Change in Control the Company substantially reduces Executive's scope of responsibility, moves the Company's headquarter offices away from the Metropolitan Atlanta area or terminates Executive's employment for any reason other than those set forth in subsections (a), (b) or (c) above then, in lieu of the amounts payable pursuant to Section 3.2(d), Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination of such employment; (ii) a lump sum equal to the average of the bonus paid to Executive with respect to each of the two fiscal years of the Company prior to the year in which the termination occurs; (iii) an amount equal to three (3) times his annual Base Compensation as of the date of termination of such employment. The amount payable pursuant to clause (iii) of the immediately preceding sentence shall be payable in periodic amounts, each equal to the periodic Base Compensation payments being made to Executive immediately prior to the date of termination, payable on the dates that salary payments are normally made to executives of the Company or its successor. Notwithstanding the provisions of the immediately preceding sentence, in the event that the Company shall fail to make any payment of any amount payable pursuant to clause (iii) above, which failure is not cured within thirty (30) days following written notice to the Company of the failure to make such payment, then all remaining portions of the total amount payable pursuant to clause (iii) shall thereupon be immediately due and payable without further notice to the Company. All payments pursuant to this Section 3.2(e) other than those pursuant to clause (iii) shall be made within thirty (30) days following the termination of Executive's employment or the date upon which Executive's scope of responsibility is substantially reduced.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of eighteen (18) months from and after the date of Executive’s termination of employment. From and after the expiration of such eighteen (18) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

For purposes of this subsection (e), “Change in Control” means and includes each of the following:

(i) The acquisition, at one time or over time, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "1934 Act") (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 35% or more of the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control; (a) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 35% or more of the Outstanding Corporation Voting Securities, (b) any acquisition by the Parent, or (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any corporation controlled by the Parent;

(ii) Consummation of a reorganization, merger, share exchange or consolidation or sale or other disposition of all or substantially all of the assets of the Parent (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors or comparable persons of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Parent or all or substantially all of the Parent's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Corporation Voting Securities, and (ii) no Person (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Parent of such corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors or comparable body of the corporation or other entity resulting from such Business Combination were members of the incumbent Board or comparable body at the time of the execution of this Agreement, or of the action of the Board or comparable body, providing for such Business Combination.

(f) Payments made pursuant to this Section 3.2 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

(g) In the event that Executive's employment is terminated pursuant to Sections 3.2(c), (d) or (e), a condition of Executive's receipt of any consideration, compensation or benefits beyond that which would otherwise be required to be paid or provided for performance rendered under this Agreement as of the date of termination shall be his execution of a separation agreement, including a full release of all claims, in a form acceptable to the Company.

4. Noncompetition. Executive covenants and agrees that during the term of his employment with the Company and for a period of eighteen (18) months thereafter, Executive shall not, as an officer, manager, supervisor, independent contractor or equity owner of any business or enterprise, engage or participate in any Business Activities in the Restricted Area. For purposes of this Section 4, "Business Activities" shall be those activities that relate to the development, operation or franchising of any single restaurant or group of restaurants that derives more than 30% of its food sales from the sale of steak products. For purposes of this Section 4, the "Restricted Area" shall be the area described in Exhibit A attached hereto, which the parties agree may be amended from time-to-time. Nothing in this Section 4 shall prohibit Executive from acquiring or holding, for investment purposes only, less than 2% of the outstanding publicly traded securities of any corporation that may compete directly or indirectly with the Company. The provisions of this Section 4 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 4 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate legal proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

5. Confidentiality. Executive recognizes and acknowledges that by reason of his employment by and service to the Company, he has had and will continue to have access to trade secrets and other confidential information of RARE including, but not limited to, confidential pricing information, marketing information, sales techniques of RARE, confidential records, RARE's expansion plans, restaurant development and marketing techniques, operating procedures, training programs and materials, business plans, franchise arrangements, plans and agreements, information regarding suppliers, product quality and control procedures, financial statements and projections and other information regarding the operation of RARE's restaurants (hereinafter referred to as the "Confidential Information"). Executive acknowledges that such Confidential Information is a valuable and unique asset of RARE and covenants that he will not, either during the term of his employment by the Company or for a period of two (2) years thereafter, disclose any such Confidential Information to any person for any reason whatsoever (except as his duties for the Company may require) without the prior written authorization of the Parent's Chief Executive Officer. Executive agrees that he will not copy any Confidential Information except as the performance of his duties for the Company may require and that upon the termination of his employment by the Company, he shall return all Confidential Information and any copies thereof in his possession to the Company. Executive hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies which RARE may have available pursuant to the laws of any jurisdiction or at common law to prevent the disclosure of trade secrets or proprietary information, and the enforcement by RARE of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies which it may possess in law or equity absent this Agreement. Notwithstanding the foregoing, the Company acknowledges and agrees that nothing contained herein shall restrict or otherwise prohibit or prevent disclosure of Confidential Information pursuant to legal proceedings, subpoena, civil investigative demand or other similar process. Executive agrees that if disclosure of Confidential Information is requested or required pursuant to any such process, he shall provide the Company with prompt written notice of any such request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, Executive is nonetheless, legally compelled to disclose Confidential Information to any tribunal or other agency, Executive may, without liability hereunder, disclose to such tribunal or other agency only that portion of the Confidential Information which Executive is legally required to disclose. Executive agrees to cooperate with RARE to obtain an appropriate protective order or other reliable assurance that such tribunal or other agency will accord the Confidential Information confidential treatment. The Company also acknowledges and agrees that Confidential Information shall not include any information (a) known by Executive prior to his employment by the Company and learned by Executive other than as a result of his employment relationship with the Company, (b) independently developed by the Executive outside of the scope of his employment relationship with the Company or (c) that is or becomes publicly available through no breach by the Executive of his obligations to RARE.

6. Non-Solicitation of Employees. Executive covenants that during the term of his employment by the Company, and during the twenty-four (24) month period immediately following the termination of such employment, Executive will neither directly nor indirectly induce or attempt to induce any employee of RARE to terminate his or her employment to go to work for any other employer in a business competing with that of RARE. The provisions of this Section 6 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 6, the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

7. Hiring of Employees. Hiring of Employees. Executive covenants that during the term of his employment by the Company, and during the twenty-four (24) month period immediately following the termination of such employment, Executive will neither directly nor indirectly hire any salaried employee of RARE. For purposes of Section 7, "neither directly nor indirectly" means Executive shall neither (i) take the prohibited action himself, (ii) act as agent, representative, consultant, recruiter or independent contractor for anyone with regard to taking the prohibited action, nor (iii) communicate to any such person the names, addresses, telephone numbers or any other information concerning any employee of RARE. The provisions of this Section 7 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 7 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

8. Property of Company. Property of Company. Executive acknowledges that from time to time in the course of providing services pursuant to the First Agreement, he has had and, by virtue of providing services pursuant to this Agreement, will continue to have the opportunity to inspect and use certain property, both tangible and intangible, of RARE, and Executive hereby agrees that said property shall remain the exclusive property of RARE and the Executive shall have no right or proprietary interest in such property, whether tangible or intangible, including, without limitation, RARE's franchise and supplier lists, contract forms, books of account, training and operating materials and similar property.

9. Developments. All developments, including inventions, whether patentable or otherwise, trade secrets, discoveries, improvements, ideas and writings which either directly or indirectly relate to or may be useful in the business of RARE (the "Developments") which Executive, either by himself or in conjunction with any other person or persons, has conceived, made, developed, acquired or acquired knowledge of during his employment by the Parent or the Company, or which Executive, either by himself or in conjunction with any other person or persons, shall conceive, make, develop, acquire or acquire knowledge of during the Employment Term, shall become and remain the sole and exclusive property of RARE. Executive hereby assigns, transfers and conveys, and agrees to so assign, transfer and convey, all of his right, title and interest in and to any and all such Developments and to disclose fully as soon as practicable, in writing, all such Developments to the Chairman of the Parent. At any time and from time to time, upon the request and at the expense of the Company, Executive will execute and deliver any and all instruments, documents and papers, give evidence and do any and all other acts which, in the opinion of the Company, are or may be necessary or desirable to document such transfer or to enable RARE to file and prosecute applications for and to acquire, maintain and enforce any and all patents, trademark registrations or copyrights under United States or foreign law with respect to any such Developments or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright. RARE will be responsible for the preparation of any such instruments, documents and papers and for the prosecution of any such proceedings and will reimburse Executive for all reasonable expenses incurred by him in compliance with the provisions of this Section.

10. Reasonableness. The restrictions contained in Sections 4, 5, 6 and 7 are considered by the parties hereto to be fair and reasonable and necessary for the protection of the legitimate business interests of RARE.

11. Equitable Relief. Executive acknowledges that the services to be rendered by him are of a special, unique, unusual, extraordinary, and intellectual character, which gives them a peculiar value, and the loss of which cannot reasonably or adequately be compensated in damages in an action at law; and that a breach by him of any of the provisions contained in Sections 4, 5, 6, 7, 8 and 9 of this Agreement will cause RARE irreparable injury and damage. Executive further acknowledges that he possesses unique skills, knowledge and ability and that any material breach of the provisions of Sections 4, 5, 6, 7, 8 and 9 of this Agreement would be extremely detrimental to RARE. By reason thereof, Executive agrees that RARE shall be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to injunctive and other equitable relief to prevent or curtail any breach of the provisions of Sections 4, 5, 6, 7, 8 and 9 of this Agreement by him.

12. Survival of Provisions. The provisions of Sections 4 through 15, inclusive, of this Agreement shall survive the termination of this Agreement to the extent required to give full effect to the covenants and agreements contained in those sections. All provisions of this Agreement which contemplate the making of payments or the provision of consideration or other items of economic value by the Company to the Executive after the termination of this Agreement shall likewise survive the termination of this Agreement to the extent required to give full effect to such undertakings or obligations of the Company to Executive hereunder.

13. Warranties and Representations. In order to induce the Company to enter into this Employment Agreement, Executive hereby warrants and represents to the Company that Executive is not under any obligation, contractual or otherwise, to any party which would prohibit or be contravened by Executive's employment by the Company and the performance of Executive's duties as Treasurer of the Company, Executive Vice President and Chief Financial Officer of the Parent, or the performance of Executive's other obligations under this Agreement.

14. Successors Bound; Assignability. This Agreement shall be binding upon Executive, the Company and their successors in interest, including without limitation, any corporation into which the Company may be merged or by which it may be acquired. This Agreement is nonassignable, except that the Company's rights, duties and obligations under this Agreement may be assigned to the Company's acquiror in the event the Company is merged, acquired or sells substantially all of its assets. Nothing contained herein shall be deemed, interpreted or construed to prevent or constitute a waiver by Executive of his right and entitlement to terminate this Agreement for Good Reason, as contemplated by Section 3.1(f) of this Agreement.

15. Severability. In the event that any one or more of the provisions of this Agreement or any word, phrase, clause, sentence or other portion thereof shall be deemed to be illegal or unenforceable for any reason, such provision or portion thereof shall be modified or deleted, to the extent permissible under applicable law, in such a manner so as to make this Agreement as modified legal and enforceable to the fullest extent permitted under applicable laws.

16. Withholding. Notwithstanding any of the terms or provisions of this Agreement, all amounts payable by the Company hereunder shall be subject to withholding of such sums related to taxes as the Company may reasonably determine it should withhold pursuant to applicable law or regulation.

17. Headings. The headings and captions used in this Agreement are for convenience of reference only, and shall in no way define, limit, expand or otherwise affect the meaning or construction of any provision of this Agreement.

18. Notices. Any notice required or permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered in person or when deposited in the United States mail, registered or certified mail, postage prepaid, addressed as follows:

        If to the Company, to:      RARE Hospitality Management, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  President

        With a copy to:             RARE Hospitality International, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention: General Counsel

        If to Executive, to:        Philip J. Hickey, Jr.
                                    867 Waterford Green
                                    Marietta, GA  30068

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

19. Entire Agreement. This Agreement, together with Exhibit A hereto, which is incorporated herein by this reference, constitutes the entire Agreement between the parties hereto with regard to Executive's employment by the Company and there are no agreements, understandings, specific restrictions, warranties or representations, written or oral, relating to said subject matter between the parties other than those set forth herein or herein provided for. Without limiting the foregoing, this Agreement replaces and supercedes the First Agreement, which is hereby terminated and of no further force and effect.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

21. Amendment, Modification and Waiver. This Agreement may only be amended, modified or terminated prior to the end of its term by the mutual agreement of the parties. The waiver by either party to this Agreement of a breach of any of the provisions of this Agreement shall not operate or be construed as a waiver of any subsequent or simultaneous breach.

22. Mitigation. Executive shall have no duty to attempt to mitigate the compensation or level of benefits payable by the Company to him hereunder and the Company shall not be entitled to set-off against the amounts payable by the Company to Executive hereunder any amounts received by the Executive from any other source, including any subsequent employer.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    RARE HOSPITALITY MANAGEMENT, INC.


                                    By:   _____________________________
                                          President


                                    EXECUTIVE


                                    -------------------------------

                                    PHILIP J. HICKEY, JR.

EXHIBIT A

Executive and the Company agree that, for purposes of this Agreement, the “Restricted Area” shall constitute the area within fifteen (15) miles of RARE’s restaurants in the following cities:

Alabama:              Daphne, Dothan, Hoover, Huntsville, Mobile, Montgomery, Prattville

Arizona:              Phoenix

Connecticut:          Manchester

Delaware:             Newark

District of Columbia: Washington, D.C.

Florida:              Altamonte Springs, Boynton Beach, Brandon, Coral Springs, Daytona Beach, Davie, Delray
                      Beach, Destin, Fleming Island, Ft. Lauderdale, Ft. Myers, Hollywood, Jacksonville
                      Beach, Jacksonville, Jensen Beach, Kissimmee, Lake Mary, Largo, Merritt Island, Miami,
                      Naples, Ocala, Orlando, Pembroke Pines, Port Richey, Sarasota, St. Augustine, St.
                      Petersburg, Tallahassee, Tampa, West Palm Beach, Winter Haven

Georgia:              Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Buford, Canton, Cartersville,
                      College Park, Columbus, Conyers, Cumming, Dalton, Douglasville, Duluth, Gainesville,
                      Hiram, Jonesboro, Kennesaw, Lawrenceville, Lithonia, McDonough, Macon, Marietta,
                      Morrow, Newnan, Peachtree City, Rome, Roswell, Savannah, Snellville, Statesboro,
                      Tifton, Tucker, Valdosta, Warner Robins, Woodstock

Illinois:             Chicago, Fairview Heights

Indiana:              Avon, Indianapolis, Carmel

Kansas:               Leawood

Kentucky:             Bowling Green, Cold Springs, Florence, Lexington, Louisville

Maine:                Bangor, South Portland

Maryland:             Bowie, Columbia, Gaithersburg, Germantown, Waldorf

Massachusetts:        Boston, Braintree, Chestnut Hill, Dedham, Framingham, Franklin, Haverhill, Loeminster,
                      Marlboro, Methuen, Milford, North Attleboro, Peabody, Seekonk, Shrewbury, Watertown

Michigan:             Troy

Minnesota:            Minneapolis

Missouri:             Ballwin, Belton, Chesterfield, Florissant, Independence, Kansas City, O'Fallon,
                      Sunset Hills, Lee's Summit

New Hampshire:        Concord, Manchester, Nashua, Newington

New Jersey:           Mt. Olive, North Brunswick, Parsippany, Piscataway, Rochelle Park

New York:             Albany, Poughkeepsie, Rochester

North Carolina:       Burlington, Charlotte, Concord, Gastonia, Greensboro, Hickory, High Point,
                      Huntersville, Pineville, Winston-Salem

Ohio:                 Beaver Creek, Boardman, Cincinnati, Columbus, Cuyahoga Falls, Dublin, Eastgate,
                      Fairview Park, Independence, Maumee, Medina, Mentor, Moraine, North Canton,
                      Pickerington, Solon, Springdale, St. Clairsville, Strongsville, Wooster

Pennsylvania:         Bensalem, Erie, Exton, Norristown, Philadelphia

Rhode Island:         Providence, Warwick

South Carolina:       Columbia, Greenville, Hilton Head, Mt. Pleasant, Rock Hill, Spartanburg

Tennessee:            Chattanooga, Clarksville, Hermitage, Jackson, Madison, Nashville

Texas:                Dallas, Houston

Virginia:             Dulles, McLean

West Virginia:        Charleston

Executive acknowledges and agrees that the geographical area described above is the area in which Executive will initially perform his services for the Company, and that the area in which such services are performed is intended to expand or contract as the locations of RARE’s restaurants (the “Consolidated Group”) increase or decrease. Executive and the Company agree that as the geographical area in which the Consolidated Group operates expands or contracts, the parties agree to amend the list of cities described on this Exhibit A from time to time, or delete cities in which there is no longer a member of the Consolidated Group to include each additional city in which there is a member of the Consolidated Group. Executive agrees to execute one or more amendments hereto upon the request of the Company from time to time in order to confirm such amended list.

EX-10 5 exh102.htm LEE EMPLOYMENT AGREEMENT exhibit 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the 28th day of April, 2003, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the "Company"), and EUGENE I. LEE, JR., a resident of the State of Georgia (hereinafter referred to as the "Executive");

WITNESSETH:

The Company, its parent corporation and subsidiaries are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse®, The Capital Grille® and Bugaboo Creek Steak House®. The Company’s parent, RARE Hospitality International, Inc. (the “Parent”) entered into that certain Employment Agreement, dated October 16, 1997, between Executive and the Parent (the “First Agreement”), which was assigned to the Company as of December 30, 2000. The Company desires to continue the employment of Executive as President of the Company and desires for Executive to continue to serve as President and Chief Operating Officer of RARE Hospitality International, Inc. (the “Parent”). The Company desires to be assured of Executive’s continued employment on the terms and conditions set forth in this Agreement. Executive desires to accept such continued employment on such terms and conditions.

1.1. Employment Term. The employment term of this Agreement shall commence on the date hereof (the "Commencement Date") and shall continue until and end on April 27, 2005, unless terminated prior thereto in accordance with Section 3 hereof. Unless renewed by mutual agreement of the Company and Executive, as expressed in writing signed by both parties on or before October 27, 2004 (the "Notice Date"), this Agreement shall terminate on April 27, 2005 with no renewal or extension; provided, however, that in the event the Company chooses not to renew the Agreement, the Executive will be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the Expiration Date, and the Company will be obligated to continue to pay Executive his Base Compensation (as defined below) as of the Expiration Date, for a period of twelve (12) months after the Expiration Date, and for such additional period of time beyond twelve (12) months, if any, equal to the period of time between the Notice Date and the date on which the Company provides Executive with written notice of non-renewal. Such payments of salary shall be made as and when salary would otherwise be payable to senior officers of the Company. The period from the Commencement Date until the employment term expires or is terminated by the Company or Executive is hereinafter referred to as the "Employment Term."

1.2 Duties of Executive. Executive agrees that during the Employment Term, he will devote his full professional and business-related time, skills and best efforts to the business of RARE, initially in the capacity of President of the Company, President and Chief Operating Officer of the Parent, and subsequently in such capacity or capacities as shall be determined by the Company or the Parent. Executive shall devote his full time and his best efforts in the performance of any other reasonable duties as may be assigned to him from time to time by the Company or the Parent; provided, that all such duties assigned to Executive shall be of a nature and type reasonably and customarily assigned by companies to employees holding the offices occupied by Executive. Executive shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of his full professional and business-related skills solely to the affairs of the Company, and shall not, during his employment, unless otherwise agreed to in advance in writing by the Company, seek or accept additional employment, become self-employed in any other capacity during the term of his employment, or engage in any activities which are detrimental to the business of the Company. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of his full-time employment duties under this Agreement.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Three Hundred Twenty-Five Thousand and 00/100 Dollars ($325,000.00) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its other senior officers (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive’s salary shall be prorated for any partial year during which this Agreement remains in effect.

3. Termination; Effect of Termination.

(a) The death of Executive.

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse relating in material harm or actual or potential physical danger to RARE or its employees;

(v) the engaging by the Executive in gross negligence or willful misconduct which causes material harm to RARE; or

(vi) any misrepresentation or breach by Executive of the warranty contained in Section 13 of this Agreement.

(d) The lapse of ten (10) days following written notice by the Company to Executive of termination other than for Cause.

3.2 Payment upon Termination.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive’s dependent family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twenty-four (24) months from and after the date of Executive’s termination of employment. From and after the expiration of such twenty-four (24) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

Payments pursuant to this Section 3.2(b) shall be in addition to any insurance proceeds that may be payable to Executive's estate or beneficiaries.

Payments pursuant to this Section 3.2 (c) shall be in addition to any disability insurance payments that may be payable to Executive.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of eighteen (18) months from and after the date of Executive’s termination of employment. From and after the expiration of such eighteen (18) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

For purposes of this subsection (e), “Change in Control” means and includes each of the following:

(f) Payments made pursuant to this Section 3.2 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

7. Hiring of Employees. Executive covenants that during the term of his employment by the Company, and during the twenty-four (24) month period immediately following the termination of such employment, Executive will neither directly nor indirectly hire any salaried employee of RARE. For purposes of Section 7, "neither directly nor indirectly" means Executive shall neither (i) take the prohibited action himself, (ii) act as agent, representative, consultant, recruiter or independent contractor for anyone with regard to taking the prohibited action, nor (iii) communicate to any such person the names, addresses, telephone numbers or any other information concerning any employee of RARE. The provisions of this Section 7 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 7 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

8. Property of Company. Executive acknowledges that from time to time in the course of providing services pursuant to the First Agreement, he has had and, by virtue of providing services pursuant to this Agreement, will continue to have the opportunity to inspect and use certain property, both tangible and intangible, of RARE, and Executive hereby agrees that said property shall remain the exclusive property of RARE and the Executive shall have no right or proprietary interest in such property, whether tangible or intangible, including, without limitation, RARE's franchise and supplier lists, contract forms, books of account, training and operating materials and similar property.

        If to the Company, to:      RARE Hospitality Management, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  President

        With a copy to:             RARE Hospitality International, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention: General Counsel

        If to Executive, to:        Eugene I. Lee, Jr.
                                    8575 Edwardton Drive
                                    Roswell, GA  30076

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    RARE HOSPITALITY MANAGEMENT, INC.


                                    By:   _______________________________
                                          Chairman and Chief Executive Officer


                                    EXECUTIVE


                                    -------------------------------
                                    EUGENE I. LEE, JR.

EXHIBIT A

Executive and the Company agree that, for purposes of this Agreement, the “Restricted Area” shall constitute the area within fifteen (15) miles of RARE’s restaurants in the following cities:

Alabama:              Daphne, Dothan, Hoover, Huntsville, Mobile, Montgomery, Prattville

Arizona:              Phoenix

Connecticut:          Manchester

Delaware:             Newark

District of Columbia: Washington, D.C.

Florida:              Altamonte Springs, Boynton Beach, Brandon, Coral Springs,
                      Daytona Beach, Davie, Delray Beach, Destin, Fleming Island, Ft.
                      Lauderdale, Ft. Myers, Hollywood, Jacksonville Beach,
                      Jacksonville, Jensen Beach, Kissimmee, Lake Mary, Largo, Merritt
                      Island, Miami, Naples, Ocala, Orlando, Pembroke Pines, Port
                      Richey, Sarasota, St. Augustine, St. Petersburg, Tallahassee,
                      Tampa, West Palm Beach, Winter Haven

Georgia:              Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Buford,
                      Canton, Cartersville, College Park, Columbus, Conyers, Cumming,
                      Dalton, Douglasville, Duluth, Gainesville, Hiram, Jonesboro,
                      Kennesaw, Lawrenceville, Lithonia, McDonough, Macon, Marietta,
                      Morrow, Newnan, Peachtree City, Rome, Roswell, Savannah,
                      Snellville, Statesboro, Tifton, Tucker, Valdosta, Warner Robins,
                      Woodstock

Illinois:             Chicago, Fairview Heights

Indiana:              Avon, Indianapolis, Carmel

Kansas:               Leawood

Kentucky:             Bowling Green, Cold Springs, Florence, Lexington, Louisville

Maine:                Bangor, South Portland

Maryland:             Bowie, Columbia, Gaithersburg, Germantown, Waldorf

Massachusetts:        Boston, Braintree, Chestnut Hill, Dedham, Framingham, Franklin,
                      Haverhill, Loeminster, Marlboro, Methuen, Milford, North
                      Attleboro, Peabody, Seekonk, Shrewbury, Watertown

Michigan:             Troy

Minnesota:            Minneapolis

Missouri:             Ballwin, Belton, Chesterfield, Florissant, Independence, Kansas
                      City, O'Fallon, Sunset Hills, Lee's Summit

New Hampshire:        Concord, Manchester, Nashua, Newington

New Jersey:           Mt. Olive, North Brunswick, Parsippany, Piscataway, Rochelle Park

New York:             Albany, Poughkeepsie, Rochester

North Carolina:       Burlington, Charlotte, Concord, Gastonia, Greensboro, Hickory,
                      High Point, Huntersville, Pineville, Winston-Salem

Ohio:                 Beaver Creek, Boardman, Cincinnati, Columbus, Cuyahoga Falls,
                      Dublin, Eastgate, Fairview Park, Independence, Maumee, Medina,
                      Mentor, Moraine, North Canton, Pickerington, Solon, Springdale,
                      St. Clairsville, Strongsville, Wooster

Pennsylvania:         Bensalem, Erie, Exton, Norristown, Philadelphia

Rhode Island:         Providence, Warwick

South Carolina:       Columbia, Greenville, Hilton Head, Mt. Pleasant, Rock Hill,
                      Spartanburg

Tennessee:            Chattanooga, Clarksville, Hermitage, Jackson, Madison, Nashville

Texas:                Dallas, Houston

Virginia:             Dulles, McLean

West Virginia:        Charleston

EX-10 6 exh103.htm BENN EMPLOYMENT AGREEMENT exhibit 10.3

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the 28th day of April, 2003, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the “Company”), and W. DOUGLAS BENN, a resident of the State of Georgia (hereinafter referred to as the “Executive”);

WITNESSETH:

The Company, its parent corporation and subsidiaries are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse®, The Capital Grille® and Bugaboo Creek Steak House®. The Company’s parent, RARE Hospitality International, Inc. (the “Parent”) entered into that certain Employment Agreement, dated March 23, 1998, between Executive and the Parent (the “First Agreement”), which was assigned to the Company as of December 30, 2000. The Company desires to continue the employment of Executive as Treasurer of the Company and desires for Executive to continue to serve as Executive Vice President, Chief Financial Officer and Treasurer of RARE Hospitality International, Inc. (the “Parent”). The Company desires to be assured of Executive’s continued employment on the terms and conditions set forth in this Agreement. Executive desires to accept such continued employment on such terms and conditions.

1.1. Employment Term. The employment term of this Agreement shall commence on the date hereof (the "Commencement Date") and shall continue until and end on April 27, 2005, unless terminated prior thereto in accordance with Section 3 hereof. Unless renewed by mutual agreement of the Company and Executive, as expressed in writing signed by both parties on or before October 27, 2004 (the "Notice Date"), this Agreement shall terminate on April 27, 2005 with no renewal or extension; provided, however, that in the event the Company chooses not to renew the Agreement, the Executive will be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the Expiration Date, and the Company will be obligated to continue to pay Executive his Base Compensation (as defined below) as of the Expiration Date, for a period of six (6) months after the Expiration Date, and for such additional period of time beyond six (6) months, if any, equal to the period of time between the Notice Date and the date on which the Company provides Executive with written notice of non-renewal. Such payments of salary shall be made as and when salary would otherwise be payable to senior officers of the Company. The period from the Commencement Date until the employment term expires or is terminated by the Company or Executive is hereinafter referred to as the "Employment Term."

1.2 Duties of Executive. Executive agrees that during the Employment Term, he will devote his full professional and business-related time, skills and best efforts to the business of RARE, initially in the capacity of Treasurer of the Company, Executive Vice President, Chief Financial Officer and Treasurer of the Parent, and subsequently in such capacity or capacities as shall be determined by the Company or the Parent. Executive shall devote his full time and his best efforts in the performance of any other reasonable duties as may be assigned to him from time to time by the Company or the Parent; provided, that all such duties assigned to Executive shall be of a nature and type reasonably and customarily assigned by companies to employees holding the offices occupied by Executive. Executive shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of his full professional and business-related skills solely to the affairs of the Company, and shall not, during his employment, unless otherwise agreed to in advance in writing by the Company, seek or accept additional employment, become self-employed in any other capacity during the term of his employment, or engage in any activities which are detrimental to the business of the Company. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of his full-time employment duties under this Agreement.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Two Hundred Seventy-Five Thousand and 00/100 Dollars ($275,000.00) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its other senior officers (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive’s salary shall be prorated for any partial year during which this Agreement remains in effect.

2.2 Bonus Awards. In addition to the Base Compensation during the Employment Term, Executive shall be eligible for a bonus potential of not less than eighty percent (80%) of his Base Compensation. The actual bonus shall be determined and paid in accordance with the bonus program for executives of the Company, as approved by the Company from time to time. Unless otherwise set forth in this Agreement, Executive must be employed by the Company on the date the bonus is paid to executive employees generally in order to be entitled to a bonus for that year.

2.4 Life and Disability Insurance. During the Employment Term the Company shall provide for the benefit of Executive, and pay the premiums when and as due on, term life insurance on the life of Executive in the amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00). In addition, during the Employment Term the Company will arrange disability income insurance for Executive that will provide compensatory payments to Executive in an amount equal to sixty percent (60%) of Executive’s Base Compensation as of the date of his disability, for the period of his disability after ninety (90) days following the date of termination of the Employment Term and until he attains the age of 65. Executive will be entitled to purchase such insurance and pay the premiums through payroll deductions, which sums the Company shall forward to the insurer when and as due under the terms of the disability income policy. To the extent that the Company has not acquired the life insurance or arranged the disability income insurance as required by this Section 2.4 at the execution of this Agreement, the Company will use its commercially reasonably efforts to obtain or arrange such insurance as soon as practicable.

3. Termination; Effect of Termination.

(a) The death of Executive.

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse relating in material harm or actual or potential physical danger to RARE or its employees;

(v) the engaging by the Executive in gross negligence or willful misconduct which causes material harm to RARE; or

(vi) any misrepresentation or breach by Executive of the warranty contained in Section 13 of this Agreement.

(d) The lapse of ten (10) days following written notice by the Company to Executive of termination other than for Cause.

3.2 Payment upon Termination.

Payments pursuant to this Section 3.2(b) shall be in addition to any insurance proceeds that may be payable to Executive's estate or beneficiaries.

Payments pursuant to this Section 3.2 (c) shall be in addition to any disability insurance payments that may be payable to Executive.

(d) In the event that the Company terminates Executive's employment for any reason other than those set forth in subsections 3.1 (a), (b) or (c) above, except upon expiration of the Employment Term, or unless the provisions of Section 3.2(e) apply, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, and the Company will be obligated to pay Executive his Base Compensation, as of the date of termination, from the date of such termination for a period of twelve (12) months. Executive shall also be entitled to receive his pro-rata share (based on days worked before termination) of the bonus to which he would have been entitled under Section 2.2 if he had been an employee on the date bonuses for the then-current fiscal year were distributed. Such payments of salary and bonus shall be made over a twelve (12) month period as and when salary and bonuses would otherwise be payable under Section 2 of this Agreement.

(e) In the event that (i) during the Employment Term a "Change in Control" shall occur and (ii) within eighteen (18) months following such Change in Control the Company substantially reduces Executive's scope of responsibility, moves the Company's headquarter offices away from the Metropolitan Atlanta area or terminates Executive's employment for any reason other than those set forth in subsections (a), (b) or (c) above then, in lieu of the amounts payable pursuant to Section 3.2(d), Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination of such employment; (ii) a lump sum equal to the average of the bonus paid to Executive with respect to each of the two fiscal years of the Company prior to the year in which the termination occurs; (iii) an amount equal to two (2) times his annual Base Compensation as of the date of termination of such employment. The amount payable pursuant to clause (iii) of the immediately preceding sentence shall be payable in periodic amounts, each equal to the periodic Base Compensation payments being made to Executive immediately prior to the date of termination, payable on the dates that salary payments are normally made to executives of the Company or its successor. Notwithstanding the provisions of the immediately preceding sentence, in the event that the Company shall fail to make any payment of any amount payable pursuant to clause (iii) above, which failure is not cured within thirty (30) days following written notice to the Company of the failure to make such payment, then all remaining portions of the total amount payable pursuant to clause (iii) shall thereupon be immediately due and payable without further notice to the Company. All payments pursuant to this Section 3.2(e) other than those pursuant to clause (iii) shall be made within thirty (30) days following the termination of Executive's employment or the date upon which Executive's scope of responsibility is substantially reduced.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of eighteen (18) months from and after the date of Executive’s termination of employment. From and after the expiration of such eighteen (18) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

For purposes of this subsection (e), “Change in Control” means and includes each of the following:

(f) Payments made pursuant to this Section 3.2 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

4. Noncompetition. Executive covenants and agrees that during the term of his employment with the Company and for a period of one (1) year thereafter, Executive shall not, as an officer, manager, supervisor, independent contractor or equity owner of any business or enterprise, engage or participate in any Business Activities in the Restricted Area. For purposes of this Section 4, "Business Activities" shall be those activities that relate to the development, operation or franchising of any single restaurant or group of restaurants that derives more than 30% of its food sales from the sale of steak products. For purposes of this Section 4, the "Restricted Area" shall be the area described in Exhibit A attached hereto, which the parties agree may be amended from time-to-time. Nothing in this Section 4 shall prohibit Executive from acquiring or holding, for investment purposes only, less than 2% of the outstanding publicly traded securities of any corporation that may compete directly or indirectly with the Company. The provisions of this Section 4 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 4 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate legal proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

6. Non-Solicitation of Employees. Executive covenants that during the term of his employment by the Company, and during the eighteen (18) month period immediately following the termination of such employment, Executive will neither directly nor indirectly induce or attempt to induce any employee of RARE to terminate his or her employment to go to work for any other employer in a business competing with that of RARE. The provisions of this Section 6 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 6, the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

7. Hiring of Employees. Executive covenants that during the term of his employment by the Company, and during the eighteen (18) month period immediately following the termination of such employment, Executive will neither directly nor indirectly hire any salaried employee of RARE. For purposes of Section 7, "neither directly nor indirectly" means Executive shall neither (i) take the prohibited action himself, (ii) act as agent, representative, consultant, recruiter or independent contractor for anyone with regard to taking the prohibited action, nor (iii) communicate to any such person the names, addresses, telephone numbers or any other information concerning any employee of RARE. The provisions of this Section 7 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 7 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

        If to the Company, to:      RARE Hospitality Management, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  President

        With a copy to:             RARE Hospitality International, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention: General Counsel

        If to Executive, to:        W. Douglas Benn
                                    4740 Merlendale Drive
                                    Atlanta, GA  30327

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    RARE HOSPITALITY MANAGEMENT, INC.


                                    By:   _______________________________
                                          Chairman and Chief Executive Officer


                                    EXECUTIVE


                                    -------------------------------
                                    W. DOUGLAS BENN

EXHIBIT A

Executive and the Company agree that, for purposes of this Agreement, the “Restricted Area” shall constitute the area within fifteen (15) miles of RARE’s restaurants in the following cities:

Alabama:              Daphne, Dothan, Hoover, Huntsville, Mobile, Montgomery, Prattville

Arizona:              Phoenix

Connecticut:          Manchester

Delaware:             Newark

District of Columbia: Washington, D.C.

Florida:              Altamonte Springs, Boynton Beach, Brandon, Coral Springs, Daytona Beach, Davie, Delray
                      Beach, Destin, Fleming Island, Ft. Lauderdale, Ft. Myers, Hollywood, Jacksonville
                      Beach, Jacksonville, Jensen Beach, Kissimmee, Lake Mary, Largo, Merritt Island, Miami,
                      Naples, Ocala, Orlando, Pembroke Pines, Port Richey, Sarasota, St. Augustine, St.
                      Petersburg, Tallahassee, Tampa, West Palm Beach, Winter Haven

Georgia:              Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Buford, Canton, Cartersville,
                      College Park, Columbus, Conyers, Cumming, Dalton, Douglasville, Duluth, Gainesville,
                      Hiram, Jonesboro, Kennesaw, Lawrenceville, Lithonia, McDonough, Macon, Marietta,
                      Morrow, Newnan, Peachtree City, Rome, Roswell, Savannah, Snellville, Statesboro,
                      Tifton, Tucker, Valdosta, Warner Robins, Woodstock

Illinois:             Chicago, Fairview Heights

Indiana:              Avon, Indianapolis, Carmel

Kansas:               Leawood

Kentucky:             Bowling Green, Cold Springs, Florence, Lexington, Louisville

Maine:                Bangor, South Portland

Maryland:             Bowie, Columbia, Gaithersburg, Germantown, Waldorf

Massachusetts:        Boston, Braintree, Chestnut Hill, Dedham, Framingham, Franklin, Haverhill, Loeminster,
                      Marlboro, Methuen, Milford, North Attleboro, Peabody, Seekonk, Shrewbury, Watertown

Michigan:             Troy

Minnesota:            Minneapolis

Missouri:             Ballwin, Belton, Chesterfield, Florissant, Independence, Kansas City, O'Fallon,
                      Sunset Hills, Lee's Summit

New Hampshire:        Concord, Manchester, Nashua, Newington

New Jersey:           Mt. Olive, North Brunswick, Parsippany, Piscataway, Rochelle Park

New York:             Albany, Poughkeepsie, Rochester

North Carolina:       Burlington, Charlotte, Concord, Gastonia, Greensboro, Hickory, High Point,
                      Huntersville, Pineville, Winston-Salem
Ohio:                 Beaver Creek, Boardman, Cincinnati, Columbus, Cuyahoga Falls,
                      Dublin, Eastgate, Fairview Park, Independence, Maumee, Medina,
                      Mentor, Moraine, North Canton, Pickerington, Solon, Springdale,
                      St. Clairsville, Strongsville, Wooster

Pennsylvania:         Bensalem, Erie, Exton, Norristown, Philadelphia

Rhode Island:         Providence, Warwick

South Carolina:       Columbia, Greenville, Hilton Head, Mt. Pleasant, Rock Hill,
                      Spartanburg

Tennessee:            Chattanooga, Clarksville, Hermitage, Jackson, Madison, Nashville

Texas:                Dallas, Houston

Virginia:             Dulles, McLean

West Virginia:        Charleston

EX-10 7 exh104.htm JOHNSON EMPLOYMENT AGREEMENT exhibit 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the 28th day of April, 2003, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the “Company”), and JOIA M. JOHNSON, a resident of the State of Georgia (hereinafter referred to as the “Executive”);

WITNESSETH:

The Company, its parent corporation and subsidiaries are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse®, The Capital Grille® and Bugaboo Creek Steak House®. The Company’s parent, RARE Hospitality International, Inc. (the “Parent”) entered into that certain Change of Control Agreement, dated June 7, 1999, between Executive and the Parent (the “First Agreement”), which was assigned to the Company as of December 30, 2000. The Company desires to continue the employment of Executive as Secretary of the Company and desires for Executive to continue to serve as Executive Vice President, General Counsel and Secretary of RARE Hospitality International, Inc. (the “Parent”). The Company desires to be assured of Executive’s continued employment on the terms and conditions set forth in this Agreement. Executive desires to accept such continued employment on such terms and conditions.

1. Employment. The Company agrees to continue to employ Executive, and Executive hereby accepts such continued employment and agrees to perform her duties and responsibilities hereunder, in accordance with the terms and conditions hereinafter set forth.

1.1. Employment Term. The employment term of this Agreement shall commence on the date hereof (the "Commencement Date") and shall continue until and end on April 27, 2005, unless terminated prior thereto in accordance with Section 3 hereof. Unless renewed by mutual agreement of the Company and Executive, as expressed in writing signed by both parties on or before October 27, 2004 (the "Notice Date"), this Agreement shall terminate on April 27, 2005 with no renewal or extension; provided, however, that in the event the Company chooses not to renew the Agreement, the Executive will be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the Expiration Date, and the Company will be obligated to continue to pay Executive his Base Compensation (as defined below) as of the Expiration Date, for a period of six (6) months after the Expiration Date, and for such additional period of time beyond six (6) months, if any, equal to the period of time between the Notice Date and the date on which the Company provides Executive with written notice of non-renewal. Such payments of salary shall be made as and when salary would otherwise be payable to senior officers of the Company. The period from the Commencement Date until the employment term expires or is terminated by the Company or Executive is hereinafter referred to as the "Employment Term."

1.2 Duties of Executive. Executive agrees that during the Employment Term, she will devote her full professional and business-related time, skills and best efforts to the business of RARE, initially in the capacity of Secretary of the Company, Executive Vice President, General Counsel and Secretary of the Parent, and subsequently in such capacity or capacities as shall be determined by the Company or the Parent. Executive shall devote her full time and her best efforts in the performance of any other reasonable duties as may be assigned to her from time to time by the Company or the Parent; provided, that all such duties assigned to Executive shall be of a nature and type reasonably and customarily assigned by companies to employees holding the offices occupied by Executive. Executive shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of her full professional and business-related skills solely to the affairs of the Company, and shall not, during her employment, unless otherwise agreed to in advance in writing by the Company, seek or accept additional employment, become self-employed in any other capacity during the term of her employment, or engage in any activities which are detrimental to the business of the Company. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of her full-time employment duties under this Agreement.

1.3 Insurance/Bond. For so long as Executive serves as either an officer or director of the Company, the Company shall, at its sole cost and expense, (i) obtain and maintain Directors’ and Officers’ and Corporate Liability Insurance covering Executive and her acts and omissions and having coverage levels, terms, and conditions not substantially less favorable than those contained in such insurance currently maintained by the Company and (ii) obtain and post any bond other than fiduciary security (including without limitation any such items required under Section 6.8 of the Company’s By-Laws) required by the Company to be maintained by, in the name of or on behalf of Executive.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Two Hundred Sixty Thousand and 00/100 Dollars ($260,000.00) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its other senior officers (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive’s salary shall be prorated for any partial year during which this Agreement remains in effect.

2.2 Bonus Awards. In addition to the Base Compensation during the Employment Term, Executive shall be eligible for a bonus potential of not less than Fifty percent (50%) of her Base Compensation. The actual bonus shall be determined and paid in accordance with the bonus program for executives of the Company, as approved by the Company from time to time. Unless otherwise set forth in this Agreement, Executive must be employed by the Company on the date the bonus is paid to executive employees generally in order to be entitled to a bonus for that year.

2.4 Life and Disability Insurance. During the Employment Term the Company shall provide for the benefit of Executive, and pay the premiums when and as due on, term life insurance on the life of Executive in the amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00). In addition, during the Employment Term the Company will arrange disability income insurance for Executive that will provide compensatory payments to Executive in an amount equal to sixty percent (60%) of Executive’s Base Compensation as of the date of her disability, for the period of her disability after ninety (90) days following the date of termination of the Employment Term and until she attains the age of 65. Executive will be entitled to purchase such insurance and pay the premiums through payroll deductions, which sums the Company shall forward to the insurer when and as due under the terms of the disability income policy. To the extent that the Company has not acquired the life insurance or arranged the disability income insurance as required by this Section 2.4 at the execution of this Agreement, the Company will use its commercially reasonably efforts to obtain or arrange such insurance as soon as practicable.

2.5 Other Benefits. In addition to all other compensation and benefits paid or payable from the Company to Executive hereunder during the Employment Term, Executive shall be entitled to participate in any supplemental life insurance plan maintained for senior executives, Executive and her or her family shall be entitled to participate in the Company’s health care benefit programs on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, and Executive will be entitled to participate in any and all other employee benefit programs maintained by the Company for the benefit of its executive employees generally, in accordance with and subject to the terms and conditions of such programs.

2.6 Expenses. In addition to the compensation described in this Agreement, the Company shall promptly reimburse Executive for all reasonable expenses incurred by her in the performance of her duties under this Agreement and vouched to the reasonable satisfaction of appropriate officers of the of the Company, pursuant to established procedures.

3. Termination; Effect of Termination.

(a) The death of Executive.

(b) The lapse of thirty (30) days following the date on which the Company shall give written notice to Executive of termination of her employment hereunder by reason of her "Disability." Executive shall be deemed to be "Disabled" for purposes of this Agreement if the Company determines that by reason of any physical or mental condition she has been unable, for a period of at least ninety (90) substantially continuous days, to perform the essential duties and responsibilities of her job, with or without reasonable accommodation. In the event that Executive disagrees with the Company's determination that she is disabled, she and the Company shall select an impartial and reputable physician to provide a second opinion. If Executive and the Company are unable to agree on a physician to provide a second opinion, each party shall select a physician and those physicians shall select another physician to provide the second medical opinion. The Company agrees that it shall pay the reasonable fees and expenses of any second medical opinion.

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse relating in material harm or actual or potential physical danger to RARE or its employees;

(v) the engaging by the Executive in gross negligence or willful misconduct which causes material harm to RARE; or

(vi) any misrepresentation or breach by Executive of the warranty contained in Section 13 of this Agreement.

(d) The lapse of ten (10) days following written notice by the Company to Executive of termination other than for Cause.

(e) The lapse of thirty (30) days following written notice by Executive to the Company of her resignation from the Company; provided, however, that the Company, in its discretion, may cause such termination to be effective at any time during such thirty (30) day period.

3.2 Payment upon Termination.

(a) Upon termination of the Employment Term for Cause, or as a result of termination pursuant to Section 3.1(e), Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination and any additional compensation she may be entitled to receive under the terms of any employee benefit plan offered by the Company.

(b) Upon termination of the Employment Term by the death of Executive, Executive's estate shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of death; and (ii) a lump sum equal to Executive's pro-rata share (based on days worked before death) of the bonus to which she would have been entitled under Section 2.2 if she had been an employee on the date bonuses for the then-current fiscal year were distributed.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive’s dependent family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twenty-four (24) months from and after the date of Executive’s termination of employment. From and after the expiration of such twenty-four (24) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

Payments pursuant to this Section 3.2(b) shall be in addition to any insurance proceeds that may be payable to Executive's estate or beneficiaries.

(c) In the event that during the Employment Term Executive becomes Disabled (as defined in Section 3.1(b)) and the Company thereafter terminates Executive's employment during the continuation of such disability, Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination; (ii) a lump sum equal to Executive's pro rata share (based on days worked before she became disabled) of the bonus to which she would have been entitled under Section 2.2 if she had been an employee on the date bonuses for the then-current fiscal year were distributed; and (iii) continuation of Executive's Base Compensation as of the date of termination of the Employment Term for a period of ninety (90) days following the termination of the Employment Term, which shall be paid as and when salary payments would otherwise be made under Section 2 of this Agreement.

In addition to the foregoing, upon such termination of employment (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion or the Options that, but for such termination, would have vested within twenty-four (24) months following such termination; and (ii) the Company shall continue to provide and to pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and her dependent family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twenty-four (24) months from after the date of Executive’s termination of employment. From and after the expiration of such twenty-four (24) month period, all applicable laws shall continue to apply to any person’s or person’ rights to continue such benefits.

Payments pursuant to this Section 3.2 (c) shall be in addition to any disability insurance payments that may be payable to Executive.

(d) In the event that the Company terminates Executive's employment for any reason other than those set forth in subsections 3.1 (a), (b) or (c) above, except upon expiration of the Employment Term, or unless the provisions of Section 3.2(e) apply, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, and the Company will be obligated to pay Executive her Base Compensation, as of the date of termination, from the date of such termination for a period of twelve (12) months. Executive shall also be entitled to receive her pro-rata share (based on days worked before termination) of the bonus to which she would have been entitled under Section 2.2 if she had been an employee on the date bonuses for the then-current fiscal year were distributed. Such payments of salary and bonus shall be made over a twelve (12) month period as and when salary and bonuses would otherwise be payable under Section 2 of this Agreement.

In addition to the foregoing, upon such termination of employment, (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and to pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program , on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twelve (12) months from and after the date of Executive’s termination of employment. From and after the expiration of such twelve (12) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

(e) In the event that (i) during the Employment Term a "Change in Control" shall occur and (ii) within eighteen (18) months following such Change in Control the Company substantially reduces Executive's scope of responsibility or terminates Executive's employment for any reason other than those set forth in subsections (a), (b) or (c) above then, in lieu of the amounts payable pursuant to Section 3.2(d), Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination of such employment; (ii) a lump sum equal to the average of the bonus paid to Executive with respect to each of the two fiscal years of the Company prior to the year in which the termination occurs; (iii) an amount equal to two (2) times her annual Base Compensation as of the date of termination of such employment. The amount payable pursuant to clause (iii) of the immediately preceding sentence shall be payable in periodic amounts, each equal to the periodic Base Compensation payments being made to Executive immediately prior to the date of termination, payable on the dates that salary payments are normally made to executives of the Company or its successor. Notwithstanding the provisions of the immediately preceding sentence, in the event that the Company shall fail to make any payment of any amount payable pursuant to clause (iii) above, which failure is not cured within thirty (30) days following written notice to the Company of the failure to make such payment, then all remaining portions of the total amount payable pursuant to clause (iii) shall thereupon be immediately due and payable without further notice to the Company. All payments pursuant to this Section 3.2(e) other than those pursuant to clause (iii) shall be made within thirty (30) days following the termination of Executive's employment or the date upon which Executive's scope of responsibility is substantially reduced.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of eighteen (18) months from and after the date of Executive’s termination of employment. From and after the expiration of such eighteen (18) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

For purposes of this subsection (e), “Change in Control” means and includes each of the following:

(f) Payments made pursuant to this Section 3.2 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

(g) In the event that Executive's employment is terminated pursuant to Sections 3.2(c), (d) or (e), a condition of Executive's receipt of any consideration, compensation or benefits beyond that which would otherwise be required to be paid or provided for performance rendered under this Agreement as of the date of termination shall be her execution of a separation agreement, including a full release of all claims, in a form acceptable to the Company.

4. Noncompetition. Executive covenants and agrees that during the term of her employment with the Company and for a period of one (1) year thereafter, Executive shall not, as an officer, manager, supervisor, independent contractor or equity owner of any business or enterprise, engage or participate in any Business Activities in the Restricted Area. For purposes of this Section 4, "Business Activities" shall be those activities that relate to the development, operation or franchising of any single restaurant or group of restaurants that derives more than 30% of its food sales from the sale of steak products. For purposes of this Section 4, the "Restricted Area" shall be the area described in Exhibit A attached hereto, which the parties agree may be amended from time-to-time. Nothing in this Section 4 shall prohibit Executive from acquiring or holding, for investment purposes only, less than 2% of the outstanding publicly traded securities of any corporation that may compete directly or indirectly with the Company. The provisions of this Section 4 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 4 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate legal proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

5. Confidentiality. Executive recognizes and acknowledges that by reason of her employment by and service to the Company, she has had and will continue to have access to trade secrets and other confidential information of RARE including, but not limited to, confidential pricing information, marketing information, sales techniques of RARE, confidential records, RARE's expansion plans, restaurant development and marketing techniques, operating procedures, training programs and materials, business plans, franchise arrangements, plans and agreements, information regarding suppliers, product quality and control procedures, financial statements and projections and other information regarding the operation of RARE's restaurants (hereinafter referred to as the "Confidential Information"). Executive acknowledges that such Confidential Information is a valuable and unique asset of RARE and covenants that she will not, either during the term of her employment by the Company or for a period of two (2) years thereafter, disclose any such Confidential Information to any person for any reason whatsoever (except as her duties for the Company may require) without the prior written authorization of the Parent's Chief Executive Officer. Executive agrees that she will not copy any Confidential Information except as the performance of her duties for the Company may require and that upon the termination of her employment by the Company, she shall return all Confidential Information and any copies thereof in her possession to the Company. Executive hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies which RARE may have available pursuant to the laws of any jurisdiction or at common law to prevent the disclosure of trade secrets or proprietary information, and the enforcement by RARE of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies which it may possess in law or equity absent this Agreement. Notwithstanding the foregoing, the Company acknowledges and agrees that nothing contained herein shall restrict or otherwise prohibit or prevent disclosure of Confidential Information pursuant to legal proceedings, subpoena, civil investigative demand or other similar process. Executive agrees that if disclosure of Confidential Information is requested or required pursuant to any such process, she shall provide the Company with prompt written notice of any such request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, Executive is nonetheless, legally compelled to disclose Confidential Information to any tribunal or other agency, Executive may, without liability hereunder, disclose to such tribunal or other agency only that portion of the Confidential Information which Executive is legally required to disclose. Executive agrees to cooperate with RARE to obtain an appropriate protective order or other reliable assurance that such tribunal or other agency will accord the Confidential Information confidential treatment. The Company also acknowledges and agrees that Confidential Information shall not include any information (a) known by Executive prior to her employment by the Company and learned by Executive other than as a result of her employment relationship with the Company, (b) independently developed by the Executive outside of the scope of her employment relationship with the Company or (c) that is or becomes publicly available through no breach by the Executive of her obligations to RARE.

6. Non-Solicitation of Employees. Executive covenants that during the term of her employment by the Company, and during the eighteen (18) month period immediately following the termination of such employment, Executive will neither directly nor indirectly induce or attempt to induce any employee of RARE to terminate her or her employment to go to work for any other employer in a business competing with that of RARE. The provisions of this Section 6 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 6, the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

7. Hiring of Employees. Executive covenants that during the term of her employment by the Company, and during the eighteen (18) month period immediately following the termination of such employment, Executive will neither directly nor indirectly hire any salaried employee of RARE. For purposes of Section 7, "neither directly nor indirectly" means Executive shall neither (i) take the prohibited action himself, (ii) act as agent, representative, consultant, recruiter or independent contractor for anyone with regard to taking the prohibited action, nor (iii) communicate to any such person the names, addresses, telephone numbers or any other information concerning any employee of RARE. The provisions of this Section 7 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid ten (10) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 7 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

8. Property of Company. Executive acknowledges that from time to time in the course of providing services pursuant to the First Agreement, she has had and, by virtue of providing services pursuant to this Agreement, will continue to have the opportunity to inspect and use certain property, both tangible and intangible, of RARE, and Executive hereby agrees that said property shall remain the exclusive property of RARE and the Executive shall have no right or proprietary interest in such property, whether tangible or intangible, including, without limitation, RARE's franchise and supplier lists, contract forms, books of account, training and operating materials and similar property.

9. Developments. All developments, including inventions, whether patentable or otherwise, trade secrets, discoveries, improvements, ideas and writings which either directly or indirectly relate to or may be useful in the business of RARE (the "Developments") which Executive, either by herself or in conjunction with any other person or persons, has conceived, made, developed, acquired or acquired knowledge of during her employment by the Parent or the Company, or which Executive, either by herself or in conjunction with any other person or persons, shall conceive, make, develop, acquire or acquire knowledge of during the Employment Term, shall become and remain the sole and exclusive property of RARE. Executive hereby assigns, transfers and conveys, and agrees to so assign, transfer and convey, all of her right, title and interest in and to any and all such Developments and to disclose fully as soon as practicable, in writing, all such Developments to the Chairman of the Parent. At any time and from time to time, upon the request and at the expense of the Company, Executive will execute and deliver any and all instruments, documents and papers, give evidence and do any and all other acts which, in the opinion of the Company, are or may be necessary or desirable to document such transfer or to enable RARE to file and prosecute applications for and to acquire, maintain and enforce any and all patents, trademark registrations or copyrights under United States or foreign law with respect to any such Developments or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright. RARE will be responsible for the preparation of any such instruments, documents and papers and for the prosecution of any such proceedings and will reimburse Executive for all reasonable expenses incurred by her in compliance with the provisions of this Section.

11. Equitable Relief. Executive acknowledges that the services to be rendered by her are of a special, unique, unusual, extraordinary, and intellectual character, which gives them a peculiar value, and the loss of which cannot reasonably or adequately be compensated in damages in an action at law; and that a breach by her of any of the provisions contained in Sections 4, 5, 6, 7, 8 and 9 of this Agreement will cause RARE irreparable injury and damage. Executive further acknowledges that she possesses unique skills, knowledge and ability and that any material breach of the provisions of Sections 4, 5, 6, 7, 8 and 9 of this Agreement would be extremely detrimental to RARE. By reason thereof, Executive agrees that RARE shall be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to injunctive and other equitable relief to prevent or curtail any breach of the provisions of Sections 4, 5, 6, 7, 8 and 9 of this Agreement by her.

14. Successors Bound; Assignability. This Agreement shall be binding upon Executive, the Company and their successors in interest, including without limitation, any corporation into which the Company may be merged or by which it may be acquired. This Agreement is nonassignable, except that the Company's rights, duties and obligations under this Agreement may be assigned to the Company's acquiror in the event the Company is merged, acquired or sells substantially all of its assets. Nothing contained herein shall be deemed, interpreted or construed to prevent or constitute a waiver by Executive of her right and entitlement to terminate this Agreement for Good Reason, as contemplated by Section 3.1(f) of this Agreement.

        If to the Company, to:              RARE Hospitality Management, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  President

        With a copy to:             RARE Hospitality International, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention: General Counsel

        If to Executive, to:        Joia M. Johnson
                                    10320 Oxford Mill Circle
                                    Alpharetta, GA  30022

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

22. Mitigation. Executive shall have no duty to attempt to mitigate the compensation or level of benefits payable by the Company to her hereunder and the Company shall not be entitled to set-off against the amounts payable by the Company to Executive hereunder any amounts received by the Executive from any other source, including any subsequent employer.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    RARE HOSPITALITY MANAGEMENT, INC.


                                    By:   _______________________________
                                          Chairman and Chief Executive Officer


                                    EXECUTIVE


                                    -------------------------------
                                    JOIA M. JOHNSON

EXHIBIT A

Executive and the Company agree that, for purposes of this Agreement, the “Restricted Area” shall constitute the area within fifteen (15) miles of RARE’s restaurants in the following cities:

Alabama:              Daphne, Dothan, Hoover, Huntsville, Mobile, Montgomery, Prattville

Arizona:              Phoenix

Connecticut:          Manchester

Delaware:             Newark

District of Columbia: Washington, D.C.

Florida:              Altamonte Springs, Boynton Beach, Brandon, Coral Springs,
                      Daytona Beach, Davie, Delray Beach, Destin, Fleming Island, Ft.
                      Lauderdale, Ft. Myers, Hollywood, Jacksonville Beach,
                      Jacksonville, Jensen Beach, Kissimmee, Lake Mary, Largo, Merritt
                      Island, Miami, Naples, Ocala, Orlando, Pembroke Pines, Port
                      Richey, Sarasota, St. Augustine, St. Petersburg, Tallahassee,
                      Tampa, West Palm Beach, Winter Haven

Georgia:              Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Buford,
                      Canton, Cartersville, College Park, Columbus, Conyers, Cumming,
                      Dalton, Douglasville, Duluth, Gainesville, Hiram, Jonesboro,
                      Kennesaw, Lawrenceville, Lithonia, McDonough, Macon, Marietta,
                      Morrow, Newnan, Peachtree City, Rome, Roswell, Savannah,
                      Snellville, Statesboro, Tifton, Tucker, Valdosta, Warner Robins,
                      Woodstock

Illinois:             Chicago, Fairview Heights

Indiana:              Avon, Indianapolis, Carmel

Kansas:               Leawood

Kentucky:             Bowling Green, Cold Springs, Florence, Lexington, Louisville

Maine:                Bangor, South Portland

Maryland:             Bowie, Columbia, Gaithersburg, Germantown, Waldorf

Massachusetts:        Boston, Braintree, Chestnut Hill, Dedham, Framingham, Franklin,
                      Haverhill, Loeminster, Marlboro, Methuen, Milford, North
                      Attleboro, Peabody, Seekonk, Shrewbury, Watertown

Michigan:             Troy

Minnesota:            Minneapolis

Missouri:             Ballwin, Belton, Chesterfield, Florissant, Independence, Kansas
                      City, O'Fallon, Sunset Hills, Lee's Summit

New Hampshire:        Concord, Manchester, Nashua, Newington

New Jersey:           Mt. Olive, North Brunswick, Parsippany, Piscataway, Rochelle Park

New York:             Albany, Poughkeepsie, Rochester

North Carolina:       Burlington, Charlotte, Concord, Gastonia, Greensboro, Hickory,
                      High Point, Huntersville, Pineville, Winston-Salem

Ohio:                 Beaver Creek, Boardman, Cincinnati, Columbus, Cuyahoga Falls,
                      Dublin, Eastgate, Fairview Park, Independence, Maumee, Medina,
                      Mentor, Moraine, North Canton, Pickerington, Solon, Springdale,
                      St. Clairsville, Strongsville, Wooster

Pennsylvania:         Bensalem, Erie, Exton, Norristown, Philadelphia

Rhode Island:         Providence, Warwick

South Carolina:       Columbia, Greenville, Hilton Head, Mt. Pleasant, Rock Hill,
                      Spartanburg

Tennessee:            Chattanooga, Clarksville, Hermitage, Jackson, Madison, Nashville

Texas:                Dallas, Houston

Virginia:             Dulles, McLean

West Virginia:        Charleston

Executive acknowledges and agrees that the geographical area described above is the area in which Executive will initially perform her services for the Company, and that the area in which such services are performed is intended to expand or contract as the locations of RARE’s restaurants (the “Consolidated Group”) increase or decrease. Executive and the Company agree that as the geographical area in which the Consolidated Group operates expands or contracts, the parties agree to amend the list of cities described on this Exhibit A from time to time, or delete cities in which there is no longer a member of the Consolidated Group to include each additional city in which there is a member of the Consolidated Group. Executive agrees to execute one or more amendments hereto upon the request of the Company from time to time in order to confirm such amended list.

EX-10 8 exh105.htm GATHERS EMPLOYMENT AGREEMENT exhibit 10.5

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the 28th day of April, 2003, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the “Company”), and THOMAS W. GATHERS, a resident of the State of Georgia (hereinafter referred to as the “Executive”);

WITNESSETH:

The Company, its parent corporation and subsidiaries are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse®, The Capital Grille® and Bugaboo Creek Steak House®. The Company’s parent, RARE Hospitality International, Inc. (the “Parent”) entered into that certain Employment Agreement, dated November 30, 1998, between Executive and the Parent (the “First Agreement”), which was assigned to the Company as of December 30, 2000. The Company desires to continue the employment of Executive with the Company and desires for Executive to continue to serve as Executive Vice President – Human Resources of RARE Hospitality International, Inc. (the “Parent”). The Company desires to be assured of Executive’s continued employment on the terms and conditions set forth in this Agreement. Executive desires to accept such continued employment on such terms and conditions.

1.1. Employment Term. The employment term of this Agreement shall commence on the date hereof (the "Commencement Date") and shall continue until and end on April 27, 2005, unless terminated prior thereto in accordance with Section 3 hereof. Unless renewed by mutual agreement of the Company and Executive, as expressed in writing signed by both parties on or before October 27, 2004 (the "Notice Date"), this Agreement shall terminate on April 27, 2005 with no renewal or extension; provided, however, that in the event the Company chooses not to renew the Agreement, the Executive will be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the Expiration Date, and the Company will be obligated to continue to pay Executive his Base Compensation (as defined below) as of the Expiration Date, for a period of six (6) months after the Expiration Date, and for such additional period of time beyond six (6) months, if any, equal to the period of time between the Notice Date and the date on which the Company provides Executive with written notice of non-renewal. Such payments of salary shall be made as and when salary would otherwise be payable to senior officers of the Company. The period from the Commencement Date until the employment term expires or is terminated by the Company or Executive is hereinafter referred to as the "Employment Term."

1.2 Duties of Executive. Executive agrees that during the Employment Term, he will devote his full professional and business-related time, skills and best efforts to the business of RARE, initially in the capacity of Executive Vice President – Human Resources of the Parent, and subsequently in such capacity or capacities as shall be determined by the Company or the Parent. Executive shall devote his full time and his best efforts in the performance of any other reasonable duties as may be assigned to him from time to time by the Company or the Parent; provided, that all such duties assigned to Executive shall be of a nature and type reasonably and customarily assigned by companies to employees holding the offices occupied by Executive. Executive shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of his full professional and business-related skills solely to the affairs of the Company, and shall not, during his employment, unless otherwise agreed to in advance in writing by the Company, seek or accept additional employment, become self-employed in any other capacity during the term of his employment, or engage in any activities which are detrimental to the business of the Company. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of his full-time employment duties under this Agreement.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Two Hundred Thirty-Five Thousand and 00/100 Dollars ($235,000.00) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its other senior officers (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive’s salary shall be prorated for any partial year during which this Agreement remains in effect.

2.2 Bonus Awards. In addition to the Base Compensation during the Employment Term, Executive shall be eligible for a potential bonus of not less than forty percent (40%) of his Base Compensation. The actual bonus shall be determined and paid in accordance with the bonus program for executives of the Company, as approved by the Company from time to time. Unless otherwise set forth in this Agreement, Executive must be employed by the Company on the date the bonus is paid to executive employees generally in order to be entitled to a bonus for that year.

2.4 Life and Disability Insurance. During the Employment Term the Company shall provide for the benefit of Executive, and pay the premiums when and as due on term life insurance on, the life of Executive in the amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00). In addition, during the Employment Term the Company will arrange disability income insurance for Executive that will provide compensatory payments to Executive in an amount equal to sixty percent (60%) of Executive’s Base Compensation as of the date of his disability, for the period of his disability after ninety (90) days following the date of termination of the Employment Term and until he attains the age of 65. Executive will be entitled to purchase such insurance and pay the premiums through payroll deductions, which sums the Company shall forward to the insurer when and as due under the terms of the disability income policy. To the extent that the Company has not acquired the life insurance or arranged the disability income insurance as required by this Section 2.4 at the execution of this Agreement, the Company will use its commercially reasonably efforts to obtain or arrange such insurance as soon as practicable.

3. Termination; Effect of Termination.

(a) The death of Executive.

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse relating in material harm or actual or potential physical danger to RARE or its employees;

(v) the engaging by the Executive in gross negligence or willful misconduct which causes material harm to RARE; or

(vi) any misrepresentation or breach by Executive of the warranty contained in Section 13 of this Agreement.

(d) The lapse of ten (10) days following written notice by the Company to Executive of termination other than for Cause.

3.2 Payment upon Termination.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive’s dependent family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of twenty-four (24) months from and after the date of Executive’s termination of employment. From and after the expiration of such twenty-four (24) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

Payments pursuant to this Section 3.2(b) shall be in addition to any insurance proceeds that may be payable to Executive's estate or beneficiaries.

(c) (c) In the event that during the Employment Term Executive becomes Disabled (as defined in Section 3.1(b)) and the Company thereafter terminates Executive's employment during the continuation of such disability, Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination; (ii) a lump sum equal to Executive's pro rata share (based on days worked before he became disabled) of the bonus to which he would have been entitled under Section 2.2 if he had been an employee on the date bonuses for the then-current fiscal year were distributed; and (iii) continuation of Executive's Base Compensation as of the date of termination of the Employment Term for a period of ninety (90) days following the termination of the Employment Term, which shall be paid as and when salary payments would otherwise be made under Section 2 of this Agreement.

Payments pursuant to this Section 3.2 (c) shall be in addition to any disability insurance payments that may be payable to Executive.

(d) (d) In the event that the Company terminates Executive's employment for any reason other than those set forth in subsections 3.1 (a), (b) or (c) above, except upon expiration of the Employment Term, or unless the provisions of Section 3.2(e) apply, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, and the Company will be obligated to pay Executive his Base Compensation, as of the date of termination, from the date of such termination for a period of twelve (12) months. Executive shall also be entitled to receive his pro-rata share (based on days worked before termination) of the bonus to which he would have been entitled under Section 2.2 if he had been an employee on the date bonuses for the then-current fiscal year were distributed. Such payments of salary and bonus shall be made over a twelve (12) month period as and when salary and bonuses would otherwise be payable under Section 2 of this Agreement.

(e) In the event that (i) during the Employment Term a "Change in Control" shall occur and (ii) within eighteen (18) months following such Change in Control the Company substantially reduces Executive's scope of responsibility or terminates Executive's employment for any reason other than those set forth in subsections (a), (b) or (c) above then, in lieu of the amounts payable pursuant to Section 3.2(d), Executive shall be entitled to receive (i) the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination of such employment; (ii) a lump sum equal to the average of the bonus paid to Executive with respect to each of the two fiscal years of the Company prior to the year in which the termination occurs; (iii) an amount equal to two (2) times his annual Base Compensation as of the date of termination of such employment. The amount payable pursuant to clause (iii) of the immediately preceding sentence shall be payable in periodic amounts, each equal to the periodic Base Compensation payments being made to Executive immediately prior to the date of termination, payable on the dates that salary payments are normally made to executives of the Company or its successor. Notwithstanding the provisions of the immediately preceding sentence, in the event that the Company shall fail to make any payment of any amount payable pursuant to clause (iii) above, which failure is not cured within thirty (30) days following written notice to the Company of the failure to make such payment, then all remaining portions of the total amount payable pursuant to clause (iii) shall thereupon be immediately due and payable without further notice to the Company. All payments pursuant to this Section 3.2(e) other than those pursuant to clause (iii) shall be made within thirty (30) days following the termination of Executive's employment or the date upon which Executive's scope of responsibility is substantially reduced.

In addition to the foregoing, upon such termination (i) the Company shall cause acceleration to the date of such termination of the exercisability of that portion of the Options that, but for such termination, would have vested within twenty-four (24) months following such termination, and (ii) the Company shall continue to provide and pay for all health, hospitalization and long-term care insurance premiums necessary to provide Executive and Executive’s dependant family members, if any, with coverage under the Company’s group health insurance program, on the same terms and conditions as offered to other executives of the Company throughout the period of coverage, for a period of eighteen (18) months from and after the date of Executive’s termination of employment. From and after the expiration of such eighteen (18) month period, all applicable laws shall continue to apply to any person’s or persons’ rights to continue such benefits.

For purposes of this subsection (e), “Change in Control” means and includes each of the following:

(f) Payments made pursuant to this Section 3.2 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

        If to the Company, to:              RARE Hospitality Management, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  President

        With a copy to:             RARE Hospitality International, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention: General Counsel

        If to Executive, to:        Thomas W. Gathers
                                    9580 Rod Road
                                    Alpharetta, GA  30022

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    RARE HOSPITALITY MANAGEMENT, INC.


                                    By:   _______________________________
                                          Chairman and Chief Executive Officer


                                    EXECUTIVE


                                    -------------------------------
                                    THOMAS W. GATHERS

EXHIBIT A

Executive and the Company agree that, for purposes of this Agreement, the “Restricted Area” shall constitute the area within fifteen (15) miles of RARE’s restaurants in the following cities:


Alabama:              Daphne, Dothan, Hoover, Huntsville, Mobile, Montgomery, Prattville

Arizona:              Phoenix

Connecticut:          Manchester

Delaware:             Newark

District of Columbia: Washington, D.C.

Florida:              Altamonte Springs, Boynton Beach, Brandon, Coral Springs,
                      Daytona Beach, Davie, Delray Beach, Destin, Fleming Island, Ft.
                      Lauderdale, Ft. Myers, Hollywood, Jacksonville Beach,
                      Jacksonville, Jensen Beach, Kissimmee, Lake Mary, Largo, Merritt
                      Island, Miami, Naples, Ocala, Orlando, Pembroke Pines, Port
                      Richey, Sarasota, St. Augustine, St. Petersburg, Tallahassee,
                      Tampa, West Palm Beach, Winter Haven

Georgia:              Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Buford,
                      Canton, Cartersville, College Park, Columbus, Conyers, Cumming,
                      Dalton, Douglasville, Duluth, Gainesville, Hiram, Jonesboro,
                      Kennesaw, Lawrenceville, Lithonia, McDonough, Macon, Marietta,
                      Morrow, Newnan, Peachtree City, Rome, Roswell, Savannah,
                      Snellville, Statesboro, Tifton, Tucker, Valdosta, Warner Robins,
                      Woodstock

Illinois:             Chicago, Fairview Heights

Indiana:              Avon, Indianapolis, Carmel

Kansas:               Leawood

Kentucky:             Bowling Green, Cold Springs, Florence, Lexington, Louisville

Maine:                Bangor, South Portland

Maryland:             Bowie, Columbia, Gaithersburg, Germantown, Waldorf

Massachusetts:        Boston, Braintree, Chestnut Hill, Dedham, Framingham, Franklin,
                      Haverhill, Loeminster, Marlboro, Methuen, Milford, North
                      Attleboro, Peabody, Seekonk, Shrewbury, Watertown

Michigan:             Troy

Minnesota:            Minneapolis

Missouri:             Ballwin, Belton, Chesterfield, Florissant, Independence, Kansas
                      City, O'Fallon, Sunset Hills, Lee's Summit

New Hampshire:        Concord, Manchester, Nashua, Newington

New Jersey:           Mt. Olive, North Brunswick, Parsippany, Piscataway, Rochelle Park

New York:             Albany, Poughkeepsie, Rochester

North Carolina:       Burlington, Charlotte, Concord, Gastonia, Greensboro, Hickory,
                      High Point, Huntersville, Pineville, Winston-Salem

Ohio:                 Beaver Creek, Boardman, Cincinnati, Columbus, Cuyahoga Falls,
                      Dublin, Eastgate, Fairview Park, Independence, Maumee, Medina,
                      Mentor, Moraine, North Canton, Pickerington, Solon, Springdale,
                      St. Clairsville, Strongsville, Wooster

Pennsylvania:         Bensalem, Erie, Exton, Norristown, Philadelphia

Rhode Island:         Providence, Warwick

South Carolina:       Columbia, Greenville, Hilton Head, Mt. Pleasant, Rock Hill,
                      Spartanburg

Tennessee:            Chattanooga, Clarksville, Hermitage, Jackson, Madison, Nashville

Texas:                Dallas, Houston

Virginia:             Dulles, McLean

West Virginia:        Charleston

EX-10 9 exh106.htm GEORGE EMPLOYMENT AGREEMENT exhibit 10.6

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the _____ day of _________, 2001, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the "Company"), and DAVID C. GEORGE, a resident of the State of Georgia (hereinafter referred to as the "Executive");

WITNESSETH:

The Company and its affiliates (collectively, “RARE”) are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse^®, The Capital Grille^®, Bugaboo Creek Steak House^® and others. Executive has recently served in the position of Vice President of Operations – Capital Grille for the Company, and the Company desires to promote Executive to the position of Senior Vice President of Operations – LongHorn Steakhouse for the Company. Executive desires to accept the promotion on the terms and conditions set forth in this Agreement.

In the course of Executive’s employment with the Company, Executive has gained and will gain knowledge of the business, affairs, customers, franchisees, plans and methods of RARE, has been and will be trained at the expense of RARE in the development, opening, operation and management of RARE’s restaurants through the use of techniques, systems, practices and methods used and devised by RARE, has had and will have access to information relating to the Company’s customers and their preferences and dining habits and has and will become personally known to and acquainted with RARE’s suppliers and managers in the Restricted Area (as defined in this Agreement) thereby establishing a personal relationship with such suppliers and managers for the benefit of RARE.

In consideration of the sum of $1.00 in hand paid by the Company to Executive, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants and obligations contained herein, the Company and Executive hereby agree as follows:

1. Employment. The Company hereby agrees to promote Executive and continue his employment with the Company. Executive hereby accepts such promotion and continued employment and agrees to perform his duties and responsibilities hereunder, in accordance with the terms and conditions hereinafter set forth.

1.1. Employment Term. The employment term of this Agreement shall commence on the date hereof (the "Commencement Date") and shall continue as employment at will until terminated by the Company or Executive for any reason. The period from the Commencement Date until the employment term is terminated by the Company or Executive is hereinafter referred to as the "Employment Term."

1.2 Duties of Executive. Executive agrees that during the Employment Term, he will devote his full professional and business-related time, skills and best efforts to the business of RARE, initially in the capacity of Senior Vice President of Operations – LongHorn Steakhouse for the Company, and subsequently in such capacity or capacities as shall be determined by the Company. In addition, Executive shall devote his full time and his best efforts to the performance of any other reasonable duties as may be assigned to him from time to time by the Company, and he shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of his full professional and business-related skills solely to the affairs of RARE, and shall not, during his employment, unless otherwise agreed to in advance in writing by the Company, seek or accept other employment, become self-employed in any other capacity during the term of his employment, or engage in any activities which are detrimental to the business of RARE. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of his full-time employment duties under this Agreement. Executive’s office shall be in the Atlanta, Georgia metropolitan area; however, Executive acknowledges that the discharge of his duties for RARE will involve travel on a regular basis from his office in Atlanta, Georgia.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Two Hundred Thousand Dollars ($200,000) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its executives generally (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive’s salary shall be prorated for any partial calendar year during which this Agreement remains in effect.

2.2 Bonus Awards. In addition to the Base Compensation, during the Employment Term Executive shall be eligible for a bonus determined and paid in accordance with the bonus program for employees of the Company, as approved by the Company from time to time. Unless otherwise set forth in this Agreement, Executive must be employed by the Company on the date the bonus is paid to executive employees generally in order to be entitled to a bonus for that year.

2.3 Other Benefits. In addition to all other compensation paid or payable from the Company to Executive hereunder, during the Employment Term Executive shall be entitled to participate in any supplemental life insurance plan maintained for Vice President level executives and participate in any and all other employee benefit programs maintained by the Company for the benefit of its executive employees generally, in accordance with and subject to the terms and conditions of such programs.

2.4 Expenses. In addition to the compensation described in this Agreement, the Company shall promptly reimburse Executive for all reasonable expenses incurred by him in the performance of his duties under this Agreement and vouched to the reasonable satisfaction of appropriate officers of the Company, pursuant to established procedures.

3. Payment upon Termination.

(a) Upon termination of the Employment Term for Cause (as defined in Exhibit A attached hereto and incorporated herein by reference), Executive shall be entitled to receive the compensation owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination and any additional compensation he may be entitled to receive under the terms of any employee benefit plan offered by the Company.

(b) Upon termination of the Employment Term by the death of Executive, Executive's estate shall be entitled to receive the compensation under Section 2.1 as calculated and owed to Executive but unpaid for performance rendered under this Agreement as of the date of death, and any additional compensation the Executive's estate may be entitled to receive under the terms of any employee benefit plan offered by the Company. Executive's estate shall also be entitled to receive Executive's pro rata share (based on days worked before death) of the bonus to which he would have been entitled if he had (i) been an employee on the date bonuses for the then-current fiscal year were distributed and (ii) achieved his individual bonus plan goals, if any. The bonus payment shall be made as and when bonus payments, if any, would otherwise be payable under Section 2 of this Agreement.

(c) In the event that during the Employment Term Executive becomes Disabled and the Company thereafter terminates Executive's employment during the continuation of such Disability, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, an additional forty percent (40%) of Executive's Base Compensation for a period of two (2) years after this Agreement is terminated (the "Disability Compensation") and any additional compensation Executive may be entitled to receive under the terms of any employee benefit plan offered by the Company. Executive shall also be entitled to receive his pro rata share (based on days worked before the commencement of the ninety-day period required for a Disability) of the bonus to which he would have been entitled if he had (i) been an employee on the date bonuses for the then-current fiscal year were distributed and (ii) achieved his individual bonus plan goals, if any. The Disability Compensation and bonus payments shall be made as and when salary bonus payments, if any, would otherwise be payable under Section 2 of this Agreement.

(d) In the event that the Company terminates Executive's employment for any reason other than those set forth in subsections (a), (b) or (c) above, unless the provisions of Section 3(e) apply, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination and the Company will be obligated to pay Executive his Base Compensation as of the date of termination of such employment from the date of such termination for six (6) months. Such payment shall be made over a six-month period as and when salary would otherwise be payable under Section 2 of this Agreement.

(e) In the event that (i) during the Employment Term a Change in Control (as defined in Exhibit A attached hereto) shall occur and (ii) within twelve (12) months following the occurrence of the Change in Control, the Company demotes Executive other than for Cause, effects an involuntary transfer of Executive to a location more than fifty (50) miles from Executive's place of residence or terminates Executive's employment other than for Cause then, in lieu of the amounts payable pursuant to Section 3(d), Executive shall be entitled to receive the compensation under Section 2.1 as owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination of such employment, and the Company will be obligated to pay Executive an additional amount equal to the sum of (x) his annual Base Compensation as of the date of termination of such employment plus (y) an amount equal to the bonus paid to Executive pursuant to Section 2.2 for the calendar year immediately preceding the calendar year in which the termination of employment occurs. Such payment shall be made within thirty (30) days following termination of Executive's employment.

(f) Payments made pursuant to this Section 3 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

4.1 Definition of“Compete. ” For the purposes of this Agreement, the term “compete” shall mean the providing of general management, supervisory or consulting services for the development, operation or franchising of restaurants that derive more than thirty percent (30%) of their food sales from steak products.

4.2 Direct or Indirect Competition. For the purposes of this Agreement, the words “directly or indirectly” as they modify the word “compete” shall mean (i) acting as an agent, representative, consultant, officer, director, independent contractor, or employee engaged in a management capacity with any entity or enterprise which is carrying on a business any significant portion of which involves the development, opening, or operation of restaurants offering steak products as at least thirty percent (30%) of their food sales, (ii) participating in any such competing entity or enterprise as an owner, partner, limited partner, joint venturer, creditor or stockholder (except as a stockholder holding less than one percent (1%) interest in a corporation whose shares are actively traded on a regional or national securities exchange or in the over-the-counter market), or (iii) communicating to any such competing entity or enterprise the names or addresses or any other information concerning any employee or supplier of RARE or any successor to the goodwill of RARE with respect to the business of RARE.

5. Confidentiality. Executive recognizes and acknowledges that by reason of his employment by and service to the Company, he will have access to all trade secrets and other confidential information of RARE including, but not limited to, confidential: pricing information, marketing information, sales techniques of RARE, confidential records, RARE's expansion plans, restaurant development and marketing techniques, operating procedures, training programs and materials, business plans, franchise arrangements, plans and agreements, information regarding suppliers, product quality and control procedures, financial statements and projections and other information regarding the operation of RARE's restaurants (hereinafter referred to as the "Confidential Information"). Executive acknowledges that such Confidential Information is a valuable and unique asset of the Company and of RARE and covenants that he will not, either during the term of his employment by the Company or for a period of two (2) years thereafter, disclose any such Confidential Information to any person for any reason whatsoever (except as his duties for the Company may require) without the prior written authorization of the Company's Chief Executive Officer. Executive agrees that he will not copy any Confidential Information except as the performance of his duties for the Company may require and that upon the termination of his employment by the Company, he shall return all Confidential Information and any copies thereof in his possession to the Company. Executive hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies which the Company may have available pursuant to the laws of any jurisdiction or at common law to prevent the disclosure of trade secrets or proprietary information, and the enforcement by the Company of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies which it may possess in law or equity absent this Agreement. Notwithstanding the foregoing, the Company acknowledges and agrees that nothing contained herein shall restrict or otherwise prohibit or prevent disclosure of Confidential Information pursuant to legal proceedings, subpoena, civil investigative demand or other similar process. Executive agrees that if disclosure of Confidential Information is requested or required pursuant to any such process, he shall provide the Company with prompt written notice of any such request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, Executive is nonetheless, legally compelled to disclose Confidential Information to any tribunal or other agency, Executive may, without liability hereunder, disclose to such tribunal or other agency only that portion of the Confidential Information which Executive is legally required to disclose, Executive agrees to cooperate with the Company to obtain an appropriate protective order or other reliable assurance that such tribunal or other agency will accord the Confidential Information confidential treatment. The Company also acknowledges and agrees that Confidential Information shall not include any information (a) known by Executive prior to his employment by the Company and learned by Executive other than as a result of his employment relationship with the Company, (b) independently developed by the Executive outside of the scope of his employment relationship with the Company or (c) that is or becomes publicly available through no breach by the Executive of his obligation to the Company.

8. Property of Company. Executive acknowledges that from time to time in the course of providing services pursuant to this Agreement he shall have the opportunity to inspect and use certain property, both tangible and intangible, of RARE, and Executive hereby agrees that said property shall remain the exclusive property of RARE and the Executive shall have no right or proprietary interest in such property, whether tangible or intangible, including, without limitation, RARE's franchise and supplier lists, contract forms, books of account, training and operating materials and similar property.

9. Developments. All developments, including inventions, whether patentable or otherwise, trade secrets, discoveries, improvements, ideas and writings which either directly or indirectly relate to or may be useful in the business of RARE or any of its affiliates (the "Developments") which Executive, either by himself or in conjunction with any other person or persons, has conceived, made, developed, acquired or acquired knowledge of during his employment by the Company or which Executive, either by himself or in conjunction with any other person or persons, shall conceive, make, develop, acquire or acquire knowledge of during the Employment Term, shall become and remain the sole and exclusive property of the Company. Executive hereby assigns, transfers and conveys, and agrees to so assign, transfer and convey, all of his right, title and interest in and to any and all such Developments and to disclose fully as soon as practicable, in writing, all such Developments to the Chief Executive Officer of the Company. At any time and from time to time, upon the request and at the expense of the Company, Executive will execute and deliver any and all instruments, documents and papers, give evidence and do any and all other acts which, in the opinion of counsel for the Company, are or may be necessary or desirable to document such transfer or to enable the Company to file and prosecute applications for and to acquire, maintain and enforce any and all patents, trademark registrations or copyrights under United States or foreign law with respect to any such Developments or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright. The Company will be responsible for the preparation of any such instruments, documents and papers and for the prosecution of any such proceedings and will reimburse Executive for all reasonable expenses incurred by him in compliance with the provisions of this Section.

11. Equitable Relief. Executive acknowledges that the services to be rendered by him are of a special, unique, unusual, extraordinary, and intellectual character, which gives them a peculiar value, and the loss of which cannot reasonably or adequately be compensated in damages in an action at law; and that a breach by him of any of the provisions contained in Sections 4, 5, 6 and 7 of this Agreement will cause the Company irreparable injury and damage. Executive further acknowledges that he possesses unique skills, knowledge and ability and that any material breach of the provisions of Sections 4, 5, 6 and 7 of this Agreement would be extremely detrimental to the Company. By reason thereof, Executive agrees that the Company shall be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to injunctive and other equitable relief to prevent or curtail any breach of the provisions of Sections 4, 5, 6 and 7 of this Agreement by him.

12. Survival of Provisions. The provisions of Sections 4 through 14, inclusive, of this Agreement shall survive the termination of this Agreement to the extent required to give full effect to the covenants and agreements contained in those sections. All provisions of this Agreement which contemplate the making of payments or the provision of consideration or other items of economic value by the Company to the Executive after the termination of this Agreement shall likewise survive the termination of this Agreement to the extent required to give full effect to such undertakings or obligations of the Company to Executive hereunder.

13. Warranties and Representations. In order to induce the Company to enter into this Employment Agreement, Executive hereby warrants and represents to the Company that Executive is not under any obligation, contractual or otherwise, to any party which would prohibit or be contravened by Executive's promotion and continued employment by the Company and the performance of Executive's duties as Senior Vice President of Operations - LongHorn Steakhouse for the Company or the performance of Executive's obligations under this Agreement.

        If to the Company, to:      RARE Hospitality Management, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  General Counsel


        If to Executive, to:        David C. George

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

19. Entire Agreement. This Agreement, together with Exhibit A and Exhibit B hereto, which are incorporated herein by this reference, constitutes the entire Agreement between the parties hereto with regard to Executive's employment by the Company, and there are no agreements, understandings, specific restrictions, warranties or representations, oral or written, relating to said subject matter between the parties other than those set forth herein or herein provided for. This Agreement shall replace and supercede any and all employment agreements, agreements pertaining to a change of control of the Company and other agreements, if any, governing the employment relationship between the parties.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    RARE HOSPITALITY MANAGEMENT, INC.


                                    By:_____________________________
                                    Title:


                                    EXECUTIVE


                                    -------------------------------
                                    DAVID C. GEORGE

INDEX TO EXHIBITS

EXHIBIT                                     DESCRIPTION
- -------                                     -----------


   A                                        DEFINITIONS

   B                                        RESTRICTED AREA

EXHIBIT A

DEFINITIONS

As used in Section 3 of this Agreement, the following terms shall have the meanings ascribed to each below:

"Cause" means:

(i) the Executive's breach of any material obligations under this Agreement; provided, however, that if such breach can be cured, Executive shall have fourteen (14) days following receipt from the Company of written notice of such breach within which to do so before said breach is deemed to constitute "Cause" for termination;

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse resulting in material harm or actual or potential physical danger to RARE or any of its employees;

(iv) the commission by Executive of (a) a felony for which Executive is indicted or with respect to which Executive pleads nolo contendere (or any similar response), (b) any act or moral turpitude or (c) any fraud or embezzlement upon RARE; or (v) the engaging by the Executive in negligence or willful misconduct which is injurious to RARE, monetarily or otherwise.

“Change of Control” means and includes each of the following:

(i) The acquisition, at one time or over time, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities and Exchange Act of 1934 (the "1934 Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding voting securities of the RARE Hospitality International, Inc. ("Parent") entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control; (a) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 50% or more of the Outstanding Corporation Voting Securities, (b) any acquisition by Parent, or (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Parent or any corporation controlled by Parent;

(ii) Consummation of a reorganization, merger, share exchange or consolidation or sale of other disposition of all or substantially all of the assets of Parent (a "Business Combination"), in each case unless following such Business Combination, (i) all of substantially all of the individuals and entities who were the beneficial owners of the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Parent or all or substantially all of Parent's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Corporation Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Parent or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 50% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

“Disability” or “Disabled” shall mean that by reason of any physical or mental incapacity Executive has been unable, or it is reasonably expected that he will be unable, for a period of at least ninety (90) substantially continuous days to perform his regular duties and responsibilities hereunder. In the event of any disagreement between Executive and the Company as to whether Executive is physically or mentally incapacitated, the question of such incapacity shall be submitted to an impartial and reputable physician for determination, selected by mutual agreement of Executive and the Company or, failing such agreement, selected by two physicians (one of which shall be selected by the Company and the other by Executive), and such determination of the question of such incapacity by such physician shall be final and binding on Executive and the Company. The Executive shall pay the fees and expenses of such physician.

EXHIBIT B

The area within the Metropolitan Statistical Area (“MSA”) surrounding each city listed below, as said MSA is determined from time to time by the U. S. Bureau of the Census, or for each city with no MSA within fifty (50) miles of the city limits.

Alabama                                        Georgia
- -------                                        -------
Auburn                                         Albany
Dothan                                         Alpharetta
Hoover                                         Athens
Huntsville                                     Atlanta
Mobile                                         Augusta
Montgomery                                     Austell
Prattville                                     Buford
                                               Canton
District of Columbia                           Cartersville
- --------------------
                                               Chamblee
Florida                                        College Park
- -------
Altamonte Springs                              Columbus
Boynton Beach                                  Conyers
Brandon                                        Cumming
Citrus Park                                    Dalton
Coral Springs                                  Douglasville
Daytona Beach                                  Duluth
Davie                                          Gainesville
Destin                                         Hiram
Ft. Lauderdale                                 Jonesboro
Ft. Myers                                      Kennesaw
Jacksonville Beach                             Lawrenceville
Jacksonville                                   Macon
Jensen Beach                                   Marietta
Kissimmee                                      Newnan
Lake Mary                                      Peachtree City
Largo                                          Rome
Merritt Island                                 Roswell
Miami                                          Savannah
Naples                                         Snellville
Ocala                                          Statesboro
Orlando                                        Tucker
Pembroke Pines                                 Valdosta
Port Richey                                    Warner Robbins
Sarasota                                       Woodstock
St. Augustine
St. Petersburg                                 Illinois
                                               --------
Southchase                                     Chicago
Tallahassee                                    Fairfiew Heights
Tampa


Indiana                                        New Jersey
- -------                                        ----------
Avon                                           Rochelle Park
Indianapolis
Carmel                                         North Carolina
                                               --------------
                                               Burlington
Kansas                                         Charlotte
- ------
Kansas City                                    Concord
Leawood                                        Gastonia
       -
                                               Greensboro
Kentucky                                       Hickory
- --------
Bowling Green                                  High Point
Florence                                       Huntersville
                                               Pineville
Maryland
- --------
Germantown                                     Ohio
                                               ----
                                               Beaver Creek
Massachusetts                                  Boardman
- -------------
Boston                                         Cincinnati
Chestnut Hill                                  Cleveland
Franklin                                       Columbus
Leominster                                     Cuyahoga Falls
Marlboro                                       Dublin
North Attleboro                                Eastgate
                                               Fairview Park
Michigan                                       Maumee
- --------
Troy                                           Mayfield Heights
                                               Medina
Minnesota                                      Mentor
- ---------
Minneapolis                                    North Canton
                                               Pickerington
Missouri                                       Solon
- --------
Ballwin                                        Springdale
Chesterfield Florissant                        St. Clairsville
Independence                                   Stongsville
Kansas City                                    Wooster
Lee's Summit
Liberty                                        Pennsylvania
                                               ------------
O'Fallon                                       Bensalem
Sunset Hills                                   Erie
                                               Philadelphia
New Hampshire
- -------------
Concord                                        Rhode Island
                                               ------------
Manchester                                     Providence
Nashua


                                               South Carolina
                                               --------------
                                               Columbia
                                               Greenville
                                               Hilton Head
                                               Rock Hill
                                               Spartanburg


                                               Tennessee
                                               ---------
                                               Chattanooga
                                               Clarksville
                                               Hermitage
                                               Jackson
                                               Madison
                                               Nashville

                                               Texas
                                               -----
                                               Dallas
                                               Houston

                                               Virginia
                                               --------
                                               McLean

                                               West Virginia
                                               -------------
                                               Charleston

Executive acknowledges and agrees that the geographical area described above is the area in which Executive has or will perform his services for the Company, and that the area in which such services are performed is intended to expand as the business of the Company and its parents, subsidiaries and affiliates (the “Consolidated Group”) grows. Executive and the Company agree that as the geographical area in which the Consolidated Group conducts its business expands, the list of cities described on this Exhibit B shall be deemed to be amended, from time to time, without any further consent, action or notice on the part of the Company or Executive, to include each additional city in which any member of the Consolidated Group operates a restaurant or a franchisee of the Consolidated Group operates a restaurant under the terms of a franchise from the Consolidated Group. Executive agrees to execute one or more amendments hereto upon the request of the Company from time to time in order to confirm such amended list.

EX-10 10 exh107.htm PEDRA EMPLOYMENT AGREEMENT exhibit 10.7

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of the 1^st day of October 2002, by and between BUGABOO CREEK HOLDINGS, INC., a Delaware corporation (hereinafter referred to as the “Company”), and DENNIS PEDRA, a resident of the State of Massachusetts (hereinafter referred to as the “Executive”);

WITNESSETH:

The Company and its parent corporations are engaged in the business of owning, operating and franchising the operation of restaurants under the names LongHorn Steakhouse^®, The Capital Grille^®, Bugaboo Creek Steak House^®. The Company desires to employ Executive as President of the Company and Vice President of RARE Hospitality International, Inc. (the “Parent”), to oversee the management and operation of the Bugaboo Creek Steak House concept. The Company desires to be assured of Executive’s employment on the terms and conditions set forth in this Agreement. Executive desires to accept such employment on such terms and conditions.

In the course of Executive’s employment, Executive will gain knowledge of the business, affairs, customers, franchisees, plans and methods of the Company, its parent corporations and subsidiaries (collectively, “RARE”) has been and will be trained at the expense of RARE in the development, opening, operation and management of RARE’s restaurants through the use of techniques, systems, practices and methods used and devised by RARE, has had and will have access to information relating to RARE’s customers and their preferences and dining habits and has and will become personally known to and acquainted with RARE’s suppliers and managers in the Restricted Area (as defined in this Agreement) thereby establishing a personal relationship with such suppliers and managers for the benefit of RARE.

1. Employment. The Company agrees to employ Executive, and Executive hereby accepts such employment and agrees to perform his duties and responsibilities hereunder, in accordance with the terms and conditions hereinafter set forth.

1.2 Duties of Executive. Executive agrees that during the Employment Term, he will devote his full professional and business-related time, skills and best efforts to the business of RARE, as it pertains to the management and operation of the Bugaboo Creek Steak House concept, initially in the capacity of President of the Company and subsequently in such capacity or capacities as shall be determined by the Company or the Parent. Executive shall devote his full time and his best efforts in the performance of any other reasonable duties as may be assigned to him from time to time by the Company or the Parent; provided, that all such duties assigned to Executive shall be of a nature and type reasonably and customarily assigned by companies to employees holding the offices occupied by Executive. Executive shall abide by the employment and other corporate policies of the Company established from time to time. Executive shall devote all of his full professional and business-related skills solely to the affairs of the Company, and shall not, during his employment, unless otherwise agreed to in advance in writing by the Company, seek or accept other employment, become self-employed in any other capacity during the term of his employment, or engage in any activities which are detrimental to the business of the Company. Notwithstanding the foregoing, Executive may engage in personal investment activities provided such activities do not interfere with Executive’s performance of his full-time employment duties under this Agreement. Executive acknowledges that the discharge of his duties for the Company will involve travel on a regular basis from his home in Massachusetts.

2. Compensation and Benefits.

2.1 Base Compensation. For all the services rendered by Executive hereunder, the Company shall pay Executive an annual salary at the rate of Two Hundred Ten Thousand Dollars ($210,000) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company (“Base Compensation”), payable in installments at such times as the Company customarily pays its other senior officers (but in any event no less often than monthly). The Company agrees that the Executive’s salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company’s Board of Directors. Executive’s salary shall be prorated for any partial calendar year during which this Agreement remains in effect.

2.2 Bonus Awards. In addition to the Base Compensation, during the Employment Term, Executive shall be eligible for a bonus of up to fifty percent (50%) of his Base compensation, which bonus shall be determined and paid in accordance with the bonus program for executives of the Company, as approved by the Company from time to time. Unless otherwise set forth in this Agreement, Executive must be employed by the Company on the date the bonus is paid to executive employees generally in order to be entitled to a bonus for that year.

2.3 Other Benefits. In addition to all other compensation paid or payable from the Company to Executive hereunder during the Employment Term, Executive shall be entitled to participate in any supplemental life insurance plan maintained for senior executives and participate in any and all other employee benefit programs maintained by the Company for the benefit of its executive employees generally, in accordance with and subject to the terms and conditions of such programs.

3. Termination; Effect of Termination.

(a) The death of Executive.

(b) The lapse of thirty (30) days following the date on which the Company shall give written notice to Executive of termination of his employment hereunder by reason of his "Disability." Executive shall be deemed to be "Disabled" for purposes of this Agreement if by reason of any physical or mental incapacity he has been unable, or it is reasonably expected that he will be unable, for a period of at lease ninety (90) days substantially continuous days to perform his regular duties and responsibilities hereunder. In the event of any disagreement between Executive and the Company as to whether Executive is physically or mentally incapacitated such as to permit the Company to terminate his employment pursuant to this paragraph (ii), the question of such incapacity shall be submitted to an impartial and reputable physician for determination, selected by mutual agreement of Executive and the Company or, failing such agreement, selected by two physicians (one of which shall be selected by the Company and the other Executive), and such determination of the question of such incapacity by such physician(s) shall be final and binding on Executive and the Company. The Company shall pay the reasonable fees and expenses of such physician(s).

(ii) habitual and unauthorized absenteeism by reason other than physical or mental illness;

(iii) chronic alcoholism or other form of substance abuse relating in material harm or actual or potential physical danger to RARE or its employees;

(v) the engaging by the Executive in negligence or willful misconduct which is injurious to RARE, monetarily or otherwise; or

(vi) any misrepresentation or breach by Executive of the warranty contained in Section 13 of this Agreement.

(d) The lapse of ten (10) days following written notice by the Company to Executive of termination other than for Cause.

3.2 Payment upon Termination.

(a) Upon termination of the Employment Term for Cause, or as a result of termination pursuant to Section 3.1(e), Executive shall be entitled to receive the compensation owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination and any additional compensation he may be entitled to receive under the terms of any employee benefit plan offered by the Company.

(b) Upon termination of the Employment Term by the death of Executive, Executive's estate shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of death and any additional compensation Executive's estate may be entitled to receive under the terms of any employee benefit plan offered by the Company. executive's estate shall also be entitled to receive Executive's pro rata share (based on days worked before death) of the bonus to which he would have been entitled under Section 2.2 if he had (i) been an employee on the date bonuses for the then-current fiscal year were distributed and (ii) achieved his individual bonus goals, if any. The bonus payment shall be made as and when bonus payments, if any, would otherwise be payable under Section 2 of this Agreement.

(c) In the event that during the Employment Term Executive becomes Disabled (as defined in Section 3.1) and the Company thereafter terminates Executive's employment during the continuation of such disability, Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, an additional forty percent (40%) of Executive's Base compensation for a period of two (2) years after this Agreement is terminated (the "Disability Compensation") and any additional compensation Executive may be entitled to receive under the terms of any employee benefit plan offered by the Company. Executive shall also be entitled to receive his pro rata share (based on days worked before the commencement of the ninety-day period required for purposes of Section 3.1) of the bonus to which he would have been entitled under Section 2.2 if he had (i) been an employee on the date bonuses for the then-current fiscal year were distributed and (ii) achieved his individual bonus plan goals, if any. The Disability Compensation and bonus payments shall be made as and when salary and bonus payments, if any, would otherwise be payable under Section 2 of this Agreement.

(d) In the event that the Company terminates Executive's employment for any reason other than those set forth in subsections (a), (b) or (c) above, unless the provisions of Section 3(e) apply, Executive shall be entitled to receive the compensation under Sections 2.1 and 2.2 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination, and the Company will be obligated to pay Executive his Base Compensation as of the date of termination of such employment from the date of such termination for a period of twelve (12) months. Such payment shall be made over a twelve-month period as and when salary would otherwise be payable under Section 2 of this Agreement.

(e) In the event that (i) during the Employment Term a "Change in Control" shall occur and (ii) within twelve (12) months following the occurrence of the Change in Control, the Company demotes Executive other than for Cause (as defined in Section 3.1), effects an involuntary transfer of Executive to a location more than fifty (50) miles from Executive's place of residence or terminates Executive's employment other than for Cause then, in lieu of the amounts payable pursuant to Section 3(d), Executive shall be entitled to receive the compensation under Section 2.1 owed to Executive but unpaid for performance rendered under this Agreement as of the date of termination of such employment, and the Company will be obligated to pay Executive an additional amount equal to the sum of (x) his annual Base Compensation as of the date of termination of such employment plus (y) an amount equal to the bonus paid to Executive pursuant to Section 2.2 for the calendar year immediately preceding the calendar year in which the termination of employment occurs. Such payment shall be made within thirty (30) days following termination of Executive's employment.

For purposes of this subsection (e), “Change in Control” means and includes each of the following:

(i) The acquisition, at one time or over time, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "1934 Act") (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control; (a) any acquisition by a Person who is on the date of this Agreement the beneficial owner of 50% or more of the Outstanding Corporation Voting Securities, (b) any acquisition by the Parent, or (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any corporation controlled by the Parent;

(ii) Consummation of a reorganization, merger, share exchange or consolidation or sale of other disposition of all or substantially all of the assets of the Parent (a "Business Combination"), in each case, unless, following such Business Combination, (i) all of substantially all of the individuals and entities who were the beneficial owners of the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Parent or all or substantially all of the Parent's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Corporation Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Parent or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 50% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.

(f) Payments made pursuant to this Section 3.2 are in lieu of any other obligations to Executive pursuant to the terms of this Agreement.

4. Noncompetition. Executive covenants and agrees that during the term of his employment by the Company and for a period of one (1) year immediately following the termination of Executive's employment by the Company for any reason whatsoever, Executive will not, within the area described on Exhibit A hereto (the "Restricted Area") directly or indirectly compete with RARE in connection with a business, any significant portion of which involves the development, opening, operation or franchising of restaurants that derive more than thirty percent (30%) of their food sales from steak products, if RARE is still engaged in such business in such area. The provisions of this Section 4 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid five (5) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 4 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate legal proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

4.2 Direct or Indirect Competition. For the purposes of this Agreement, the words “directly or indirectly” as they modify the word “compete” shall mean (i) acting as an agent, representative, consultant, officer, director, independent contractor, or employee engaged in a management capacity with any entity or enterprise which is carrying on a business any significant portion of which involves the development, opening, or operation of restaurants offering steak products as at least thirty percent (30%) of their food sales, (ii) participating in any such competing entity or enterprise as an owner, partner, limited partner, joint venturer, creditor or stockholder (except as a stockholder holding less than two percent (2%) interest in a corporation whose shares are actively traded on a regional or national securities exchange or in the over-the-counter market), or (iii) communicating to any such competing entity or enterprise the names or addresses or any other information concerning any employee or supplier of RARE or any successor to the goodwill of RARE with respect to the business of RARE.

5. Confidentiality. Executive recognizes and acknowledges that by reason of his employment by and service to the Company, he will have access to trade secrets and other confidential information of RARE including, but not limited to, confidential: pricing information, marketing information, sales techniques of RARE, confidential records, RARE's expansion plans, restaurant development and marketing techniques, operating procedures, training programs and materials, business plans, franchise arrangements, plans and agreements, information regarding suppliers, product quality and control procedures, financial statements and projections and other information regarding the operation of RARE's restaurants (hereinafter referred to as the "Confidential Information"). Executive acknowledges that such Confidential Information is a valuable and unique asset of RARE and covenants that he will not, either during the term of his employment by the Company or for a period of two (2) years thereafter, disclose any such Confidential Information to any person for any reason whatsoever (except as his duties for the Company may require) without the prior written authorization of the Parent's Chief Executive Officer. Executive agrees that he will not copy any Confidential Information except as the performance of his duties for the Company may require and that upon the termination of his employment by the Company, he shall return all Confidential Information and any copies thereof in his possession to the Company. Executive hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies which RARE may have available pursuant to the laws of any jurisdiction or at common law to prevent the disclosure of trade secrets or proprietary information, and the enforcement by RARE of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies which it may possess in law or equity absent this Agreement. Notwithstanding the foregoing, the Company acknowledges and agrees that nothing contained herein shall restrict or otherwise prohibit or prevent disclosure of Confidential Information pursuant to legal proceedings, subpoena, civil investigative demand or other similar process. Executive agrees that if disclosure of Confidential Information is requested or required pursuant to any such process, he shall provide the Company with prompt written notice of any such request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, Executive is nonetheless, legally compelled to disclose Confidential Information to any tribunal or other agency, Executive may, without liability hereunder, disclose to such tribunal or other agency only that portion of the Confidential Information which Executive is legally required to disclose. Executive agrees to cooperate with RARE to obtain an appropriate protective order or other reliable assurance that such tribunal or other agency will accord the Confidential Information confidential treatment. The Company also acknowledges and agrees that Confidential Information shall not include any information (a) known by Executive prior to his employment by the Company and learned by Executive other than as a result of his employment relationship with the Company, (b) independently developed by the Executive outside of the scope of his employment relationship with the Company or (c) that is or becomes publicly available through no breach by the Executive of his obligations to RARE.

6. Non-Solicitation of Employees. Executive covenants that during the term of his employment by the Company, and during the two (2) year period immediately following the termination of such employment, Executive will neither directly nor indirectly induce or attempt to induce any employee of RARE to terminate his or her employment to go to work for any other employer in a business competing with that of RARE. The provisions of this Section 6 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid five (5) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 6, the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

7. Hiring of Employees. Executive covenants that during the term of his employment by the Company, and during the one (1) year period immediately following the termination of such employment, Executive will neither directly nor indirectly hire any salaried employee of RARE. The provisions of this Section 7 shall terminate and be of no further force and effect from and after the date on which the Company fails to make any payment owed to Executive under this Agreement following the Employment Term, which payment remains unpaid five (5) business days following the receipt of written notice from Executive that such payment has not been made (provided that such cure period shall not apply with respect to the Company's third or subsequent failure to make any payment due Executive hereunder in any twelve (12) month period); provided, however, that in the event that there is any reasonable and good faith dispute between the Company and Executive as to any amount payable to Executive, for purposes of this Section 7 the disputed amount shall not be considered due and payable until such dispute shall have been finally resolved in an appropriate proceeding and any time for appeal of such resolution shall have run without an appropriate appeal having been taken.

9. Developments. All developments, including inventions, whether patentable or otherwise, trade secrets, discoveries, improvements, ideas and writings which either directly or indirectly relate to or may be useful in the business of RARE (the "Developments") which Executive, either by himself or in conjunction with any other person or persons, has conceived, made, developed, acquired or acquired knowledge of during his employment by the Company or which Executive, either by himself or in conjunction with any other person or persons, shall conceive, make, develop, acquire or acquire knowledge of during the Employment Term, shall become and remain the sole and exclusive property of RARE. Executive hereby assigns, transfers and conveys, and agrees to so assign, transfer and convey, all of his right, title and interest in and to any and all such Developments and to disclose fully as soon as practicable, in writing, all such Developments to the Chairman of the Parent. At any time and from time to time, upon the request and at the expense of the Company, Executive will execute and deliver any and all instruments, documents and papers, give evidence and do any and all other acts which, in the opinion of counsel for the Company, are or may be necessary or desirable to document such transfer or to enable RARE to file and prosecute applications for and to acquire, maintain and enforce any and all patents, trademark registrations or copyrights under United States or foreign law with respect to any such Developments or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright. RARE will be responsible for the preparation of any such instruments, documents and papers and for the prosecution of any such proceedings and will reimburse Executive for all reasonable expenses incurred by him in compliance with the provisions of this Section.

11. Equitable Relief. Executive acknowledges that the services to be rendered by him are of a special, unique, unusual, extraordinary, and intellectual character, which gives them a peculiar value, and the loss of which cannot reasonably or adequately be compensated in damages in an action at law; and that a breach by him of any of the provisions contained in Sections 4, 5, 6 and 7 of this Agreement will cause RARE irreparable injury and damage. Executive further acknowledges that he possesses unique skills, knowledge and ability and that any material breach of the provisions of Sections 4, 5, 6 and 7 of this Agreement would be extremely detrimental to RARE. By reason thereof, Executive agrees that RARE shall be entitled, in addition to any other remedies it may have under this Agreement or otherwise, to injunctive and other equitable relief to prevent or curtail any breach of the provisions of Sections 4, 5, 6 and 7 of this Agreement by him..

12. Survival of Provisions. The provisions of Sections 4 through 14 , inclusive, of this Agreement shall survive the termination of this Agreement to the extent required to give full effect to the covenants and agreements contained in those sections. All provisions of this Agreement which contemplate the making of payments or the provision of consideration or other items of economic value by the Company to the Executive after the termination of this Agreement shall likewise survive the termination of this Agreement to the extent required to give full effect to such undertakings or obligations of the Company to Executive hereunder.

13. Warranties and Representations. In order to induce the Company to enter into this Employment Agreement, Executive hereby warrants and represents to the Company that Executive is not under any obligation, contractual or otherwise, to any party which would prohibit or be contravened by Executive's employment by the Company and the performance of Executive's duties as President of the Company, Vice President of the Parent, or the performance of Executive's other obligations under this Agreement.

        If to the Company, to:      Bugaboo Creek Holdings, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention:  President

        With a copy to:             RARE Hospitality International, Inc.
                                    8215 Roswell Road
                                    Building 600
                                    Atlanta, Georgia 30350
                                    Attention: General Counsel

        If to Executive, to:        Dennis Pedra
                                    123 Elizabeth Ridge Road
                                    Carlisle, Massachusetts 01741

Any party may by written notice change the address to which notices to such party are to be delivered or mailed.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which will take effect as an original and all of which shall evidence one and the same Agreement.

23. Governing Law. All of the terms and provisions of this Agreement shall be construed in accordance with and governed by the applicable laws of the State of Georgia.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

                                    BUGABOO CREEK HOLDINGS, INC.


                                    By:   _____________________________
                                          President


                                    EXECUTIVE


                                    -------------------------------
                                    DENNIS PEDRA

EXHIBIT A

Connecticut                                    Massachusetts
- -----------                                    -------------
Manchester                                     Boston
                                               Braintree
Delaware                                       Framingham
- --------
Newark                                         Methuen
                                               Milford
Georgia                                        Peabody
- -------
Alpharetta                                     Seekonk
Duluth                                         Shrewsbury
Lithonia                                       Watertown

Maine                                          New Hampshire
- -----                                          -------------
Bangor                                         Newington
South Portland
                                               New York
                                               --------
Maryland                                       Albany
- --------
Gaithersburg                                   Poughkeepsie
                                               Rochester

                                               Pennsylvania
                                               ------------
                                               Philadelphia

                                               Rhode Island
                                               ------------
                                               Warwick

Executive acknowledges and agrees that the geographical area described above is the area in which Executive will initially perform his services for the Company, and that the area in which such services are performed is intended to expand as the locations of Bugaboo Creek Steak House restaurants (the “Consolidated Group”) increase. Executive and the Company agree that as the geographical area in which the Consolidated Group operates expands, the list of cities described on this Exhibit A shall be deemed to be amended, from time to time, without any further consent, action or notice on the part of the Company or Executive, to include each additional city in which there is a member of the Consolidated Group. Executive agrees to execute one or more amendments hereto upon the request of the Company from time to time in order to confirm such amended list.

EX-32 11 exh321.htm PHIL HICKEY CERTIFICATION exhibit 99.1

Exhibit 32.1

Statement of Chief Executive Officer of RARE Hospitality International, Inc.

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of RARE Hospitality International, Inc. (the “Company”) on Form 10-Q for the period ended June 29, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip J. Hickey, Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Philip J. Hickey, Jr.
- -----------------------------------
Philip J. Hickey, Jr.
Chief Executive Officer
August 12, 2003

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to RARE Hospitality International, Inc. and will be retained by RARE Hospitality International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32 12 exh322.htm DOUG BENN CERTIFICATION exhibit 99.2

Exhibit 32.2

Statement of Chief Financial Officer of RARE Hospitality International, Inc.

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of RARE Hospitality International, Inc. (the “Company”) on Form 10-Q for the period ended June 29, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Douglas Benn, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ W. Douglas Benn
- -------------------------------------------
W. Douglas Benn
Chief Financial Officer
August 12, 2003

-----END PRIVACY-ENHANCED MESSAGE-----

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 29, 2003

Commission file number 0-19924

RARE Hospitality International, Inc. (Exact name of registrant as specified in its charter)

Internal Revenue Service - Employer Identification No. 58-1498312

8215 Roswell Rd; Bldg. 600; Atlanta, GA 30350 (770) 399-9595 (Registrant's telephone number, including area code)

XX Yes No

XX Yes No

RARE Hospitality International, Inc. and Subsidiaries

Index

Part I. Financial Information Item 1. Financial Statements

RARE Hospitality International, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share amounts) (Unaudited)

RARE Hospitality International, Inc. and Subsidiaries Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited)

RARE Hospitality International, Inc. and Subsidiaries Consolidated Statement of Shareholders' Equity For the quarter ended June 29, 2003 (In thousands, unaudited)

RARE Hospitality International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands, unaudited)

RARE Hospitality International, Inc. Notes to Consolidated Financial Statements (Unaudited)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Revenues

LongHorn Steakhouse:

The Capital Grille:

Bugaboo Creek Steak House:

Franchise Revenue:

Costs and Expenses

Liquidity and Capital Resources:

Forward-Looking Statements

Item 3. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk

Investment Portfolio

Item 4. Controls and Procedures

Part II - Other Information Item 1. Legal Proceedings

Item 2. Changes in Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Securities Holders

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

Signatures

CERTIFICATIONS

EMPLOYMENT AGREEMENT

WITNESSETH:

EXHIBIT A

EMPLOYMENT AGREEMENT

WITNESSETH:

EXHIBIT A

EMPLOYMENT AGREEMENT

WITNESSETH:

EXHIBIT A

EMPLOYMENT AGREEMENT

WITNESSETH:

EXHIBIT A

EMPLOYMENT AGREEMENT

WITNESSETH:

EXHIBIT A

EMPLOYMENT AGREEMENT

WITNESSETH:

INDEX TO EXHIBITS

EXHIBIT A DEFINITIONS

EXHIBIT B

EMPLOYMENT AGREEMENT

WITNESSETH:

EXHIBIT A

Exhibit 32.1

Statement of Chief Executive Officer of RARE Hospitality International, Inc.

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

Exhibit 32.2

Statement of Chief Financial Officer of RARE Hospitality International, Inc.

Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

RARE Hospitality International, Inc.
(Exact name of registrant as specified in its charter)

8215 Roswell Rd; Bldg. 600; Atlanta, GA 30350
(770) 399-9595
(Registrant's telephone number, including area code)

Part I. Financial Information
Item 1. Financial Statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share data)
(Unaudited)

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statement of Shareholders' Equity
For the quarter ended June 29, 2003
(In thousands, unaudited)

RARE Hospitality International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)

RARE Hospitality International, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations

Results of Operations

Revenues

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Part II - Other Information

Item 1. Legal Proceedings

EXHIBIT A

DEFINITIONS