RUBY TUESDAY, INC.
PARTNER AGREEMENT
THIS PARTNER AGREEMENT ("Agreement") is made as of the 6th day
of June, 2001 (the "Effective Date"), by and between RUBY TUESDAY, INC., a
Georgia corporation ("RTI"), and XXXXXX X. XXXX, an employee of RTI ("Partner").
STATEMENT OF BACKGROUND INFORMATION
A. RTI desires that the Partner serve as a concept
partner regarding Company operated Ruby Tuesday
restaurants.
B. The Partner desires to serve in such capacity
pursuant to the terms and conditions of this
Agreement.
C. The parties wish to set forth Partner's duties,
obligations, and compensation during the Term
(hereinafter defined).
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and promises herein contained, and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I. AUTHORITY AND RESPONSIBILITIES
1.1 The Partner shall serve as a concept partner of RTI responsible for the
development and operation of RTI's Ruby Tuesday(r) concept restaurants
(the "Concept"; restaurants in the Concept are herein referred to as a
"Restaurant" or "Restaurants") as directed by RTI from time to time. In such
capacity, the Partner shall be charged with the general supervision, operation,
growth (at a rate not less than fifty (50) new Restaurants each Fiscal Year
[hereinafter defined]) and management of the Concept including, without
limitation, those objectives set forth on the Strategic Plan attached as
Exhibit A hereto. RTI shall have the right to amend, prospectively, Exhibit A,
in its sole discretion. Partner shall further perform such other duties related
to the Concept as directed and determined from time to time by RTI. The Partner
shall report to the Chief Executive Officer of RTI.
1.2 Reconfiguration of the Concept. RTI reserves the right, in its sole
discretion, to reconfigure the Concept, including the closing and opening of
Restaurants in its sole discretion. In the event a Restaurant is closed, such
Restaurant shall be included in all elements of the bonus calculation (including
calculations that may reduce bonus) through the date of closing and for
purposes of any post-closing charges or expenses. In the event a new Restaurant
is opened, such Restaurant shall be included in calculation of all elements of
the bonus (including calculations that may reduce bonus) as of the date of
opening. All such adjustments described in this Section 1.2 shall be determined
by RTI according to its normal policies and procedures, but in RTI's sole
discretion.
ARTICLE II. PARTNER PERFORMANCE COMMITMENT
2.1 Delivery of RTI Stock. Within ten (10) days following
Partner's execution of this Agreement, the Partner shall deliver to RTI a number
of shares of RTI common stock registered in the name of Partner having a value,
in total, equal to at least Three Hundred Thousand Dollars ($300,000.00) to
secure satisfactory performance by Partner of the duties and responsibilities to
be discharged by the Partner pursuant to the terms of this Agreement. The number
of such shares to be delivered shall be determined based upon the highest per
share closing price of RTI common stock reported for any trading day within the
thirty (30) day period prior to the Effective Date. The shares of RTI common
stock delivered to RTI pursuant to this Section 2.1 (or the proceeds thereof if
the shares have been converted or exchanged for other securities in connection
with a corporate event affecting RTI's capital structure including, without
limitation, stock splits and stock dividends) are referred to hereafter a
"Escrowed Shares." Partner shall hold good title to the Escrowed Shares, free
and clear of all liens, charges and encumbrances or restrictions on
transferability. With the Escrowed Shares, the Partner shall also tender an
irrevocable stock power in favor of the Secretary of RTI (or any other officer
of RTI designated in writing to the Partner), in a form acceptable to RTI for
the purpose of implementing the provisions of Section 4.5 hereof.
On the Effective Date, Partner shall deliver to RTI Partner's promissory note in
favor of RTI, in the original principal amount of $200,000 in the form attached
hereto as Exhibit B (the "Note"). The Note shall accrue interest at seven
percent (7%) per annum. The proceeds of the Note otherwise payable to Partner
shall be utilized by Partner to purchase a portion of the Escrowed Shares. In
the event the Escrowed Shares are forfeited by Partner, the Escrowed Shares may
be sold or otherwise liquidated by RTI and the net proceeds thereof applied to
unpaid principal and accrued and unpaid interest under the Note. Partner hereby
waives any claim that any such sale or other liquidation by RTI was not
conducted in a commercially reasonable manner.
2.2 Title and Stock Power covering Stock. Until the Escrowed Shares are either
returned to, or forfeited by, the Partner, as provided below, at the expiration
of the Term , the Escrowed Shares shall be held in escrow by RTI. During such
period, RTI shall make appropriate provisions allowing the Partner to vote any
Escrowed Shares and collect dividends with respect to the Escrowed Shares. Stock
dividends and stock splits with respect to the Escrowed Shares shall be a part
thereof and delivered to RTI.
2.3 Disposition of Escrowed Shares. At the expiration of the Term, the Escrowed
Shares shall be returned to, or forfeited by, the Partner in accordance with
Section 4.5 below.
2.4 Failure to Deliver. In the event Partner fails to deliver the Escrowed
Shares in the manner and within the time period specified by Section 2.1 above,
then this Agreement shall not become effective, notwithstanding any other
provision of this Agreement to the contrary. If this Agreement fails to become
effective pursuant to this Section 2.4, Partner's future eligibility to
participate in any arrangement of the type represented by this Agreement shall
be determined by RTI in its sole discretion.
ARTICLE III. COMPENSATION
During the Term, RTI agrees to provide the Partner with the
following compensation and benefits:
3.1 Annual Salary. RTI shall pay to the Partner an annual salary of One Hundred
Sixty-Five Thousand Five Hundred Dollars ($165,500.00), which amount shall be
payable in bi-weekly installments (the "Salary"). The Salary shall not be
increased during the Term.
3.2 Bonuses.
(a) Subject to the terms and conditions of this Agreement,
including without limitation, Sections 3.2(c), 3.2(d), 3.4, 3.5 and 4.4 below,
for each Fiscal Year during the Term, the Partner shall be paid a bonus in an
amount which is a multiple of Salary based upon the same store sales performance
of the Concept as shown on Exhibit C attached hereto and incorporated herein.
The determination of all elements related to the calculation of bonus criteria
and bonus amount shall be made by RTI in its sole discretion consistent with its
internal accounting practices in effect from time to time (including adjustments
related to, or elimination of, any so-called "53rd week" in Fiscal Years
containing 53 accounting weeks). Regardless of its internal accounting practices
in effect from time to time, RTI shall charge the Concept with any expenses
attributable to legal, administrative or regulatory proceedings, including the
cost of judgments, penalties, fines or settlements (collectively "Legal Cost as
RTI determines, in its sole discretion, are attributable to the Concept. The
timing of any such charges and the number of Fiscal Quarters (hereinafter
defined) over which the charges may be amortized shall be determined by RTI in
its sole discretion. RTI may, in its sole discretion, charge the Concept for the
estimated liability related to any such matter prior to the resolution of such
matter, and such estimates may be adjusted by the Company from time to time.
(b) Fiscal Year/Fiscal Quarter. The term "Fiscal Year" shall mean the
appropriate fiscal year of RTI as from time to time determined by RTI. The term
"Fiscal Quarter" shall mean the fiscal quarters of RTI as determined from time
to time by RTI.
(c) Conditions. Any bonus amount applicable to a Fiscal Year shall be (i) paid
only if this Agreement is in effect through the last day of that Fiscal Year or
if Partner dies or becomes disabled during that Fiscal Year, and (ii) may be
reduced as described on Exhibit C unless, in each case, the payment is otherwise
expressly precluded by the provisions of Section 4.5 below.
(d) Timing of Bonus Payments. Any bonus amount described in Section 3.2(a) and
Exhibit C, with respect to which the Partner has satisfied the applicable
conditions of Section 3.2(c) and Exhibit C, and which is not otherwise reduced
or forfeited pursuant to the terms of this Agreement, shall be paid to the
Partner in cash in a lump sum no later than forty-five (45) days after the end
of the Fiscal Year to which the bonus applies.
3.3 Miscellaneous Benefits. RTI shall extend to the Partner all company-wide
employee benefits and any benefits extended generally to concept partners of RTI
during the Term. Any such participation by the Partner in RTI employee benefit
programs generally shall be on the terms available to similarly situated
participants or on such other terms as any such particular program may provide;
provided, further, that the undertaking in this Section 3.3 shall in no way
limit RTI's ability to amend or terminate any such program at any time.
3.4 Withholding, Etc. RTI shall be entitled to withhold appropriate employment
and income taxes, as required by applicable law, with respect to compensation
and other benefits provided by this Agreement.
3.5 Maximum Salary and Bonus. The total aggregate amount of Salary plus bonus
applicable for any Fiscal Year shall not exceed three (3) times Salary.
ARTICLE IV. TERM AND TERMINATION
4.1 Term. The term of this Agreement shall begin as of the Effective Date and
shall continue until the end of the third Fiscal Year following the Effective
Date (the "Term").
4.2 Termination by Mutual Agreement or Due to Death. Notwithstanding Section 4.1
hereof, this Agreement may be terminated at any time prior to the expiration
of the Term by the mutual written agreement of the parties. In the event of the
Partner's death during the Term, this Agreement shall terminate immediately.
4.3 Termination by RTI. Notwithstanding Section 4.1 hereof, this Agreement may
be terminated by RTI:
(a) immediately for "cause", as determined by RTI in the exercise of its
sole discretion. As used herein, the term "cause" shall mean (1) Partner
knowingly or negligently violates any law, statute, rule or regulation as
reasonably determined by RTI; (2) commission of acts involving dishonesty or
fraud (including, but not limited to, falsifying, misrepresenting or failing to
follow RTI policy or procedure regarding inventory, sales, profit, profit
margin, employee turnover, cash handling, bank deposits or credit card
processing, irrespective of whether Partner seeks to profit therefrom) by
Partner with respect to RTI; (3) any material violation of RTI's harassment
policy or any violation of law in connection with discriminatory or harassing
treatment of any RTI employee; (4) any gross or continuing failure to treat any
RTI employee with courtesy and respect; (5) any failure by the Concept to
achieve "norm" performance as determined pursuant to RTI's "WOW Report" measured
over any period of six (6) consecutive Fiscal Quarters or; (6) a material
violation or breach by Partner of RTI's philosophies, policies, procedures and
standards; or (7) other than the matters listed above in this subsection (a), a
course of conduct determined by RTI to be in violation of Partner's duties under
this Agreement (including, but not limited to, a violation or breach by Partner
of RTI's philosophies, policies, procedures and standards which does not rise to
the level described in subsection (6) above) if such conduct referenced in
sub-subsection (a)(7) is not corrected within ten (10) days following receipt of
written notice from RTI addressing such conduct (no notice of correction need be
given with respect to a course of conduct for which a previous notice was given
hereunder).
(b) immediately upon a determination by RTI that the Partner has become mentally
or physically disabled in a manner that shall prevent performance of
substantially all of the Partner's duties for a period of not less than thirty
(30) days, which determination shall be supported by the written opinion of a
physician competent in the branch of medicine to which such disability
relates; or
(c) at any time upon one hundred twenty (120) days notice to Partner.
4.4 Payments upon Termination. Except as otherwise provided in this Section 4.4,
upon termination of this Agreement for any reason, the Partner shall receive
only that portion of Salary due but unpaid through the date of termination of
the Agreement.
(a) Terminations Other Than for Cause or Due to Partner Resignation. In the
event this Agreement is terminated pursuant to Section 4.2 hereof or is
terminated by RTI pursuant to Section 4.3(b) or (c) hereof, then RTI shall
return the Escrowed Shares to Partner and the Partner shall also receive any
bonus applicable to Section 3.2 above, but unpaid, through the date of
termination of this Agreement. If this Agreement is terminated due to the
Partner's death or disability during a Fiscal Year, RTI also shall pay a pro
rata portion of any bonus that would otherwise be payable for the Fiscal Year
to the Partner or the Partner's surviving spouse in the event of the Partner's
death or, if there is no surviving spouse, to the Partner's estate.
(b) Terminations for Cause or Due to Partner Resignation. In the event this
Agreement is terminated by RTI pursuant to Section 4.3(a) hereof or should
Partner resign his employment with RTI, then the Partner shall receive only due
but unpaid Salary and shall forfeit all other amounts otherwise payable or
reimbursable pursuant to this Agreement, including, without limitation, the
Escrowed Shares and any bonus then unpaid.
Subject to Section 5.6 below, any amounts payable to the Partner
pursuant to this Section 4.4 shall be paid by RTI as soon as practicable
following the date of termination of this Agreement. RTI shall be authorized to
instruct the attorney-in-fact named on the irrevocable stock power to deliver
any Escrowed Shares to the appropriate party as determined in accordance with
this Section.
4.5 Liquidated Damages. The parties agree that RTI payments made
pursuant to Section 4.4 hereof, if any, shall be in lieu of any other damages,
payments or amounts which the Partner might otherwise be due from or claim
against RTI or its affiliates arising from or attributable to the Partner's
employment relationship with RTI.
4.6 Terminations of Agreement not Resulting in a Termination of Employment. This
Agreement does not guaranty Partner's employment with RTI for any period of
time. If Partner's employment status with RTI is not terminated in connection
with a termination of this Agreement, the terms of this Agreement shall not
apply for purposes of establishing, interpreting or otherwise implying the terms
and conditions of the Partner's employment with RTI following the termination of
this Agreement.
ARTICLE V. PROTECTIVE COVENANTS
5.1 Trade Secrets. As a concept president of RTI, the Partner has access to
Trade Secrets (as defined under the Uniform Trade Secrets Act or other
applicable law), which are the sole and exclusive property of RTI. The Partner
agrees that throughout the Term and for the maximum period of time allowable
under applicable law, except to the extent necessary to perform the Partner's
obligations hereunder, the Partner shall not reproduce, use, distribute or
disclose any Trade Secrets to any other person including, without limitation,
any competitors or potential competitors of the RTI.
5.2 Confidential Information. As a senior management employee of
RTI, the Partner has access to Confidential Information (as defined herein). The
Partner agrees to maintain the confidentiality of all Confidential Information
throughout the Term and for a period of two (2) years after the termination of
this Agreement. For purposes of this Section, the term "Confidential
Information" means data and information relating to the business of RTI which
does not rise to the level of a Trade Secret and which is or has been disclosed
to the Partner or of which the Partner has become aware as a consequence of or
through his employment relationship with RTI and which has value to RTI and is
not generally known to its competitors. Confidential Information shall not
include any data or information that has been voluntarily disclosed to the
public by RTI (except where such public disclosure was effected by the Partner
without authorization) or that has been independently developed and disclosed by
others or that otherwise enters the public domain through lawful means.
5.3 No Solicitation. During the Term and for a period of twelve (12)
months immediately following the termination of this Agreement or the
termination of Partner's employment with RTI, whichever occurs later, the
Partner shall not, for himself or on behalf of or for the benefit of any other
person, corporation or entity, seek to employ, solicit or recruit any employee
of RTI or any of its franchisees or licensees for employment by a "Competing
Business", or induce or encourage any such employee to terminate employment with
RTI or such franchisee or licensee, nor will the Partner knowingly provide the
name of any employee of RTI or such franchisee or licensee for the purpose of
solicitation or recruitment by or for the benefit of a Competing Business. For
purposes of this section, "Competing Business" means a casual dining restaurant
business offering the same or similar products and services as offered by
Concept Restaurants or restaurants in any other system owned, operated,
franchised or licensed by RTI or any affiliate including, without limitation,
varied menu (to include, without limitation, any combination of soups,
sandwiches, chicken, ethnic cuisine, health/fitness oriented dishes),
waiter/waitress service, sit-down dining and bar services. "Competing Business"
shall not include so called "fast food" restaurants. The parties agree that the
damages which RTI will suffer in the event of Partner's breach of the foregoing
covenant are difficult to quantify and determine. Therefore, the parties agree
that in the event of each such breach, Partner shall pay to RTI, as liquidated
damages and not as a penalty, the amount of $25,000.00.
5.4 Covenant Not to Compete. The Partner agrees, acknowledges and understands
that the nature, kind and character of the business conducted by RTI is highly
competitive. Incident to the terms and conditions hereof and for the
considerations contained herein, the Partner agrees that:
(a) throughout the Term and for a period of two (2) years following the
termination of this Agreement or the termination of Partner's employment with
RTI, whichever occurs later, and for whatever reason, the Partner will not enter
into any employment, consulting or similar relationship with any person,
organization or entity which is in the same or similar business as RTI in an
executive, managerial or other capacity. The Partner acknowledges that this
covenant is reasonable and necessary to protect the interests of RTI; and
(b) by virtue of the duties and special knowledge of the affairs and operations
of RTI that the Partner has and will obtain as a result of his employment
relationship with RTI, a breach or threatened breach by him of the provisions
of this covenant not to compete shall cause irreparable injury to RTI and shall
entitle RTI, in addition to any other remedy, to injunctive relief against such
breach or threatened breach.
5.5 No Other Employment. The Partner agrees, acknowledges and understands that
the nature, kind and character of RTI's business is highly competitive. Incident
to the Partner's engagement hereunder and for the considerations contained
herein, the Partner agrees that throughout the Term of this Agreement Partner
will devote all of his/her full time, energy, skills and best efforts to the
supervision and management of the Restaurants in the Concept and the Partner's
duties and responsibilities under this Agreement (with earned vacations and
reasonable absences because of illness or permitted leaves of absence excepted),
and will not enter into any employment, consulting or similar relationship with
any organization or entity. The Partner acknowledges that this covenant is
reasonable and necessary to protect the interests of RTI.
5.6 Default. In the event the Partner shall breach any covenant contained in
Sections 5.1, 5.2, 5.3, 5.4 or 5.5 hereof, and such breach shall not be cured to
the reasonable satisfaction of RTI within five (5) days after delivery of a
written notice thereof from RTI, then in addition to all other rights and
remedies of RTI with respect thereto, RTI shall thereupon be relieved of
liability for all obligations then remaining under Section 5 above.
ARTICLE VI. MISCELLANEOUS
6.1 Headings and Capitalized Terms. Titles or captions of Articles or Sections
contained in this Agreement are intended for reference convenience only, and
shall not define, limit, extend or describe the scope of this Agreement or the
meaning of any provision hereof. Capitalized terms not otherwise defined herein
shall have the customary meaning then being ascribed to them in the course of
RTI's general business operations.
6.2 Amendment. This Agreement may not be amended (in whole or in part) orally or
by course of performance, but only by a written instrument signed by both
parties.
6.3 Notice. Except as otherwise required under this Agreement, any notice
required or permitted to be given pursuant to this Agreement shall be
sufficiently given:
(a) to the Partner if in writing and personally delivered, or mailed (and if
mailed shall be deemed given three (3) business days after mailing) registered
or certified mail addressed to the Partner at Partner's residence as shown in
the records of RTI or at such other address as the Partner shall designate in
writing to RTI in accordance with this Section 6.3(a); and
(b) to RTI if in writing and personally delivered to the Chief Executive Officer
of RTI or mailed (and if mailed shall be deemed given three (3) business days
after mailing) registered or certified mail addressed to the Chief Executive
Officer of RTI at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or to such
other person and address as RTI shall designate in writing to the Partner in
accordance with this Section 6.3(b).
6.4 Binding Effect. This Agreement shall inure to the benefit of and be binding
upon the Partner and the Partner's executor, administrator, heirs and personal
representatives and upon RTI and its successors and assigns. The Partner may
not assign his rights and obligations hereunder without the written consent of
RTI. RTI may assign its rights hereunder without Partner's consent.
6.5 Relationship. Nothing herein shall be construed as creating a joint venture,
unincorporated association, partnership or other relationship.
6.6 Applicable Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Tennessee, without regard to the
principles of conflicts of laws.
6.7 No Defense. The existence of any claim or cause of action of the Partner
against RTI, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by RTI of any covenant contained in this
Agreement. No claim or proceeding may be made, brought or maintained by Partner
(his/her successors, assigns or legal representatives) to enforce any liability
or obligation of RTI under this Agreement, unless brought before the first to
occur of one (1) year after (a) the date any Salary amount or bonus is paid (or
required to be paid) to Partner with respect to such Salary amount or bonus, or
(b) the expiration or termination of this Agreement with respect to all other
matters.
6.8 Survival. The provisions of Sections 4.4, 4.5 and Article V hereof shall
survive any termination of this Agreement.
IN WITNESS WHEREOF, RTI has executed and delivered by its duly
authorized officer, and Partner has executed and delivered, this Agreement all
as of the day and year first above written.
RUBY TUESDAY, INC.
By:/s/ Xxxxxx X. Xxxxx, III
Title: Chairman and Chief Executive Officer
PARTNER:
/s/ Xxxxxx X. Xxxx
XXXXXX X. XXXX
