1
EXHIBIT 10(m)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 30th day of September,
1997, by and between RARE HOSPITALITY INTERNATIONAL, INC., a Georgia corporation
(hereinafter referred to as the "Company"), and XXXXXX X. XXXXXX, Xx. a resident
of the State of Georgia (hereinafter referred to as the "Executive");
WITNESSETH:
The Company is engaged in the business of owning, operating and
franchising the operation of restaurants under the names Longhorn Steakhouse(R),
The Capital Grille(R), Bugaboo Creek Steak House(R) and others. The Company
desires to employ Executive in an executive capacity and to be assured of his
services in such capacity on the terms and conditions set forth in this
Agreement. Executive desires to accept such employment on such terms and
conditions.
The Company acknowledges and agrees that Executive has (i) previously
been and is currently engaged in the restaurant industry throughout the United
States including in particular and without limit within the State of Georgia,
(ii) has extensive background and expertise in the development, opening,
operation and management of restaurants, and (iii) has developed professional
relationships with clients, customers, suppliers and other individuals within
the restaurant industry all of which experience and expertise of Executive (the
"Executive's Information Base") has been developed outside the scope of
Executive's employment with the Company.
In the course of Executive's employment, Executive will gain knowledge
of the business, affairs, customers, franchisees, plans and methods of the
Company, will be trained at the expense of the Company in the development,
opening, operation and management of the Company's restaurants through the use
of techniques, systems, practices and methods used and devised by the Company,
will have access to information relating to the Company's customers and their
preferences and dining habits and will become personally known to and acquainted
with the Company's suppliers and managers in the Restricted Area thereby
establishing a personal relationship with such suppliers and managers for the
benefit of the Company.
The Company would suffer irreparable harm if Executive were to use such
knowledge, information and personal relationships, other than the Executive's
Information Base, related to the Company 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 $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:
2
1. Employment. The Company hereby employs 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.
1.1. Employment Term. The employment term of this
Agreement shall commence on November 1, 1997 or such later date within 30 days
thereafter as designated by Executive (the "Commencement Date") and shall
continue until and end on December 31, 2000, unless terminated prior thereto in
accordance with Section 3 hereof. Notwithstanding the foregoing, as of January
1, 2001 and the same day of each calendar year thereafter, this Agreement shall
be automatically renewed for an additional period of one (1) year unless either
Executive or the Company provides the other with at least six (6) months prior
written notice of such party's intention not to renew this Agreement as of the
next ensuing January 1; provided, that this Agreement shall during all such
renewal terms remain subject to earlier termination in accordance with Section 3
hereof. All periods during which this Agreement remains in effect are
hereinafter referred to as the "Employment Term."
1.2. Duties of Executive. Executive agrees that during the
term of this Agreement, he will devote his full professional and
business-related time, skills and best efforts to the business of the Company,
initially in the capacity of President and Chief Operating Officer; provided,
that no material changes in title or Executive's duties or the principal office
from which Executive shall perform those duties shall occur without Executive's
consent. In addition, 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; 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 office or offices occupied by Executive.
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.
The Company acknowledges that Executive currently resides in metropolitan
Atlanta, Georgia and shall remain entitled to continue to reside at such
location throughout the Employment Term. As a result, Executive shall be
required to perform his duties from the offices of the Company located in
metropolitan Atlanta, Georgia, and Executive may not be required by the Company
to move his residence and principal business location outside of metropolitan
Atlanta, Georgia without Executive's prior written consent; provided, that
Executive acknowledges that the discharge of his duties for the Company will
involve travel on a regular basis from the Company's offices in Atlanta,
Georgia. No refusal by Executive to move his residence or the principal office
of the Company from which he performs his duties from metropolitan Atlanta,
Georgia will be deemed a breach of this Agreement by Executive or a failure of
Executive to perform his obligations under this Agreement.
- 2 -
3
1.3. Service on Board of Directors. During the Employment
Term, the Company shall use its best efforts to cause Executive to be nominated
and elected as a member of the Board of Directors of the Company.
1.4. 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 or other fiduciary security (including without
limitation any such items required under Section 6.9 of the Company's By-Laws)
required by the Company to be maintained by, in the name of, or on behalf of the
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 $250,000 for each full year of the Employment Term, plus such additional
amounts, if any as may be approved by the Company's Board of Directors, ("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 by the Compensation Committee of the Company's Board of Directors 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. (a) In addition to the Base
Compensation, promptly following the Commencement Date, the Company shall pay
Executive as initial, additional compensation, and on a one-time basis only, the
sum of $50,000 in consideration for his entering into this Agreement and his
services rendered and to be rendered to the Company during the term hereof.
(b) In addition to the Base Compensation, during the
Employment Term Executive shall be eligible for an annual bonus of up to 100% of
the Base Compensation, which bonus shall be determined and paid in accordance
with the bonus program for executive officers of the Company as approved by the
Company's Board of Directors from time to time. The Company shall seek and
receive Executive's input in establishing and implementing the Company's bonus
program for its executive officers. The Company shall use its best and good
faith efforts to cause such bonus program to be implemented within ninety (90)
days after the Commencement Date. From and after the date of such
implementation, Executive will be entitled to participate with the Compensation
Committee of the Board of Directors of the Company in any alteration,
modification or termination of such bonus program. To the extent reasonably
calculable under the bonus program, Executive's bonus shall be prorated for any
partial calendar year during which this Agreement remains in effect.
- 3 -
4
2.3. Stock Options. (a) The Company shall grant to
Executive, effective as of the Commencement Date, the following options to
acquire shares of the Company's common stock:
(i) 90,910 shares with an exercise price equal to
the fair market value of the Company's common stock on the date of
grant, which option shall become exercisable with respect to one-half
of such shares six (6) months following the date of this Agreement and
with respect to the remainder of such shares on the first anniversary
of the date of this Agreement; and
(ii) 91,667 shares with an exercise price of $12.00
per share, which option shall become exercisable on the second
anniversary of the date of this Agreement; and
(iii) 93,334 shares with an exercise price of $15.00
per share, which option shall become exercisable on the third
anniversary of the date of this Agreement.
Those options granted to Executive under subclauses (i) and (ii) above are
hereinafter referred to as the "Initial Non-qualified Options" and the options
granted to Executive under subclause (iii) above are sometimes hereinafter
referred to as the "Remaining Non-qualified Options." The Initial Non-Qualified
Options shall be granted to Executive pursuant to the Company's Amended and
Restated 1992 Incentive Plan (the "Existing Plan") The terms and conditions
governing the Initial Non-Qualified Options shall be as set forth in the form of
the Stock Option Agreement attached hereto as Exhibit A and made a part hereof.
The Remaining Non-Qualified Options shall be granted to Executive pursuant to
that certain Rare Hospitality International, Inc. 1997 Long-Term Incentive Plan
(the "1997 Plan"). The terms and conditions governing the Remaining
Non-Qualified Options shall be as set forth in the form of the Stock Option
Agreement attached hereto as Exhibit B and made a part hereof.
(b) The Company shall grant to Executive, effective as of
the Commencement Date, the following incentive stock options to acquire shares
of the company's common stock;
(i) 9,090 shares with an exercise price equal to
the fair market value of the Company's common stock on the date of
grant, which option shall become exercisable with respect to one-half
of such shares six (6) months following the date of this Agreement and
with respect to the remainder of such shares on the first anniversary
of the date of this Agreement; and
(ii) 8,333 shares with an exercise price equal to the
fair market value of the Company's common stock on the date of grant,,
which option shall become exercisable with respect to all of such
shares on the second anniversary of the date of this Agreement; and
- 4 -
5
(iii) 6,666 shares with an exercise price equal to
the fair market value of the Company's common stock on the date of
grant, which option shall become exercisable with respect to all of
such shares on the third anniversary of the date of this Agreement.
The options described in this Section 2.3(d) shall be granted to Executive
pursuant to the Existing Plan. The terms and conditions governing such options
shall be as set forth in the form of the Stock Option Agreement attached hereto
as Exhibit C and made a part hereof.
(c) The options described in Sections 2.3(a) and (b) are
sometimes hereinafter collectively referred to as the "Options." The Company
represents and warrants to Executive that (i) during the Employment Term,
Executive shall be within the category of persons for which awards may be
granted under the Existing Plan and the 1997 Plan; (ii) the Existing Plan has
been approved by the Company's Board of Directors and shareholders and all
Options granted to Executive under the Existing Plan are and shall remain in
full force and effect as the legally binding obligation of the Company
throughout the Employment Term, (iii) the 1997 Plan has been approved by the
Company's Board of Directors and all Options granted to Executive under the 1997
Plan are and shall remain in full force and effect as the legally binding
obligation of the Company throughout the Employment Term, (iv) the Company shall
submit the 1997 Plan to the Company's shareholders and shall use its best
efforts to cause the 1997 Plan to be approved by said shareholders, (v) the
Company shall cause this Agreement, the grant to Executive of the Options, and
Exhibits A, B and C to each be duly and properly approved by all officers and
members of the Board of Directors (including all compensation or other
committees thereof) of the Company so as to cause the same to be and remain in
full force and effect as the legally binding obligation of the Company
throughout the Employment Term, and (vi) the Company shall cause all shares of
stock in the Company 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 Company's filing of all necessary S-8 registrations or otherwise, by
Executive from and after the date Executive exercises any one or more of the
Options; 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 Company's securities.
2.4. Other Benefits. In addition to all other compensation
paid or payable from the Company to Executive hereunder, during the Employment
Term, the Company shall provide and Executive shall be entitled to participate
in and receive the following employment benefits:
(a) The Company shall provide and pay all health,
hospitalization and long term care insurance premiums necessary to provide
Executive and Executive's dependent family members with coverage under the
Company's group health insurance program.
(b) The Company shall provide and pay all life insurance
premiums necessary to provide Executive with Fifty Thousand ($50,000) Dollars of
unencumbered
- 5 -
6
death benefit; provided, that Executive shall have the full and unencumbered
right to designate the beneficiary of such life insurance coverage.
(c) The Company shall provide and pay all short term and
long term disability income insurance premiums necessary to provide Executive
with coverage not substantially less favorable to Executive than the coverage
currently provided by the Company to its executive employees. To the extent
practicable under the Company's group coverage, such payment shall be reported
as compensation paid by the Company to Executive and as such shall be included
in the taxable income of Executive.
(d) Executive shall be entitled to participate in all
qualified deferred compensation plans maintained by the Company in accordance
with the applicable provisions thereof. To the extent the same can be waived,
the Company shall cause all entry, waiting, and vesting periods imposed under
such plans to be waived with respect to Executive's participation therein.
(e) Executive shall 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.
2.5. 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 the Board of Directors
or appropriate officers 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:
(i) The death of Executive.
(ii) 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 physical or mental incapacity. Executive shall be
deemed to be physically or mentally incapacitated for purposes
of this section 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 least one hundred
and eighty (180) 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
- 6 -
7
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 Company
shall pay the reasonable fees and expenses of such physician.
(iii) 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" shall mean:
(A) Commission by Executive of a willful or
grossly negligent act which causes material harm
to the Company,
(B) The commission or perpetration by
Executive of any criminal act involving a felony
for which Executive is indicted or with respect
to which Executive pleads nolo contendere (or
any similar response),
(C) Habitual and unauthorized absenteeism by
reason other than physical or mental illness,
chronic alcoholism or other form of substance
abuse resulting in material harm or actual or
potential physical danger to the Company or its
employees,
(D) Any material violation by Executive of
his obligations under this Agreement, or
(E) Any misrepresentation or breach by
Executive of warranty contained in Section 13 of
this Agreement,
provided, however, that if the cause specified in such notice is such that there
is a reasonable prospect that it can be cured with diligent effort 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 in any event
exceed thirty (30) days from the date of such notice, and Executive's employment
shall continue in effect during such reasonable time so long as Executive makes
diligent efforts during such time to cure such cause. If such cause shall be
cured by Executive during such reasonable time his employment and the
obligations of the Company hereunder shall not terminate as a result of the
notice which has been given with respect to such cause. Cure of any cause with
or without notice from the Company shall not relieve Executive from 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.
- 7 -
8
(iv) The lapse of ten (10) days following written
notice by the Company to Executive of termination other than
for "cause".
(v) 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.
(vi) The lapse of ten (10) days following written
notice by Executive to the Company of termination for
"reason," which notice shall reasonably describe the reason
for which Executive is terminating his employment hereunder.
For purposes of this Agreement, "reason" shall mean (i) any
material breach or default by the Company with respect to any
payment, undertaking or other obligation owed, made or
extended by the Company to Executive hereunder, or (ii) the
occurrence of any "Change in Control" (as defined in Exhibit D
attached hereto and made a part hereof). Notwithstanding the
foregoing, (x) if the reason specified in any notice is the
Company's failure to make any payment to Executive, the
Company shall have five (5) business days to make such payment
(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-month period)
and (y) if the reason specified in any notice is not monetary
in nature and is such that there is a reasonable prospect that
it can be cured with diligent effort within a reasonable time,
the Company shall have such reasonable time (having regard for
the nature of the reason) to cure such reason, which time
shall not in any event exceed thirty (30) days from the date
of such notice. In either such event, Executive's employment
shall continue in effect during such cure period so long as
the Company makes diligent efforts during such time to cure
such reason. If the reason shall be cured by the Company
during its applicable cure period, Executive's employment
shall not terminate as a result of the notice which has been
given with respect to such reason. Cure of any reason with or
without notice from Executive shall not relieve the Company
from any obligations to the Executive under this Agreement or
otherwise and shall not affect the Executive's rights upon the
recurrence of the same or the occurrence of any other reason.
If such reason shall not be cured within the applicable cure
period, Executive's employment under this Agreement shall
terminate upon expiration of such applicable cure period.
- 8 -
9
3.2. Payment upon Termination.
(a) Upon termination of this Agreement for any reason
described in Section 3.1 above, other than termination pursuant to clauses (i),
(ii) (iv) or (vi), 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.
(b) Upon termination of this Agreement pursuant to clause (i)
of Section 3.1, Executive shall be entitled to receive the compensation
consisting of both base salary and bonus under Sections 2.1 and 2.2(b) as
calculated and 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 plus the
Company will pay to the personal representative of Executive, a lump sum amount
equal to one-half of Executive's annual Base Compensation under Section 2.1 as
in effect on the date of his death. In addition to the foregoing, upon such
termination (i) the exercisability of the Options shall accelerate as provided
in the agreements governing such Options, and (ii) the Company shall continue to
provide and pay for those employment benefits contemplated under Section 2.4(a)
hereof for Executive's dependent family members 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).
(c) In the event that the Company terminates Executive's
employment pursuant to clause (ii) of Section 3.1, Executive shall be entitled
to receive the compensation consisting of both base salary and bonus under
Sections 2.1 and 2.2(b) as calculated and 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. In addition, the Company shall pay to Executive, for up
to ninety (90) days, an amount equal to the difference between the amount of
Executive's then level of Base Compensation payable pursuant to Section 2.1 and
100% of the amount paid to Executive under any short-term disability insurance
policy obtained by the Executive and paid by the Company through the Company's
group coverage until the Company's long-term disability insurance begins to pay.
In addition to the foregoing, upon such termination (i) the exercisability of
the Options shall accelerate as provided in the agreements governing such
Options and (ii) the Company shall continue to provide and pay for those
employment benefits contemplated under Section 2.4(a) hereof for Executive and
Executive's dependent family members 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).
(d) In the event that the Company terminates Executive's
employment pursuant to clause (iv) of Section 3.1 or Executive terminates his
employment pursuant to clause (vi) of Section 3.1, Executive shall be entitled
to receive the compensation consisting
- 9 -
10
of both base salary and bonus under Sections 2.1 and 2.2(b) as calculated and
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
annual Base Compensation under Section 2.1 as of the date of termination of such
employment from the date of such termination for the greater of (i) eighteen
(18) months or (ii) the period of time from the date of such termination (if
prior to the second anniversary of the Commencement Date) to the second
anniversary of the Commencement Date. In addition to the foregoing, upon such
termination (i) the exercisability of the Options shall accelerate as provided
in the agreements governing such Options, and (ii) the Company shall continue to
provide and pay for those employment benefits contemplated under Section 2.4(a)
hereof for Executive and Executive's dependent family members 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). Such payment shall be made as and when otherwise due
under this Agreement.
(e) 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 E hereto (the "Restricted Area") directly or indirectly compete with the
Company by carrying on a business any significant portion of which involves the
development, opening, operation or franchising of restaurants that offer steak
as a principal portion of their menu ( with a principal portion of the menu
defined as products from which the restaurant derives more than thirty percent
(30%) of its food sales), if the Company 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 Employee 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 proceeding and any time for appeal of such
resolution shall have run without an appropriate appeal having been taken.
4.1 Definition of "Compete." For the purposes of this
Agreement, the term "compete" shall mean the providing of general management or
supervisory services for the development or operation or franchising of
restaurants that offer steak as a principal portion of their menu ( with a
principal portion of the menu defined as products from which the restaurant
derives more than thirty percent (30%) of its food sales).
- 10 -
11
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 as a principal portion of their menu, (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), and (iii) communicating to any such competing
entity or enterprise the names or addresses or any other information concerning
any employee or supplier of the Company or any successor to the goodwill of the
Company with respect to the business of the Company.
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 the Company including,
but not limited to, confidential: pricing information, marketing information,
sales techniques of the Company, confidential records, the Company'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 the Company's restaurants (hereinafter referred to as the
"Confidential Information"). The Company acknowledges that information in
Executive's Information Base is not Confidential Information. Executive
acknowledges that such Confidential Information is a valuable and unique asset
of the Company 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 as President may require) without the prior written
authorization of the Company's Board of Directors. 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 (i) Executive's use or
disclosure of Executive's Information Base or (ii) 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
- 11 -
12
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 the date of this Agreement 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) is or becomes publicly available through no
breach by the Executive of his obligation to the Company.
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 the Company
to terminate his or her employment to go to work for any other employer in a
business competing with that of the Company. 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 Employee 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 management level employee of the Company. 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 Employee
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
- 12 -
13
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 this Agreement he shall
have the opportunity to inspect and use certain property, both tangible and
intangible, of the Company, and Executive hereby agrees that said property shall
remain the exclusive property of the Company and the Executive shall have no
right or proprietary interest in such property, whether tangible or intangible,
including, without limitation, the Company'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 the Company 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
Chairman 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.
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 the
Company.
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
- 13 -
14
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 as follows:
(a) Executive is not under any obligation, contractual or
otherwise, to any party which would prohibit or be contravened by Executive's
acceptance of employment by the Company and the performance of Executive's
duties as President, Chief Operating Officer and director of the Company or the
performance of Executive's obligations under this Agreement; and
(b) The answers to the questions contained in the
Questionnaire attached hereto as Exhibit F are true and correct as of the date
of execution of this agreement.
Notwithstanding the foregoing, the Company acknowledges and agrees that (i)
Executive has provided the Company with a copy of the provisions contained under
Section 10,11 and 12 (the "Subject Provisions") of Executive's employment
agreement with Executive's employer, Xxxxxxxx'x International, Inc., and (ii)
any actions or claims raised by any person or entity with respect to the Subject
Provisions, whether successful or unsuccessful, shall not constitute a breach or
violations of the provisions of this Section 13 by Employee.
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 reason as contemplated by
clause (vi) of Section 3.1 of this Agreement.
- 14 -
15
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 International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman
With a copy to: Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
If to Executive, to: Xxxxxx X. Xxxxxx, Xx.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
With a copy to: Xxxxxx, Xxxxxxx & Xxxxxx, P.C.
0000 Xxxxxx Xxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx or Xxxxx X. Xxxxx
- 15 -
16
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 Exhibits A, B,
C, D, E and F hereto which are incorporated herein by this reference,
constitutes the entire Agreement between the parties hereto with regard to the
subject matter hereof, and there are no agreements, understandings, specific
restrictions, warranties or representations relating to said subject matter
between the parties other than those set forth herein or herein provided for.
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 INTERNATIONAL, INC.
By: /s/ Xxxxxx X. XxXxxxxx, Xx.
------------------------------------
Title: President
EXECUTIVE
/s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------------------
XXXXXX X. XXXXXX, XX.
- 16 -
17
INDEX TO EXHIBITS
-----------------
EXHIBIT DESCRIPTION
------- -----------
A INITIAL NON-QUALIFIED STOCK OPTION AGREEMENT
B REMAINING NON-QUALIFIED STOCK OPTION AGREEMENT
C INCENTIVE STOCK OPTION AGREEMENT
D DEFINITION OF CHANGE IN CONTROL
E RESTRICTED AREA
F QUESTIONNAIRE
18
EXHIBIT A
NON-QUALIFIED STOCK OPTION AGREEMENT
under the
RARE HOSPITALITY INTERNATIONAL, INC.
AMENDED AND RESTATED 1992 INCENTIVE PLAN
This Stock Option Agreement is made as of the ___ day of _______ 1997
by and between RARE HOSPITALITY INTERNATIONAL, INC., a Georgia corporation
(hereinafter referred to as the "Company"), and XXXXXX X. XXXXXX, XX., a
resident of the State of Georgia (hereinafter referred to as the "Optionee").
Simultaneously with the execution and delivery of this Option
Agreement, the Company and the Optionee have entered into an agreement pursuant
to which the Optionee will become an employee of the Company as of _________,
1997 (the "Employment Agreement").
In order to induce the Optionee to enter into the Employment Agreement
and to become an employee of the Company and in consideration of the Optionee's
entering into the Employment Agreement, accepting employment with the Company
and performing services on behalf of the Company, the Company desires to grant
to Optionee options to purchase shares of the Company's common stock on the
terms, and subject to the conditions contained in this Agreement.
In consideration of Optionee's entering into the Employment Agreement
and the services of the Optionee for the Company, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee,
under the RARE Hospitality International, Inc. Amended and Restated 1992 Plan
(the "Plan"), a Non-Qualified Stock Option to purchase, on the terms and
conditions set forth in this agreement (this "Option Agreement"), 182,577 shares
of the Company's no par value common stock (the "Stock"), at the exercise prices
per share set forth below (the "Option"):
(a) 90,910 shares at $ ____ per share; and
(b) 91,667 shares at $12.00 per share.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Plan.
2. Vesting of Option. Unless the exercisability of the
Option is accelerated in accordance with Article 13 of the Plan or as provided
in Section 5 hereof, the Option shall vest (become exercisable) only in
cumulative periodic installments as follows:
19
(a) During the six months following the date of this
Agreement, the Option shall be exercisable as to none of the shares
subject to the Option;
(b) During the period beginning six months after the date
of this Agreement and for a period of six months thereafter, the Option
shall be exercisable as to one-half of the shares described in
paragraph 1(a) above, minus the number of shares, if any, as to which
the Option has been previously exercised;
(c) During the period beginning one year after the date
of this Agreement and for a period of one year thereafter, the Option
shall be exercisable as to all of the shares described in paragraph
1(a) above, minus the number of shares, if any, as to which the Option
has been previously exercised;
(d) During the period beginning two years after the date
of this Agreement and for the remainder of its term, the Option shall
be exercisable with respect to all of the shares described in paragraph
1(a) and 1(b) above, minus the number of shares, if any, as to which
the Option has been previously exercised.
3. Period of Option and Limitations on Right to Exercise. The
Option will, to the extent not previously exercised, lapse under the earliest of
the following circumstances; provided, however, that the Committee may, prior to
the lapse of the Option under the circumstances described in paragraphs (b), (c)
and (d) below, provide in writing that the Option will extend until a later
date:
(a) The Option shall lapse as of 5:00 p.m., Eastern Time,
on the day immediately prior to the tenth anniversary of the date of
grant (the "Expiration Date").
(b) The Option shall lapse three months after the
termination of Optionee's employment for any reason other than the
Optionee's death or Disability; provided, however, that if the
Optionee's employment is terminated by the Company for cause or by the
Optionee without reason and without the consent of the Company, the
Option shall lapse immediately.
(c) If the Optionee's employment terminates by reason of
Disability, the Option shall lapse one year after the date of the
Optionee's termination of employment.
(d) If the Optionee dies while employed, or during the
three-month period described in subsection (b) above or during the
one-year period described in subsection (c) above and before the Option
otherwise lapses, the Option shall lapse one year after the date of the
Optionee's death. Upon the Optionee's death, the Option may be
exercised by the Optionee's beneficiary.
If the Optionee or his beneficiary exercises an Option after
termination of employment, the Option may be exercised only with respect to the
shares that were otherwise vested on the Optionee's termination of employment
including vesting by acceleration in accordance with Article 13 of the Plan and
Section 5 hereof.
- 2 -
20
4. Exercise of Option. The Option shall be exercised by written
notice directed to the Secretary of the Company at the principal executive
offices of the Company, in substantially the form attached hereto as Exhibit A,
or such other form as the Committee may approve. Such written notice shall be
accompanied by full payment in cash, shares of Stock previously acquired by the
Optionee, or any combination thereof, for the number of shares specified in such
written notice; provided, however, that if shares of Stock are used to pay the
exercise price, such shares must have been held by the Optionee for at least six
months. The Fair Market Value of the surrendered Stock as of the date of the
exercise shall be determined in valuing Stock used in payment of the exercise
price. To the extent permitted under Regulation T of the Federal Reserve Board,
and subject to applicable securities laws, the Option may be exercised through a
broker in a so-called "cashless exercise" whereby the broker sells the Option
shares and delivers cash sales proceeds to the Company in payment of the
exercise price. The Committee may, in the exercise of its discretion, but need
not, allow the Optionee to pay the exercise price by directing the Company to
withhold from the shares of Stock that would otherwise be issued upon exercise
of the Option that number of shares having a Fair Market Value on the exercise
date equal to the exercise price, all as determined pursuant to rules and
procedures established by the Committee.
Subject to the terms of this Option Agreement, the Option may be
exercised at any time and without regard to any other option held by the
Optionee to purchase stock of the Company.
5. Acceleration of Exercisability Under Certain Circumstances.
(a) In the event that the Optionee's employment by the
Company shall terminate pursuant to Section 3.1(i) or (ii) of the
Employment Agreement dated as of ___________, 1997 by and between the
Company and the Optionee (the "Employment Agreement"), then any
portions of the Option which would have become exercisable within
twelve (12) months following the date of such termination, shall, for
all purposes of this Option Agreement, be deemed exercisable as of the
date of termination of the Optionee's employment.
(b) In the event that the Optionee's employment by the
Company shall terminate pursuant to clause (iv) or clause (vi) of
Section 3.1 of the Employment Agreement, the Option shall become fully
exercisable with respect to all shares of Stock, other than those with
respect to which the Option has previously been exercised.
(c) Upon the occurrence of a Change in Control (as
defined in Exhibit B attached hereto and incorporated herein), the
Option shall become fully exercisable with respect to all shares of
Stock, other than those with respect to which the Option has previously
been exercised; provided, however, that such acceleration will not
occur if, in the opinion of the Company's accountants ( a copy of which
opinion shall be delivered to Optionee in verification of the
applicability of this proviso), such acceleration would preclude the
use of "pooling of interest" accounting treatment for a Change In
Control transaction that (a) would otherwise qualify for such
accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment.
- 4 -
21
6. Limitation of Rights. The Option does not confer to the
Optionee or the Optionee's personal representative any rights of a shareholder
of the Company unless and until shares of Stock are in fact issued to such
person in connection with the exercise of the Option. Nothing in this Option
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate the Optionee's employment at any time, nor confer
upon the Optionee any right to continue in the employ of the Company or any
Subsidiary.
7. Stock Reserve. The Company shall at all times during the term
of this Option Agreement reserve and keep available such number of shares of
Stock as will be sufficient to satisfy the requirements of this Option
Agreement.
8. Optionee's Covenant. The Optionee hereby agrees to use his
best efforts to provide services to the Company in a workmanlike manner and to
promote the Company's interests.
9. Restrictions on Transfer and Pledge. The Option may not be
pledged, encumbered, or hypothecated to or in favor of any party other than the
Company or a Parent or Subsidiary, or be subject to any lien, obligation, or
liability of the Optionee to any other party other than the Company or a Parent
or Subsidiary. The Option is not assignable or transferable by the Optionee
other than by will or the laws of descent and distribution; provided, however,
that the Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation
and (ii) is otherwise appropriate and desirable, taking into account any state
or federal tax or securities laws applicable to transferable options. The Option
may be exercised during the lifetime of the Optionee only by the Optionee.
10. Restrictions on Issuance of Shares. If at any time the Board
shall determine in its discretion, that listing, registration or qualification
of the shares of Stock covered by the Option upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition to the exercise of the
Option, the Option may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. The
Company shall be responsible for (i) reasonably and promptly pursuing,
prosecuting and obtaining any listing, registration, qualification, consent or
approval required hereunder on a timely basis in accordance with all applicable
laws and (ii) all costs or expenses incurred in connection therewith.
Notwithstanding the foregoing, the Company shall cause all shares of Stock
acquired by Executive through the exercise of the Option to be registered and
freely tradeable, whether by means of the Company's filing of all necessary S-8
registrations or otherwise, by Executive from and after the date Executive
exercises such Option; subject to restrictions on sale or transfer of such
shares under applicable securities laws by virtue of Executive's position with
the Company or ownership of the Company's securities.
11. Plan Controls. The terms contained in the Plan are
incorporated into and made a part of this Option Agreement and this Option
Agreement shall be governed by and construed in accordance with the Plan. In the
event of any actual or alleged conflict between the provisions of the Plan and
the provisions of this Option Agreement, the provisions of the Plan shall be
controlling and determinative Whenever any provision of the Plan permits or
requires any action or the exercise of
- 4 -
22
discretion by the Company, the Board of Directors of the Company, or any
committee of the Company or the Board of Directors of the Company, in order to
give effect to the provisions of this Agreement under the terms of the Plan, the
Company, the Board of Directors and any such committee in approving this
Agreement has authorized and approved such action and discretion and hereby
agrees to take any such action or exercise any such discretion in such manner so
as to fully give effect to the provisions of this Agreement under the Plan.
12. Successors. This Option Agreement shall be binding upon
any successor of the Company, in accordance with the terms of this Option
Agreement and the Plan.
13. Severability. If any one or more of the provisions contained
in this Option Agreement are invalid, illegal or unenforceable, the other
provisions of this Option Agreement will be construed and enforced as if the
invalid, illegal or unenforceable provision had never been included.
14. Notice. Notices and communications under this Option
Agreement must be in writing and either personally delivered or sent by
registered or certified United States mail, return receipt requested, postage
prepaid. Notices to the Company must be addressed to:
RARE Hospitality International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
or any other address designated by the Company in a written notice to the
Optionee. Notices to the Optionee will be directed to the address of the
Optionee then currently on file with the Company, or at any other address given
by the Optionee in a written notice to the Company.
IN WITNESS WHEREOF, RARE Hospitality International, Inc., acting by and
through its duly authorized officers, has caused this Option Agreement to be
executed, and the Optionee has executed this Option Agreement, all as of the day
and year first above written.
RARE HOSPITALITY INTERNATIONAL, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
OPTIONEE:
-------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
-5-
23
EXHIBIT A
NOTICE OF EXERCISE OF OPTION TO PURCHASE
COMMON STOCK OF
RARE HOSPITALITY INTERNATIONAL, INC.
Name
------------------------------------
Address:
----------------------------------------
----------------------------------------
Date
------------------------------------
RARE Hospitality International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Re: Exercise of Non-Qualified Stock Option
I elect to purchase ______________ shares of Common Stock of RARE
Hospitality International, Inc. ("RARE") pursuant to the RARE Hospitality
International, Inc. Non-Qualified Stock Option Agreement dated ______________
and the RARE Hospitality International, Inc. Amended and Restated 1992 Incentive
Plan. The purchase will take place on the Exercise Date which will be as soon as
practicable following the date this notice and all other necessary forms and
payments are received by RARE, unless I specify a later date (not to exceed 30
days following the date of this notice).
On or before the Exercise Date, I will pay the full exercise price in
the form specified below (check one):
[ ] Cash Only: by delivering a check to RARE Hospitality
International, Inc. for $___________.
[ ] Cash and Shares: by delivering a check to RARE Hospitality
International, Inc. for $_________ for the part of the
exercise price. I will pay the balance of the exercise price
by delivering to RARE a stock certificate with my endorsement
for shares of RARE Stock that I have owned for at least six
months. If the number of shares of RARE Stock represented by
such stock certificate exceeds the number needed to pay the
exercise price, RARE will issue me a new stock certificate for
the excess.
24
[ ] Shares Only: by delivering to RARE a stock certificate with
my endorsement for shares of RARE Stock that I have owned for
at least six months. If the number of shares of RARE Stock
represented by such stock certificate exceeds the number
needed to pay the exercise price, RARE will issue me a new
stock certificate for the excess.
[ ] Cash From Broker: by delivering the purchase price from
_______________________, a broker, dealer or other "creditor"
as defined by Regulation T issued by the Board of Governors of
the Federal Reserve System (the "Broker"). I authorize RARE to
issue a stock certificate in the number of shares indicated
above in the name of the Broker in accordance with
instructions received by RARE from the Broker and to deliver
such stock certificate directly to the Broker (or to any other
party specified in the instructions from the Broker) upon
receiving the exercise price from the Broker.
Please deliver the stock certificate to me (unless I have chosen to pay
the purchase price through a broker).
Very truly yours,
---------------------------------------
AGREED TO AND ACCEPTED:
RARE HOSPITALITY INTERNATIONAL, INC.
By:
-------------------------------
Title:
----------------------------
Number of Option Shares
Exercised:
------------------------
Number of Option Shares
Remaining:
------------------------
Date:
-----------------------------
- 7 -
25
EXHIBIT B
TO
RARE HOSPITALITY, INC.
STOCK OPTION AGREEMENT
"Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 0000 Xxx) of 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
by a Person who is on the date of this Agreement (the "Effective Date") the
beneficial owner of 25% or more of the Outstanding Company Voting
Securities, (ii) any acquisition by the Company, (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to
September 28, 1997 whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors of the Company; or
(3) Consummation of a reorganization, share
exchange, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (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 Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% 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
26
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company'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 Company Voting Securities, and (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% 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 of Directors of the Company, providing for such
Business Combination; or
(4) approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
- 2 -
27
EXHIBIT B
NON-QUALIFIED STOCK OPTION AGREEMENT
under the
RARE HOSPITALITY INTERNATIONAL, INC.
1997 LONG-TERM INCENTIVE PLAN
This Stock Option Agreement is made as of the ____ day of _______ 1997
by and between RARE HOSPITALITY INTERNATIONAL, INC., a Georgia corporation
(hereinafter referred to as the "Corporation"), and XXXXXX X. XXXXXX, XX., a
resident of the State of Georgia (hereinafter referred to as the "Optionee").
Simultaneously with the execution and delivery of this Option
Agreement, the Corporation and the Optionee have entered into an agreement
pursuant to which the Optionee will become an employee of the Corporation as of
__________, 1997 (the "Employment Agreement").
In order to induce the Optionee to enter into the Employment Agreement
and to become an employee of the Corporation and in consideration of the
Optionee's entering into the Employment Agreement, accepting employment with the
Corporation and performing services on behalf of the Corporation, the
Corporation desires to grant to Optionee options to purchase shares of the
Corporation's common stock on the terms, and subject to the conditions contained
in this Agreement.
In consideration of Optionee's entering into the Employment Agreement
and the services of the Optionee for the Corporation, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Optionee
hereby agree as follows:
1. Grant of Option. The Corporation hereby grants to the
Optionee, under the RARE Hospitality International, Inc. 1997 Long-Term
Incentive Plan (the "Plan"), a Non-Qualified Stock Option to purchase, on the
terms and conditions set forth in this agreement (this "Option Agreement"),
93,334 shares of the Corporation's no par value common stock (the "Stock"), at a
price of $15.00 per share. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned such terms in the Plan.
2. Vesting of Option. Unless the exercisability of the
Option is accelerated in accordance with Article 13 of the Plan or as provided
in Section 5 hereof, the Option shall vest (become exercisable) only as follows:
(a) During the first three years following the date of
this Agreement, the Option shall be exercisable as to none of the
shares subject to the Option;
(b) During the period beginning three years after the
date of this Agreement and for the remainder of its term, the Option
shall be exercisable with respect to all of the shares described in
Section 1 above minus the number of shares, if any, as to which the
Option has been previously exercised.
28
3. Period of Option and Limitations on Right to Exercise. The
Option will, to the extent not previously exercised, lapse under the earliest of
the following circumstances; provided, however, that the Committee may, prior to
the lapse of the Option under the circumstances described in paragraphs (b), (c)
and (d) below, provide in writing that the Option will extend until a later
date:
(a) The Option shall lapse as of 5:00 p.m., Eastern Time,
on the day immediately prior to the tenth anniversary of the date of
grant (the "Expiration Date").
(b) The Option shall lapse three months after the
termination of Optionee's employment for any reason other than the
Optionee's death or Disability; provided, however, that if the
Optionee's employment is terminated by the Corporation for cause or by
the Optionee without reason and without the consent of the Corporation,
the Option shall lapse immediately.
(c) If the Optionee's employment terminates by reason of
Disability, the Option shall lapse one year after the date of the
Optionee's termination of employment.
(d) If the Optionee dies while employed, or during the
three-month period described in subsection (b) above or during the
one-year period described in subsection (c) above and before the Option
otherwise lapses, the Option shall lapse one year after the date of the
Optionee's death. Upon the Optionee's death, the Option may be
exercised by the Optionee's beneficiary.
If the Optionee or his beneficiary exercises an Option after
termination of employment, the Option may be exercised only with respect to the
shares that were otherwise vested on the Optionee's termination of employment
including vesting by acceleration in accordance with Article 13 of the Plan and
Section 5 hereof.
4. Exercise of Option. The Option shall be exercised by written
notice directed to the Secretary of the Corporation at the principal executive
offices of the Corporation, in substantially the form attached hereto as Exhibit
A, or such other form as the Committee may approve. Such written notice shall be
accompanied by full payment in cash, shares of Stock previously acquired by the
Optionee, or any combination thereof, for the number of shares specified in such
written notice; provided, however, that if shares of Stock are used to pay the
exercise price, such shares must have been held by the Optionee for at least six
months. The Fair Market Value of the surrendered Stock as of the date of the
exercise shall be determined in valuing Stock used in payment of the exercise
price. To the extent permitted under Regulation T of the Federal Reserve Board,
and subject to applicable securities laws, the Option may be exercised through a
broker in a so-called "cashless exercise" whereby the broker sells the Option
shares and delivers cash sales proceeds to the Corporation in payment of the
exercise price. The Committee may, in the exercise of its discretion, but need
not, allow the Optionee to pay the exercise price by directing the Corporation
to withhold from the shares of Stock that would otherwise be issued upon
exercise of the Option that number of shares having a Fair Market Value on the
exercise date equal to the exercise price, all as determined pursuant to rules
and procedures established by the Committee.
- 2 -
29
Subject to the terms of this Option Agreement, the Option may be
exercised at any time and without regard to any other option held by the
Optionee to purchase stock of the Corporation.
5. Acceleration of Exercisability Under Certain Circumstances.
(a) In the event that the Optionee's employment by the
Corporation shall terminate pursuant to Section 3.1(i) or (ii) of the
Employment Agreement dated as of ____________, 1997 by and between the
Corporation and the Optionee (the "Employment Agreement"), then any
portions of the Option which would have become exercisable within
twelve (12) months following the date of such termination, shall, for
all purposes of this Option Agreement, be deemed exercisable as of the
date of termination of the Optionee's employment.
(b) In the event that the Optionee's employment by the Company
shall terminate pursuant to clause (iv) or clause (vi) of Section 3.1
of the Employment Agreement, then the Option shall become fully
exercisable with respect to all shares of Stock, other than those with
respect to which the Option has previously been exercised.
(c) Upon the occurrence of a Change in Control, the Option
shall become fully exercisable with respect to all shares of Stock,
other than those with respect to which the Option has previously been
exercised; provided, however, that such acceleration will not occur if,
in the opinion of the Corporation's accountants ( a copy of which
opinion shall be delivered to Optionee in verification of the
applicability of this proviso), such acceleration would preclude the
use of "pooling of interest" accounting treatment for a Change In
Control transaction that (a) would otherwise qualify for such
accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment.
6. Limitation of Rights. The Option does not confer to the
Optionee or the Optionee's personal representative any rights of a shareholder
of the Corporation unless and until shares of Stock are in fact issued to such
person in connection with the exercise of the Option. Nothing in this Option
Agreement shall interfere with or limit in any way the right of the Corporation
or any Subsidiary to terminate the Optionee's employment at any time, nor confer
upon the Optionee any right to continue in the employ of the Corporation or any
Subsidiary.
7. Stock Reserve. The Corporation shall at all times during the
term of this Option Agreement reserve and keep available such number of shares
of Stock as will be sufficient to satisfy the requirements of this Option
Agreement.
8. Optionee's Covenant. The Optionee hereby agrees to use his
best efforts to provide services to the Corporation in a workmanlike manner and
to promote the Corporation's interests.
9. Restrictions on Transfer and Pledge. The Option may not be
pledged, encumbered, or hypothecated to or in favor of any party other than the
Corporation or a Parent or Subsidiary, or be subject to any lien, obligation, or
liability of the Optionee to any other party other than the Corporation or a
Parent or Subsidiary. The Option is not assignable or transferable by the
Optionee
- 3 -
30
other than by will or the laws of descent and distribution; provided, however,
that the Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation
and (ii) is otherwise appropriate and desirable, taking into account any state
or federal tax or securities laws applicable to transferable options. The Option
may be exercised during the lifetime of the Optionee only by the Optionee.
10. Restrictions on Issuance of Shares. If at any time the Board
shall determine in its discretion, that listing, registration or qualification
of the shares of Stock covered by the Option upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition to the exercise of the
Option, the Option may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. The
Company shall be responsible for (i) reasonably and promptly pursuing,
prosecuting and obtaining any listing, registration, qualification, consent or
approval required hereunder on a timely basis in accordance with all applicable
laws and (ii) all costs or expenses incurred in connection therewith.
Notwithstanding the foregoing, the Company shall cause all shares of Stock
acquired by Executive through the exercise of the Option to be registered and
freely tradeable, whether by means of the Company's filing of all necessary S-8
registrations or otherwise, by Executive from and after the date Executive
exercises such Option; subject to restrictions on sale or transfer of such
shares under applicable securities laws by virtue of Executive's position with
the Company or ownership of the Company's securities.
11. Plan Controls. The terms contained in the Plan are
incorporated into and made a part of this Option Agreement and this Option
Agreement shall be governed by and construed in accordance with the Plan. In the
event of any actual or alleged conflict between the provisions of the Plan and
the provisions of this Option Agreement, the provisions of the Plan shall be
controlling and determinative. Notwithstanding the foregoing, nothing contained
in Section 13.10 or 15.2. of the Plan shall be exercised by any person, persons,
entity or entities having authority to do the same and contravention of
Optionee's rights under this Agreement or so as to cause any diminution in the
value or benefit of Optionee's rights or entitlements hereunder. Whenever any
provision of the Plan permits or requires any action or the exercise of
discretion by the Company, the Board of Directors of the Company, or any
committee of the Company or the Board of Directors of the Company, in order to
give effect to the provisions of this Agreement under the terms of the Plan, the
Company, the Board of Directors and any such committee in approving this
Agreement has authorized and approved such action and discretion and hereby
agrees to take any such action or exercise any such discretion in such manner so
as to fully give effect to the provisions of this Agreement under the Plan.
12. Successors. This Option Agreement shall be binding upon any
successor of the Corporation, in accordance with the terms of this Option
Agreement and the Plan.
13. Severability. If any one or more of the provisions contained
in this Option Agreement are invalid, illegal or unenforceable, the other
provisions of this Option Agreement will be construed and enforced as if the
invalid, illegal or unenforceable provision had never been included.
- 4 -
31
14. Notice. Notices and communications under this Option
Agreement must be in writing and either personally delivered or sent by
registered or certified United States mail, return receipt requested, postage
prepaid. Notices to the Corporation must be addressed to:
RARE Hospitality International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
or any other address designated by the Corporation in a written notice to the
Optionee. Notices to the Optionee will be directed to the address of the
Optionee then currently on file with the Corporation, or at any other address
given by the Optionee in a written notice to the Corporation.
IN WITNESS WHEREOF, RARE Hospitality International, Inc., acting by and
through its duly authorized officers, has caused this Option Agreement to be
executed, and the Optionee has executed this Option Agreement, all as of the day
and year first above written.
RARE HOSPITALITY INTERNATIONAL, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
OPTIONEE:
----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
- 5 -
32
EXHIBIT A
NOTICE OF EXERCISE OF OPTION TO PURCHASE
COMMON STOCK OF
RARE HOSPITALITY INTERNATIONAL, INC.
Name
------------------------------------
Address:
----------------------------------------
----------------------------------------
Date
------------------------------------
RARE Hospitality International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Re: Exercise of Non-Qualified Stock Option
I elect to purchase ______________ shares of Common Stock of RARE
Hospitality International, Inc. ("RARE") pursuant to the RARE Hospitality
International, Inc. Non-Qualified Stock Option Agreement dated ______________
and the RARE Hospitality International, Inc. 1997 Long-Term Incentive Plan. The
purchase will take place on the Exercise Date which will be as soon as
practicable following the date this notice and all other necessary forms and
payments are received by RARE, unless I specify a later date (not to exceed 30
days following the date of this notice).
On or before the Exercise Date, I will pay the full exercise price in
the form specified below (check one):
[ ] Cash Only: by delivering a check to RARE Hospitality
International, Inc. for $___________.
[ ] Cash and Shares: by delivering a check to RARE Hospitality
International, Inc. for $_________ for the part of the
exercise price. I will pay the balance of the exercise price
by delivering to RARE a stock certificate with my endorsement
for shares of RARE Stock that I have owned for at least six
months. If the number of shares of RARE Stock represented by
such stock certificate exceeds the number needed to pay the
exercise price, RARE will issue me a new stock certificate for
the excess.
33
[ ] Shares Only: by delivering to RARE a stock certificate with
my endorsement for shares of RARE Stock that I have owned for
at least six months. If the number of shares of RARE Stock
represented by such stock certificate exceeds the number
needed to pay the exercise price, RARE will issue me a new
stock certificate for the excess.
[ ] Cash From Broker: by delivering the purchase price from
_______________________, a broker, dealer or other "creditor"
as defined by Regulation T issued by the Board of Governors of
the Federal Reserve System (the "Broker"). I authorize RARE to
issue a stock certificate in the number of shares indicated
above in the name of the Broker in accordance with
instructions received by RARE from the Broker and to deliver
such stock certificate directly to the Broker (or to any other
party specified in the instructions from the Broker) upon
receiving the exercise price from the Broker.
Please deliver the stock certificate to me (unless I have chosen to pay
the purchase price through a broker).
Very truly yours,
---------------------------------------
AGREED TO AND ACCEPTED:
RARE HOSPITALITY INTERNATIONAL, INC.
By:
-------------------------------
Title:
----------------------------
Number of Option Shares
Exercised:
------------------------
Number of Option Shares
Remaining:
------------------------
Date:
-----------------------------
- 2 -
34
EXHIBIT C
INCENTIVE STOCK OPTION AGREEMENT
under the
RARE HOSPITALITY INTERNATIONAL, INC.
AMENDED AND RESTATED 1992 INCENTIVE PLAN
This Stock Option Agreement is made as of the ____ day of _______, 1997
by and between RARE HOSPITALITY INTERNATIONAL, INC., a Georgia corporation
(hereinafter referred to as the "Corporation"), and XXXXXX X. XXXXXX, XX., a
resident of the State of Georgia (hereinafter referred to as the "Optionee").
1. Grant of Option. The Corporation hereby grants to the Optionee under
the RARE Hospitality International, Inc. Amended and Restated 1992 Incentive
Plan (the "Plan"), an Incentive Stock Option to purchase, on the terms and
conditions set forth in this agreement (this "Option Agreement"), 24,089 shares
of the Corporation's no par value common stock (the "Stock"), at the exercise
prices per share set forth below (the "Option"):
(a) 9,090 shares at $____ per share;
(b) 8,333 shares at $____ per share; and
(c) 6,666 shares at $____ per share.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Plan.
2. Vesting of Option. Unless the exercisability of the Option
is accelerated in accordance with Article 13 of the Plan or as provided in
Section 5 hereof, the Option shall vest (become exercisable) only in cumulative
periodic installments as follows:
(a) during the first six months following the date of
this Agreement, the Option shall be exercisable as to none of the
shares subject to the Option;
(b) during the period beginning six months after the date
of this Agreement and for a period of six months thereafter, the Option
shall be exercisable as to one-half of the shares described in
paragraph 1(a) above, minus the number of shares, if any, as to which
the Option has been previously exercised;
(c) during the period beginning one year after the date
of this Agreement and for a period of one year thereafter, the Option
shall be exercisable as to all of the shares described in paragraph
1(a) above, minus the number of shares, if any, as to which the Option
has been previously exercised;
35
(d) during the period beginning two years after the date
of this Agreement and for a period of one year thereafter, the Option
shall be exercisable with respect to the shares described in paragraphs
1(a) and (b) above, minus the number of shares, if any, as to which the
initial option has been previously exercised; and
(e) during the period beginning three years after the
date of this Agreement and for the remainder of its term, the Option
shall be exercisable with respect to all of the shares described in
paragraphs 1(a), 1(b) and 1(c) above, minus the number of shares, if
any, as to which the Option has been previously exercised.
3. Period of Option and Limitations on Right to Exercise. The
Option will, to the extent not previously exercised, lapse under the earliest of
the following circumstances; provided, however, that the Committee may, prior to
the lapse of the Option under the circumstances described in paragraphs (b), (c)
and (d) below, provide in writing that the Option will extend until a later
date, but if Option is exercised after the dates specified in paragraphs (b),
(c) and (d) above, it will automatically become a Non-Qualified Stock Option:
(a) The Option shall lapse as of 5:00 p.m., Eastern Time,
on the day immediately prior to the tenth anniversary of the date of
grant (the "Expiration Date").
(b) The Option shall lapse three months after the
termination of Optionee's employment for any reason other than the
Optionee's death or Disability; provided, however, that if the
Optionee's employment is terminated by the Corporation for cause or by
the Optionee without reason and without the consent of the Corporation,
the Option shall lapse immediately.
(c) If the Optionee's employment terminates by reason of
Disability, the Option shall lapse one year after the date of the
Optionee's termination of employment.
(d) If the Optionee dies while employed, or during the
three-month period described in subsection (b) above or during the
one-year period described in subsection (c) above and before the Option
otherwise lapses, the Option shall lapse one year after the date of the
Optionee's death. Upon the Optionee's death, the Option may be
exercised by the Optionee's beneficiary.
If the Optionee or his beneficiary exercises an Option after
termination of employment, the Option may be exercised only with respect to the
shares that were otherwise vested on the Optionee's termination of employment
(including vesting by acceleration in accordance with Article 13 of the Plan and
Section 5 hereof ).
4. Exercise of Option. The Option shall be exercised by written
notice directed to the Secretary of the Corporation at the principal executive
offices of the Corporation, in substantially the form attached hereto as Exhibit
A, or such other form as the Committee may approve. Such written notice shall be
accompanied by full payment in cash, shares of Stock previously acquired by the
Optionee, or any combination thereof, for the number of shares specified in such
written notice; provided, however, that if shares of Stock are used to pay the
exercise price, such shares
- 2 -
36
must have been held by the Optionee for at least six months The Fair Market
Value of the surrendered Stock as of the date of the exercise shall be
determined in valuing Stock used in payment of the exercise price. To the extent
permitted under Regulation T of the Federal Reserve Board, and subject to
applicable securities laws, the Option may be exercised through a broker in a
so-called "cashless exercise" whereby the broker sells the Option shares and
delivers cash sales proceeds to the Corporation in payment of the exercise
price. The Committee may, in the exercise of its discretion, but need not, allow
the Optionee to pay the exercise price by directing the Corporation to withhold
from the shares of Stock that would otherwise be issued upon exercise of the
Option that number of shares having a Fair Market Value on the exercise date
equal to the exercise price, all as determined pursuant to rules and procedures
established by the Committee.
Subject to the terms of this Option Agreement, the Option may be
exercised at any time and without regard to any other option held by the
Optionee to purchase stock of the Corporation.
5. Acceleration of Exercisability Under Certain Circumstances.
(a) In the event that the Optionee's employment by the
Corporation shall terminate pursuant to Section 3.1(i) or (ii) of the
Employment Agreement dated as of ____________, 1997 by and between the
Corporation and the Optionee (the "Employment Agreement"), then any
portions of the Option which would have become exercisable within
twelve (12) months following the date of such termination, shall, for
all purposes of this Option Agreement, be deemed exercisable as of the
date of termination of the Optionee's employment.
(b) In the event that the Optionee's employment by the
Company shall terminate pursuant to clause (iv) of Section 3.1 of the
Employment Agreement then the Option shall become fully exercisable
with respect to all shares of Stock, other than those with respect to
which the Option has previously been exercised.
(c) Upon the occurrence of a Change in Control (as
defined in Exhibit B attached hereto and incorporated herein), the
Option shall become fully exercisable with respect to all shares of
Stock, other than those with respect to which the Option has previously
been exercised; provided, however, that such acceleration will not
occur if, in the opinion of the Corporation's accountants ( a copy of
which opinion shall be delivered to Optionee in verification of the
applicability of this proviso), such acceleration would preclude the
use of "pooling of interest" accounting treatment for a Change In
Control transaction that (a) would otherwise qualify for such
accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in
Section 7.2(d) of the Plan, the excess Options shall be deemed to be
Non-Qualified Stock Options.
6. Limitation of Rights. The Option does not confer to the
Optionee or the Optionee's personal representative any rights of a shareholder
of the Corporation unless and until shares of Stock are in fact issued to such
person in connection with the exercise of the Option. Nothing in this Option
Agreement shall interfere with or limit in any way the right of the Corporation
or any
- 3 -
37
Subsidiary to terminate the Optionee's employment at any time, nor confer upon
the Optionee any right to continue in the employ of the Corporation or any
Subsidiary.
7. Stock Reserve. The Corporation shall at all times during the
term of this Option Agreement reserve and keep available such number of shares
of Stock as will be sufficient to satisfy the requirements of this Option
Agreement.
8. Optionee's Covenant. The Optionee hereby agrees to use his
best efforts to provide services to the Corporation in a workmanlike manner and
to promote the Corporation's interests.
9. Restrictions on Transfer and Pledge. The Option may not be
pledged, encumbered, or hypothecated to or in favor of any party other than the
Corporation or a Parent or Subsidiary, or be subject to any lien, obligation, or
liability of the Optionee to any other party other than the Corporation or a
Parent or Subsidiary. The Option is not assignable or transferable by the
Optionee other than by will or the laws of descent and distribution. The Option
may be exercised during the lifetime of the Optionee only by the Optionee.
10. Restrictions on Issuance of Shares. If at any time the Board
shall determine in its discretion, that listing, registration or qualification
of the shares of Stock covered by the Option upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition to the exercise of the
Option, the Option may not be exercised in whole or in part unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board. The
Company shall be responsible for (i) reasonably and promptly pursuing,
prosecuting and obtaining any listing, registration, qualification, consent or
approval required hereunder on a timely basis in accordance with all applicable
laws and (ii) all costs or expenses incurred in connection therewith.
Notwithstanding the foregoing, the Company shall cause all shares of Stock
acquired by Executive through the exercise of the Option to be registered and
freely tradeable, whether by means of the Company's filing of all necessary S-8
registrations or otherwise, by Executive from and after the date Executive
exercises such Option; subject to restrictions on sale or transfer of such
shares under applicable securities laws by virtue of Executive's position with
the Company or ownership of the Company's securities.
11. Plan Controls. The terms contained in the Plan are
incorporated into and made a part of this Option Agreement and this Option
Agreement shall be governed by and construed in accordance with the Plan. In the
event of any actual or alleged conflict between the provisions of the Plan and
the provisions of this Option Agreement, the provisions of the Plan shall be
controlling and determinative. Whenever any provision of the Plan permits or
requires any action or the exercise of discretion by the Company, the Board of
Directors of the Company, or any committee of the Company or the Board of
Directors of the Company, in order to give effect to the provisions of this
Agreement under the terms of the Plan, the Company, the Board of Directors and
any such committee in approving this Agreement has authorized and approved such
action and discretion and hereby agrees to take any such action or exercise any
such discretion in such manner so as to fully give effect to the provisions of
this Agreement under the Plan.
- 4 -
38
12. Successors. This Option Agreement shall be binding upon any
successor of the Corporation, in accordance with the terms of this Option
Agreement and the Plan.
13. Severability. If any one or more of the provisions
contained in this Option Agreement are invalid, illegal or unenforceable, the
other provisions of this Option Agreement will be construed and enforced as if
the invalid, illegal or unenforceable provision had never been included.
14. Notice. Notices and communications under this Option
Agreement must be in writing and either personally delivered or sent by
registered or certified United States mail, return receipt requested, postage
prepaid. Notices to the Corporation must be addressed to:
RARE Hospitality International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
or any other address designated by the Corporation in a written notice to the
Optionee. Notices to the Optionee will be directed to the address of the
Optionee then currently on file with the Corporation, or at any other address
given by the Optionee in a written notice to the Corporation.
15. Interpretation. It is the intent of the parties hereto that
the Option qualify for incentive stock option treatment pursuant to, and to the
extent permitted by, Section 422 of the Code. All provisions hereof are intended
to have, and shall be construed to have, such meanings as are set forth in
applicable provisions of the Code and Treasury Regulations to allow the Option
to so qualify.
IN WITNESS WHEREOF, RARE Hospitality International, Inc., acting by and
through its duly authorized officers, has caused this Option Agreement to be
executed, and the Optionee has executed this Option Agreement, all as of the day
and year first above written.
RARE HOSPITALITY INTERNATIONAL, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
OPTIONEE:
----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
- 5 -
39
EXHIBIT A
NOTICE OF EXERCISE OF OPTION TO PURCHASE
COMMON STOCK OF
RARE HOSPITALITY INTERNATIONAL, INC.
Name
------------------------------------
Address:
----------------------------------------
----------------------------------------
Date
------------------------------------
RARE Hospitality International, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Re: Exercise of Incentive Stock Option
I elect to purchase ______________ shares of Common Stock of RARE
Hospitality International, Inc. pursuant to the RARE Hospitality International,
Inc. Incentive Stock Option Agreement dated ______________ and the RARE
Hospitality International, Inc. Amended and Restated 1992 Incentive Plan. The
purchase will take place on the Exercise Date which will be as soon as
practicable following the date this notice and all other necessary forms and
payments are received by RARE, unless I specify a later date (not to exceed 30
days following the date of this notice).
On or before the Exercise Date, I will pay the full exercise price in
the form specified below (check one):
[ ] Cash Only: by delivering a check to RARE Hospitality
International, Inc. for $___________.
[ ] Cash and Shares: by delivering a check to RARE Hospitality
International, Inc. for $_________ for the part of the
exercise price. I will pay the balance of the exercise price
by delivering to RARE a stock certificate with my endorsement
for shares of RARE Stock that I have owned for at least six
months. If the number of shares of RARE Stock represented by
such stock certificate exceeds the number needed to pay the
exercise price, RARE will issue me a new stock certificate for
the excess.
40
[ ] Shares Only: by delivering to RARE a stock certificate with
my endorsement for shares of RARE Stock that I have owned for
at least six months. If the number of shares of RARE Stock
represented by such stock certificate exceeds the number
needed to pay the exercise price, RARE will issue me a new
stock certificate for the excess.
[ ] Cash From Broker: by delivering the purchase price from
_______________________, a broker, dealer or other "creditor"
as defined by Regulation T issued by the Board of Governors of
the Federal Reserve System (the "Broker"). I authorize RARE to
issue a stock certificate in the number of shares indicated
above in the name of the Broker in accordance with
instructions received by RARE from the Broker and to deliver
such stock certificate directly to the Broker (or to any other
party specified in the instructions from the Broker) upon
receiving the exercise price from the Broker.
Please deliver the stock certificate to me (unless I have chosen to pay
the purchase price through a broker).
Very truly yours,
---------------------------------------
AGREED TO AND ACCEPTED:
RARE HOSPITALITY INTERNATIONAL, INC.
By:
---------------------------------
Title:
------------------------------
Number of Option Shares
Exercised:
--------------------------
Number of Option Shares
Remaining:
--------------------------
Date:
-------------------------------
- 2 -
41
EXHIBIT B
TO
RARE HOSPITALITY, INC.
STOCK OPTION AGREEMENT
"Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 0000 Xxx) of 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
by a Person who is on the date of this Agreement (the "Effective Date") the
beneficial owner of 25% or more of the Outstanding Company Voting
Securities, (ii) any acquisition by the Company, (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to
September 28, 1997 whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors of the Company; or
(3) Consummation of a reorganization, share
exchange, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (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 Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% 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
42
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company'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 Company Voting Securities, and (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% 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 of Directors of the Company, providing for such
Business Combination; or
(4) approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
- 2 -
43
EXHIBIT D
DEFINITION OF
CHANGE IN CONTROL
"Change in Control" means and includes each of the following:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 0000 Xxx) of 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
by a Person who is on the date of this Agreement (the "Effective Date") the
beneficial owner of 25% or more of the Outstanding Company Voting
Securities, (ii) any acquisition by the Company, (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (iv) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to
September 28, 1997 whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors of the Company; or
(3) Consummation of a reorganization, share
exchange, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company (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 Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 50% 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
Company or all or substantially all of the Company'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 Company Voting Securities, and (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% 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 of Directors of the Company, providing for such
Business Combination; or
(4) approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
- 2 -
44
EXHIBIT E
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 Florida
Birmingham Altamonte Springs
Dothan Boynton Beach
Mobile Xxxxxxx
Xxxxxxxxxx Coral Springs
Davie
California Destin
San Francisco Ft. Lauderdale
Ft. Xxxxx
Connecticut Jacksonville Beach
Manchester Jacksonville
Xxxxxx Beach
Delaware Kissimmee
Newark Xxxx Xxxx
Largo
District of Columbia Xxxxxxx Island
Miami
Ocala
Orlando
Sarasota
St. Augustine
St. Petersburg
Tallahassee
Tampa
45
Georgia Maine
Albany Bangor
Athens Seakonk
Atlanta South Portland
Augusta
Austell Maryland
Cartersville Gaithersburg
Chamblee
College Park Massachusetts
Columbus Boston
Conyers Braintree
Douglasville Chestnut Hill
Duluth Peabody
Gainesville Farmington
Jonesboro Watertown
Kennesaw
Lawrenceville Michigan
Xxxxx Xxxx
Xxxxxxxx
Xxxxxxxxxx Minnesota
Peachtree City Minneapolis
Rome
Roswell Missouri
Savannah Florissant
Snellville
Xxxxxx Nevada
Valdosta Las Vegas
Illinois New Hampshire
Chicago Newington
Kentucky New York
Xxxxxxxx Albany
Poughkeepsie
Rochester
- 2 -
46
North Carolina Pennsylvania
Burlington Philadelphia
Charlotte
Concord Rhode Island
Gastonia Providence
Greensboro Warwick
High Point
Huntersville South Carolina
Pineville Columbia
Ohio Greenville
Cincinnati Hilton Head
Cleveland Spartanburg
Columbus
Cuyahoga Falls Tennessee
Dublin Antioch
Fairview Park Chattanooga
Xxxxxxxx Heights Hermitage
Mentor Knoxville
North Canton Nashville
Xxxxx Xxxxxxx
Springdale
Strongsville Texas
Houston
Xxxxxxxx
Xxxxxxxxxxx
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 business of the Company grows. Executive and the Company agree that as the
geographical area in which the Company conducts its business expands, the list
of cities described on this Exhibit E 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 the Company
operates a restaurant or a franchisee of the Company operates a restaurant under
the terms of a franchise from the Company. 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.
- 3 -
47
EXHIBIT F
QUESTIONNAIRE
Have any of the following events happened to you at any time
since December 31, 1987:
(NOTE: Answer each question "Yes" or "No." If any answer to
parts (a) through (g) is "Yes," give details in part (h). For purposes of this
question, the date of the event is the date on which the final order, judgment,
or decree was entered, or the date on which any rights of appeal from
preliminary orders, judgments, or decrees have lapsed. With respect to
bankruptcy petitions, the event date shall be the date of filing for uncontested
petitions or the date upon which approval of a contested petition became final.)
(a) Has a petition under the federal bankruptcy laws or any
state insolvency law been filed by or against, or has a receiver, fiscal agent,
or similar officer been appointed by a court for the business or property of (i)
you, (ii) any partnership in which you were a general partner at the time of
filing or within two years before such filing, or (iii) any corporation or
business association of which you were an executive officer at the time of
filing or within two years before such filing?
Answer: Yes No X
----- -----
(b) Have you been convicted in a criminal proceeding, or are
you the named subject of a criminal proceeding which is presently pending
(excluding traffic violations and other minor offenses)?
Answer: Yes No X
----- -----
(c) Have you been the subject of any court order, judgment, or
decree, not subsequently reversed, suspended, or vacated, permanently or
temporarily enjoining you from, or otherwise limiting, the following activities:
(i) acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director, or employee of any investment
company, bank, savings and loan association, or insurance company, or engaging
in or continuing any conduct or practice in connection with such activity?
Answer: Yes No X
----- -----
48
(ii) engaging in any type of business practice?
Answer: Yes No X
----- -----
(iii) engaging in any activity in connection with
the purchase or sale of any security or commodity or in connection with any
violation of Federal or state securities laws or Federal commodities laws?
Answer: Yes No X
----- -----
(d) Have you been the subject of any order, judgment, or
decree, not subsequently reversed, suspended, or vacated, of any Federal or
state authority barring, suspending, or otherwise limiting for more than 60 days
your right to engage in any of the activities described in (c) above, or to be
associated with persons engaged in any such activity?
Answer: Yes No X
----- -----
(e) Have you been found by a court in a civil action or by the
Securities and Exchange Commission to have violated any Federal or state
securities law, which judgment in such civil action or finding by the Securities
and Exchange Commission has not been subsequently reversed, suspended, or
vacated, or are you presently the subject of any investigation by the Securities
and Exchange Commission which could result in the finding of such a violation?
Answer: Yes No X
----- -----
(f) Have you been found by a court in a civil action or by the
Commodity Futures Trading Commission to have violated any Federal commodities
law, which judgment in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed, suspended, or vacated, or
are you presently the subject of any investigation by the Commodity Futures
Trading Commission which could result in the finding of such a violation?
Answer: Yes No X
----- -----
(g) Are you a party to any legal proceeding (other than one to
which the Company or any of its present subsidiaries is a party) in which you
are charged with any wrongdoing, misfeasance, or nonfeasance, in connection with
your service as a director, officer, or manager of any business, incorporated or
unincorporated, or your practice of any profession?
Answer: Yes No X
----- -----
- 2 -
49
(h) If your answer to any of the parts of this question is
"Yes," give details. If you believe such incident is not material to an
evaluation of your ability or integrity, or if there are mitigating
circumstances, give details:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
