Vice President of Finance Employment Agreement

EMPLOYMENT AGREEMENT


THIS AGREEMENT, made and entered into as of the 15th day of December, 2003, by and between RARE HOSPITALITY MANAGEMENT, INC., a Delaware corporation (hereinafter referred to as the "Company"), and BENJAMIN WAITES, a resident of the State of Georgia (hereinafter referred to as the "Executive");


WITNESSETH:


The Company, its parent and subsidiaries (collectively, "RARE" and individually, a "RARE Entity") are 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. Executive currently serves in the position of Vice President of Finance for the Company, and the Executive desires to be assured of this position on the terms and conditions set forth in this Agreement. The Company desires to continue to employ the Executive on such terms and conditions.


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


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


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


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


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


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


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 One Hundred Forty-Seven Thousand Dollars ($147,000) for each full year of the Employment Term, plus such additional amounts, if any, as may be approved by the Company ("Base Compensation"), payable in installments at such times as the Company customarily pays its other executives generally (but in any event no less often than monthly). The Company agrees that the Executive's salary will be reviewed at least annually to determine if an increase is appropriate, which increase shall be in the sole discretion of the Company. Executive's salary shall be prorated for any partial calendar year during which this Agreement remains in effect.


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


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


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


2


3. Payment upon Termination.


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


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


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


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


3


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


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


4. 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 B hereto (the "Restricted Area"), directly or indirectly compete with RARE in connection with a business, any significant portion of which involves the development, opening, operation or franchising of restaurants that derive more than thirty percent (30%) of their food sales from steak products, if a RARE Entity is still engaged in such business in such area.


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


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


4


5. Confidentiality. Executive recognizes and acknowledges that by reason of his employment by and service to the Company, he will have access to all trade secrets and other confidential information of RARE including, but not limited to, confidential: pricing information, marketing information, sales techniques of RARE, confidential records, RARE's expansion plans, restaurant development and marketing techniques, operating procedures, training programs and materials, business plans, franchise arrangements, plans and agreements, information regarding suppliers, product quality and control procedures, financial statements and projections and other information regarding the operation of RARE's restaurants (hereinafter referred to as the "Confidential Information"). Executive acknowledges that such Confidential Information is a valuable and unique asset of RARE and covenants that he will not, either during the term of his employment by the Company or for a period of two (2) years thereafter, disclose any such Confidential Information to any person for any reason whatsoever (except as his duties for the Company may require) without the prior written authorization of the Company's Chief Executive Officer. Executive agrees that he will not copy any Confidential Information except as the performance of his duties for the Company may require and that upon the termination of his employment by the Company, he shall return all Confidential Information and any copies thereof in his possession to the Company. Executive hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies which the Company may have available pursuant to the laws of any jurisdiction or at common law to prevent the disclosure of trade secrets or proprietary information, and the enforcement by the Company of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies which it may possess in law or equity absent this Agreement. Notwithstanding the foregoing, the Company acknowledges and agrees that nothing contained herein shall restrict or otherwise prohibit or prevent disclosure of Confidential Information pursuant to legal proceedings, subpoena, civil investigative demand or other similar process. Executive agrees that if disclosure of Confidential Information is requested or required pursuant to any such pro ...