Delaware
|
5812
|
84-1573084
|
||
(State or other jurisdiction of
incorporation or organization) |
(Primary standard industrial
classification code number) |
(I.R.S. employer
identification number) |
Thomas J. Leary
Brandi R. Steege
OMelveny & Myers LLP
610 Newport Center Drive, Suite 1700
Newport Beach, California 92660
(949) 760-9600
|
Valerie Ford Jacob
Stuart H. Gelfond
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
(212) 859-8000
|
Title of Each Class of Securities to be Registered
|
Proposed Maximum Aggregate Offering Price(1)
|
Amount of Registration Fee
|
||
|
|
|
|
|
Common Stock, $0.001 par value per share
|
$60,000,000
|
$5,520
|
(1)
|
|
Estimated solely for the purpose of determining the registration fee pursuant to Rule 457(o) promulgated under the Securities Act of 1933, as amended.
|
Per Share
|
Total
|
|||||
Offering Price
|
$
|
|
$
|
|
||
Discounts and Commissions to Underwriters
|
$
|
|
$
|
|
||
Offering Proceeds to Red Robin
|
$
|
|
$
|
|
||
Offering Proceeds to the Selling Stockholders
|
$
|
|
$
|
|
Banc of America Securities LLC
|
U.S. Bancorp Piper Jaffray
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Page
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7
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16
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18
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21
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34
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47
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60
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64
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66
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68
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69
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73
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76
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76
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76
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F-1
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|
|
the underwriters will not exercise their over-allotment option to purchase up to additional shares of our common stock from us and the selling
stockholders at the price set forth on the cover of this prospectus;
|
|
|
an offering price of $ per share;
|
|
|
no exercise of options to purchase an aggregate of 4,240,950 shares of common stock which are outstanding as of March 24, 2002 under our stock option plans; and
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|
|
that we have not completed a -for- reverse stock split that we intend to complete prior to the consummation of this
offering.
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|
Focus on key guiding principals, or cornerstones, that drive our success.
In managing our operations, we focus on four cornerstones
that we believe are essential to our business. Our four cornerstones are: 1)
Values
to enhance the dining experience of our guests, we strive to maintain our core valueshonor, integrity, seeking knowledge and having fun; 2)
People
we recognize that our team members are our strongest asset and seek to provide them with comprehensive training programs to ensure superior guest service; 3)
Burgers
we strive to be the number one casual dining
destination for gourmet burgers in the markets in which we operate; and 4)
Time
we believe in giving our guests the gift of time and we strive to provide guests with a 37-minute dining experience at lunch and 42 minutes at
dinner.
|
|
|
Offer high quality, imaginative menu items.
Our restaurants feature menu items that use imaginative toppings and showcase recipes that capture
tastes and flavors that our guests do not typically associate with burgers, salads and sandwiches. We believe the success of our concept is due to our ability to interpret the latest food trends and incorporate them into our gourmet burgers and
other menu items.
|
|
|
Create a fun, festive and memorable dining experience.
We promote an exciting, high-energy and family-friendly atmosphere by decorating our
restaurant interiors with an eclectic selection of celebrity posters, three-dimensional artwork, carousel horses and statues of our mascot Red.
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|
|
Provide an exceptional dining value with broad consumer appeal.
We offer generous portions of high quality, imaginative food and beverages for a
per person average check of approximately $10.00, which includes alcoholic beverages. We believe this price-to-value relationship differentiates us from our competitors, many of whom have significantly higher average guest checks, and allows us to
appeal to a broad base of consumers with a wide range of income levels.
|
|
|
Deliver strong unit economics
. We believe our company-owned restaurants provide strong unit-level economics. In 2001, our comparable
company-owned restaurants generated average sales of approximately $3.0 million and restaurant level operating profit of approximately $618,000, or 20.5% of comparable company-owned restaurant sales. The average cash investment cost for our
free-standing restaurants opened in 2001 was approximately $1.7 million, excluding pre-opening costs, which averaged approximately $146,000 per restaurant.
|
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|
Pursue disciplined restaurant and franchise growth.
Our management team adheres to a disciplined expansion strategy, including both company-owned
and franchised development. In 2001, we opened six company-owned restaurants and our franchisees opened 16 restaurants and expanded into two new states. In 2002, we expect to open ten new company-owned restaurants and relocate one restaurant, and we
expect our franchisees to open seven new restaurants.
|
|
|
Build awareness of the Red Robin
®
Americas Gourmet Burgers & Spirits
®
brand.
We believe that the Red Robin name has achieved substantial brand equity among our guests and has become well known within our markets for our signature menu items. We intend to strengthen this brand loyalty by
continuing to offer new menu items and deliver a consistently memorable guest experience.
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|
|
Continue to capitalize on favorable lifestyle and demographic trends.
We believe that we have benefited from several key lifestyle and
demographic trends that have helped drive our business. These trends include:
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Common stock offered by:
|
||
Red Robin Gourmet Burgers, Inc.
|
shares
|
|
Selling stockholders
|
shares
|
|
Common stock to be outstanding after this offering
|
shares
|
|
Use of proceeds
|
We intend to use the proceeds of this offering:
|
|
to repay approximately $ million
of indebtedness under our term loan, including related fees;
|
||
to repay approximately $ million
of indebtedness under our revolving credit facility; and
|
||
to repay approximately $ million
of indebtedness under one real estate and three equipment loans, including related fees.
|
||
The remaining net proceeds will be used for general corporate purposes, including opening new restaurants and acquiring existing restaurants from franchisees. We will not
receive any of the proceeds from the sale of shares by the selling stockholders. See Use of Proceeds.
|
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Proposed Nasdaq National Market symbol
|
RRGB
|
|
Risk factors
|
See Risk Factors and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in
shares of our common stock.
|
|
|
shares of common stock reserved for issuance under our stock option plans, of which
shares are subject to options outstanding at a weighted average exercise price of $ per share;
|
|
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shares of common stock reserved for issuance under our employee stock purchase plan; and
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|
|
the effect of a -for- reverse stock split that we intend to complete prior to the consummation of this offering.
|
Fiscal Year Ended
|
||||||||||||
1999
|
2000(1)
|
2001
|
||||||||||
(in thousands, except per share data, restaurant-related data and footnotes)
|
||||||||||||
Statement of Income Data:
|
||||||||||||
Revenues:
|
||||||||||||
Restaurant
|
$
|
121,430
|
|
$
|
180,413
|
|
$
|
214,963
|
|
|||
Franchise royalties and fees
|
|
8,249
|
|
|
8,247
|
|
|
9,002
|
|
|||
Rent revenue
|
|
333
|
|
|
510
|
|
|
520
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total revenues
|
|
130,012
|
|
|
189,170
|
|
|
224,485
|
|
|||
Income from operations
|
|
7,145
|
|
|
8,805
|
|
|
18,740
|
|
|||
Interest expense
|
|
4,156
|
|
|
6,482
|
|
|
7,850
|
|
|||
Interest income
|
|
(186
|
)
|
|
(742
|
)
|
|
(746
|
)
|
|||
Other expense
|
|
391
|
|
|
191
|
|
|
190
|
|
|||
(Provision) benefit for income taxes(2)
|
|
1,596
|
|
|
12,557
|
|
|
(3,722
|
)
|
|||
Net income(2)
|
|
4,380
|
|
|
15,431
|
|
|
7,724
|
|
|||
Net income per common share(2)
|
||||||||||||
Basic
|
$
|
0.51
|
|
$
|
0.71
|
|
$
|
0.26
|
|
|||
Diluted
|
$
|
0.51
|
|
$
|
0.71
|
|
$
|
0.26
|
|
|||
Shares used in computing net income per common share
|
||||||||||||
Basic
|
|
8,617
|
|
|
21,587
|
|
|
29,248
|
|
|||
Diluted
|
|
8,617
|
|
|
21,587
|
|
|
29,684
|
|
|||
Selected Operating Data:
|
||||||||||||
System-wide restaurants open at end of year
|
|
144
|
|
|
164
|
|
|
182
|
|
|||
Company-owned restaurants open at end of year
|
|
46
|
|
|
73
|
|
|
77
|
|
|||
Average annual comparable company-owned restaurant sales(3)
|
$
|
2,664
|
|
$
|
2,890
|
|
$
|
3,020
|
|
|||
Comparable company-owned restaurant sales increase(3)
|
|
5.8
|
%
|
|
6.9
|
%
|
|
2.0
|
%
|
|||
Restaurant-level operating profit(4)
|
$
|
20,340
|
|
$
|
32,423
|
|
$
|
41,215
|
|
|||
EBITDA(5)
|
|
12,539
|
|
|
16,870
|
|
|
29,231
|
|
|||
EBITDA margin(5)
|
|
9.6
|
%
|
|
8.9
|
%
|
|
13.0
|
%
|
December 30, 2001
|
||||||
Actual
|
As Adjusted(6)
|
|||||
(unaudited)
|
||||||
Balance Sheet Data:
|
||||||
Cash and cash equivalents
|
$
|
18,992
|
$
|
|
||
Total assets
|
|
155,041
|
||||
Long-term debt, including current portion
|
|
80,087
|
||||
Total stockholders equity
|
|
47,578
|
(1)
|
|
In May 2000, we purchased all of the outstanding capital stock of one of our franchisees, The Snyder Group Company, for approximately $23.7 million plus liabilities assumed of
$20.0 million, thereby acquiring 14 restaurants and significantly changing our capital structure. See the financial statements of The Snyder Group Company and the related notes included elsewhere in this prospectus.
|
|
|
In addition, in May 2000, we sold 12,500,000 shares of our common stock to affiliates of Quad-C, a private equity firm, for $25.0 million. The proceeds were used to pay off
debentures and promissory notes, as well as pay down bank debt and fund new restaurant construction.
|
(2)
|
|
Net income in 1999 included a benefit for income taxes of $1.6 million and net income in 2000 included a benefit for income taxes of $12.6 million, in each case as a result of
the reversal of previously recorded deferred tax asset valuation allowance. Due to our improved profitability, the deferred tax asset valuation allowance was reversed because it became more likely than not that the deferred tax asset would be
realized in the future.
|
(3)
|
|
Company-owned restaurants become comparable in the first period following the first full fiscal year of operations. For example, the restaurants we acquired in May 2000 from
The Snyder Group Company will be included in comparable company-owned restaurants in 2002.
|
(4)
|
|
We define restaurant-level operating profit to be restaurant sales minus restaurant operating costs, excluding restaurant closures and impairment costs.
|
(5)
|
|
EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA is another measure commonly used to evaluate operating performance. EBITDA is not a
measurement determined in accordance with generally accepted accounting principles and should not be considered in isolation or as an alternative to net income, cash flows generated by operations, investing or financing activities or other financial
statement data presented as indicators of financial performance or liquidity. EBITDA as presented may not be comparable to other similarly titled measures of other companies. EBITDA margin is calculated as EBITDA divided by total revenues. The
following table sets forth our calculation of EBITDA:
|
1999
|
2000
|
2001
|
|||||||
(in thousands)
|
|||||||||
Income (loss) from operations
|
$
|
7,145
|
$
|
8,805
|
$
|
18,740
|
|||
Depreciation and amortization
|
|
5,394
|
|
8,065
|
|
10,491
|
|||
|
|
|
|
|
|
||||
EBITDA
|
$
|
12,539
|
$
|
16,870
|
$
|
29,231
|
|||
|
|
|
|
|
|
(6)
|
|
Adjusted to reflect the sale of shares of our common stock offered by us in this
offering at an offering price of $ per share, less the underwriting discount and estimated offering expenses payable by us, and the use of the proceeds from this offering to repay approximately
$ million of indebtedness under our term loan, including related fees, approximately
$ million of indebtedness under our revolving credit facility and approximately $
million of indebtedness under one real estate and three equipment loans, including related fees.
|
|
|
the hiring, training and retention of qualified operating personnel, especially managers;
|
|
|
reliance on the knowledge of our executives and franchisees to identify available and suitable restaurant sites;
|
|
|
competition for restaurant sites;
|
|
|
negotiation of favorable lease terms;
|
|
|
timely development of new restaurants, including the availability of construction materials and labor;
|
|
|
management of construction and development costs of new restaurants;
|
|
|
securing required governmental approvals and permits in a timely manner, or at all;
|
|
|
competition in our markets; and
|
|
|
general economic conditions.
|
|
|
material adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition as it is integrated into our operations;
|
|
|
risks associated with entering into markets or conducting operations where we have no or limited prior experience; and
|
|
|
the diversion of managements attention from other business concerns.
|
|
|
the timing of new restaurant openings and related expenses;
|
|
|
restaurant operating costs and pre-opening costs for our newly-opened restaurants, which are often materially greater during the first several months of operation than
thereafter;
|
|
|
labor availability and costs for hourly and management personnel;
|
|
|
profitability of our restaurants, especially in new markets;
|
|
|
franchise development costs;
|
|
|
increases and decreases in comparable restaurant sales;
|
|
|
impairment of long-lived assets, including goodwill, and any loss on restaurant closures;
|
|
|
general economic conditions;
|
|
|
changes in consumer preferences and competitive conditions; and
|
|
|
fluctuations in commodity prices.
|
|
|
authorize our board of directors to establish one or more series of preferred stock, the terms of which can be determined by the board of directors at the time of issuance;
|
|
|
divide our board of directors into three classes of directors, with each class serving a staggered three-year term. As the classification of the board of directors generally
increases the difficulty of replacing a majority of the directors, it may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us and may maintain the composition of the board of directors;
|
|
|
prohibit cumulative voting in the election of directors unless required by applicable law. Under cumulative voting, a minority stockholder holding a sufficient percentage of a
class of shares may be able to ensure the election of one or more directors;
|
|
|
provide that a director may be removed from our board of directors only for cause, and then only by a supermajority vote of the outstanding shares;
|
|
|
require that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be
effected by any consent in writing;
|
|
|
state that special meetings of our stockholders may be called only by the chairman of the board of directors, our chief executive officer, by the board of directors after a
resolution is adopted by a majority of the total number of authorized directors, or by the holders of not less than 10.0% of our outstanding voting stock;
|
|
|
provide that the chairman or other person presiding over any stockholder meeting may adjourn the meeting whether or not a quorum is present at the meeting;
|
|
|
establish advance notice requirements for submitting nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a
meeting;
|
|
|
provide that certain provisions of our certificate of incorporation can be amended only by supermajority vote of the outstanding shares, and that our bylaws can be amended only
by supermajority vote of the outstanding shares or our board of directors;
|
|
|
allow our directors, not our stockholders, to fill vacancies on our board of directors; and
|
|
|
provide that the authorized number of directors may be changed only by resolution of the board of directors.
|
|
|
our ability to achieve and manage our planned expansion;
|
|
|
our ability to raise capital in the future;
|
|
|
the ability of our franchisees to open and manage new restaurants;
|
|
|
our franchisees adherence to our practices, policies and procedures;
|
|
|
changes in the availability and costs of food;
|
|
|
potential fluctuation in our quarterly operating results due to seasonality and other factors;
|
|
|
the continued service of key management personnel;
|
|
|
the concentration of our restaurants in the Western United States;
|
|
|
our ability to protect our name and logo and other proprietary information;
|
|
|
changes in consumer preferences or consumer discretionary spending;
|
|
|
health concerns about our food products;
|
|
|
our ability to attract, motivate and retain qualified team members;
|
|
|
the impact of federal, state or local government regulations relating to our team members or the sale of food and alcoholic beverages;
|
|
|
the impact of litigation; and
|
|
|
the effect of competition in the restaurant industry.
|
|
|
approximately $ million to repay the outstanding amounts under our term loan with Finova Capital Corporation, including a prepayment penalty of 4.0%,
which bears interest at 9.9% and has a maturity date of September 1, 2012.
|
|
|
approximately $ million to repay the outstanding amounts under our revolving credit facility with U.S. Bank National Association, which bears interest
at the London Interbank Offered Rate, or LIBOR, plus 3.0% and has a maturity date of March 31, 2003. We entered into this revolving credit facility for working capital and capital expenditure needs.
|
|
|
approximately $ million to repay the outstanding amounts under one real estate loan with Captec Financial Group, including a prepayment penalty of 1.0%,
which bears interest at 10.1% and has a maturity date of January 1, 2012.
|
|
|
approximately $ million to repay the outstanding amounts under two equipment loans with Captec and one equipment loan with General Electric Capital
Corporation, which bear interest at rates ranging from 9.6% to 11.6% and have maturity dates between April 1, 2003 and December 1, 2003.
|
|
|
on an actual basis; and
|
|
|
on an as adjusted basis to reflect the sale of shares of our common stock offered by us in this offering at an offering price of
$ per share, less the underwriting discount and estimated offering expenses payable by us, and the use of proceeds from this offering to repay approximately $ million of indebtedness under our term
loan, including related fees, approximately $ million of indebtedness under our revolving credit facility and approximately $ of indebtedness under one real estate and three equipment loans, including
related fees.
|
(1)
|
|
We are currently in discussions with lenders to enter into a new credit facility contingent upon the consummation of this offering.
|
(2)
|
|
Long-term debt includes capital leases.
|
(3)
|
|
Excludes 4,097,600 shares of common stock issuable on the exercise of stock options outstanding as of December 30, 2001.
|
Shares Purchased
|
Total Consideration
|
Average Price Per Share
|
||||||||||||
Number
|
Percent
|
Amount
|
Percent
|
|||||||||||
Existing stockholders
|
29,261,906
|
%
|
|
$
|
53,464,958
|
%
|
|
$
|
1.83
|
|||||
New stockholders
|
||||||||||||||
|
|
|
|
|
|
|
||||||||
Total
|
100
|
%
|
$
|
|
100
|
%
|
||||||||
|
|
|
|
|
|
|
Fiscal Year
|
||||||||||||||||||
1997
|
1998
|
1999
|
2000
|
2001
|
||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
3,414
|
|
$
|
5,645
|
|
$
|
5,176
|
|
$
|
8,317
|
$
|
18,992
|
|||||
Total assets(1)
|
|
52,555
|
|
|
55,338
|
|
|
70,706
|
|
|
141,184
|
|
155,041
|
|||||
Long-term debt, including current portion
|
|
58,418
|
|
|
57,509
|
|
|
66,120
|
|
|
78,413
|
|
80,087
|
|||||
Total stockholders equity (deficit)(1)
|
|
(22,248
|
)
|
|
(19,291
|
)
|
|
(14,861
|
)
|
|
39,773
|
|
47,578
|
(1)
|
|
In May 2000, we purchased all of the outstanding capital stock of one of our franchisees, The Snyder Group Company, for approximately
$
23.7 million plus liabilities
assumed of $20.0 million, thereby acquiring 14 restaurants and significantly changing our capital structure. See the financial statements of The Snyder Group Company and the related notes included elsewhere in this prospectus.
|
|
|
In addition, in May 2000, we sold 12,500,000 shares of our common stock to affiliates of Quad-C, a private equity firm, for $25.0 million. The proceeds were used to pay off
debentures and promissory notes, as well as pay down bank debt and fund new restaurant construction.
|
(2)
|
|
Net income in 1999 included a benefit for income taxes of $1.6 million and net income in 2000 included a benefit for income taxes of $12.6 million, in each case as a result of
the reversal of previously recorded deferred tax asset valuation allowance. Due to our improved profitability, the deferred tax asset valuation allowance was reversed because it became more likely than not that the deferred tax asset would be
realized in the future.
|
(3)
|
|
Company-owned restaurants become comparable in the first period following the first full fiscal year of operations. For example, the restaurants we acquired in May 2000 from
The Snyder Group Company will be included in comparable company-owned restaurants in 2002.
|
(4)
|
|
We define restaurant-level operating profit to be restaurant sales minus restaurant operating costs, excluding restaurant closures and impairment costs.
|
(5)
|
|
EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA is another measure commonly used to evaluate operating performance. EBITDA is not a
measurement determined in accordance with generally accepted accounting principles and should not be considered in isolation or as an alternative to net income, cash flows generated by operations, investing or financing activities or other financial
statement data presented as indicators of financial performance or liquidity. EBITDA as presented may not be comparable to other similarly titled measures of other companies. EBITDA margin is calculated as EBITDA divided by total revenues. The
following table sets forth our calculation of EBITDA:
|
|
|
the timing of new restaurant openings and related expenses;
|
|
|
restaurant operating costs and pre-opening costs for our newly-opened restaurants, which are often materially greater during the first several months of operation than
thereafter;
|
|
|
labor availability and costs for hourly and management personnel;
|
|
|
profitability of our restaurants, especially in new markets;
|
|
|
franchise development costs;
|
|
|
increases and decreases in comparable restaurant sales;
|
|
|
impairment of long-lived assets, including goodwill, and any loss on restaurant closures;
|
|
|
general economic conditions;
|
|
|
changes in consumer preferences and competitive conditions; and
|
|
|
fluctuations in commodity prices.
|
|
|
Focus on key guiding principals, or cornerstones, that drive our success.
In managing our operations, we focus on four cornerstones
that we believe are essential to our business. Our four cornerstones are:
|
|
|
Offer high quality, imaginative menu items.
Our restaurants feature menu items that use imaginative toppings and showcase recipes that capture
tastes and flavors that our guests do not typically associate with burgers, salads and sandwiches. We believe the success of our concept is due to our ability to interpret the latest food trends and incorporate them into our gourmet burgers, pastas,
rice bowls, appetizers, salads, sandwiches and beverages. Our menu items are cooked to order, using high-quality, fresh ingredients and premium meats and based on unique recipes. One of our signature menu items is our Royal Red Robin Burger, which
features a gourmet burger topped with a fried egg, along with bacon, cheese, lettuce, tomato and mayonnaise. We offer a wide selection of toppings for our gourmet burgers, including fresh guacamole, roasted green chilies, honey mustard dressing,
grilled pineapple, crispy onion straws, sautéed mushrooms and a choice of six different cheeses. We serve all of our gourmet burgers and sandwiches with bottomless french fries.
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|
|
Create a fun, festive and memorable dining experience.
We promote an exciting, high-energy and family-friendly atmosphere by decorating our
restaurant interiors with an eclectic selection of celebrity posters, three-dimensional artwork, carousel horses and statues of our mascot Red. We enhance the excitement and energy levels in our restaurants by placing televisions in our
main dining areas, in our floors and in our bathrooms and by playing upbeat, popular music throughout the day.
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|
|
Provide an exceptional dining value with broad consumer appeal.
We offer generous portions of high quality, imaginative food and beverages for a
per person average check of approximately $10.00, which includes alcoholic beverages. We believe this price-to-value relationship differentiates us from our competitors, many of whom have significantly higher average guest checks, and allows us to
appeal to a broad base of consumers with a wide range of income levels. In addition to attracting families and groups, our restaurant features seating in the bar area, which is often used by our single diners. Our restaurants are popular during both
the day and evening hours as evidenced by our almost equal split between lunch and dinner sales. We believe that our diverse menu further enhances our broad appeal by accommodating groups with different tastes.
|
|
|
Deliver strong unit economics
. We believe our company-owned restaurants provide strong unit-level economics. In 2001, our comparable company-owned
restaurants generated average sales of approximately $3.0 million and restaurant-level operating profit of approximately $618,000, or 20.5% of total comparable company-owned restaurant sales. The average cash investment cost for our free-standing
restaurants opened in 2001 was approximately $1.7 million, excluding pre-opening costs, which averaged approximately $146,000 per restaurant.
|
|
|
Pursue disciplined restaurant and franchise growth
. We are pursuing a disciplined growth strategy, including both company-owned and franchised
development. In 2001, we opened six company-owned restaurants and our franchisees opened 16 restaurants and expanded into two new states. In 2002, we expect to open ten new company-owned restaurants and relocate one restaurant, and we expect our
franchisees to open seven new restaurants. We intend to continue to expand by opening new company-owned and franchised restaurants at a comparable pace in future years. Our site selection criteria focuses on identifying markets, trade areas and
other specific sites that are likely to yield the greatest density of desirable demographics, heavy retail traffic and a highly visible site.
|
|
|
Build awareness of the Red Robin
®
Americas Gourmet Burgers & Spirits
®
brand.
We believe that the Red Robin name has achieved substantial brand equity among our guests and has become well known within our markets for our signature menu items. We intend to strengthen this brand loyalty by
continuing to offer new menu items and deliver a consistently memorable guest experience. Additionally, we believe that Red Robin is recognized for the family-friendly, high-energy and exciting atmosphere our restaurants offer. Key brand attributes
that we continue to build upon are our high-quality imaginative food items, commitment to guest service and a strong price-to-value relationship.
|
|
|
Continue to capitalize on favorable lifestyle and demographic trends.
We believe that we have benefited from several key lifestyle and demographic
trends that have helped drive our business. These trends include:
|
|
|
employee discounts or other discounts;
|
|
|
any federal, state, municipal or other sales, value added or retailers excise taxes; or
|
|
|
adjustments for net returns on salable goods and discounts allowed to customers on sales.
|
|
|
Selection process
. We generally select franchisees that are experienced, well-capitalized, multi-unit restaurant operators or who have
demonstrated the ability to raise capital and rapidly grow a multi-unit retail or service organization. During the selection process, we conduct comprehensive background, financial, and reference checks on all candidates. Key department heads will
typically meet with each franchisee candidate and often visit their current business operations to assess his or her level of relevant expertise. References are obtained from the candidates as well as through industry sources, such as former
suppliers, executives, managers, or other business associates. We will generally not grant development rights for the development of a single restaurant.
|
|
|
Development and operations
. After a franchise agreement is signed, we actively work with and monitor our franchisees to ensure successful
franchise operations as well as compliance with Red Robin systems and procedures. During the development phase, we assist in the selection of restaurant sites and the development of prototype and building plans, including all required changes by
local municipalities and developers. After construction is completed, we review the building for compliance with our standards and provide eight trainers to assist in the opening of the restaurant. We advise the franchisee on menu, management
training, and equipment and food purchases. At least once a year, we review all menu items and descriptions to ensure compliance with our requirements and standards. We require all suppliers of ground beef, if different than ours, to pay for and
pass an annual inspection performed by third party auditors. Finally, on an ongoing basis, we conduct brand equity reviews on all franchise restaurants to determine their level of effectiveness in executing our concept at a variety of operational
levels. Reviews are conducted by seasoned operations teams, last approximately two to three days, and focus on seven key areas including health, safety, brand foundation, and execution proficiency.
|
|
|
Class I directors, whose term will expire at the annual meeting of stockholders to be held in 2003;
|
|
|
Class II directors, whose term will expire at the annual meeting of stockholders to be held in 2004; and
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|
|
Class III directors, whose term will expire at the annual meeting of stockholders to be held in 2005.
|
Long-Term Compensation
|
|||||||||||||||
Annual Compensation(1)
|
Securities Underlying Options/SARs (#)
|
All Other Compensation ($)(2)
|
|||||||||||||
Name and Principal Position
|
Year
|
Salary($)
|
Bonus($)
|
||||||||||||
Michael J. Snyder, Chief Executive Officer
|
2001
|
$
|
340,609
|
|
$
|
347,288
|
|
|
$
|
4,620
|
|||||
James P. McCloskey, Chief Financial Officer
|
2001
|
|
226,861
|
|
|
162,068
|
(3)
|
|
|
2,793
|
|||||
Michael E. Woods, Senior Vice President of Franchise Development
|
2001
|
|
196,568
|
|
|
140,498
|
(3)
|
|
|
2,562
|
|||||
Robert J. Merullo, Senior Vice President of Restaurant Operations
|
2001
|
|
207,563
|
|
|
147,630
|
(3)
|
|
|
5,600
|
|||||
Todd A. Brighton, Vice President of Development
|
2001
|
|
95,192
|
(4)
|
|
30,000
|
|
150,000
|
|
1,400
|
|||||
Eric C. Houseman, Vice President of Restaurant Operations
|
2001
|
|
128,942
|
|
|
48,300
|
|
25,000
|
|
1,391
|
(1)
|
|
In accordance with the rules of the SEC, the compensation described in this table does not include a) medical, group life insurance or other benefits received by the named
executive officers that are available generally to all of our salaried employees, or b) perquisites and other personal benefits received by the named executive officers that do not exceed the lesser of $50,000 or 10.0% of the officers salary
and bonus disclosed in this table.
|
(2)
|
|
Represents premiums paid for supplemental life insurance.
|
(3)
|
|
Includes $20,000 of bonus compensation earned during 2001 that has been deferred at the election of the named executive officer.
|
(4)
|
|
Mr. Brighton joined Red Robin in April 2001. His annualized salary for 2001 was $150,000.
|
(1)
|
|
The potential realizable values are based on an assumption that the stock price of our common stock will appreciate at the annual rate shown, compounded annually, from the date
of grant until the end of the option term. These values do not take into account amounts required to be paid as income taxes under the Internal Revenue Code and any applicable state laws or option provisions providing for termination of an option
following termination of employment, non-transferability or vesting. These amounts are calculated based on the requirements promulgated by the SEC and do not reflect our estimate of future stock price growth of the shares of our common stock.
|
(2)
|
|
Represents options we granted under our 2000 management performance common stock option plan. These options vest over a three-year period, with 50.0% vesting on the second
anniversary of the grant date and the remaining 50.0% vesting on the third anniversary of the grant date.
|
(3)
|
|
Based on an aggregate of 381,600 shares of our common stock that are subject to options granted to employees during 2001.
|
(4)
|
|
We granted options at an exercise price equal to the fair market value of our common stock as determined by our board of directors at the date of grant. In determining the fair
market value of our common stock, the board considered various factors, including our financial condition and business prospects, operating results, the absence of a market for our common stock and the risks normally associated with investments in
companies engaged in similar businesses.
|
(5)
|
|
The term of each option we grant is generally ten years from the date of grant. Our options may terminate before their expiration date if the option holders status as an
employee is terminated or upon the option holders death or disability.
|
Number of
Securities Underlying
Unexercised Options at
December 30, 2001(1)
|
Value of Unexercised
In-the-Money Options
at
December 30, 2001
|
|||||||
Name
|
Exercisable
|
Unexercisable
|
Exercisable($)
|
Unexercisable($)
|
||||
Michael J. Snyder
|
|
1,500,000
|
||||||
James P. McCloskey
|
300,000
|
100,000
|
||||||
Michael E. Woods
|
125,000
|
300,000
|
||||||
Robert J. Merullo
|
|
250,000
|
||||||
Todd A. Brighton
|
|
150,000
|
||||||
Eric C. Houseman
|
10,000
|
65,000
|
(1)
|
|
This table does not give effect to the early exercise of stock options by certain of our executive officers in April 2002. See Related Party TransactionsOption
Exercises.
|
|
|
designate recipients of awards;
|
|
|
determine or modify, subject to any required consent, the terms and provisions of awards, including the price, vesting provisions, terms of exercise and expiration dates;
|
|
|
approve the form of award agreements;
|
|
|
determine specific objectives and performance criteria with respect to performance awards;
|
|
|
construe and interpret the 2002 stock incentive plan; and
|
|
|
re-price, accelerate and extend the exercisability or term, and establish the events of termination or reversion of outstanding awards.
|
|
|
stockholder approval of our dissolution or liquidation;
|
|
|
certain changes in a majority of the membership of our board of directors over a period of two years or less;
|
|
|
the acquisition of more than 20.0% of our outstanding voting securities by any person other than a person who held more than 20.0% of our outstanding voting securities as of
the date that the 2002 stock incentive plan was approved, a company benefit plan, or one of their affiliates, successors, heirs, relatives or certain donees or certain other affiliates;
|
|
|
certain transfers of all or substantially all of our assets; and
|
|
|
a merger, consolidation or reorganization (other than with an affiliate) whereby our stockholders do not own more than 50.0% of the outstanding voting securities of the
resulting entity after such event.
|
|
|
for any breach of the directors duty of loyalty to us or our stockholders;
|
|
|
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
|
|
under Section 174 of the Delaware General Corporation Law; or
|
|
|
for any transaction from which the director derives an improper personal benefit.
|
|
|
Mike Snyder, our chief executive officer, received $4,100 in cash, $5.5 million in debentures repaid by us in August 2001, $18,870 in debentures repaid by us in May 2001 and
2,301,576 shares of our common stock.
|
|
|
Mike Woods, our senior vice president of franchise development, received $2,241 in cash, $399,934 pursuant to a promissory note repaid by us in August 2001 and 201,087 shares
of our common stock.
|
|
|
Bob Merullo, our senior vice president of operations, received $2,241 in cash, $399,934 pursuant to a promissory note repaid by us in August 2001 and 201,087 shares of our
common stock.
|
|
|
Steve Snyder, Mike Snyders brother and one of our principal stockholders, and his wife each received $2,050 in cash, $1.8 million in debentures repaid by us in August
2001, $9,435 in debentures repaid by us in May 2001 and 1,150,789 shares of our common stock.
|
|
|
Mike Snyder elected to exercise options to purchase an aggregate of 1,500,000 shares of common stock. Mr. Snyder paid the exercise price by delivering a full recourse
promissory note in the principal amount of $3,000,000. This promissory note bears interest at 4.65% per annum, with principal and accrued and unpaid interest due and payable on December 31, 2009.
|
|
|
Jim McCloskey elected to exercise options to purchase an aggregate of 500,000 shares of common stock. Mr. McCloskey paid the exercise price by delivering three full recourse
promissory notes in the aggregate principal amount of $1,050,000. These promissory notes bear interest at 4.65% per annum, with principal and accrued and unpaid interest due and payable as follows: June 26, 2006 with respect to $600,000 principal
amount, December 31, 2009 with respect to $200,000 principal amount and January 29, 2012 with respect to $250,000 principal amount.
|
|
|
Bob Merullo elected to exercise options to purchase 250,000 shares of common stock. Mr. Merullo paid the exercise price by delivering a full recourse promissory note in
the principal amount of $500,000. This promissory note bears interest at 4.65% per annum, with principal and accrued and unpaid interest due and payable on December 31, 2009.
|
|
|
Mike Woods elected to exercise options to purchase an aggregate of 425,000 shares of common stock. Mr. Woods paid the exercise price by delivering two full recourse
promissory notes in the aggregate principal amount of $850,000. These promissory notes bear interest at 4.65% per annum, with principal and accrued and unpaid interest due and payable as follows: January 6, 2007 with respect to $250,000 principal
amount and December 31, 2009 with respect to $600,000 principal amount.
|
(1)
|
|
This table reflects the early exercise of stock options by certain of our executive officers in April 2002. See Related Party TransactionsOption Exercises.
|
(2)
|
|
Quad-C Partners V, L.P. is the sole member of RR Investors, LLC, and as such, controls the disposition of the shares held by RR Investors, LLC and the exercise of the
registration rights.
|
(3)
|
|
Edward T. Harvey, Terrence D. Daniels and certain other principals and employees of Quad-C collectively control the disposition of the shares held by RR Investors II, LLC and
the exercise of the registration rights.
|
(4)
|
|
Consists of 200,000 shares of common stock issuable pursuant to stock options, all of which are exercisable within 60 days of March 24, 2002.
|
|
|
each person who beneficially owns more than 5.0% of our capital stock;
|
|
|
each of our directors;
|
|
|
each named executive officer;
|
|
|
all directors and executive officers as a group; and
|
|
|
each selling stockholder.
|
*
|
|
Represents beneficial ownership of less than one percent (1.0%) of the outstanding shares of our common stock.
|
(1)
|
|
This table does not give effect to the early exercise of stock options by certain of our executive officers. See Related Party TransactionsOption Exercises.
|
(2)
|
|
If a stockholder holds options or other securities that are exercisable or otherwise convertible into our common stock within 60 days of March 24, 2002, we treat the common
stock underlying those securities as owned by that stockholder, and as outstanding shares when we calculate the stockholders percentage
|
ownership of our common stock. However, we do not consider that common stock to be outstanding when we calculate the percentage ownership of any other stockholder.
|
(3)
|
|
12,019,231 shares of our common stock are owned of record by RR Investors, LLC. As the sole member of RR Investors, Quad-C Partners V, L.P. has the sole power to vote and
dispose of the shares held by RR Investors. Quad-C Advisors V, L.L.C. is the general partner of Quad-C Partners V. Edward T. Harvey, one of our directors, is the president and a director of RR Investors. In addition, Mr. Harvey has an indirect
management interest in RR Investors as a holder of a 15.0% membership interest in Quad-C Advisors V. Terrence D. Daniels, one of our other directors, is the vice president and secretary of RR Investors. In addition, Mr. Daniels has an indirect
membership interest in RR Investors as a holder of a 40.0% membership interest in Quad-C Advisors V. The address of this stockholder is c/o Quad-C Management, Inc., 230 East High Street, Charlottesville, Virginia 22902.
|
(4)
|
|
Includes 2,250,000 shares of common stock held by Hibari Guam Corporation, an indirect wholly owned subsidiary of Skylark Co., Ltd. Skylark Co., Ltd.s address is
Shacho-Shitsu Branch, 16
th Floor, Shinjuku Green Tower, 6-14-1 Nishi Shinjuku, Shinjuku, Tokyo 160-0023 Japan.
|
(5)
|
|
These shares are beneficially owned by Stephen S. Snyder, as trustee of the Stephen S. Snyder Intervivos Trust. Mr. Snyders address is 2300 River Road, #17, Yakima,
Washington 98902.
|
(6)
|
|
Gaishoku System Kenkyujos address is 1-25-8 Nishikubo, Musashino-shi, Tokyo, 180 Japan.
|
(7)
|
|
Hibari Guam Corporations address is 9999 South Marine Drive, Temuning, Guam 96911.
|
(8)
|
|
Consists of 300,000 shares of common stock subject to options exercisable within 60 days of March 24, 2002.
|
(9)
|
|
Includes 125,000 shares of common stock subject to options exercisable within 60 days of March 24, 2002.
|
(10)
|
|
Consists of 10,000 shares of common stock subject to options exercisable within 60 days of March 24, 2002.
|
(11)
|
|
Excludes 2,250,000 shares of common stock held by Gaishoku System Kenkyujo Company, Ltd. Mr. Chino owns approximately 25.0% of the outstanding capital stock of Gaishoku System
Kenkyujo and his three brothers own the remaining 75.0% of the outstanding capital stock of Gaishoku System Kenkyujo. Mr. Chino and his three brothers are each members on the board of directors of Gaishoku System Kenkyujo. One of Mr. Chinos
brothers is also the president of Gaishoku System Kenkyujo. Mr. Chino disclaims beneficial ownership of these shares.
|
(12)
|
|
Excludes 12,019,231 shares of common stock held by RR Investors, LLC and 480,769 shares of common stock held by RR Investors II, LLC. Mr. Daniels is the vice president and
secretary of each of RR Investors and RR Investors II and, as such, shares voting and dispositive power as to the shares held by RR Investors and RR Investors II. In addition, Mr. Daniels has an indirect membership interest in RR Investors as a
holder of a 40.0% membership interest in Quad-C Advisors V, L.L.C., the general partner of the sole member of RR Investors, Quad-C Partners V, L.P. Mr. Daniels also has a membership interest in RR Investors II equal to 22.5% and his four children
collectively own an additional 20.8% of the outstanding membership interests of RR Investors II. Mr. Daniels disclaims beneficial ownership of these shares except to the extent of Mr. Daniels pecuniary interest therein.
|
(13)
|
|
Excludes 12,019,231 shares of common stock held by RR Investors, LLC and 480,769 shares of common stock held by RR Investors II, LLC. Mr. Harvey is the president and a director
of each of RR Investors and RR Investors II and, as such, shares voting and dispositive power as to the shares held by RR Investors and RR Investors II. In addition, Mr. Harvey has an indirect membership interest in RR Investors as a holder of a
15.0% membership interest in Quad-C Advisors V, L.L.C., the general partner of the sole member of RR Investors, Quad-C Partners V, L.P. Mr. Harvey also has an indirect membership interest in RR Investors II through High Street Holdings, L.C.,
in which he is the manager and has an 80.0% ownership interest. Mr. Harvey disclaims beneficial ownership of these shares except to the extent of Mr. Harveys pecuniary interest therein.
|
(14)
|
|
Includes 8,000 shares of common stock subject to options exercisable within 60 days of March 24, 2002.
|
(15)
|
|
Includes 443,000 shares of common stock subject to options exercisable within 60 days of March 24, 2002.
|
|
|
authorize our board of directors to establish one or more series of preferred stock, the terms of which can be determined by the board of directors at the time of issuance;
|
|
|
divide our board of directors into three classes of directors, with each class serving a staggered three-year term. As the classification of the board of directors generally
increases the difficulty of replacing a majority of the directors, it may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us and may maintain the composition of the board of directors;
|
|
|
prohibit cumulative voting in the election of directors unless required by applicable law. Under cumulative voting, a minority stockholder holding a sufficient percentage of a
class of shares may be able to ensure the election of one or more directors;
|
|
|
provide that a director may be removed from our board of directors only for cause, and then only by a supermajority vote of the outstanding shares;
|
|
|
require that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be
effected by any consent in writing;
|
|
|
state that special meetings of our stockholders may be called only by the chairman of the board of directors, our chief executive officer, by the board of directors after a
resolution is adopted by a majority of the total number of authorized directors, or by the holders of not less than 10.0% of our outstanding voting stock;
|
|
|
provide that the chairman or other person presiding over any stockholder meeting may adjourn the meeting whether or not a quorum is present at the meeting;
|
|
|
establish advance notice requirements for submitting nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at a
meeting;
|
|
|
provide that certain provisions of our certificate of incorporation can be amended only by supermajority vote of the outstanding shares, and that our bylaws can be amended only
by supermajority vote of the outstanding shares or our board of directors;
|
|
|
allow our directors, not our stockholders, to fill vacancies on our board of directors; and
|
|
|
provide that the authorized number of directors may be changed only by resolution of the board of directors.
|
|
|
an individual who is a citizen or resident of the United States;
|
|
|
a corporation (including any entity treated as a corporation for U.S. tax purposes) or partnership (including any entity treated as a partnership for U.S. tax purposes) created
or organized in the United States or under the laws of the United States or of any political subdivision of the United States, other than a partnership treated as foreign under U.S. Treasury regulations;
|
|
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|
|
a trust, in general, if its administration is subject to the primary supervision of a U.S. court and one or more U.S. persons have the authority to control all of its
substantial decisions, or if it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
|
|
U.S. state and local or non-U.S. tax consequences;
|
|
|
specific facts and circumstances that may be relevant to a particular non-U.S. holders tax position, including, if the non-U.S. holder is an entity that is treated as a
partnership for U.S. tax purposes, the U.S. tax consequences of holding and disposing our common stock may be affected by determinations made at the partner level;
|
|
|
the tax consequences for the shareholders, partners or beneficiaries of a non-U.S. holder;
|
|
|
special tax rules that may apply to some non-U.S. holders, including without limitation, banks, insurance companies, financial institutions, broker-dealers, tax-exempt
entities, or U.S. expatriates; or
|
|
|
special tax rules that may apply to a non-U.S. holder that holds our common stock as part of a straddle, hedge or conversion transaction.
|
|
|
in the case of common stock held by a foreign partnership, the certification requirement will generally be applied to the partners of the partnership and the partnership will
be required to provide certain information;
|
|
|
in the case of common stock held by a foreign trust, the certification requirement will generally be applied to the trust or the beneficial owners of the trust depending on
whether the trust is a foreign complex trust, foreign simple trust, or foreign grantor trust as defined in the U.S. Treasury regulations; and
|
|
|
look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.
|
1.
|
|
The non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition
and certain other requirements are met;
|
2.
|
|
The gain is effectively connected with the non-U.S. holders conduct of a trade or business in the United States, directly or through an entity treated as a partnership
for U.S. tax purposes and, if an applicable tax treaty requires, attributable to a U.S. permanent establishment of such non-U.S. holder; or
|
3.
|
|
Our common stock constitutes a U.S. real property interest by reason of our status as a U.S. real property holding corporation for U.S. federal income tax purposes
at any time during the shorter of (i) the period during which the non-U.S. holder holds our common stock or (ii) the 5-year period ending
|
on the date the non-U.S. holder disposes of our common stock. As long as our common stock is regularly traded on an established securities market for tax purposes, our common stock will not be
treated as a U.S. real property interest with respect to a non-U.S. holder that has not beneficially owned more than 5.0% of such regularly traded common stock at any time within the five-year period preceding such disposition. We believe that we
are a U.S. real property holding corporation and will remain a U.S. real property holding corporation for the foreseeable future. See discussion below.
|
Underwriter
|
Number of Shares
|
|
Banc of America Securities LLC
|
||
U.S. Bancorp Piper Jaffray Inc.
|
||
First Union Securities, Inc.
|
||
|
||
Total
|
||
|
|
|
receipt and acceptance of our common stock by the underwriters, and
|
|
|
the right to reject orders in whole or in part.
|
Paid by Red Robin
|
||||
No Exercise
|
Full Exercise
|
|||
Per Share
|
||||
Total
|
Paid by the
Selling Stockholders |
||||
No Exercise
|
Full Exercise
|
|||
Per Share
|
||||
Total
|
|
|
the history of, and prospects for, our company and the industry in which we compete,
|
|
|
the past and present financial performance of our company,
|
|
|
an assessment of our management,
|
|
|
the present state of our development,
|
|
|
the prospects for our future earnings,
|
|
|
the prevailing market conditions of the applicable United States securities market at the time of this offering,
|
|
|
market valuations of publicly traded companies that we and the representatives of the underwriters believe to be comparable to our company, and
|
|
|
other factors deemed relevant.
|
Page
|
||
RED ROBIN GOURMET BURGERS, INC.
|
||
Independent Auditors Report
|
F-2
|
|
Consolidated Balance SheetsDecember 31, 2000 and December 30, 2001
|
F-3
|
|
Consolidated Statements of IncomeYears Ended December 26, 1999, December 31, 2000 and December 30, 2001
|
F-5
|
|
Consolidated Statements of Stockholders Equity (Deficit)Years Ended December 26, 1999, December 31, 2000 and December
30, 2001
|
F-6
|
|
Consolidated Statements of Cash FlowsYears Ended December 26, 1999, December 31, 2000 and December 30, 2001
|
F-7
|
|
Notes to Consolidated Financial Statements
|
F-9
|
|
THE SNYDER GROUP COMPANY
|
||
Report of Independent Public Accountants
|
F-23
|
|
Statement of Operationsfor the Year Ended December 26, 1999
|
F-24
|
|
Statement of Stockholders Deficitfor the Year Ended December 26, 1999
|
F-25
|
|
Statement of Cash Flowsfor the Year Ended December 26, 1999
|
F-26
|
|
Notes to Financial Statements
|
F-27
|
|
Report of Independent Public Accountants
|
F-32
|
|
Balance SheetMay 10, 2000
|
F-33
|
|
Statement of Operationsfor the Period December 27, 1999 through May 10, 2000
|
F-34
|
|
Statement of Stockholders Deficitfor the Period December 27, 1999 through May 10, 2000
|
F-35
|
|
Statement of Cash Flowsfor the Period December 27, 1999 through May 10, 2000
|
F-36
|
|
Notes to Financial Statements
|
F-37
|
December 31, 2000
|
December 30, 2001
|
|||||
Assets
|
||||||
Current Assets:
|
||||||
Cash and cash equivalents
|
$
|
8,316,826
|
$
|
18,992,153
|
||
Accounts receivable, net
|
|
3,398,531
|
|
2,697,197
|
||
Inventories
|
|
2,607,272
|
|
2,745,898
|
||
Prepaid expenses and other current assets
|
|
1,866,486
|
|
2,072,715
|
||
Income tax refund receivable
|
|
1,045,494
|
|
25,379
|
||
Deferred tax asset
|
|
3,371,444
|
|
1,667,165
|
||
Restricted current assetsmarketing funds
|
|
834,121
|
|
680,607
|
||
|
|
|
|
|||
Total current assets
|
|
21,440,174
|
|
28,881,114
|
||
Real estate held for sale
|
|
3,696,574
|
|
842,496
|
||
Property and equipment, net
|
|
72,159,703
|
|
82,451,120
|
||
Deferred tax asset
|
|
8,172,572
|
|
8,652,382
|
||
Goodwill, net
|
|
23,114,528
|
|
22,554,777
|
||
Notes receivablestockholder/officer
|
|
300,000
|
|
600,000
|
||
Other assets, net
|
|
12,300,847
|
|
11,059,097
|
||
|
|
|
|
|||
Total assets
|
$
|
141,184,398
|
$
|
155,040,986
|
||
|
|
|
|
December 31, 2000
|
December 30, 2001
|
|||||||
Liabilities and Stockholders Equity
|
||||||||
Current Liabilities:
|
||||||||
Trade accounts payable
|
$
|
5,004,767
|
|
$
|
5,669,512
|
|
||
Accrued payroll and payroll-related liabilities
|
|
4,951,330
|
|
|
7,254,058
|
|
||
Unredeemed gift certificates
|
|
2,237,199
|
|
|
2,341,504
|
|
||
Accrued liabilities
|
|
6,209,630
|
|
|
7,200,640
|
|
||
Accrued liabilitiesmarketing funds
|
|
834,121
|
|
|
680,607
|
|
||
Current portion of long-term debt
|
|
4,387,221
|
|
|
5,077,515
|
|
||
|
|
|
|
|
|
|||
Total current liabilities
|
|
23,624,268
|
|
|
28,223,836
|
|
||
Deferred rent payable
|
|
3,761,506
|
|
|
4,229,199
|
|
||
Long-term debt
|
|
74,025,280
|
|
|
75,009,577
|
|
||
Commitments and contingencies (note 10)
|
|
|
|
|
|
|
||
Stockholders Equity:
|
||||||||
Common stock, $.001 par value: 50,000,000 shares authorized; 29,221,394 and 29,261,906 shares issued and outstanding at 2000 and
2001, respectively
|
|
29,221
|
|
|
29,262
|
|
||
Preferred stock, $.001 par value: 1,000,000 shares authorized; no shares issued and outstanding
|
|
|
|
|
|
|
||
Additional paid-in capital
|
|
53,354,713
|
|
|
53,435,696
|
|
||
Retained earnings (accumulated deficit)
|
|
(13,610,590
|
)
|
|
(5,886,584
|
)
|
||
|
|
|
|
|
|
|||
Total stockholders equity
|
|
39,773,344
|
|
|
47,578,374
|
|
||
|
|
|
|
|
|
|||
Total liabilities and stockholders equity
|
$
|
141,184,398
|
|
$
|
155,040,986
|
|
||
|
|
|
|
|
|
Year Ended
|
||||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
||||||||||
Revenues:
|
||||||||||||
Restaurant
|
$
|
121,430,239
|
|
$
|
180,413,546
|
|
$
|
214,963,264
|
|
|||
Franchise royalties and fees
|
|
8,248,810
|
|
|
8,247,439
|
|
|
9,002,090
|
|
|||
Rent revenue
|
|
333,101
|
|
|
509,514
|
|
|
519,408
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total revenues
|
|
130,012,150
|
|
|
189,170,499
|
|
|
224,484,762
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Costs and Expenses:
|
||||||||||||
Restaurant operating costs:
|
||||||||||||
Cost of sales
|
|
30,158,666
|
|
|
43,945,312
|
|
|
50,913,947
|
|
|||
Labor
|
|
43,503,825
|
|
|
64,565,631
|
|
|
74,853,721
|
|
|||
Operating
|
|
19,429,491
|
|
|
27,959,620
|
|
|
33,194,842
|
|
|||
Occupancy
|
|
7,997,915
|
|
|
11,519,135
|
|
|
14,785,060
|
|
|||
Restaurant closures and impairment
|
|
(330,000
|
)
|
|
1,302,186
|
|
|
36,359
|
|
|||
Depreciation and amortization
|
|
5,394,203
|
|
|
8,065,141
|
|
|
10,491,058
|
|
|||
General and administrative
|
|
13,434,319
|
|
|
17,116,344
|
|
|
16,844,988
|
|
|||
Franchise development
|
|
2,508,426
|
|
|
3,386,169
|
|
|
3,703,485
|
|
|||
Pre-opening costs
|
|
770,597
|
|
|
2,506,387
|
|
|
920,845
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total costs and expenses
|
|
122,867,442
|
|
|
180,365,925
|
|
|
205,744,305
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Income from operations
|
|
7,144,708
|
|
|
8,804,574
|
|
|
18,740,457
|
|
|||
Other (Income) Expense:
|
||||||||||||
Interest expense
|
|
4,155,967
|
|
|
6,482,028
|
|
|
7,850,101
|
|
|||
Interest income
|
|
(185,912
|
)
|
|
(741,521
|
)
|
|
(746,344
|
)
|
|||
Other
|
|
390,971
|
|
|
190,715
|
|
|
190,437
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total other expense
|
|
4,361,026
|
|
|
5,931,222
|
|
|
7,294,194
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Income before income taxes
|
|
2,783,682
|
|
|
2,873,352
|
|
|
11,446,263
|
|
|||
(Provision) benefit for income taxes
|
|
1,595,989
|
|
|
12,557,195
|
|
|
(3,722,257
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
4,379,671
|
|
$
|
15,430,547
|
|
$
|
7,724,006
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net Income Per Share:
|
||||||||||||
Basic
|
$
|
0.51
|
|
$
|
0.71
|
|
$
|
0.26
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Diluted
|
$
|
0.51
|
|
$
|
0.71
|
|
$
|
0.26
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Weighted Average Shares Outstanding:
|
||||||||||||
Basic
|
|
8,617,079
|
|
|
21,587,290
|
|
|
29,247,856
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Diluted
|
|
8,617,079
|
|
|
21,587,290
|
|
|
29,684,159
|
|
|||
|
|
|
|
|
|
|
|
|
Common Stock
|
Additional Paid-In Capital
|
Retained Earnings (Deficit)
|
Total
|
|||||||||||||
Shares
|
Amount
|
|||||||||||||||
Balance, December 27,
1998
|
8,614,675
|
$
|
8,615
|
$
|
14,121,680
|
$
|
(33,420,808
|
)
|
$
|
(19,290,513
|
)
|
|||||
Options exercised for common stock
|
25,000
|
|
25
|
|
49,975
|
|
|
|
|
50,000
|
|
|||||
Net income
|
|
|
|
|
|
|
4,379,671
|
|
|
4,379,671
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, December 26, 1999
|
8,639,675
|
|
8,640
|
|
14,171,655
|
|
(29,041,137
|
)
|
|
(14,860,842
|
)
|
|||||
Common stock issued, including The Snyder Group Company acquisition and debt retirement, net of offering costs of
$1,959,799
|
20,562,219
|
|
20,561
|
|
39,144,078
|
|
|
|
|
39,164,639
|
|
|||||
Options exercised for common stock
|
19,500
|
|
20
|
|
38,980
|
|
|
|
|
39,000
|
|
|||||
Net income
|
|
|
|
|
|
|
15,430,547
|
|
|
15,430,547
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, December 31, 2000
|
29,221,394
|
|
29,221
|
|
53,354,713
|
|
(13,610,590
|
)
|
|
39,773,344
|
|
|||||
Common stock issued
|
28,012
|
|
28
|
|
55,996
|
|
|
|
|
56,024
|
|
|||||
Options exercised for common stock
|
12,500
|
|
13
|
|
24,987
|
|
|
|
|
25,000
|
|
|||||
Net income
|
|
|
|
|
|
|
7,724,006
|
|
|
7,724,006
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, December 30, 2001
|
29,261,906
|
$
|
29,262
|
$
|
53,435,696
|
$
|
(5,886,584
|
)
|
$
|
47,578,374
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
||||||||||
Cash Flows From Operating Activities:
|
||||||||||||
Net income
|
$
|
4,379,671
|
|
$
|
15,430,547
|
|
$
|
7,724,006
|
|
|||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
||||||||||||
Depreciation and amortization
|
|
5,394,203
|
|
|
8,065,141
|
|
|
10,491,058
|
|
|||
Loss (gain) on sale of property and equipment
|
|
52,252
|
|
|
(61,832
|
)
|
|
191,552
|
|
|||
Noncash restaurant closure and impairment costs
|
|
(330,000
|
)
|
|
1,302,186
|
|
|
36,359
|
|
|||
Provision for doubtful accounts, net of charge-offs
|
|
104,732
|
|
|
1,272,256
|
|
|
698,316
|
|
|||
Provision (benefit) for deferred income taxes
|
|
(2,186,121
|
)
|
|
(13,235,077
|
)
|
|
1,224,469
|
|
|||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
|
(1,405,280
|
)
|
|
(1,981,133
|
)
|
|
531,837
|
|
|||
Inventories
|
|
(347,042
|
)
|
|
(1,051,706
|
)
|
|
(138,626
|
)
|
|||
Prepaid expenses and other current assets
|
|
(187,668
|
)
|
|
(906,078
|
)
|
|
(206,229
|
)
|
|||
Income tax refund receivable
|
|
(133,879
|
)
|
|
(254,491
|
)
|
|
1,020,116
|
|
|||
Other assets
|
|
(815,424
|
)
|
|
345,880
|
|
|
72,192
|
|
|||
Trade accounts payable and accrued liabilities
|
|
2,509,359
|
|
|
(1,486,592
|
)
|
|
3,426,428
|
|
|||
Deferred rent payable
|
|
272,365
|
|
|
660,741
|
|
|
467,693
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash provided by operating activities
|
|
7,307,168
|
|
|
8,099,842
|
|
|
25,539,171
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Cash Flows From Investing Activities:
|
||||||||||||
Proceeds from sales of real estate, property and equipment
|
|
44,144
|
|
|
1,209,449
|
|
|
2,648,232
|
|
|||
Purchases of property and equipment
|
|
(16,301,773
|
)
|
|
(20,196,996
|
)
|
|
(18,675,387
|
)
|
|||
Purchase of The Snyder Group Company
|
|
|
|
|
(1,572,900
|
)
|
|
(56,024
|
)
|
|||
Issuance of notes receivablestockholder/officer
|
|
|
|
|
(300,000
|
)
|
|
(300,000
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash used in investing activities
|
|
(16,257,629
|
)
|
|
(20,860,447
|
)
|
|
(16,383,179
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Cash Flows From Financing Activities:
|
||||||||||||
Proceeds from issuance of long-term debt
|
|
9,500,000
|
|
|
53,133,034
|
|
|
6,376,775
|
|
|||
Debt issuance costs
|
|
|
|
|
(2,052,642
|
)
|
|
(459,419
|
)
|
|||
Amortization of debt issuance costs
|
|
32,084
|
|
|
83,882
|
|
|
223,139
|
|
|||
Payments of long-term debt and capital leases
|
|
(1,100,697
|
)
|
|
(48,007,002
|
)
|
|
(4,702,184
|
)
|
|||
Repayment of debentures
|
|
|
|
|
(9,160,363
|
)
|
|
|
|
|||
Repayment of promissory note
|
|
|
|
|
(1,799,938
|
)
|
|
|
|
|||
Sale of common stock
|
|
50,000
|
|
|
23,704,333
|
|
|
81,024
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net cash provided by financing activities
|
|
8,481,387
|
|
|
15,901,304
|
|
|
1,519,335
|
|
|||
|
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
(469,074
|
)
|
$
|
3,140,699
|
$
|
10,675,327
|
|||
Cash and cash equivalents, beginning of year
|
|
5,645,201
|
|
|
5,176,127
|
|
8,316,826
|
|||
|
|
|
|
|
|
|
||||
Cash and cash equivalents, end of year
|
$
|
5,176,127
|
|
$
|
8,316,826
|
$
|
18,992,153
|
|||
Supplemental Disclosures, Including Non-Cash Transactions:
|
||||||||||
Interest paid
|
$
|
4,320,276
|
|
$
|
6,536,349
|
$
|
7,805,576
|
|||
Income taxes paid, net
|
$
|
590,132
|
|
$
|
817,102
|
$
|
1,600,000
|
|||
Note receivable from sale of property
|
$
|
|
|
$
|
1,195,121
|
$
|
|
|||
Common stock issued for The Snyder Group Company acquisition
|
$
|
|
|
$
|
10,960,306
|
$
|
56,024
|
|||
Common stock issued for debt retirement
|
$
|
|
|
$
|
4,500,000
|
$
|
|
|||
Debentures and promissory note issued for The Snyder Group Company acquisition
|
$
|
|
|
$
|
10,960,301
|
$
|
|
|||
Capital lease obligations incurred for equipment purchase
|
$
|
211,513
|
|
$
|
|
$
|
|
Year Ended
|
|||||||||
December 26,
1999 |
December 31,
2000 |
December 30,
2001 |
|||||||
Net earnings
|
$
|
4,379,671
|
$
|
15,430,547
|
$
|
7,724,006
|
|||
Basic
|
|
8,617,079
|
|
21,587,290
|
|
29,247,856
|
|||
Dilutive effect of stock options
|
|
|
|
|
|
436,303
|
|||
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding
|
|
8,617,079
|
|
21,587,290
|
|
29,684,159
|
|||
Earnings Per Share:
|
|||||||||
Basic
|
$
|
0.51
|
$
|
0.71
|
$
|
0.26
|
|||
Diluted
|
$
|
0.51
|
$
|
0.71
|
$
|
0.26
|
Year Ended December 31, 2000
|
|||
Total revenues
|
$
|
204,837,502
|
|
Net income
|
|
14,184,054
|
|
Earnings Per Share:
|
|||
Basic
|
$
|
0.49
|
|
Diluted
|
$
|
0.49
|
2000
|
2001
|
|||||||
Trade receivable due from franchisees
|
$
|
1,794,023
|
|
$
|
2,498,572
|
|
||
Receivable from landlords
|
|
3,024,675
|
|
|
1,530,817
|
|
||
Other
|
|
187,416
|
|
|
232,856
|
|
||
|
|
|
|
|
|
|||
|
5,006,114
|
|
|
4,262,245
|
|
|||
Allowance for doubtful accounts
|
|
(1,607,583
|
)
|
|
(1,565,048
|
)
|
||
|
|
|
|
|
|
|||
Accounts receivable, net
|
$
|
3,398,531
|
|
$
|
2,697,197
|
|
||
|
|
|
|
|
|
1999
|
2000
|
2001
|
||||||||||
Allowance for doubtful accounts, beginning of year
|
$
|
230,595
|
|
$
|
335,327
|
|
$
|
1,607,583
|
|
|||
Additions
|
|
219,404
|
|
|
1,335,776
|
|
|
724,782
|
|
|||
Decreases
|
|
(114,672
|
)
|
|
(63,520
|
)
|
|
(767,317
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Allowance for doubtful accounts, end of year
|
$
|
335,327
|
|
$
|
1,607,583
|
|
$
|
1,565,048
|
|
|||
|
|
|
|
|
|
|
|
|
2000
|
2001
|
|||||
Cash
|
$
|
300,935
|
$
|
161,516
|
||
Prepaids
|
|
345,971
|
|
281,593
|
||
Inventory
|
|
|
|
6,036
|
||
Accounts receivable from franchisees
|
|
187,215
|
|
231,462
|
||
|
|
|
|
|||
Restricted current assets-marketing funds
|
$
|
834,121
|
$
|
680,607
|
||
|
|
|
|
2000
|
2001
|
|||||||
Franchise rights
|
$
|
5,800,000
|
|
$
|
5,800,000
|
|
||
Workforce
|
|
2,530,000
|
|
|
2,530,000
|
|
||
Loan fees
|
|
2,454,855
|
|
|
2,630,956
|
|
||
Note receivable
|
|
1,195,121
|
|
|
1,050,000
|
|
||
Deposits
|
|
322,129
|
|
|
252,009
|
|
||
Liquor licenses
|
|
771,723
|
|
|
919,925
|
|
||
Other
|
|
59,540
|
|
|
91,732
|
|
||
|
|
|
|
|
|
|||
|
13,133,368
|
|
|
13,274,622
|
|
|||
Accumulated amortization
|
|
(832,521
|
)
|
|
(2,215,525
|
)
|
||
|
|
|
|
|
|
|||
Other assets, net
|
$
|
12,300,847
|
|
$
|
11,059,097
|
|
||
|
|
|
|
|
|
2000
|
2001
|
|||||||
Term loan
|
$
|
49,633,418
|
|
$
|
47,303,212
|
|
||
Collateralized notes payable and capital leases
|
|
28,779,083
|
|
|
32,783,880
|
|
||
|
|
|
|
|
|
|||
|
78,412,501
|
|
|
80,087,092
|
|
|||
Current portion
|
|
(4,387,221
|
)
|
|
(5,077,515
|
)
|
||
|
|
|
|
|
|
|||
Long-term debt
|
$
|
74,025,280
|
|
$
|
75,009,577
|
|
||
|
|
|
|
|
|
2002
|
$
|
5,077,515
|
|
2003
|
|
5,060,889
|
|
2004
|
|
5,233,094
|
|
2005
|
|
7,331,474
|
|
2006
|
|
6,131,984
|
|
Thereafter
|
|
51,252,136
|
|
|
|
||
$
|
80,087,092
|
||
|
|
1999
|
2000
|
2001
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
(586,121
|
)
|
$
|
(670,484
|
)
|
$
|
(1,964,493
|
)
|
|||
State
|
|
(4,011
|
)
|
|
(7,398
|
)
|
|
(533,295
|
)
|
|||
Deferred:
|
||||||||||||
Federal
|
|
170,758
|
|
|
284,494
|
|
|
(1,104,231
|
)
|
|||
State
|
|
(260,478
|
)
|
|
(183,937
|
)
|
|
(120,238
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
|
(679,852
|
)
|
|
(577,325
|
)
|
|
(3,722,257
|
)
|
||||
Change in valuation allowance
|
|
2,275,841
|
|
|
13,134,520
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
$
|
1,595,989
|
|
$
|
12,557,195
|
|
$
|
(3,722,257
|
)
|
||||
|
|
|
|
|
|
|
|
|
1999
|
2000
|
2001
|
||||||||||
Tax provision at federal statutory rate
|
$
|
(946,452
|
)
|
$
|
(976,940
|
)
|
$
|
(3,891,729
|
)
|
|||
State income taxes
|
|
(244,675
|
)
|
|
(271,796
|
)
|
|
(806,826
|
)
|
|||
General business and other tax credits
|
|
546,925
|
|
|
804,036
|
|
|
990,556
|
|
|||
Other
|
|
(35,650
|
)
|
|
(132,625
|
)
|
|
(14,258
|
)
|
|||
Change in valuation allowance
|
|
2,275,841
|
|
|
13,134,520
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
$
|
1,595,989
|
|
$
|
12,557,195
|
|
$
|
(3,722,257
|
)
|
||||
|
|
|
|
|
|
|
|
|
1999
|
2000
|
2001
|
|||||||
Minimum rent
|
$
|
4,757,404
|
$
|
7,220,168
|
$
|
9,593,137
|
|||
Percentage rent
|
|
661,298
|
|
1,090,149
|
|
944,977
|
|||
|
|
|
|
|
|
||||
$
|
5,418,702
|
$
|
8,310,317
|
$
|
10,538,114
|
||||
|
|
|
|
|
|
1999
|
2000
|
2001
|
|||||||
Franchise Royalties and Fees:
|
|||||||||
Royalty income
|
$
|
7,902,810
|
$
|
7,934,226
|
$
|
8,520,990
|
|||
Franchise fees
|
|
346,000
|
|
313,213
|
|
481,100
|
|||
|
|
|
|
|
|
||||
Total franchise royalties and fees
|
|
8,248,810
|
|
8,247,439
|
|
9,002,090
|
|||
|
|
|
|
|
|
||||
Franchise Development Costs:
|
|||||||||
Payroll and employee benefit costs
|
|
727,653
|
|
1,313,785
|
|
1,344,745
|
|||
General and administrative
|
|
1,780,773
|
|
2,072,384
|
|
2,358,740
|
|||
|
|
|
|
|
|
||||
Total franchise development costs
|
|
2,508,426
|
|
3,386,169
|
|
3,703,485
|
|||
|
|
|
|
|
|
||||
Operating income from franchise operations
|
$
|
5,740,384
|
$
|
4,861,270
|
$
|
5,298,605
|
|||
|
|
|
|
|
|
1999
|
2000
|
2001
|
||||||||||||||||
Shares
|
Weighted Average Exercise Price
|
Shares
|
Weighted Average Exercise Price
|
Shares
|
Weighted Average Exercise Price
|
|||||||||||||
Outstanding at beginning of year
|
1,548,100
|
|
$
|
2.00
|
1,565,100
|
|
$
|
2.00
|
4,098,100
|
|
$
|
2.00
|
||||||
Granted
|
343,500
|
|
|
2.00
|
2,783,750
|
|
|
2.00
|
395,500
|
|
|
2.25
|
||||||
Canceled
|
(301,500
|
)
|
|
2.00
|
(231,250
|
)
|
|
2.00
|
(383,500
|
)
|
|
2.00
|
||||||
Exercised
|
(25,000
|
)
|
|
2.00
|
(19,500
|
)
|
|
2.00
|
(12,500
|
)
|
|
2.00
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Outstanding at end of year
|
1,565,100
|
|
$
|
2.00
|
4,098,100
|
|
$
|
2.00
|
4,097,600
|
|
$
|
2.02
|
Revenue
|
$
|
41,675,004
|
|
|
Costs and expenses:
|
||||
Store-
|
||||
Salaries and benefits
|
|
12,876,697
|
|
|
Cost of products sold
|
|
10,482,092
|
|
|
Other controllable costs
|
|
5,748,659
|
|
|
Rent, occupancy and related costs
|
|
4,782,055
|
|
|
Advertising and promotion
|
|
827,580
|
|
|
Depreciation and amortization
|
|
1,316,618
|
|
|
|
|
|
||
Total store costs and expenses
|
|
36,033,701
|
|
|
Non-Store-
|
||||
General And administrative
|
|
4,904,661
|
|
|
Reorganization costs
|
|
130,072
|
|
|
Depreciation and amortization
|
|
113,307
|
|
|
|
|
|
||
Total non-store costs and expenses
|
|
5,148,040
|
|
|
|
|
|
||
Total costs and expenses
|
|
41,181,741
|
|
|
|
|
|
||
Income from Operations
|
|
493,263
|
|
|
Other Income (Expense):
|
||||
Other income (expense)
|
|
263,529
|
|
|
Loss on sale of assets
|
|
(444,510
|
)
|
|
Interest income from related party
|
|
94,878
|
|
|
Interest expense
|
|
(1,879,110
|
)
|
|
|
|
|
||
Total other expense, net
|
|
(1,965,213
|
)
|
|
|
|
|
||
Loss Before Income Taxes and Change
in Accounting Principle |
|
(1,471,950
|
)
|
|
Income Tax Expense
|
|
129,555
|
|
|
|
|
|
||
Net Loss Before Change in Accounting Principle
|
|
(1,601,505
|
)
|
|
|
|
|
||
Change in Accounting Principle
|
|
(223,753
|
)
|
|
|
|
|
||
Net Loss
|
$
|
(1,825,258
|
)
|
|
|
|
|
Common Stock
|
Additional Paid-In Capital
|
Retained Earnings (Deficit)
|
Total
|
||||||||||||||||
Shares
|
Amount
|
||||||||||||||||||
Balances,
December 27, 1998
|
106,487
|
|
|
1,065
|
|
|
138,075
|
|
|
(637,629
|
)
|
|
(498,489
|
)
|
|||||
Repurchase of common stock
|
(4,782
|
)
|
|
(48
|
)
|
|
(151,952
|
)
|
|
|
|
|
(152,000
|
)
|
|||||
Capital contribution
|
|
|
|
|
|
|
42,400
|
|
|
|
|
|
42,400
|
|
|||||
Net loss
|
|
|
|
|
|
|
|
|
|
(1,825,258
|
)
|
|
(1,825,258
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balances,
December 26, 1999
|
101,705
|
|
$
|
1,017
|
|
$
|
28,523
|
|
$
|
(2,462,887
|
)
|
$
|
(2,433,347
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
||||
Net loss
|
$
|
(1,825,258
|
)
|
|
Adjustments to reconcile net loss to net cash provided by
operating activities- |
||||
Depreciation and amortization
|
|
1,789,160
|
|
|
Loss on sale of assets
|
|
445,899
|
|
|
Changes in assets and liabilities-
|
||||
Increase in current assets
|
|
(832,220
|
)
|
|
Increase in accounts payable and accrued expenses
|
|
2,164,132
|
|
|
Increase in deposits and other non-current assets
|
|
(51,265
|
)
|
|
|
|
|
||
Net cash provided by operating activities
|
|
1,690,448
|
|
|
|
|
|
||
Cash Flows from Investing Activities:
|
||||
Purchases of property and equipment
|
|
(1,904,017
|
)
|
|
Proceeds from sale of assets
|
|
1,350,000
|
|
|
|
|
|
||
Net cash used in investing activities
|
|
(554,017
|
)
|
|
|
|
|
||
Cash Flows from Financing Activities:
|
||||
Repayment of notes payable
|
|
(2,185,755
|
)
|
|
Draws on debt
|
|
1,833,036
|
|
|
Repayments of capital lease obligations
|
|
(463,207
|
)
|
|
Capital contribution
|
|
42,400
|
|
|
Repurchase of common stock
|
|
(152,000
|
)
|
|
|
|
|
||
Net cash used in financing activities
|
|
(925,527
|
)
|
|
|
|
|
||
Increase in Cash
|
|
210,904
|
|
|
Cash
, beginning of period
|
|
136,103
|
|
|
|
|
|
||
Cash
, end of period
|
$
|
347,007
|
|
|
|
|
|
||
Supplemental Disclosure of Cash Flow Information:
|
||||
Cash paid for interest
|
$
|
1,850,848
|
|
|
|
|
|
Buildings and leasehold improvements
|
5-20 years
|
|
Furniture and equipment
|
5-10 years
|
|
Smallwares
|
2 years
|
License agreements
|
15-20 years
|
|
Goodwill
|
18 years
|
2000
|
||||
Assets
|
||||
Current Assets:
|
||||
Cash
|
$
|
112,066
|
|
|
Accounts receivable
|
|
246,646
|
|
|
Inventory
|
|
255,506
|
|
|
Prepaid expenses and other current assets
|
|
71,161
|
|
|
Income tax receivable
|
|
132,102
|
|
|
|
|
|
||
Total current assets
|
|
817,481
|
|
|
|
|
|
||
Property and Equipment, net
|
|
10,904,798
|
|
|
Receivable From Affiliate
|
|
5,074
|
|
|
Advances to Stockholders
|
|
1,920,605
|
|
|
Deposits
|
|
128,678
|
|
|
Other Assets, net
|
|
463,075
|
|
|
|
|
|
||
Total assets
|
$
|
14,239,711
|
|
|
Liabilities and Stockholders Deficit
|
||||
Current Liabilities:
|
||||
Accounts payable
|
$
|
2,203,472
|
|
|
Accrued expenses
|
|
5,017,312
|
|
|
Current portion of notes payable
|
|
1,454,678
|
|
|
Current portion of capital lease obligations
|
|
248,622
|
|
|
|
|
|
||
Total current liabilities
|
|
8,924,084
|
|
|
|
|
|
||
Notes Payable, net of current portion
|
|
2,602,681
|
|
|
Capital Lease Obligations, net of current portion
|
|
6,048,517
|
|
|
|
|
|
||
Total liabilities
|
|
17,575,282
|
|
|
|
|
|
||
Commitments And Contingencies (Note 8)
|
||||
Stockholders Deficit:
|
||||
Preferred stock, no par value; 100,000 shares authorized, none issued and outstanding
|
|
|
|
|
Common stock, $.01 par value; 200,000 shares authorized, 84,214 shares issued and outstanding
|
|
842
|
|
|
Additional paid-in capital
|
|
(527,302
|
)
|
|
Retained (deficit)
|
|
(2,809,111
|
)
|
|
|
|
|
||
Total stockholders deficit
|
|
(3,335,571
|
)
|
|
|
|
|
||
Total liabilities and stockholders deficit
|
$
|
14,239,711
|
|
|
|
|
|
Revenue
|
$
|
16,296,336
|
|
|
Costs and Expenses:
|
||||
Store-
|
||||
Salaries and benefits
|
|
4,898,376
|
|
|
Cost of products sold
|
|
4,131,860
|
|
|
Other controllable costs
|
|
2,185,047
|
|
|
Rent, occupancy and related costs
|
|
1,833,921
|
|
|
Advertising and promotion
|
|
336,693
|
|
|
Depreciation and amortization
|
|
496,809
|
|
|
|
|
|
||
Total store costs and expenses
|
|
13,882,706
|
|
|
Non-store-
|
||||
General and administrative
|
|
1,531,807
|
|
|
Reorganization costs
|
|
420,485
|
|
|
Depreciation and amortization
|
|
51,204
|
|
|
|
|
|
||
Total non-store costs and expenses
|
|
2,003,496
|
|
|
|
|
|
||
Total costs and expenses
|
|
15,886,202
|
|
|
|
|
|
||
Income From Operations
|
|
410,134
|
|
|
Other Income (Expense):
|
||||
Other expense, net
|
|
(149,076
|
)
|
|
Interest income from related party
|
|
31,025
|
|
|
Interest expense
|
|
(748,907
|
)
|
|
|
|
|
||
Total other expense, net
|
|
(866,958
|
)
|
|
|
|
|
||
Loss Before Income Taxes
|
|
(456,824
|
)
|
|
Income Tax Benefit
|
|
110,600
|
|
|
|
|
|
||
Net Loss
|
$
|
(346,224
|
)
|
|
|
|
|
Additional Paid-In Capital
|
Retained Earnings (Deficit)
|
Total
|
|||||||||||||||||
Common Stock
|
|||||||||||||||||||
Shares
|
Amount
|
||||||||||||||||||
Balances
, December 26, 1999
|
101,705
|
|
$
|
1,017
|
|
$
|
28,523
|
|
$
|
(2,462,887
|
)
|
$
|
(2,433,347
|
)
|
|||||
Repurchase of common stock
|
(17,491
|
)
|
|
(175
|
)
|
|
(555,825
|
)
|
|
|
|
|
(556,000
|
)
|
|||||
Net loss
|
|
|
|
|
|
|
|
|
|
(346,224
|
)
|
|
(346,224
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balances
, May 10, 2000
|
84,214
|
|
$
|
842
|
|
$
|
(527,302
|
)
|
$
|
(2,809,111
|
)
|
$
|
(3,335,571
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
||||
Net loss
|
$
|
(346,224
|
)
|
|
Adjustments to reconcile net loss to net cash provided by
operating activities- |
||||
Depreciation and amortization
|
|
548,014
|
|
|
Gain on disposition of assets
|
|
(1,249
|
)
|
|
Changes in assets and liabilities-
|
||||
Decrease in current assets
|
|
533,649
|
|
|
Increase in accounts payable and accrued expenses
|
|
131,478
|
|
|
Increase in deposits and other non-current assets
|
|
(198,045
|
)
|
|
|
|
|
||
Net cash provided by operating activities
|
|
667,623
|
|
|
|
|
|
||
Cash Flows From Investing Activities:
|
||||
Purchases of property and equipment
|
|
(66,762
|
)
|
|
|
|
|
||
Net cash used in investing activities
|
|
(66,762
|
)
|
|
|
|
|
||
Cash Flows from Financing Activities:
|
||||
Repayment of notes payable
|
|
(167,066
|
)
|
|
Repayments of capital lease obligations
|
|
(112,736
|
)
|
|
Repurchase of common stock
|
|
(556,000
|
)
|
|
|
|
|
||
Net cash used in financing activities
|
|
(835,802
|
)
|
|
|
|
|
||
Decrease in Cash
|
|
(234,941
|
)
|
|
Cash, beginning of period
|
|
347,007
|
|
|
|
|
|
||
Cash, end of period
|
$
|
112,066
|
|
|
|
|
|
||
Supplemental Disclosure of Cash Flow Information:
|
||||
Cash paid for interest
|
$
|
672,855
|
|
|
|
|
|
Buildings and leasehold improvements
|
5-20 years
|
|
Furniture and equipment
|
5-10 years
|
|
Smallwares
|
2 years
|
License agreements
|
15-20 years
|
|
Goodwill
|
18 years
|
Land
|
$
|
1,189,883
|
|
|
Buildings and leasehold improvements
|
|
9,051,336
|
|
|
Furniture and equipment
|
|
8,593,752
|
|
|
Smallwares
|
|
279,231
|
|
|
Less-Accumulated depreciation and amortization
|
|
(8,209,404
|
)
|
|
|
|
|
||
Total property and equipment, net
|
$
|
10,904,798
|
|
|
|
|
|
||
Other assets at May 10, 2000 consisted of the following:
|
||||
License agreements
|
$
|
345,000
|
|
|
Goodwill
|
|
134,777
|
|
|
Cash surrender of insurance policies
|
|
247,002
|
|
|
Less-Accumulated amortization
|
|
(263,704
|
)
|
|
|
|
|
||
Total other assets, net
|
$
|
463,075
|
|
|
|
|
|
2001
|
$
|
1,454,678
|
|
2002
|
|
432,271
|
|
2003
|
|
442,539
|
|
2004
|
|
327,471
|
|
2005
|
|
242,407
|
|
Thereafter
|
$
|
1,157,993
|
|
|
|
||
Total
|
$
|
4,057,359
|
|
|
|
Operating Lease
|
Capital
Lease |
|||||
May 11, 2000May 10, 2001
|
$
|
2,159,606
|
$
|
1,154,586
|
||
May 11, 2001May 10, 2002
|
|
1,993,352
|
|
978,124
|
||
May 11, 2002May 10, 2003
|
|
1,961,475
|
|
981,097
|
||
May 11, 2003May 10, 2004
|
|
1,899,477
|
|
906,677
|
||
May 11, 2004May 10, 2005
|
|
1,644,095
|
|
933,031
|
||
Thereafter
|
|
13,009,584
|
|
11,214,072
|
||
|
|
|
|
|||
Total future minimum leases
|
$
|
22,667,589
|
$
|
16,167,587
|
||
|
|
|
|
|||
Lessamount representing interest
|
$
|
9,870,448
|
||||
Present value of net future minimum lease payments
|
|
6,297,139
|
||||
Lessamounts due within one year
|
|
248,622
|
||||
|
|
|||||
$
|
6,048,517
|
|||||
|
|
2000
|
|||
Deferred tax assets:
|
|||
Net operating loss carryforwards
|
130,550
|
|
|
Accrued liabilities
|
165,771
|
|
|
|
|
||
Total deferred tax assets
|
296,321
|
|
|
|
|
||
Valuation Allowance
|
(246,446
|
)
|
|
Deferred tax liabilities:
|
|||
Property and equipment
|
(49,875
|
)
|
|
Total deferred tax liabilities
|
(49,875
|
)
|
|
|
|
|
*
|
|
To be completed by amendment.
|
Exhibit Number
|
Description of Document
|
|
10.23
|
Promissory Note, dated February 27, 2001, by Michael J. Snyder in favor of Red Robin International, Inc.
|
|
10.24
|
Pledge Agreement, dated June 30, 2000, by and between Michael J. Snyder and Red Robin International, Inc.
|
|
10.25
|
Pledge Agreement, dated February 27, 2001, by and between Michael J. Snyder and Red Robin International, Inc.
|
|
10.26
|
Agreement, dated July 15, 1998, by and between Red Robin International, Inc. and McClain Finlon Advertising, Inc., as amended.
|
|
10.27**
|
Fountain Beverage Agreement, dated April 1, 2000, by and between Pepsi-Cola Company, a division of PepsiCo, a North Carolina corporation, and Red Robin International,
Inc.
|
|
10.28**
|
Master Distribution Agreement, dated May 16, 2001, by and between Sysco Corporation and Red Robin International, Inc.
|
|
10.29
|
Credit Agreement, dated as of April 12, 2002, between Red Robin International, Inc. and U.S. Bank National Association.
|
|
21.1
|
List of Subsidiaries.
|
|
23.1
|
Consent of Deloitte & Touche LLP, Independent Auditors.
|
|
23.2
|
Consent of Arthur Andersen LLP, Independent Auditors.
|
|
23.3*
|
Consent of OMelveny & Myers LLP. Reference is made to Exhibit 5.1.
|
|
24.1
|
Power of Attorney. Reference is made to page II-10.
|
*
|
|
To be filed by amendment.
|
**
|
|
Confidential treatment has been requested for a portion of this Exhibit.
|
By:
|
/s/ M
ICHAEL
J. S
NYDER
|
|
Michael J. Snyder
|
||
Chairman of the Board, President and
Chief Executive
Officer
|
Signature
|
Title
|
Date
|
||
/
S
/ M
ICHAEL
J.
S
NYDER
Michael J. Snyder
|
Chairman of the Board, President, Chief
Executive Officer and Director (Principal Executive Officer) |
April 25, 2002
|
||
/s/ J
AMES
P. M
C
C
LOSKEY
James P. McCloskey
|
Chief Financial Officer
(Principal Financial Officer) |
April 25, 2002
|
||
/s/ E
DWARD
T. H
ARVEY
Edward T. Harvey
|
Director
|
April 22, 2002
|
||
/s/ T
ERRENCE
D. D
ANIELS
Terrence D. Daniels
|
Director
|
April 25, 2002
|
||
/s/ G
ARY
J. S
INGER
Gary J. Singer
|
Director
|
April 23, 2002
|
||
/s/ T
ASUKO
C
HINO
Tasuko Chino
|
Director
|
April 25, 2002
|
Exhibit Number
|
Description of Document
|
|
1.1*
|
Form of Underwriting Agreement.
|
|
2.1
|
Agreement and Plan of Merger, dated February 18, 2000, by and among Red Robin International, Inc., Red Robin Holding Co., Inc., The Snyder Group Company and the stockholders
of The Snyder Group Company.
|
|
2.2*
|
Closing Agreement and Amendment to Merger Agreement, entered into as May 11, 2000, by and among Red Robin International Inc., Red Robin Holding Co., Inc., The Snyder Group
Company and the stockholders of The Snyder Group Company.
|
|
2.3
|
Memorandum Agreement, dated May 10, 2001, by and among The Snyder Group Company, Red Robin International, Inc., Red Robin West, Inc., Rodney Bench, as trustee of that
certain Trust Indenture Agreement, dated May 11, 2000, by and among Red Robin International, Inc., Rodney Bench and Bunch Grass Leasing, LLC. Filed as Exhibit 10.16.
|
|
2.4
|
Agreement and Plan of Merger, dated January 23, 2001, by and among Red Robin International, Inc., Red Robin Gourmet Burgers, Inc. and Red Robin Merger Sub, Inc.
|
|
2.5
|
Stock Purchase Agreement, dated as of September 19, 2001, by and among Western Franchise Development, Inc., Dennis E. Garcelon and E. Marlena Garcelon, trustees of the
Garcelon Trust dated January 6, 1992, Samuel Winston Garcelon and Red Robin International, Inc.
|
|
3.1*
|
Form of Amended and Restated Certificate of Incorporation.
|
|
3.2*
|
Form of Amended and Restated Bylaws.
|
|
4.1*
|
Specimen Stock Certificate.
|
|
5.1*
|
Opinion of OMelveny & Myers LLP.
|
|
10.1
|
Red Robin Gourmet Burgers, Inc. Incentive Stock Option and Nonqualified Stock Option Plan 1990.
|
|
10.2
|
Red Robin Gourmet Burgers, Inc. 1996 Stock Option Plan.
|
|
10.3
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan.
|
|
10.4*
|
Red Robin Gourmet Burgers, Inc. 2002 Stock Incentive Plan.
|
|
10.5*
|
Red Robin Gourmet Burgers, Inc. Employee Stock Purchase Plan.
|
|
10.6*
|
Stock Subscription Agreement, dated as of February 18, 2000, between Red Robin International, Inc., a Nevada corporation, RR Investors, LLC, a Virginia limited liability
company, and RR Investors II, LLC, a Virginia limited liability company.
|
|
10.7
|
Amended and Restated Shareholders Agreement, dated August 9, 2001, by and among Red Robin Gourmet Burgers, Inc., Skylark Co., Ltd., RR Investors LLC, RR Investors II, LLC,
Michael J. Snyder and certain other stockholders named therein.
|
|
10.8
|
Registration Rights Agreement, dated May 11, 2000, by and among Red Robin International, Inc., Skylark Co., Ltd., RR Investors LLC, RR Investors II, LLC, Michael J. Snyder
and certain stockholders named therein.
|
|
10.9
|
First Amendment to Registration Rights Agreement, dated August 9, 2001, by and among Red Robin Gourmet Burgers, Inc., Red Robin International, Inc., Skylark Co., Ltd., RR
Investors LLC, RR Investors II, LLC, Michael J. Snyder and certain other stockholders named therein.
|
|
10.10
|
Employment Agreement, dated May 11, 2000, by and between Red Robin International, Inc. and Michael J. Snyder.
|
Exhibit Number
|
Description of Document
|
|
10.11
|
Employment Agreement, dated January 7, 1997, by and between Mike Woods and Red Robin International, Inc.
|
|
10.12
|
Non-Interference, Non-Disclosure and Non-Competition Agreement, dated May 11, 2000, by and among RR Investors, LLC, RR Investors II, LLC, Red Robin International, Inc. and
Michael J. Snyder.
|
|
10.13
|
Consulting Services Agreement, dated May 11, 2000, by and between Red Robin International, Inc. and Quad-C Management, Inc.
|
|
10.14
|
Escrow Agreement, dated May 11, 2000, by and among Red Robin International, Inc., Red Robin Holding Co., Inc., the former stockholders of The Snyder Group Company and The
Bank of New York, as escrow agent.
|
|
10.15
|
First Amendment to Escrow Agreement, dated August 9, 2001, by and among Red Robin Gourmet Burgers, Inc., Red Robin International, Inc., Red Robin West, Inc., the former
stockholders of The Snyder Group Company and The Bank of New York, as escrow agent.
|
|
10.16
|
Memorandum Agreement, dated May 10, 2001, by and among The Snyder Group Company, each stockholder of The Snyder Group Company, Red Robin International, Inc., Red Robin West,
Inc., Rodney Bench, as trustee of that certain Trust Indenture Agreement, dated May 11, 2000, by and among Red Robin International, Inc., Rodney Bench and Bunch Grass Leasing, LLC.
|
|
10.17
|
Loan Agreement, dated as of September 6, 2000, among Red Robin International, Inc., Red Robin Distributing Company, Inc., Red Robin Holding Co., Inc., Red Robin of Baltimore
County, Inc., Red Robin of Anne Arundel County, Inc., Finova Capital Corporation and certain other financial institutions from time to time party thereto.
|
|
10.18
|
First Amendment to Loan Instruments, dated as of August 9, 2001, by and among Red Robin Gourmet Burgers, Inc., Red Robin International, Inc., Red Robin Distributing Company,
Inc., Red Robin West, Inc., Red Robin of Baltimore County, Inc., Red Robin of Montgomery County, Inc., Red Robin of Anne Arundel County, Inc., Finova Capital Corporation and certain other financial institutions from time to time party
thereto.
|
|
10.19
|
Second Amendment to Loan Instruments, dated as of January 31, 2002, by and among Red Robin Gourmet Burgers, Inc., Red Robin International, Inc. Red Robin Distributing
Company, Inc., Red Robin West, Inc., Red Robin of Baltimore County, Inc., Red Robin of Montgomery County, Inc., Red Robin of Anne Arundel County, Inc., Western Franchise Development, Inc., Finova Capital Corporation and certain other financial
institutions from time to time party thereto.
|
|
10.20*
|
Form of Indemnification Agreement entered into by and between Red Robin Gourmet Burgers, Inc. and each of our directors and executive officers.
|
|
10.21
|
Master Loan Agreement, dated November 3, 2000, by and between Red Robin and General Electric Capital Business Asset Funding Corporation.
|
|
10.22
|
Promissory Note, dated June 30, 2000, by Michael J. Snyder in favor of Red Robin International, Inc.
|
|
10.23
|
Promissory Note, dated February 27, 2001, by Michael J. Snyder in favor of Red Robin International, Inc.
|
|
10.24
|
Pledge Agreement, dated June 30, 2000, by and between Michael J. Snyder and Red Robin International, Inc.
|
|
10.25
|
Pledge Agreement, dated February 27, 2001, by and between Michael J. Snyder and Red Robin International, Inc.
|
|
10.26
|
Agreement, dated July 15, 1998, by and between Red Robin International, Inc. and McClain Finlon Advertising, Inc., as amended.
|
Exhibit Number
|
Description of Document
|
|
10.27**
|
Fountain Beverage Agreement, dated April 1, 2000, by and between Pepsi-Cola Company, a division of PepsiCo, a North Carolina corporation, and Red Robin International,
Inc.
|
|
10.28**
|
Master Distribution Agreement, dated May 16, 2001, by and between Sysco Corporation and Red Robin International, Inc.
|
|
10.29
|
Credit Agreement, dated as of April 12, 2002, between Red Robin International, Inc. and U.S. Bank National Association.
|
|
21.1
|
List of Subsidiaries.
|
|
23.1
|
Consent of Deloitte & Touche LLP, Independent Auditors.
|
|
23.2
|
Consent of Arthur Andersen LLP, Independent Auditors.
|
|
23.3*
|
Consent of OMelveny & Myers LLP. Reference is made to Exhibit 5.1.
|
|
24.1
|
Power of Attorney. Reference is made to page II-10.
|
*
|
|
To be filed by amendment.
|
**
|
|
Confidential treatment has been requested for a portion of this Exhibit.
|
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
RED ROBIN INTERNATIONAL, INC.,
RED ROBIN HOLDING CO., INC.,
THE SNYDER GROUP COMPANY
AND
THE STOCKHOLDERS OF THE SNYDER GROUP COMPANY
Dated as of February 18, 2000
TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS 1.1 Definitions ........................................................................... 1 ARTICLE II THE MERGER 2.1 The Merger ............................................................................ 10 2.2 Closing ............................................................................... 10 2.3 Effects of the Merger ................................................................. 10 2.4 Articles of Incorporation and Bylaws .................................................. 11 2.5 Directors and Officers of the Surviving Corporation ................................... 11 2.6 Additional Actions .................................................................... 11 2.7 Nature and Qualification of Merger .................................................... 11 2.8 Conversion of Capital Stock ........................................................... 11 2.9 Merger Consideration; Adjustments ..................................................... 12 2.10 Exchange of Certificates .............................................................. 14 2.11 Escrow Agreement ...................................................................... 14 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS 3.1 Organization and Qualification ........................................................ 15 3.2 Capitalization; Validity of Shares; Voting Trusts ..................................... 16 3.3 Authority Relative to this Agreement .................................................. 17 3.4 Consents and Approvals ................................................................ 17 3.5 Non-Contravention ..................................................................... 17 3.6 Environmental Matters ................................................................. 17 3.7 Licenses and Permits .................................................................. 18 3.8 Compliance with Laws .................................................................. 19 3.9 Financial Statements .................................................................. 19 3.10 Absence of Changes .................................................................... 19 3.11 No Undisclosed Liabilities ............................................................ 22 3.12 Litigation ............................................................................ 22 3.13 Real Property ......................................................................... 23 3.14 Personal Property ..................................................................... 24 3.15 Sufficiency of Assets ................................................................. 25 3.16 Books and Records ..................................................................... 25 3.17 Intellectual Property; Computer Software .............................................. 26 |
TABLE OF CONTENTS
(continued)
Page 3.18 Material Contracts .................................................................. 26 3.19 Insurance ........................................................................... 28 3.20 Labor Matters ....................................................................... 29 3.21 Employee Plans ...................................................................... 30 3.22 Tax Matters ......................................................................... 36 3.23 Transactions with Certain Persons ................................................... 38 3.24 Suppliers ........................................................................... 38 3.25 Banking Relationships ............................................................... 38 3.26 Prohibited Payments ................................................................. 39 3.27 Year 2000 Matters ................................................................... 39 3.28 Brokers ............................................................................. 39 3.29 Full Disclosure ..................................................................... 39 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 4.1 Ownership of Company Common Stock ................................................... 40 4.2 Power, Authorization and Enforceability of Agreement ................................ 40 4.3 Compliance with Other Instruments and Laws .......................................... 40 4.4 No Third Party Options .............................................................. 41 4.5 Brokers and Finders ................................................................. 41 4.6 Investment Representations .......................................................... 41 4.7 Tax Free Reorganization Treatment ................................................... 42 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER 5.1 Organization; Qualification ......................................................... 42 5.2 Authority Relative to this Agreement ................................................ 42 5.3 Consents and Approvals .............................................................. 43 5.4 Non-Contravention ................................................................... 43 5.5 Litigation .......................................................................... 43 5.6 Brokers ............................................................................. 43 5.7 Interim Operations of Sub ........................................................... 43 ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Conduct of Business ................................................................. 44 6.2 Forbearances ........................................................................ 44 6.3 Negotiations with Others ............................................................ 45 |
TABLE OF CONTENTS
(continued)
Page 6.4 Investigation of Business and Properties ...................................... 45 6.5 Confidentiality ............................................................... 45 6.6 No Disclosure; Public Announcements ........................................... 46 6.7 Expenses ...................................................................... 46 6.8 Interim Financial Statements .................................................. 46 6.9 Efforts to Consummate ......................................................... 46 6.10 Environmental Investigation ................................................... 47 6.11 Further Assurances ............................................................ 47 6.12 HSR Act ....................................................................... 47 6.13 Tax Treatment; Plan of Reorganization ......................................... 47 6.14 Form 5500 Filings ............................................................. 47 6.15 Tax Matters ................................................................... 48 6.16 Delivery of Reports to the Company and Access to Officers ..................... 50 6.17 Valuation Items ............................................................... 50 6.18 Retained Assets ............................................................... 50 6.19 Books and Records ............................................................. 50 6.20 Company Schedules ............................................................. 51 ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER 7.1 Representations and Warranties ................................................ 51 7.2 Performance of this Agreement ................................................. 51 7.3 Consents and Approvals ........................................................ 51 7.4 Injunction, Litigation, etc. .................................................. 52 7.5 Legislation ................................................................... 52 7.6 Proceedings ................................................................... 52 7.7 Closing Deliveries ............................................................ 52 7.8 Material Change ............................................................... 53 7.9 Quad-C Investment ............................................................. 53 7.10 Shareholders Agreement; Registration Rights Agreement ......................... 53 7.11 Master Agreement; Stock Purchase and Sale Agreement ........................... 53 7.12 Employment Agreement .......................................................... 53 7.13 Due Diligence Review .......................................................... 53 7.14 Opinion of Financial Advisor .................................................. 53 7.15 Escrow Agreement .............................................................. 53 7.16 Minimum Debenture Merger Consideration ........................................ 53 7.17 Dissenting Stockholders ....................................................... 53 7.18 Refinancing of Debt ........................................................... 53 7.19 Assets ........................................................................ 54 7.20 Tax Free Reorganization Treatment ............................................. 54 7.21 Approval of the Company Schedules ............................................. 54 |
TABLE OF CONTENTS
(continued)
Page ARTICLE VIII CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS 8.1 Representations and Warranties ............................................ 54 8.2 Performance of this Agreement ............................................. 54 8.3 Consents and Approvals .................................................... 55 8.4 Injunction, Litigation, etc. .............................................. 55 8.5 Legislation ............................................................... 55 8.6 Proceedings; Certificates ................................................. 55 8.7 Closing Deliveries ........................................................ 55 8.8 Tax Free Reorganization Treatment ......................................... 56 8.9 Releases .................................................................. 56 8.10 Merger Consideration ...................................................... 56 8.11 Quad-C Investment ......................................................... 56 8.12 Master Agreement; Stock Purchase and Sale Agreement ....................... 56 8.13 Shareholders Agreement; Registration Rights Agreement ..................... 56 8.14 Employment Agreement ...................................................... 56 8.15 Refinancing of Debt ....................................................... 56 8.16 Indenture ................................................................. 57 ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 9.1 Survival of Representations ............................................... 57 9.2 Indemnification by the Stockholders ....................................... 57 9.3 Indemnification by Buyer .................................................. 58 9.4 Notice and Defense of Claims .............................................. 59 9.5 Limitations on Indemnification ............................................ 62 9.6 Calculation of Covered Liabilities ........................................ 62 9.7 Exclusive Remedy .......................................................... 63 ARTICLE X TERMINATION 10.1 Termination ............................................................... 63 10.2 Procedure: Effect of Termination .......................................... 64 ARTICLE XI GENERAL PROVISIONS |
TABLE OF CONTENTS
(continued)
Page 11.1 Notices .................................................... 64 11.2 Interpretation ............................................. 65 11.3 Entire Agreement ........................................... 65 11.4 No Third Party Beneficiaries ............................... 65 11.5 Successors and Assigns ..................................... 66 11.6 Severability ............................................... 66 11.7 Amendment .................................................. 66 11.8 Extension; Waiver .......................................... 66 11.9 Disclosure Schedules ....................................... 66 11.10 Counterparts ............................................... 67 11.11 Jurisdiction; Waiver of Jury Trial ......................... 67 11.12 Governing Law .............................................. 67 11.13 Stockholder Agent .......................................... 67 11.14 Stockholders Covenant ...................................... 68 11.15 Attorney's Fees ............................................ 68 |
EXHIBITS
A Stockholders
B Form of Shareholders Agreement
C Form of Registration Rights Agreement
D Form of Employment Agreement
E Estimated Closing Balance Sheet
F Form of Debenture
G Form of Indenture
H Form of Escrow Agreement
I Merger Agreement
SCHEDULES
2.9(b) Variations from GAAP 3.1 Organization and Qualification 3.2 Capitalization 3.4 Consents and Approvals 3.5 Non-Contravention 3.6 Environmental Matters 3.7 Licenses and Permits 3.8 The Company's Compliance 3.9 GAAP 3.10 Absence of Changes 3.11 Undisclosed Liabilities 3.12 Litigation 3.13 Real Property 3.14 Personal Property 3.15 Sufficiency of Assets 3.17 Intellectual Property 3.18 Contracts 3.19 Insurance 3.20 Labor Matters 3.21 Employee Plans 3.22 Tax Matters 3.23 Transactions with Certain Persons 3.24 Suppliers 3.25 Banking Relationships 4.1 Company Common Stock Ownership 4.2 Enforceability 4.3 Stockholder Compliance 4.4 Third Party Options 5.3 Consents and Approvals 6.2 Forbearances 6.9 Efforts to Consummate 6.17 Valuation Items 6.18 Retained Assets |
8.9 Releases 11.2(a) The Company's' Executive Officers 11.2(b) Buyer's Executive Officers |
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February 18, 2000, is made by and among RED ROBIN INTERNATIONAL, INC., a Nevada corporation ("Buyer"), RED ROBIN HOLDING CO., INC., a Nevada corporation ("Sub"), THE SNYDER GROUP COMPANY, a Delaware corporation (the "Company"), Stephen S. Snyder, Louise Snyder and the stockholders of the Company set forth on Exhibit A (Stephen S. Snyder, Louise Snyder and the stockholders of the Company set forth on Exhibit A are collectively referred to herein as the "Stockholders").
RECITALS
A. Buyer and the Company have agreed to merge the Company with and into Sub, a direct wholly-owned subsidiary of Buyer (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Nevada General Corporation Law (the "NGCL") and the Delaware General Corporation Law (the "DGCL").
B. The respective Boards of Directors of Buyer, Sub and the Company have determined that the Merger is in the best interests of their respective stockholders.
C. Buyer, Sub, the Company and the Stockholders desire to make representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.
D. For federal income tax purposes, the parties intend that the Merger qualify as a reorganization within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and agreements herein contained, the parties hereto agree as follow:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following meanings:
"Action" means any complaint, claim, prosecution, indictment, action, suit, arbitration, investigation, governmental audit, inquiry or proceeding by or before any Governmental Authority.
"Adjusted Stockholder's Equity" has the meaning set forth in
Section 2.9(b)(i)(A).
"Affiliate" of a Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.
"Assets" means all of the Company's or any of the Company's Subsidiaries' right, title and interest in and to all properties, assets and rights of any kind, whether tangible or intangible, real or personal, owned by the Company or any of its Subsidiaries or in which the Company or any of its Subsidiaries has any interest whatsoever.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.9.
"Basis" means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction that forms or could reasonably be expected to form the basis for any specified consequence.
"Benefit Arrangement" means any employment, consulting, severance
or other similar contract, arrangement or policy and each plan, arrangement,
program or agreement providing for insurance coverage (including, without
limitation, any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits, severance benefits, life, health or accident benefits (including,
without limitation, any "voluntary employees' beneficiary association" as
defined in Section 501(c)(9) of the Internal Revenue Code providing for the same
or other benefits), "fringe benefits" or other perquisites (including, but not
limited to, benefits related to any Company reimbursed or leased airplanes,
automobiles, clubs, childcare, parenting, sabbatical, sick leave or other
benefits) or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (i) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (ii) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or any of its Subsidiaries or any ERISA Affiliate or under which
the Company, any Subsidiary or any ERISA Affiliate may incur any liability, and
(iii) covers any employee or former employee, current or former leased employee,
current or former consultant or independent contractor of the Company, any
Subsidiary or any ERISA Affiliate (with respect to their relationship with any
such entity).
"Books and Records" means all books, records, lists, ledgers,
files, reports, plans, drawings and operating records of every kind (in any form
or medium) relating to the Company and its Subsidiaries, the Assets, Business
operations, customers, suppliers and personnel, including (i) all corporate
books and records of the Company and its Subsidiaries, disk or tape files,
printouts, runs or other computer-based information and the Company and its
Subsidiaries' interest in all computer programs required to access, and the
equipment containing, all such computer-based information, (ii) all product,
business and marketing plans, (iii) all environmental control records, (iv) all
sales, maintenance and production records, (v) equipment warranty information,
(vi) litigation files, (vii) customer and supplier lists and information and
(viii) personnel records.
"Breaching Party" shall have the meaning set forth in Section 10.2.
"Business" means the operation as a franchisee of the "Red Robin" casual restaurant dining business conducted by the Company and its Subsidiaries and the development, administration, management and support thereof.
"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Richmond, Virginia, Denver, Colorado or New York, New York are authorized by Law to close.
"Buyer Common Stock" means the common stock, par value $.001, of Buyer.
"Buyer Indemnified Parties" has the meaning set forth in 9.2(a).
"Capitalized Leases" means any lease of which the Company or any of its Subsidiaries is the lessee which is required to be capitalized on the balance sheet in accordance with GAAP.
"Cash Merger Consideration" has the meaning set forth in Section 2.8(a)(ii).
"Certificate" has the meaning set forth in Section 2.10(a)
"Claim Notice" has the meaning set forth in Section 9.4(a).
"Closing" has the meaning set forth in Section 2.2.
"Closing Balance Sheet" has the meaning set forth in Section 2.9(b).
"Closing Date" has the meaning set forth in Section 2.2.
"Closing Stock Value" means $2.00 per share of Buyer Common Stock, as proportionately adjusted from time to time for any stock dividends, stock splits, reverse stock splits, reclassifications or events of a similar nature affecting the shares of Buyer Common Stock after the Effective Time.
"Company" means The Snyder Group Company, a Delaware corporation.
"Company's Accountants" means the accountants of the Company from the Denver, Colorado office of Arthur Andersen, LLP.
"Company Common Stock" means the common stock, $.01 par value, of the Company.
"Company Schedules" has the meaning set forth in Section 6.20.
"Contract" means any agreement, contract, lease, note, loan, evidence of indebtedness, purchase order, letter of credit, franchise agreement, undertaking, covenant not to compete, employment agreement, license, instrument and other executory commitment to which the Company or any of its Subsidiaries is a party and which relates to the Business or any of the Assets of the Company and its Subsidiaries, whether oral or written, and which pursuant to its terms has not expired, terminated or been fully performed by the parties thereto.
"Covered Liabilities" means any and all debts, losses, liabilities, claims, fines, royalties, deficiencies, damages, Actions, obligations, payments (including those arising out of any demand, assessment, settlement, judgment or compromise relating to any Action), reasonable costs (including costs of mitigation) and reasonable expenses (including interest and penalties due and payable with respect thereto and reasonable attorneys' and accountants' fees and any other reasonable out-of-pocket expenses incurred in investigating, preparing, defending, avoiding or settling any Action or in investigating, preserving or enforcing another party's obligations hereunder), including any of the foregoing arising under, out of or in connection with any Action, order or consent decree of any Governmental Authority or award of any arbitrator of any kind, or any law, rule, regulation, contract, commitment or undertaking, but excluding consequential damages suffered or incurred by an indemnified party.
"DGCL" has the meaning set forth in the recitals herein.
"Debenture" means the obligations of Buyer evidenced by certain debenture certificates substantially in the form of Exhibit H and subject to the Indenture, in the principal amount of the Debenture Merger Consideration elected by the Stockholders pursuant to Section 2.8.
"Debenture Merger Consideration" has the meaning set forth in
Section 2.8(a)(ii).
"Decrees" has the meaning set forth in Section 3.8.
"Dispute Notice" has the meaning set forth in Section 2.9(b).
"Effective Time" has the meaning set forth in Section 2.3.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
"Employment Agreement" means the employment agreement entered into by and between Michael J. Snyder and Buyer substantially in the form of Exhibit E.
"Encumbrance" means any claim, lien, pledge, option, charge, easement, security interest, deed of trust, mortgage, right-of-way, encroachment, conditional sales agreement, encumbrance or other right of third parties, whether voluntarily incurred or arising by operation of law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.
"Environmental Laws" means all applicable federal, state, local and foreign laws, all rules or regulations promulgated thereunder, and all orders, consent orders, judgments, notices, permits or demand letters issued, promulgated or entered pursuant thereto, relating to
pollution or protection of the environment (including ambient air, surface water, ground water, land surface, or subsurface strata), including (i) laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, industrial materials, wastes or other substances into the environment and (ii) laws relating to the identification, generation, manufacture, processing, distribution, use, treatment, storage, disposal, recovery, transport or other handling of pollutants, contaminants, chemicals, industrial materials, wastes or other substances, in each case as in effect on the Closing Date. By way of example only, Environmental Laws include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous Materials Transportation Act, as amended, the Resource Conservation and Recovery Act, as amended ("RCRA"), the Clean Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air Act, as amended, the Atomic Energy Act of 1954, as amended, the Occupational Safety and Health Act, as amended, and all analogous laws promulgated or issued by any state or other governmental authority.
"Environmental Permit" means a License or Permit issued under or with respect to an Environmental Law.
"Environmental Reports" means any and all written reports or analyses in the possession of the Company or any of its Subsidiaries, of (i) Hazardous Emissions, Handling Hazardous Substances or any environmental conditions in, on or about the properties of the Company or any of its Subsidiaries or (ii) the Company's or its Subsidiaries' compliance with Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any entity which is (or at any relevant time was) a member of a "controlled group of corporations" with, under "common control" with, or a member of an "affiliated service group" with, or otherwise required to be aggregated with, the Company or any of its Subsidiaries as set forth in Section 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Escrow Agent" means Harris Trust Company of California, the escrow agent under the Escrow Agreement.
"Escrow Agreement" means that certain escrow agreement to be entered into by and among Buyer, Sub, the Stockholders and the Escrow Agent at the Closing, substantially in the form of Exhibit J.
"Escrow Assets" means 2,500,000 shares of Buyer Common Stock received by the Stockholders in connection with the consummation of the Merger which shall be deposited in an escrow account and any and all distributions of stock or any securities of Buyer Common Stock issued in respect thereof (including, without limitation, any shares issued pursuant to any stock dividend, stock split, reverse stock split, combination or reclassification thereof) and any cash substituted for such shares of Buyer Common Stock in accordance with the terms and conditions set forth in the Escrow Agreement, but excluding any cash dividends or other
property distributed in respect of Buyer Common Stock and interest paid in respect of cash substituted for any shares of Buyer Common Stock.
"Estimated Closing Balance Sheet" means the unaudited pro forma balance sheet of the Company attached hereto as Exhibit F.
"Facilities" means all restaurants, commissaries, offices, manufacturing facilities, stores, warehouses, administration buildings and all real property owned or leased by the Company or any of its Subsidiaries.
"Final Determination" has the meaning set forth in Section 9.4(f).
"Fixtures and Equipment" means all of the furniture, fixtures, furnishings, machinery, equipment, spare parts, supplies, appliances, vehicles and other tangible personal property owned by the Company or any of its Subsidiaries, wherever located (including any of the foregoing purchased subject to any conditional sales agreement or title retention agreement in favor of any other Person), including all warranty rights with respect thereto.
"Fully-Diluted Basis" means, without duplication, all outstanding Company Common Stock and all Company Common Stock issuable upon exercise of options, warrants, convertible or exchangeable securities or other similar instruments or rights.
"GAAP" means generally accepted accounting principles in the United States of America, as in effect from time to time, consistently applied.
"Governmental Authority" means any federal, state, local, foreign, court or tribunal, governmental, regulatory or administrative agency, department, bureau, authority or commission or arbitral panel.
"Handling Hazardous Substances" has the meaning set forth in
Section 3.6(a).
"Hazardous Emissions" has the meaning set forth in Section 3.6(a).
"Hazardous Substances" means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under Environmental Laws. By way of example only, the term Hazardous Substances includes petroleum, urea formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides, herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"indemnified party" has the meaning set forth in Section 9.4(a).
"indemnifying party" has the meaning set forth in Section 9.4(a).
"Indenture" means that certain agreement of trust between Buyer and the Trustee, substantially in the form of Exhibit I, for the benefit of the Stockholders who accept Merger Consideration in the form of Debentures.
"Intellectual Property" means all trade names (including the trade names "Red Robin International, Inc." and "America's Gourmet Burgers & Spirits"), trademarks and service marks, patents, patent rights, copyrights, whether domestic or foreign, (as well as applications, registrations or certificates for any of the foregoing), inventions, trade secrets, proprietary processes, operating manuals, software and other industrial and intellectual property rights.
"Interim Financial Statements" has the meaning set forth in
Section 3.9.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended.
"Inventory" means all inventories of food and beverages, paper, supplies and raw materials, wherever located (including items in transit).
"Laws" has the meaning set forth in Section 3.8.
"Lease" means a Real Property Lease or a Personal Property Lease.
"Leased Real Property" has the meaning set forth in Section 3.13(b)(i).
"Letter of Intent" has the meaning set forth in Section 6.5.
"Licenses and Permits" means all registrations, applications, filings, certifications, notices, orders, licenses, permits, approvals, consents, qualifications, authorizations and waivers of any Governmental Authority, but does not include Environmental Permits.
"Material Adverse Effect" or "Material Adverse Change" means as to any Person any material adverse effect on or material adverse change with respect to (A) the business, operations, assets, liabilities, condition (financial or otherwise,) or results of operations of such Person and its Subsidiaries, taken as a whole, or (B) the right or ability of such Person or any of its Subsidiaries to consummate the transactions contemplated hereby.
"Material Contract" has the meaning set forth in Section 3.18.
"Merger" has the meaning set forth in the recitals herein.
"Merger Agreement" has the meaning set forth in Section 2.2.
"Merger Consideration" means the aggregate of the Stock Merger Consideration, Debenture Merger Consideration and Cash Merger Consideration issued or delivered to the Stockholders pursuant to Section 2.8.
"Multiemployer Plan" means any "multiemployer plan," as defined in
Section 4001(a)(3) or 3(37) of ERISA, which (i) the Company, any Subsidiary or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, maintained, administered,
contributed to or was required to contribute to, or under which the Company, any
Subsidiary or any ERISA Affiliate may reasonably be expected to incur any
material liability which has not been fully satisfied as of the date hereof and
(ii) covers any employee or former employee of the Company, any Subsidiary or
any ERISA Affiliate (with respect to their relationship with any such entity).
"Multiple Employer Plan" means any plan that has two or more contributing sponsors, at least two of whom are not under common control, within the meaning of Section 4063 of ERISA.
"NGCL" has the meaning set forth in the recitals herein.
"Pension Plans" means any "employee pension benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which (i) the Company, any Subsidiary or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or, within the five years prior to the Closing Date, maintained, administered, contributed to or was required to contribute to, or under which the Company, any Subsidiary or any ERISA Affiliate may reasonably be expected to incur any liability (including, without limitation, any contingent liability) and (ii) covers any employee or former employee, current or former leased employee, current or former consultant or independent contractor of the Company, any Subsidiary or any ERISA Affiliate (with respect to their relationship with any such entity).
"Permitted Encumbrances" means (i) statutory liens for current state and local property taxes or assessments not yet due or delinquent; (ii) mechanics', carriers', workers', repairers' and other similar liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Company or any of its Subsidiaries; (iii) exceptions shown on the surveys or title reports furnished by the Company to Buyer on or before the date hereof and which do not materially affect the use, value, enjoyment, occupancy or marketability of such property; and (iv) such other recorded liens, imperfections in title, charges, easements, restrictions and encumbrances which do not materially affect the use, value, enjoyment, occupancy or marketability of such property.
"Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a governmental or political subdivision or an agency of instrumentality thereof.
"Personal Property Lease" has the meaning set forth in Section 3.14(b)(i).
"Personnel" of a corporation means all directors, officers and employees of such corporation and its Subsidiaries.
"Pro Rata Percentage" has the meaning set forth in Section 2.9.
"Proposed Acquisition Transaction" has the meaning set forth in
Section 6.3.
"Real Property" means real property, together with the structures, fixtures and other improvements thereon and the appurtenances, rights and easements thereto.
"Real Property Leases" has the meaning set forth in Section 3.13(b)(i).
"Schedules" has the meaning set forth in Article III.
"Stockholders" has the meaning set forth in the introductory paragraph herein.
"Stockholder Agent" has the meaning set forth in Section 11.13(a).
"Stockholder Documents" has the meaning set forth in Section 4.2.
"Stock Merger Consideration" has the meaning set forth in Section 2.8(a)(i).
"Subsidiary" with respect to any party to this Agreement, means any corporation or other business entity, whether or not incorporated, of which at least 50% of the securities or interests having, by their terms, ordinary voting power to elect members of the Board of Directors, or other persons performing similar functions with respect to such entity, is held directly or indirectly by such party.
"Survival Date" has the meaning set forth in Section 9.1.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Tax Benefit" means the tax effect of any item of loss, deduction or credit or any other item (including any increase in tax basis of Assets of the Company or its Subsidiaries) which decreases Taxes paid or payable.
"Tax Loss" means the tax effect of any item (including any decrease in tax basis of Assets of the Company and its Subsidiaries) which increases Taxes paid or payable.
"Tax Returns" means any and all returns, reports, declarations and information statements with respect to Taxes required to be filed by or on behalf of the Company or any of its Subsidiaries with any Governmental Authority, whether domestic or foreign, including consolidated, combined or unitary returns and all amendments thereto.
"Taxes" means (i) all federal, state and local, whether domestic or foreign, taxes or assessments, including those relating to income, gross receipts, gross income, capital stock, franchise, profits, employees and payroll, withholding, foreign withholding, social security, unemployment, disability, license, real property, personal property, intangibles, stamp, excise, sales, use, transfer, occupation, value added, ad valorem, customs duties, premium, windfall profits, information reporting, abandoned and unclaimed property reporting, environmental (including taxes under Section 59A of the Internal Revenue Code), alternative minimum or estimated taxes or other similar tax, duty or governmental charge, together with any interest, penalties or additions to tax or additional amounts with respect to the foregoing, whether disputed or not and (ii) any obligations under any agreements or arrangements with respect to any Taxes described in clause (i) hereof.
"Taxing Authority" means any Governmental Authority including social security administration, domestic or foreign, having jurisdiction over the assessment, determination, collection, or other imposition of any Taxes.
"Third Party Claim" has the meaning set forth in Section 9.4(b).
"Total Reorganization Expenses" has the meaning set forth in
Section 2.9(b)(i)(B).
"Trustee" means Rod Bench, the trustee under the Indenture.
"Welfare Plan" means any "employee welfare benefit plan" as defined in Section 3(1) of ERISA, which (i) any of the Company, any Subsidiary or any ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or under which the Company, any Subsidiary or any ERISA Affiliate may reasonably be expected to incur any material liability or (ii) covers any employee or former employee, current or former leased employee, current or former consultant or independent contractor of the Company, any Subsidiary or any ERISA Affiliate (with respect to their relationship with any such entity).
"Year 2000 Computer System Issues" has the meaning set forth in
Section 3.27.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions hereof, and in accordance with the provisions of the NGCL and the DGCL, the Company shall be merged with and into Sub at the Effective Time. As a result of the Merger, the separate corporate existence of the Company shall cease and Sub shall continue its existence under the laws of the State of Nevada. Sub, in its capacity as the corporation surviving the Merger, is hereinafter sometimes referred to as the "Surviving Corporation".
2.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of O'Melveny & Myers
LLP, 610 Newport Center Drive, Suite 1700, Newport Beach, California, at 8:00
a.m. local time on May 11, 2000, or such other date as may be agreed upon by the
parties (the "Closing Date"). On the Closing Date, the parties shall file with
the Nevada Secretary of State and the Delaware Secretary of State duly executed
articles of merger and a certificate of merger, respectively, and Buyer shall
keep on file in its registered office an agreement and plan of merger, in the
forms included as Exhibit K (the "Merger Agreement"), all as required by and in
accordance with the NGCL and the DGCL.
2.3 Effects of the Merger. The effective time of the Merger (the "Effective Time") shall be the date upon which the Merger Agreement is filed with the Nevada Secretary of State and the Delaware Secretary of State or at such later time as shall be agreed upon by Buyer and the Company and specified in the Merger Agreement. From and after the Effective Time, the Merger shall have the effects set forth in Section 92A.250 of the NGCL and Section 259 of the DGCL.
2.4 Articles of Incorporation and Bylaws. At the Effective Time (i) the Articles of Incorporation of Sub in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation, and (ii) the Bylaws of Sub as amended and in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation; in each case until amended in accordance with applicable law.
2.5 Directors and Officers of the Surviving Corporation. From and after the Effective Time, the directors and officers of Sub shall be the directors and officers of the Surviving Corporation, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified.
2.6 Additional Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any further deeds, assignments or assurances or any other acts or things are necessary or desirable to (a) vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Sub or the Company, or (b) otherwise carry out the provisions of this Agreement, the Company and Sub and their respective officers and directors shall be deemed to have granted to the Surviving Corporation an irrevocable power of attorney to execute and deliver all such deeds, assignments or assurances and to take all acts necessary, proper or desirable to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Corporation and otherwise to carry out the provisions of this Agreement, and the officers and directors of the Surviving Corporation are authorized in the name of the Company or Sub or otherwise to take any and all such actions.
2.7 Nature and Qualification of Merger. This Agreement contemplates that the Merger will be a tax free reorganization pursuant to Sections 368(a)(2)(D) of the Code.
2.8 Conversion of Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any action on the part of Buyer, Sub, the Company or any of their respective stockholders, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into and represent the right to receive the following:
(i) Subject to Section 2.8(c), a number of shares of Buyer Common Stock (rounded to the nearest whole share) determined by dividing 5,480,152 shares of Buyer Common Stock (the "Stock Merger Consideration"), subject to adjustment as set forth in Section 2.9, by the number of issued and outstanding shares of Company Common Stock on a Fully-Diluted Basis immediately prior to the Effective Time; and
(ii) At the election of each Stockholder, (x) an amount in cash determined by dividing $10,960,301 (the "Cash Merger Consideration"), subject to adjustment as set forth in Section 2.9, by the number of issued and outstanding shares of Company Common Stock on a Fully-Diluted Basis immediately prior to the Effective Time or (y) an amount in Debentures determined by dividing $10,960,301 (the "Debenture Merger Consideration"), subject to adjustment as set
forth in Section 2.9, by the number of issued and outstanding shares of Company Common Stock on a Fully-Diluted Basis immediately prior to the Effective Time. Each Stockholder shall notify Buyer of their election under this Section 2.8(a)(ii) at least 3 business days prior to the Closing Date.
(b) The following legend shall be placed on the face of each certificate representing shares of Buyer Common Stock issued to the Stockholders in connection with the Merger: "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT AND PLAN OF MERGER DATED FEBRUARY 18, 2000 BETWEEN THE REGISTERED HOLDER HEREOF AND RED ROBIN INTERNATIONAL, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF RED ROBIN INTERNATIONAL, INC."
(c) No certificates for fractional shares of Buyer Common Stock shall be issued as a result of the conversion provided for in Section 2.8(a)(i). If more than one certificate representing shares of Company Common Stock shall be surrendered for the account of the same holder, the number of shares issuable in the Merger to such holder shall be computed on the basis of the aggregate number of shares represented by the certificates so surrendered, rounded to the nearest whole share.
2.9 Merger Consideration; Adjustments.
(a) The Merger Consideration shall be adjusted, plus or minus (as the case may be) under the remaining provisions of this Section 2.9.
(b) The Merger Consideration shall be subject to adjustment as follows:
disagreement). During such 30-day period, the Company's Accountants shall give Buyer and its accountants or other representatives access to all work papers of the Company's Accountants related to the preparation of the Closing Balance Sheet. Buyer and the Stockholder Agent shall negotiate in good faith to resolve any disagreements concerning the Closing Balance Sheet as promptly as practicable. If any disagreement concerning the Closing Balance Sheet is not resolved by Buyer and the Stockholder Agent within 30 days following the Stockholder Agent's receipt of the Dispute Notice, the Merger Consideration shall be adjusted as set forth below for any undisputed amounts, and Buyer and the Stockholder Agent shall promptly engage, on standard terms and conditions for a matter of such nature, a nationally recognized firm of independent accountants to resolve the disputed amounts. The firm of independent accountants shall be proposed in writing by Buyer to the Stockholder Agent. In the absence of prompt agreement on the identity of the independent accountants, the Denver office of the accounting firm of Ernst & Young LLP shall be engaged by the parties. The parties shall be entitled to provide the independent accountants with supporting documentation in connection with the resolution of the items in dispute. The engagement agreement with the independent accountants shall require the independent accountants to make their determination with respect to the items in dispute within 60 days following their appointment. Buyer and the Stockholder Agent (in the latter case, on behalf of and for the account of the Stockholders) shall each pay one-half of the cost of the fees and expenses of such independent accountants. The resolution by the independent accountants of any dispute concerning the Closing Balance Sheet shall be final, binding and conclusive upon the parties for purposes of any adjustment of the Merger Consideration pursuant to this Section.
(i) The Merger Consideration shall be reduced, dollar for dollar, by the amount (if any) by which the stockholder's equity in the Company as shown on the Closing Balance Sheet is less than (2,991,619); and
(ii) The Merger Consideration shall be increased, dollar for dollar, by the amount (if any) by which the stockholder's equity is greater than (2,891,619).
three business days after the final determination of the amount thereof, (i) issue to the Stockholders on a pro rata basis based on each Stockholder's percentage ownership of the Company immediately prior to the Effective Time (the "Pro Rata Percentage"), additional shares of Buyer Common Stock having a value equal to 50% of the amount of such increase and (ii) deliver to each Stockholder that elected Cash Merger Consideration pursuant to Section 2.8(a)(ii), immediately available funds in the amount of 50% of such increase based on each such Stockholder's Pro Rata Percentage or issue to each Stockholder that elected Debenture Merger Consideration pursuant to Section 2.8(a)(ii), Debentures in the amount of 50% of such increase based on each such Stockholder's Pro Rata Percentage. Notwithstanding the foregoing, to the extent the aggregate amount of cash and Debentures to be delivered to the Stockholders by Buyer for any increase in the Merger Consideration pursuant to the foregoing would exceed $960,301, Buyer shall deliver Buyer Common Stock to the Stockholders (based on each Stockholder's Pro Rata Percentage in an aggregate amount equal to such excess amount). For purposes of determining the number of shares to be released to Buyer or issued to the Stockholders, the value of a share of Buyer Common Stock will be equal to the Closing Stock Value.
2.10 Exchange of Certificates.
2.11 Escrow Agreement. At the Closing, without any act of the Stockholders, the Stockholders will be deemed to have received and deposited with the Escrow Agent, 2,500,000
shares of Buyer Common Stock issuable in accordance with Section 2.8 hereof in an escrow account in accordance with the terms and conditions of the Escrow Agreement substantially in the form attached hereto as Exhibit J. Such Buyer Common Stock shall be in the name and account of the Stockholders, as set forth in the Escrow Agreement, and shall be held to satisfy (i) any adjustments to the Stock Merger Consideration required under Section 2.9 hereof, and (ii) any claims by Buyer or the Surviving Corporation for indemnification pursuant to Article IX hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE STOCKHOLDERS
As an inducement to Buyer and Sub to enter into this Agreement, the Company and the Stockholders hereby severally but not jointly, make the following representations and warranties to Buyer and Sub, except as otherwise set forth in written disclosure schedules (the "Schedules") delivered to Buyer prior to the execution hereof, a copy of which is attached hereto. The Schedules are numbered to correspond to the various sections of this Article III setting forth certain exceptions to the representations and warranties contained in this Article III and certain other information called for by this Agreement. Unless otherwise specified, no disclosure made in any particular Schedule shall be deemed made in any other Schedule unless expressly made therein (by cross-reference or otherwise) unless, and only to the extent that, it would fairly be understood on its face to contain information which also is applicable to the representations and warranties to which such other Schedule relates.
3.1 Organization and Qualification.
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has corporate power and authority to own or lease all of its respective properties and assets and to carry on its business as it is presently being conducted, and is duly qualified and in good standing to transact business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be in good standing or to be duly qualified would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or where such failure to be in good standing or to be duly qualified would not, individually or in the aggregate, to the knowledge of the Company or the Stockholders, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, be reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole. Each jurisdiction in which the Company is qualified to do business is set forth in Schedule 3.1. The Company has heretofore delivered to Buyer complete and correct copies of the Articles of Incorporation and Bylaws or equivalent organizational documents of the Company as currently in effect.
(b) Except as set forth in Schedule 3.1, the Company does not have any Subsidiaries.
(c) Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has corporate power and authority to
own or lease all of its respective properties and assets and to carry on its business as it is presently being conducted, and is duly qualified and in good standing to transact business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be in good standing or to be duly qualified would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or where such failure to be in good standing or to be duly qualified would not, individually or in the aggregate, to the knowledge of the Company or the Stockholders, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, be reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole. Each jurisdiction in which each Subsidiary is qualified to do business is set forth in Schedule 3.1.
(d) A complete list of the directors and officers of the Company and each of its Subsidiaries is set forth in Schedule 3.1.
3.2 Capitalization; Validity of Shares; Voting Trusts.
(a) The authorized capitalization of the Company and the shares of capital stock which are outstanding are set forth in Schedule 3.2. All of the outstanding shares of capital stock (i) have been duly authorized, are validly issued, fully paid and nonassessable, and were not issued in violation of any preemptive rights, and (ii), except as set forth in Schedule 3.2, are owned of record and, to the knowledge of the Stockholders or the Company, beneficially as set forth in Schedule 3.2.
(b) Except as set forth in Schedule 3.2, (i) neither the Company
nor any Subsidiary has any commitment to issue or sell any shares of capital
stock, or any securities or obligations convertible into or exchangeable for, or
giving any Person any right to acquire from the Company or any Subsidiary, any
shares of capital stock, and no such securities or obligations are outstanding,
(ii) there are no obligations or commitments of any kind for the repurchase,
redemption or other acquisition of any shares of capital stock of the Company or
any of its Subsidiaries, and (iii) there are no outstanding Company stock
appreciation rights, limited stock appreciation or other rights or derivative
securities to receive or redeem for cash, warrants, options or other derivative
securities.
(c) Except as set forth in Schedule 3.2, and except for any equity interests held by the Company in publicly traded companies in an amount that is less than 5% of the outstanding securities of any such company, the Company does not, directly or indirectly, own any capital stock of or other equity interest in any corporation, partnership or other entity or other Person. All of the issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly issued, fully paid and nonassessable and are owned of record and beneficially by the Company or another Subsidiary, free and clear of all Encumbrances.
(d) Except as set forth in Schedule 3.2, there are no shareholder agreements, voting trusts, proxies or other agreements or understandings to which the Company is a party or by which it is bound, or, to the knowledge of the Stockholders or the Company, any other such
agreements or understandings, with respect to or concerning the purchase, sale or voting of the capital stock of the Company or any of its Subsidiaries.
3.3 Authority Relative to this Agreement. The Company has all corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of the Company, subject to approval by the Stockholders pursuant to the DGCL. This Agreement has been duly executed and delivered by the Company and, assuming that Buyer has duly authorized, executed and delivered this Agreement, this Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
3.4 Consents and Approvals. No consent, waiver, agreement, approval or authorization of, or declaration, filing, notice or registration to or with, any Governmental Authority is required to be made or obtained by the Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby other than those set forth in Schedule 3.4. Except as set forth in Schedule 3.4, there is no requirement that any party to any Material Contract or Real Property Lease to which the Company or any of its Subsidiaries is a party or by which any of them is bound, consent to the execution and delivery of this Agreement by the Company or the consummation of the transactions contemplated hereby.
3.5 Non-Contravention. The execution, delivery and performance by the Company of this Agreement does not, and the consummation by the Company of the transactions contemplated hereby will not (i) violate or result in a breach of any provision of the Articles of Incorporation, Bylaws or similar organizational documents of the Company or any of its Subsidiaries, (ii) except as described in Schedule 3.5, conflict with, result in a breach of or result in a default (or give rise to any right of termination, cancellation or acceleration) under the terms, conditions or provisions of any Material Contract or Real Property Lease to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their Assets is bound, or (iii) except as described in Schedule 3.5, violate any order, writ, injunction, decree or, to the knowledge of the Stockholders or the Company, any Law applicable to the Company or any of its Subsidiaries or any of their Assets.
3.6 Environmental Matters.
(a) Except as set forth in Schedule 3.6, the Company and its Subsidiaries have all Environmental Permits which are necessary and material to the conduct of the Business as it is presently being conducted, including those relating to (i) emissions, discharges or threatened discharges of pollutants, contaminants, hazardous or toxic substances or petroleum into the air, surface water, ground water or the ocean, or on or into the land ("Hazardous Emissions") and (ii) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous or toxic substances, or petroleum ("Handling Hazardous Substances"), whether by the Company or any of its Subsidiaries or by a third party on their behalf. To the knowledge of the Company or the Stockholders, the Company and its Subsidiaries are in compliance in all material respects with all of the terms and conditions set
forth in such Environmental Permits and are also in compliance in all material respects with all of the terms and conditions contained in or required of it by any Environmental Law applicable to the Company and its Subsidiaries, their Assets, or the Business.
(b) Except as set forth in Schedule 3.6, to the knowledge of the Company or the Stockholders, no underground storage tanks or underground storage receptacles for Hazardous Substances are located on the Facilities, there have been no releases of Hazardous Substances and no owners or operators of real property adjacent to the Facilities spilled, released or discharged any Hazardous Substances onto such adjacent properties. Except as set forth in Schedule 3.6, to the knowledge of the Company or the Stockholders, no facts, conditions or events exist which (i) interfere with or prevent continued compliance in all material respects with any of the Environmental Permits or any Environmental Law, (ii) are reasonably expected to give rise to any material liability (whether based in contract, tort, implied or express warranty, criminal or civil statute or otherwise) under any Environmental Law relating to the Hazardous Emissions or Handling Hazardous Substances or (iii) obligate the Company or any of its Subsidiaries to clean up, remedy, abate or otherwise restore to a former condition, by themselves or jointly with others, any contaminated surface water, ground water, soil or any natural resources associated therewith either on the Facilities or at any property owned by a third party, or in any building, structural or insulation materials located on or in the Facilities that contain greater than 1% asbestos.
(c) Except as set forth on Schedule 3.6, to the knowledge of the Company or the Stockholders, the Company, the Company and its Subsidiaries have not released any other person from any claim under any Environmental Law or waived any rights concerning any violation of Environmental Law. Except as set forth in Schedule 3.6, the Company and its Subsidiaries have not contractually indemnified any other person for any violation of Environmental Law related to the Facilities or any Real Property formerly owned by the Company and its Subsidiaries.
(d) There are no consent decrees, consent orders, judgments, judicial or administrative orders or agreements (other than Licenses and Permits) with or, to the knowledge of the Company or the Stockholders, liens by, any Governmental Authority or quasi-governmental entity relating to any Environmental Law which regulate, obligate or bind the Company or any of its Subsidiaries.
(e) True and correct copies of the Environmental Reports have been delivered to Buyer and a list of all such reports, audits and assessments is set forth in Schedule 3.6.
3.7 Licenses and Permits. Except as set forth on Schedule 3.7, to the knowledge of the Stockholders or the Company, the Company and its Subsidiaries have all Licenses and Permits material to the conduct of the Business as it is presently being conducted. Schedule 3.7 contains a complete and correct list of all such Licenses and Permits known to the Stockholders and the Company, all of which are in full force and effect and, to the knowledge of the Stockholders or the Company, all of which will remain in full force and effect following consummation of the transactions contemplated hereby, except as set forth in Schedule 3.7. Except for matters relating to Buyer and its Affiliates, neither the Stockholders nor the Company has any reason to believe that the Licenses or Permits in effect on the date hereof will not be
renewed or will be renewed with conditions that materially affect the operation of the Business. Except as set forth in Schedule 3.7, neither the Stockholders, the Company nor any of the Company's Subsidiaries has received any written notice to the effect that, or otherwise has any knowledge that, (i) the Company and its Subsidiaries are not currently in compliance with, or are in violation of, any such Licenses and Permits in any material respect or (ii) any currently existing circumstances are likely to result in a failure of the Company and its Subsidiaries to comply with, or in a violation by the Company or any of its Subsidiaries of, any such Licenses and Permits in any material respect.
3.8 Compliance with Laws. Except as set forth in Schedule 3.8, to the knowledge of the Stockholders or the Company, the Company and its Subsidiaries have not violated, and are in compliance with, (i) all applicable laws, statutes, ordinances, regulations, rules and orders of every federal, state, local or foreign government and every federal, state, local or foreign court or other Governmental Authority (collectively, "Laws") and (ii) every judgment, decision, decree or order of any court or governmental agency, department, authority or instrumentality (collectively, "Decrees"), relating to the Assets, Business or operations of the Company and its Subsidiaries, except to the extent that any such violation or failure to comply is likely to result in Covered Liabilities of less than $10,000 singly or $50,000 in the aggregate. Except as set forth in Schedule 3.8, neither the Stockholders, the Company nor any of the Company's Subsidiaries has received any written notice to the effect that, nor do the Stockholders or the Company have knowledge that, (i) the Company and its Subsidiaries are not currently in compliance with, or are in violation of, any applicable Laws or (ii) any currently existing circumstances are reasonably likely to result in a failure of the Company or any of its Subsidiaries to comply with, or a violation by the Company or any of its Subsidiaries of, any Laws, which such failure to comply or violation would be reasonably likely to result in Covered Liabilities in excess of $10,000 singly or $50,000 in the aggregate.
3.9 Financial Statements. Buyer has previously been delivered true and complete copies of (i) the audited consolidated financial statements, including the notes thereto, of the Company and its Subsidiaries for each of the three fiscal years ended December 27, 1998 (the "Audited Financial Statements") together with the report on such financial statements of the Company's independent certified public accountants, and (ii) management's unaudited consolidated financial statements for the Company and its Subsidiaries for the fiscal year ended December 26, 1999 and the four-week period ended January 23, 2000 (the "Interim Financial Statements"). The Audited Financial Statements present fairly, in all material respects, the consolidated financial position of the Company and its Subsidiaries as of such dates and the results of operations and cash flows for such periods and, except as set forth in Schedule 3.9, have been prepared in accordance with GAAP applied on a consistent basis. The Interim Financial Statements present fairly, in all material respects, the consolidated financial position of the Company and its Subsidiaries as of such date and the results of operations and cash flows for the periods set forth therein and, except as set forth in Schedule 3.9, have been prepared in accordance with GAAP applied on a consistent basis, subject to changes resulting from normal year-end adjustments.
3.10 Absence of Changes. Except as set forth in Schedule 3.10, since November 30, 1999, (a) the Business has been operated in the ordinary course consistent with past practices, (b) there has not been any Material Adverse Change with respect to the Business and to the
knowledge of the Company or the Stockholders, there has not been any event or condition which, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, that would reasonably be expected to constitute a Material Adverse Change with respect to the Business, (c) there has not been any material deterioration of relations between the Company or its Subsidiaries and their suppliers or Personnel and (d) to the knowledge of the Stockholders or the Company there has been no threatened Material Adverse Change with respect to the Company and its Subsidiaries taken as a whole or any event or condition which, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, that would reasonably be expected to result in a threatened Material Adverse Change with respect to the Company and its Subsidiaries taken as a whole. Without limiting the generality of the foregoing, except as set forth in Schedule 3.10, the Company and its Subsidiaries have not:
(i) sold, assigned, leased or transferred any of their Assets, material singly or in the aggregate to the Company and its Subsidiaries taken as a whole, other than Inventory sold or disposed of in the ordinary course of business, consistent with past practice, to persons who are not Affiliates of the Company for fair consideration;
(ii) canceled or terminated, or amended, modified or waived any material term of, any Material Contract;
(iii) (A) increased the compensation payable or to become payable to any of its directors or officers, (B) increased the base compensation payable or to become payable to any of its Personnel who are not directors or officers, except for normal periodic increases in such base compensation (not exceeding, in each case, 5%) in the ordinary course of business, consistent with past practice, (C) increased any sales commission rate, bonus or other compensation based on sales payable or to become payable to any of its Personnel who are not directors or officers, (D) granted, made or accrued any loan, bonus, severance, termination or continuation fee, incentive compensation (excluding sales commissions), service award or other like benefit, to or for the benefit of any of its Personnel, except pursuant to the Employee Plans set forth in Schedule 3.21, (E) adopted, amended or caused or suffered any addition to or modification of any Employee Plan, other than (1) contributions made in the ordinary course of business, consistent with past practice or (2) the extension of coverage to any of its Personnel who became eligible after the date of this Agreement, (F) granted any additional stock options or performance unit grants or other interest under any Employee Plan, (G) entered into any new employment or consulting agreement or caused or suffered any written or oral termination, cancellation or amendment of any such employment or consulting agreement to which it is a party (except with respect to any employee at will without a written agreement), (H) entered into any collective bargaining agreement or caused or suffered any termination or amendment of any collective bargaining agreement to which it is a party or (I) with respect to any shareholder of the Company or any Affiliate of any shareholder, granted, made or accrued any payment or distribution or other like benefit, contingently or otherwise, or otherwise transferred Assets, including any payment of principal of
or interest on any debt owed to any such shareholder or Affiliate, other than (1) any payments to such person in the ordinary course of business in his capacity as an employee of the Company or any of its Subsidiaries and (2) any transactions between the Company and its Subsidiaries, in the ordinary course of business and on an arms' length basis;
(iv) made any capital expenditure or any commitment to make any capital expenditure in excess of $50,000 in the aggregate;
(v) except in the ordinary course of business, executed (A) any Lease for real property or (B) any Lease for personal property involving annual payments in excess of $17,500, or, with respect to clauses (A) and (B) of this clause (v), offered to execute any Lease or incurred any liability therefor;
(vi) made any payments or given any other consideration to customers or suppliers, other than payments under, and in accordance with the terms of, Contracts in effect on the date hereof and other than in the ordinary course of business consistent with past practice;
(vii) changed its accounting methods, principles or practices, including any change in the application or interpretation of GAAP;
(viii) suffered any damage, destruction or casualty loss (whether or not covered by insurance) affecting its physical properties that exceeded $17,500 in any one instance or $87,500 in the aggregate;
(ix) (A) issued or sold, or entered into any agreement
obligating it to issue or sell, (B) declared, set aside for
payment or paid dividends or distributions in respect of, or
(C) directly or indirectly redeemed, purchased or otherwise
acquired, or split, combined, reclassified or otherwise
adjusted, any class or series of capital stock or any
securities convertible into or exchangeable for capital stock;
(x) (A) incurred any indebtedness for borrowed money or entered into any commitment to borrow money or (B) incurred any obligations for any performance bonds, payment bonds, bid bonds, surety bonds, letters of credit, guarantees or similar instruments;
(xi) changed or amended its Certificate or Articles of Incorporation or Bylaws;
(xii) (A) acquired (by merger, consolidation, acquisition of stock, other securities or assets or otherwise), (B) made a capital investment (whether through the acquisition of an equity interest, the making of a loan or advance or otherwise) in or (C) guaranteed indebtedness for borrowed money of, (1) any Person or (2) any portion of the assets of any Person that constitutes a division or operating unit of such Person;
(xiii) mortgaged or pledged, or otherwise made or suffered any Encumbrance (other than any Permitted Encumbrance) on, any material Asset or group of Assets that are material in the aggregate;
(xiv) revalued any of their Assets, including any write-off of notes, accounts receivable or fixed Assets, or any increase in any reserve (other than in the ordinary course of business consistent with past practice), involving in excess of $17,500 individually or $87,500 in the aggregate (such amounts to be calculated without netting any decrease);
(xv) granted any license or sublicense of any material rights under or with respect to any Intellectual Property;
(xvi) amended, cancelled or suffered termination of any License or Permit that is material to the Company or any of its Subsidiaries;
(xvii) canceled, waived or released any right or claim (or series of related rights or claims) (A) owed, directly or indirectly, by any officer, director or any of the Stockholders to the Company or any of its Subsidiaries or (B) owed by any other Person to the Company or any of its Subsidiaries involving in excess of $10,000 individually or $50,000 in the aggregate;
(xviii) made any material change in the policies of employment; or
(xix) committed, or entered into any Contract, to do any of the foregoing.
3.11 No Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any liabilities, obligations or commitments of any nature,
whether known or unknown, absolute, accrued, contingent or otherwise and whether
due or to become due (and, to the knowledge of the Stockholders or the Company,
there is no Basis for any present or future Action giving rise to any
liability), except (i) as and to the extent set forth in the balance sheet
included in the Interim Financial Statements or specifically disclosed in the
notes thereto, (ii) liabilities and obligations incurred after the date of the
balance sheet in the Interim Financial Statements in the ordinary course of
business and not prohibited by this Agreement and (iii) as set forth in Schedule
3.11. None of the liabilities described in clause (ii) of this Section 3.11
relates to any breach of Contract, breach of warranty, tort, infringement or
violation of Law or arose out of any Action.
3.12 Litigation. Except as set forth in Schedule 3.12, there is no outstanding order, writ, injunction, judgment or decree by any court or Governmental Authority or any Action pending or, to the knowledge of the Stockholders or the Company, threatened (i) against (A) the Company or any of its Subsidiaries or their Assets involving amounts not covered by insurance in excess of $17,500 or seeking non-monetary relief, (B) any director, officer or shareholder of the Company or any of its Subsidiaries in their capacity as such or (C) any Employee Plan of the Company or any of its Subsidiaries, (ii) relating to the transactions contemplated hereby, (iii) that involve allegations of criminal conduct on the part of the Company or any of its Subsidiaries or any of their respective officers or directors in their capacity as such or (iv) in which the Company or any of its Subsidiaries is a plaintiff (including any derivative suits brought by or on
behalf of the Company or any of its Subsidiaries), and neither the Stockholders nor the Company has knowledge of any Basis that is reasonably expected to result in any such Action. Neither the Company nor any of its Subsidiaries is in default with respect to any Action listed in Schedule 3.12, and there are no unsatisfied judgments or awards against the Company or any of its Subsidiaries or their respective business or Assets. To the knowledge of the Stockholders or the Company, except as specifically disclosed in Schedule 3.12, none of the Actions listed in Schedule 3.12, individually or in the aggregate, if adversely determined, would reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or would, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, be reasonably expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
3.13 Real Property.
(i) Schedule 3.13 sets forth all leases ("Real Property Leases") pursuant to which Facilities are leased by the Company or any of its Subsidiaries (as lessee), true and correct copies of which have been delivered to Buyer. Such Real Property Leases constitute all leases, subleases or other occupancy agreements pursuant to which the Company or any of its Subsidiaries occupy or use such Facilities. Except as set forth in Schedule 3.13, the Company or its Subsidiary has a good and valid leasehold interest in all leased property described in such Real Property Leases (the "Leased Real Property"), free and clear of any and all Encumbrances other than any Permitted Encumbrances. With respect to each such parcel of Leased Real Property (A) to the knowledge of the Stockholders or the Company, there are no pending or threatened condemnation proceedings or Actions relating to such Leased Real Property, (B) except as set forth in Schedule 3.13, other than Permitted Encumbrances neither the Company or any of its Subsidiaries nor, to the knowledge of the Stockholders or the Company, any third party has entered into any sublease, license, option, right, concession or other agreement or arrangement, written or oral, granting to any Person (other than the Company and its Subsidiaries) the right to use or occupy such Leased Real Property or any portion thereof or interest therein (C) neither the Stockholders nor the Company has received written notice of any pending or, to the knowledge of the Stockholders or the Company, threatened special assessment relating to such Leased Real Property and (D) the Company and its Subsidiaries enjoy peaceful and undisturbed possession of the Leased Real Property.
(ii) With respect to each such Real Property Lease listed in Schedule 3.13 and except as set forth therein, (A) there has been no material default under
any such Real Property Lease by the Company or any of its Subsidiaries or, to the knowledge of the Stockholders or the Company, by any other party thereto, (B) each such Real Property Lease is in full force and effect, (C) no action has been taken by the Company or any of its Subsidiaries and, to the knowledge of the Stockholders or the Company no event has occurred which, with notice or lapse of time or both, would permit termination, modification or acceleration by a party thereto other than the Company or its Subsidiaries, without the consent of the Company or its Subsidiaries, under any such Real Property Lease that is material to the Company and its Subsidiaries, (D) to the knowledge of the Stockholders or the Company, no party has repudiated in writing any term thereof or threatened in writing to terminate, cancel or not renew any such Real Property Lease that is material to the Company and its Subsidiaries and (E) neither the Company nor its Subsidiaries has assigned, transferred, conveyed, mortgaged or encumbered any interest therein or in any leased property subject thereto (or any portion thereof).
(i) to the knowledge of the Stockholders or the Company, no Facility thereon is in material violation of applicable zoning Laws;
(ii) to the knowledge of the Stockholders or the Company, all Facilities thereon have received all approvals of Governmental Authorities (including Licenses and Permits) required in connection with the ownership or operation thereof and have been operated and maintained in compliance in all material respects with applicable laws, rules and regulations; and
(iii) all Facilities thereon are supplied with utilities and other services necessary for the present operation of such facilities, including gas, electricity, water, telephone, sanitary sewer and storm sewer.
3.14 Personal Property.
(i) Except as set forth in Schedule 3.14, the Company and its Subsidiaries have a good and valid leasehold interest in all of the Fixtures and Equipment and other tangible personal property Assets leased by it from third parties, free and clear of any and all Encumbrances other than Permitted Encumbrances. Schedule 3.14 sets forth all leases for personal property ("Personal Property Leases") involving annual payments in excess of $17,500, true and correct copies of which have been delivered to Buyer.
(ii) With respect to each such Lease listed in Schedule 3.14 and except as set forth therein, (A) there has been no material default under any such Personal Property Lease by the Company or any of its Subsidiaries or, to the knowledge of the Stockholders or the Company, by any other party thereto, (B) such Personal Property Lease is in full force and effect, (C) no action has been taken by the Company or any of its Subsidiaries and, to the knowledge of the Stockholders or the Company no event has occurred which, with notice or lapse of time or both, would permit termination, modification or acceleration by a party thereto other than the Company and its Subsidiaries, without the consent of the Company and its Subsidiaries, under any such Personal Property Lease that is material to the Company and its Subsidiaries, (D) to the knowledge of the Stockholders or the Company, no party has repudiated in writing any term thereof or threatened in writing to terminate, cancel or not renew any such Personal Property Lease that is material to the Company and its Subsidiaries and (E) the Company and its Subsidiaries have not assigned, transferred, conveyed, mortgaged or encumbered any interest therein or in any leased property subject thereto (or any portion thereof).
3.15 Sufficiency of Assets. Except as set forth in Schedule 3.15, the Assets constitute all of the properties and assets used or held for use in connection with and necessary for the operation of the Business as currently conducted by the Company. Except as set forth in Schedule 3.15, the Assets that are owned by any Person other than the Company and its Subsidiaries are leased or licensed to the Company and its Subsidiaries under valid, current leases or license arrangements that will remain in full force and effect following consummation of the transactions contemplated hereby.
3.16 Books and Records. The Company and its Subsidiaries have made and kept Books and Records and accounts that, in reasonable detail, accurately and fairly reflect the activities of the Company and its Subsidiaries in all material respects. The minute books of the Company and its Subsidiaries are true and correct and contain copies of the minutes and records of, and accurately and adequately reflect, certain material corporate actions taken by the board of directors, committees of the board of directors and shareholders of the Company and its
Subsidiaries. The copies of the stock record books and the stock certificate books of the Company and its Subsidiaries are true and correct and accurately reflect all transactions in connection with the Company's and its Subsidiaries' capital stock through and including the date hereof.
3.17 Intellectual Property; Computer Software.
(a) Schedule 3.17 sets forth a complete and correct list of all Intellectual Property that is used in the Business. The Company has delivered to Buyer true, correct and complete copies of each registration, application, license, sublicense or other material document relating to the Intellectual Property set forth in Schedule 3.17. Except as set forth in Schedule 3.17, the Company and its Subsidiaries own, or possess adequate and enforceable licenses or other rights to use, all Intellectual Property used in the Business as it is currently conducted, and such ownership and licenses will not cease to be valid and in full force and effect in any material respect by reason of the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. To the knowledge of the Stockholders or the Company, the Company and its Subsidiaries have taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses. There is no Action pending or, to the knowledge of the Stockholders or the Company, threatened, against the Company or any of its Subsidiaries asserting that the Company's or any of its Subsidiaries' use of any Intellectual Property infringes the rights of any third party or otherwise contesting its rights with respect to any Intellectual Property and no third party has given written notice to the Stockholders, the Company or any of the Company's Subsidiaries that such third party is claiming ownership of or right to use any Intellectual Property, and, to the knowledge of the Stockholders or the Company (i) there are no grounds for any such assertion and (ii) no third party is infringing upon the rights of the Company or any of its Subsidiaries in the Intellectual Property in a manner which would have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or in a manner which, to the knowledge of the Company or the Stockholders, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, would reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
(b) The Company and its Subsidiaries own, or possess adequate and enforceable licenses or other rights to use, the computer software for the POS system and, except as set forth in Schedule 3.17, such ownership and licenses will not cease to be valid and in full force and effect in any material respect by reason of the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.
3.18 Material Contracts.
(a) Schedule 3.18 sets forth a complete and accurate list of all Contracts in the following categories (each, a "Material Contract") as of the date hereof (except to the extent that any such category specifies a different date, in which case such corresponding list is made as of such specified date):
(i) each Contract (or group of related Contracts) concerning a partnership or joint venture with, or any other investment in (whether through the
acquisition of an equity interest, the making of a loan or advance or otherwise), any other Person;
(ii) each Contract (or group of related Contracts) (A) under which the Company or any of its Subsidiaries has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness for borrowed money, (B) constituting a Capitalized Lease obligation, (C) under which the Company or any of its Subsidiaries has granted (or may grant) a security interest or lien in excess of $17,500 on any Assets or (D) under which the Company or any of its Subsidiaries has incurred any obligations for any performance bonds, payment bonds, bid bonds, surety bonds, letters of credit, guarantees or similar instruments;
(iii) each Contract (or group of related Contracts) concerning confidentiality regarding the Intellectual Property;
(iv) each Contract (or group of related Contracts) with any Personnel, any Affiliate of the Company or any of its Subsidiaries or, to the knowledge of the Stockholders or the Company, any member of any such person's immediate family, involving annual compensation in excess of $17,500, including (A) Contracts, including Contracts to employ or compensate (including to grant options to or to accelerate options that are outstanding), with present or former shareholders, directors or officers or other Personnel of the Company or any of its Subsidiaries or (B) Contracts that will result in the payment by, or the creation of any commitment or obligation (absolute or contingent) of the Company or any of its Subsidiaries to pay, any severance, termination, "golden parachute" or other similar payments to any present or former Personnel following termination of employment or otherwise as a result of the consummation of the transactions contemplated hereby;
(v) each Contract (or group of related Contracts), including open purchase orders or groups of related open purchase orders, for the purchase or sale of raw materials, commodities, supplies, products or other property providing for payments in excess of $87,500 over the life of such Contract (or group of related contracts);
(vi) each Contract (or group of related Contracts) providing for payments in excess of $50,000 over the life of such Contract (or group of related Contracts), except for such Contracts that are cancelable on not more than 30 days' notice by the Company or any of its Subsidiaries without substantial penalty or substantial increased cost;
(vii) each distribution, development, franchise, license, commission, consulting, agency or advertising Contract related to the Assets or the business involving annual payments in excess of $10,000, except for such Contracts that are cancelable on not more than 30 days' notice by the Company or any of its Subsidiaries without substantial penalty or substantial increased cost;
(viii) each Contract (or group of related Contracts) containing covenants restraining or limiting the freedom of the Company or any of its Subsidiaries or any officer, director, shareholder or Affiliate thereof to engage in any line of business or compete with any Person including by restraining or limiting the right to solicit customers;
(ix) each option with respect to any real property or any personal property, whether the Company or any of its Subsidiaries are the grantor or grantee thereunder;
(x) each other Contract (or group of related Contracts) not entered into in the ordinary course of business, consistent with past practice; and
(xi) each Contract (or group of related Contracts), other than any Contract covered by any other clause of this Section 3.18, the consequences of a default or termination under which would have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole or the consequences of a default or termination under which, to the knowledge of the Company or the Stockholders, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, would reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
The Company has delivered to Buyer a true and correct copy of each written Material Contract listed in Schedule 3.18 and has included as part of Schedule 3.18 a brief summary of the material terms of each oral Material Contract.
(b) With respect to each Contract set forth or described in Schedule 3.18 except as set forth in Schedule 3.18, (i) there is no material default under any such Contract by the Company or any of its Subsidiaries or, to the knowledge of the Stockholders or the Company, by any other party to any such Contract, (ii) such Contract is in full force and effect; (iii) no action has been taken by the Company or any of its Subsidiaries and, to the knowledge of the Stockholders or the Company, no event has occurred which, with notice or lapse of time or both, would be reasonably likely to permit termination, modification or acceleration by a party thereto other than the Company or any of its Subsidiaries under any such Contract; and (iv) to the knowledge of the Stockholders or the Company, no party has repudiated any term thereof or threatened to terminate, cancel or not renew any such Contract.
3.19 Insurance. Schedule 3.19 contains a complete and accurate list of all policies or binders for business interruption, fire, liability, title, worker's compensation, product liability, errors and omissions and other forms of insurance (showing as to each policy or binder the carrier, policy number, expiration date and a general description of the coverage provided) maintained by the Company and its Subsidiaries. The insurance policies referred to in Schedule 3.19 provide, and during their respective terms have provided, coverage to the extent and in the manner (i) adequate (consistent with industry standards) for the Assets, Businesses and operations of the Company and its Subsidiaries, and the risks insured against in connection therewith and (ii) as may be or may have been required by Law. Neither the Company nor any
of its Subsidiaries is in material default under any of such policies or binders, and they have not failed to give any notice or to present any material claim under any such policy or binder in a due and timely fashion. Since January 1, 1996, no insurer has refused, denied or disputed coverage of any material claim made thereunder. No insurer has advised the Company or any of its Subsidiaries that it intends to reduce coverage or increase any premium in any material respect or fail to renew any existing policy or binder. All such policies and binders are in full force and effect on the date hereof and shall be kept in full force and effect through the Closing Date. Schedule 3.19 describes any self-insurance arrangements affecting the Company or any of its Subsidiaries.
3.20 Labor Matters.
(a) The Company has delivered to Buyer true and complete copies or descriptions of all employment contracts and all material personnel policies, employment practices, supervisors' manuals, commission, and any other material arrangements applicable to any employee or former employee or any beneficiary or dependent thereof, whether or not written, whether or not terminable at will, and whether covering one person or more than one person, entered into, issued, adopted, or followed by the Company or any of its Subsidiaries, other than an arrangement listed in Schedule 3.21 as an Employee Benefit Plan.
(b) Schedule 3.20 identifies and describes all written and unwritten grievances or complaints filed or submitted since January 1, 1996, by any employee or applicant for employment against the Company or any of its Subsidiaries or their employees whether pursuant to a collective bargaining agreement, a formal or informal grievance procedure afforded employees, or otherwise, including without limitation, any claims of sexual, racial or other harassment, discriminatory treatment, breach of collective bargaining agreement, breach of contract, or violation of policy.
(c) Except as set forth in Schedule 3.20 there have been no unfair labor practice charges, union organizing efforts, union certifications, bargaining unit definitions, recognitions, demands for recognition or collective bargaining, strikes or work stoppages, union election results, National Labor Relations Board proceedings or related court cases relating to or affecting any employees of the Company or any of its Subsidiaries since January 1, 1996.
(d) Schedule 3.20 identifies and describes all affirmative action plans, audits, results, conciliation agreements, Office of Federal Contract Compliance charges or proceedings, Equal Employment Opportunity Commission employment charges or proceedings, state or local unfair employment practice charges or proceedings, or any written or unwritten claims or suspected claims of discrimination, unequal pay, or retaliation relating to any current or former employee or applicant for employment of the Company or any of its Subsidiaries since January 1, 1996.
(e) Schedule 3.20 identifies and describes all state or federal wage and hour, wage payment, or other wage related investigations, claims, or proceedings, any other local, state or federal investigations, claims, or proceedings related to any current or former practice, current or former employee, or applicant for employment of the Company or any of its Subsidiaries since January 1, 1996.
(f) Schedule 3.20 identifies and describes all Actions not expressly identified and described in previous schedules under this section which relate to current or former employment practices, current or former employees, or applicants for employment of the Company or any of its Subsidiaries, including claims relating to the Family and Medical Leave Act, immigration law compliance, the Worker Adjustment and Retraining Notification Act, wrongful discharge, tortious interference, intentional infliction of emotional distress, or any other claim raised by or on behalf of a current or former employee or applicant for employment since January 1, 1996.
(g) The Company has delivered to Buyer copies or descriptions of all Occupational Health and Safety Act or state occupational safety and health citations, charges, lawsuits, inspections, investigations, claims, and proceedings, all current or former claims for unsafe or unhealthy working conditions, including without limitation claims for exposure to asbestos, carcinogenic substances, or other workplace risks since January 1, 1996.
(h) Except as set forth in Schedule 3.20, to the knowledge of the Stockholders or the Company, all policies and practices of the Company or any of its Subsidiaries are in all material respects in compliance with, and have been administered in all material respects in compliance with, all applicable requirements of Law, including but not limited to federal, state, or local Laws relating to employment, including Laws relating to wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, duties to prevent, disclose, warn or remedy unhealthy or unsafe workplace conditions, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, ERISA, COBRA, the Family and Medical Leave Act, the Occupational Safety and Health Act, the Worker Adjustment and Retraining Notification Act, workers compensation statutes, and other federal, state or local regulations, rules, statutes, or ordinances relating to employees or employment.
3.21 Employee Plans.
(a) Schedule 3.21 contains a complete list of Employee Plans. True and complete copies of each of the following documents have been delivered by the Company to Buyer: (i) the current version of each Employee Plan (and, if applicable, related trust agreements and all amendments thereto) (or a summary description of any Employee Plan not in writing), the current summary plan description, summaries of material modifications (as defined in ERISA), annuity contracts or other funding instruments, the number of and a general description of the level of employees covered by each Benefit Arrangement and a complete description of any Employee Plan which is not in writing, (ii) except as set forth in Schedule 3.21, the most recent determination letter issued by the Internal Revenue Service and any opinion letter issued by the Department of Labor with respect to each Pension Plan and each voluntary employees' beneficiary association as defined under Section 501(c)(9) of the Internal Revenue Code which covers or has covered employees of the Company or any of its Subsidiaries, (iii) for the three most recent plan years, Annual Reports on Form 5500 Series required to be filed with any governmental agency for each Pension Plan, Welfare Plan or Benefit Arrangement (to the extent (a) required) which covers or has covered employees, consultants or independent contractors of the Company or any of its Subsidiaries or ERISA Affiliates, (iv) the most recent annual financial report for any Pension Plan and (v) a description setting forth the amount of any material liability of the Company or any of its Subsidiaries as of the Closing Date for payments more than 30
calendar days past due with respect to each Welfare Plan which covers or has covered employees or former employees, consultants or independent contractors of the Company or any of its Subsidiaries.
(A) Except as set forth in Schedule 3.21, no Employee
Plan is a Pension Plan subject to Title IV or Section 302 of
ERISA or Section 312 or 4971 of the Internal Revenue Code.
None of the Company or any of its Subsidiaries or any ERISA
Affiliate has engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction
described in Section 4069 of ERISA which could reasonably be
expected to result in a material liability. None of the
Company or any of its Subsidiaries or any ERISA Affiliate
has, at any time, (1) ceased operations at a Facility so as
to become subject to the provisions of Section 4062(e) of
ERISA, (2) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA,
or (3) ceased making contributions on or before the Closing
Date to any Pension Plan subject to Section 4064(a) of ERISA
to which the Company or any of its Subsidiaries or any ERISA
Affiliate made contributions during the six years prior to
the Closing Date, excluding in each of clauses (1) through
(3) any instances other than those which would reasonably be
expected to have a material liability which has not yet been
satisfied.
(B) Except as set forth on Schedule 3.21, to the knowledge of the Stockholders or the Company, each Pension Plan and each related trust agreement, annuity contract or other funding instrument which covers or has covered employees or former employees of the Company or any of its Subsidiaries which has been operated as a plan qualified under Section 401(a) of the Internal Revenue Code (1) has received a favorable determination letter from the Internal Revenue Service relating to such Pension Plan stating that such Pension Plan and each related trust is qualified and tax-exempt under the provisions of Internal Revenue Code Sections 401(a) and 501(a), (2) has been so qualified during the period from its adoption to the date of such determination letter and (3) any amendment made to the Pension Plan subsequent to the favorable determination letter has not adversely affected the Pension Plan's tax-qualified status. To the knowledge of the Stockholders or the Company, no event or condition exists or has occurred, and neither the Company nor any fiduciary of the Pension Plan has done or failed to do anything that would reasonably be expected to adversely affect such qualified and tax-exempt status.
(C) To the knowledge of the Stockholders or the Company, each Pension Plan and each related trust agreement, annuity contract or other funding instrument which covers or has covered employees or former employees of the Company or any of its Subsidiaries currently complies in
all material respects and has been maintained in compliance in all material respects with its terms and, both as to form and in operation, with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such plans, including ERISA and the Internal Revenue Code. Except as set forth in Schedule 3.21, all contributions required to be made to each Employee Plan under the terms of such plan, ERISA or the Internal Revenue Code for all periods of time before the Closing Date have been, or, as applicable, will by the Closing Date be timely made or paid in full.
(D) Subject to the requirements of the Internal Revenue Code and ERISA, no condition exists which would reasonably be expected to prevent the Company or any of its Subsidiaries or an ERISA Affiliate from amending or terminating any Pension Plan.
(A) To the knowledge of the Stockholders or the Company, each Welfare Plan which covers or has covered, employees or former employees of the Company or any of its Subsidiaries currently complies in all material respects and has been maintained in compliance in all material respects with its terms and, both as to form and operation, with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Welfare Plan, including ERISA and the Internal Revenue Code.
(B) Except as required by Section 4980B of the Internal Revenue Code or Part 6 of Title 1, Subtitle B of ERISA, or as set forth in Schedule 3.21, none of the Company or any of its Subsidiaries, any ERISA Affiliate or any Welfare Plan has any present or future obligation to make any payment to, or with respect to any present or former employee of the Company or any of its Subsidiaries or any ERISA Affiliate pursuant to, any retiree medical benefit plan, or other retiree Welfare Plan, and, to the knowledge of the Stockholders or the Company, no condition exists which would reasonably be expected to prevent the Company or any of its Subsidiaries or an ERISA Affiliate from amending or terminating any such benefit plan or such Welfare Plan.
(C) To the knowledge of the Stockholders or the
Company, each Welfare Plan which covers or has covered
employees or former employees of the Company or any of its
Subsidiaries and which is a "group health plan," as defined
in Section 607(1) of ERISA, presently complies (and at all
relevant times complied) in all material respects with and
has been operated in compliance in all material respects
with (i) the provisions of Part 6 of Title I, Subtitle B of
ERISA and Sections 162(k) and 4980B of the Internal Revenue
Code, (ii) Section 712 of ERISA and Section 9812 of the
Internal Revenue Code, (iii) Section 711 of ERISA and
Section 9811 of the Internal Revenue Code and (iv) Sections
701 through 707 of ERISA and Sections 9801 through 9806 of
the Internal Revenue Code.
(D) None of the Company or any of its Subsidiaries or any ERISA Affiliate has maintained, contributed to or had any obligation to maintain or contribute to any Welfare Plan that is a Multiemployer Plan.
(E) To the knowledge of the Stockholders or the Company, the insurance policies or other funding instruments, if any, for each Welfare Plan provide coverage for each employee, consultant, independent contractor or retiree of the Company or any of its Subsidiaries (and, if applicable, their respective dependents) who has been advised by the Company or any of its Subsidiaries, whether through an Employee Plan or otherwise, that he or she is covered by such Welfare Plan.
or the Company, none of the Company or any of its Subsidiaries or any ERISA Affiliate has any material liability for unpaid contributions under Section 515 of ERISA with respect to any Employee Plan.
(b) There does not now exist, nor, to the knowledge of the Stockholders or the Company, do any circumstances exist that could result in, any Controlled Group Liability that would be a liability of the Company or any of its Subsidiaries following the Closing Date.
3.22 Tax Matters.
Agreement from qualifying as a "reorganization" within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code. Neither the Company nor any of its Subsidiaries will take any position on any federal, state or local income or franchise tax return, or take any other tax reporting position that is inconsistent with the treatment of the Merger as a reorganization within the meaning of Internal Revenue Code Section 368(a)(2)(D), unless otherwise required by a "determination" (as defined in Section 1313(a)(1)) of the Internal Revenue Code or by applicable state or local income or franchise tax law.
3.23 Transactions with Certain Persons. Except as disclosed in Schedule 3.23, (i) no officer, director or shareholder of the Company or any of its Subsidiaries or any member of any such Person's immediate family, or, to the knowledge of the Stockholders or the Company, any Affiliate of such Person, is currently, or since January 1, 1996 has been, directly or indirectly, a party to any transaction, arrangement or relationship (other than employment relationships) with the Company or any of its Subsidiaries and (ii) to the knowledge of the Stockholders or the Company, no employee or any member of any such Person's immediate family, is currently, or since January 1, 1996 has been, a party to any material transaction, arrangement or relationship (other than employment relationships) with the Company or any of its Subsidiaries, including any Contract or Lease (A) providing for the furnishing of services by, (B) providing for the rental of real or personal property from, or (C) otherwise requiring payments to (other than (1) dividends or distributions to any shareholder of the Company in his or her capacity as such or (2) compensation for services as officers, directors or employees of the Company or any of its Subsidiaries), any such Person or any corporation, partnership, trust or other entity in which any such Person has an interest as an officer, director, trustee or partner, or as the holder of more than 10% of such entity's equity securities. The only Contracts, Leases, arrangements, relationships or other items listed in Schedule 3.23 that will remain in place after the Closing or with respect to which the Company or any of its Subsidiaries will have any ongoing obligations or duties are those items which are explicitly identified in Schedule 3.23 as remaining in place or having ongoing obligations or duties.
3.24 Suppliers. Schedule 3.24 sets forth for the period of February 27, 1998 through September 3, 1999 and the period of September 4, 1999 through February 2, 2000, the name and address of each of the ten largest suppliers of the Company and its Subsidiaries based on the aggregate value of Inventory ordered by the Company and its Subsidiaries during such period, and the approximate amount each such supplier invoiced the Company and its Subsidiaries during each such period. Except as set forth in Schedule 3.24, none of the Stockholders, the Company or any of the Company's Subsidiaries has received any notice or has any reason to believe that there has been any material adverse change in the Company's or any of its Subsidiaries' relations with its suppliers or that any such supplier will not sell Inventory or other goods and services to the Company or any of its Subsidiaries after the Closing on terms and conditions similar to those used in its current sales to the Company and its Subsidiaries.
3.25 Banking Relationships. Schedule 3.25 sets forth a complete and accurate description in all material respects of all arrangements that the Company or any of its Subsidiaries has with any banks, savings and loan associations or other financial institutions providing for any accounts, including checking accounts, cash contribution accounts, safe deposit boxes, borrowing arrangements, certificates of deposit or otherwise, indicating in each case account numbers, if applicable, and the person or persons authorized to act or sign on behalf
of the Company or any of its Subsidiaries in respect of any of the foregoing. No person holds any power of attorney or similar authority from the Company or any of its Subsidiaries with respect to any such accounts.
3.26 Prohibited Payments. To the knowledge of the Stockholders or the Company, none of the Company or any of its Subsidiaries has, directly or indirectly, (i) made or agreed to make any contribution, payment or gift to any government official, employee or agent where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction or (ii) established or maintained any unrecorded fund or asset for any purpose or made any false entries on the Books and Records for any reason.
3.27 Year 2000 Matters. The Company and its Subsidiaries have initiated a review and assessment of all areas within their operations (including those affected by its material suppliers and customers) that could be adversely affected by the inability of computer systems used by the Company or any of its Subsidiaries to recognize and perform properly date-sensitive functions involving certain dates prior to and any date after December 31, 1999 ("Year 2000 Computer System Issues"). Except as set forth in Schedule 3.27, to the knowledge of the Stockholders or the Company, the Company and its Subsidiaries have all systems and software solutions necessary or appropriate to address and accommodate Year 2000 Computer Systems Issues.
3.28 Brokers. No broker, finder or investment banker is entitled to any fee or commission for services rendered on behalf of the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement.
3.29 Full Disclosure. To the knowledge of the Stockholders or the Company, none of the representations and warranties of the Company in this Article III (a representation and warranty being deemed to include, for the purpose of the Section to which it is referenced and not for the purpose of any other Section, the information contained in the schedules hereto) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
As an inducement to Buyer and Sub to enter into this Agreement, each Stockholder severally, but not jointly, determined individually as to the representations and warranties contained herein, makes the following representations and warranties to Buyer and Sub, except as set forth in the Schedules delivered to Buyer prior to the execution hereof, a copy of which is attached hereto. The Schedules are numbered to correspond to the various sections of this Article IV setting forth certain exceptions to the representations and warranties contained in this Article IV and certain other information called for by this Agreement. Unless otherwise specified, no disclosure made in any particular Schedule shall be deemed made in any other Schedule unless expressly made therein (by cross-reference or otherwise) unless, and only to the extent that, it would fairly be understood on its face to contain information which also is applicable to the representations and warranties to which such other Schedule relates.
4.1 Ownership of Company Common Stock. Except as described on Schedule 4.1, (i) each Stockholder is the legal and beneficial owner of the number of shares of Company Common Stock listed opposite, his, hers or its name on Schedule 4.1, (ii) such Company Common Stock so listed is free and clear of all Encumbrances and (iii) such Stockholder does not have any right or interest in any Company stock options, warrants, stock appreciation rights, limited stock appreciation or other rights or derivative securities to receive or redeem for cash, warrants, options or other derivative securities.
4.2 Power, Authorization and Enforceability of Agreement. Each Stockholder has the legal capacity, and, if such Stockholder is a corporation or partnership, the corporate or partnership power and authority, to execute and deliver this Agreement, to perform his, hers or its obligations hereunder and to consummate the transactions contemplated hereby with respect to such Stockholder. If such Stockholder is a corporation or partnership, such execution, delivery, performance and consummation by such Stockholder has been duly authorized by all necessary corporate or partnership action on the part of such Stockholder. Except as described on Schedule 4.2, this Agreement has been, and all other agreements, documents and instruments required to be delivered by such Stockholder, pursuant to the provisions hereof (the "Stockholder Documents") have been, or at the Effective Time will be, duly executed and delivered by such Stockholder and this Agreement constitutes, and such of the Stockholder Documents, when executed and delivered will constitute, the legal, valid and binding obligations of such Stockholder enforceable against such Stockholder in accordance with its respective terms, except as enforcement may be limited by debtor relief laws or equitable principles relating to the granting of specific performance and other equitable remedies as a matter of judicial discretion.
4.3 Compliance with Other Instruments and Laws. Except as
disclosed on Schedule 4.3, to the knowledge of the respective Stockholder, the
execution and delivery by such Stockholder of, and the performance by such
Stockholder of his, hers or its respective obligations under, this Agreement and
the Stockholder Documents and the consummation of the transactions contemplated
hereby and thereby with respect to each such Stockholder do not violate,
conflict with, result in any breach of, or constitute a default under (or with
the giving of notice or the passage of time or both, violate, conflict with or
constitute a default under), (i) any Law that is applicable to such Stockholder,
(ii) any provision of the Articles or Certificate of Incorporation or Bylaws or
other organizational documents of such Stockholder, or (iii) any mortgage,
lease, indenture, agreement, contract or other instrument, document or
understanding, oral or written, to which such Stockholder is a party or by which
such Stockholder is bound or has rights, except, in the cases of clause (i) and
clause (iii) above, for such instances as do not have, individually or in the
aggregate, a Material Adverse Effect on such Stockholder's ability to perform
its obligations under this Agreement or the Stockholder Documents and such
instances which, individually or in the aggregate, to the knowledge of the
Company or the Stockholders, with the passage of time, the giving or receipt of
notice or the occurrence or nonoccurrence of any other circumstance, action or
event, would not reasonably be expected to have a Material Adverse Effect on
such Stockholder's ability to perform its obligations under this Agreement or
the Stockholder Documents.
4.4 No Third Party Options. Except as described on Schedule 4.4, there are no existing agreements, options, contracts or rights with, of or to any person to acquire any Company Common Stock owned by such Stockholder from such Stockholder.
4.5 Brokers and Finders. Such Stockholder has not employed any broker or finder or incurred any liability for any fees or commissions in connection with the transactions contemplated herein.
4.6 Investment Representations. Each Stockholder acknowledges that Buyer Common Stock to be issued in the Merger is not being registered under the Securities Act, based, in part, on reliance that the issuance of Buyer Common Stock is exempt from registration under Section 4(2) of the Securities Act as not involving any public offering. Each Stockholder further acknowledges that Buyer's reliance on such exemption is predicated, in part, on the representations set forth below by the Stockholders to Buyer:
(a) Each Stockholder is acquiring Buyer Common Stock solely for its own account, for investment purposes only, and not with an intent to sell, or for resale in connection with any distribution of all or any portion of Buyer Common Stock within the meaning of the Securities Act;
(b) Each Stockholder is an "accredited investor," as such term is defined in Rule 501(a) under the Securities Act, which, by reason of its business and financial experience, has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of the investment in Buyer Common Stock;
(c) Each Stockholder is experienced in evaluating and investing in companies such as Buyer. Each Stockholder has been given access to all books, records and other information of Buyer which such Stockholder has desired to review and analyze in connection with such Stockholder's purchase of Buyer Common Stock hereunder;
(d) Each Stockholder is aware that an investment in a closely held corporation such as Buyer is not liquid and will require each Stockholder's capital to be invested for an indefinite period of time, possibly without return. Each Stockholder has the ability to bear the economic risk of this investment, and can afford a complete loss of its investment;
(e) Each Stockholder understands that (i) the offering and sale of Buyer Common Stock hereunder has not been registered under the Securities Act, and that Buyer Common Stock may not be re-offered or re-sold unless Buyer Common Stock is registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available, (ii) if any transfer of Buyer Common Stock is to be made in reliance on an exemption under the Securities Act, Buyer may require an opinion of counsel satisfactory to it that such transfer may be made pursuant to such exemption, and (iii) so long as deemed appropriate by Buyer, Buyer Common Stock may bear a legend to the effect of clauses (i) and (ii) of this paragraph. Each Stockholder represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act; and
(f) At no time was any Stockholder presented with or solicited by any leaflet, public or promotional meeting, newspaper or magazine article, radio or television advertisement or any other form of general advertising relating to the purchase hereunder.
4.7 Tax Free Reorganization Treatment. To the knowledge of each Stockholder, each such Stockholder has not taken and has not agreed to take any action, and each such Stockholder does not have any knowledge of any fact or circumstance, that would prevent the Merger or any other transactions contemplated by this Agreement from qualifying as a "reorganization" within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code. Each of the Stockholders will not take any position on any federal, state or local income or franchise tax return, and will not take any other tax reporting position that is inconsistent with the treatment of the Merger as a reorganization within the meaning of Internal Revenue Code Section 368(a)(2)(D), unless otherwise required by a "determination" (as defined in Section 1313(a)(1)) of the Internal Revenue Code or by applicable state or local income or franchise tax law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the Company and the Stockholders to enter into this Agreement, Buyer hereby makes the following representations and warranties to the Company and the Stockholders, except as otherwise set forth in the Schedules delivered to the Company prior to the execution hereof, a copy of which is attached hereto. The Schedules are numbered to correspond to the various sections of this Article V setting forth certain exceptions to the representations and warranties contained in this Article V and certain other information called for by this Agreement. Unless otherwise specified, no disclosure made in any particular Schedule shall be deemed made in any other Schedule unless expressly made therein (by cross-reference or otherwise) unless, and only to the extent that, it would fairly be understood on its face to contain information which also is applicable to the representations and warranty to which such other Schedule relates.
5.1 Organization; Qualification. Each of Buyer and Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power and authority to own all of its properties and assets and to carry on its business as it is presently being conducted. Buyer is qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed would not, individually or in the aggregate, have a Material Adverse Effect on Buyer and Sub taken as a whole and where such failure to be so qualified, to the knowledge of Buyer or Sub, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, would not reasonably be expected to have a Material Adverse Effect on Buyer and Sub taken as a whole.
5.2 Authority Relative to this Agreement. Each of Buyer and Sub has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder. The execution and
delivery by each of Buyer and Sub of this Agreement and the consummation by each of Buyer and Sub of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Buyer and Sub and, assuming that each of the Company and each of the Stockholders has duly authorized, executed and delivered this Agreement, this Agreement constitutes a valid and binding obligation of each of Buyer and Sub, enforceable against each of Buyer and Sub in accordance with its terms.
5.3 Consents and Approvals. No consent, waiver, agreement, approval or authorization of, or declaration, filing, notice or registration to or with, any Governmental Authority is required to be made or obtained by Buyer or Sub in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby other than those set forth in Schedule 5.3. There is no requirement that any party to any material agreement, contract, lease, note, loan, evidence of indebtedness, purchase order, letter of credit, franchise agreement, undertaking, covenant not to compete, employment agreement, license, instrument, obligation, commitment or purchase and sales order to which either Buyer or Sub is a party or by which either Buyer or Sub is bound, consent to the execution and delivery of this Agreement by either Buyer or Sub or the consummation of the transactions contemplated hereby.
5.4 Non-Contravention. The execution, delivery and performance by each of Buyer and Sub of this Agreement do not, and the consummation by each of Buyer and Sub of the transactions contemplated hereby will not (i) violate or result in a breach of any provision of the Articles of Incorporation of either Buyer or Sub, (ii) result in a breach of or result in a default (or give rise to any right of termination, cancellation or acceleration) under the terms, conditions or provisions of any material agreement, contract, lease, note, loan, evidence of indebtedness, purchase order, letter of credit, franchise agreement, undertaking, covenant not to compete, employment agreement, license, instrument, obligation, commitment or purchase and sales order to which either Buyer or Sub is a party or by which either Buyer or Sub is bound, or (iii) violate any order, writ, injunction, decree or Law applicable to either Buyer or Sub.
5.5 Litigation. There is no Decree or Action pending or, to the knowledge of Buyer or Sub, threatened (a) against either Buyer or Sub or any of its Affiliates with respect to which there is a reasonable likelihood of a determination which would have a Material Adverse Effect on either Buyer or Sub or on the ability of either Buyer or Sub to consummate the transactions contemplated hereby or (b) which seeks to enjoin or prevent, or questions the validity or legality of, the consummation of the transactions contemplated hereby.
5.6 Brokers. Except for Banc of America Securities LLC, no broker, finder or investment banker is entitled to any fee or commission from Buyer for services rendered on behalf of Buyer in connection with transactions contemplated by this Agreement. A true and complete copy of the agreements between Buyer and Bank of America Securities LLC has been delivered to the Company.
5.7 Interim Operations of Sub. Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and will engage in no other business activities and will conduct its operations only as contemplated hereby. As of the Closing, except for obligations or liabilities incurred in connection with its incorporation or organization and the
transactions contemplated by this Agreement, Sub will not have incurred, directly or indirectly, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Conduct of Business. From the date hereof and until the Closing, the Company shall, and shall cause its Subsidiaries to, conduct the Business only in the ordinary and usual course and in a manner consistent with past practices; maintain its Books and Records in accordance with past practices; maintain in good repair (ordinary wear and tear excepted) all of its material structures and Fixtures and Equipment; and use its reasonable best efforts to preserve intact the present business organization and operations of the Business, keep available the services of its officers, employees, representatives, agents and consultants, and preserve its relationships with licensors, suppliers and others having business relationships with it. The Company's management shall be available to meet with Buyer on a reasonable basis with prior notice to discuss the general status of the ongoing operations of the Business and any issues relating to the conduct thereof. The Company shall give prompt notice to Buyer of (i) any Material Adverse Change and, to the knowledge of the Stockholders or the Company, any event or condition which, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, would reasonably be expected to constitute a Material Adverse Change, (ii) the occurrence or non-occurrence of any event which would be reasonably likely to cause the Company to believe that any representation or warranty of the Company herein to be untrue or inaccurate, or the failure of the Company to comply with or satisfy any covenant, agreement or condition to be complied with or satisfied by it hereunder and (iii) any budget revisions approved by the Board of Directors of the Company, and will keep Buyer reasonably informed of developments with respect to such events and afford Buyer's representatives reasonable access to all materials in their possession relating thereto.
6.2 Forbearances. Except as contemplated by this Agreement or as set forth on Schedule 6.2, the Company shall not, and shall cause its Subsidiaries not to, from the date hereof until the earlier of (i) the Closing Date or (ii) termination under Article X, without the written consent of Buyer, which consent shall not unreasonably be withheld, (A) take or fail to take any action or enter into any transaction of the kind which if taken or failed to be taken after November 30, 1999, would have been in violation of Section 3.10, (B) engage in any practice, or take, or fail or omit to take, any action or enter into any transaction, other than in the ordinary course of business and consistent with past practices, that would reasonably be expected to cause or result in any of the representations and warranties set forth in Article III to be untrue in any material respect at any time after the date hereof through the Closing Date, (C) declare or make any distribution to the Stockholders, (D) reorganize, sell or dispose of any significant amount of assets, or engage in any sale-leaseback or similar type of transaction with respect to its assets outside the ordinary course of its business, (E) materially increase the level of compensation to any officer, director or employee, or (F) engage in any transaction out of the usual and ordinary course of business. Notwithstanding the foregoing, the Company shall be permitted to take any action prohibited by this Section 6.2 if such action is conditioned upon the nonclosure of the transactions contemplated by this Agreement.
6.3 Negotiations with Others. From the date hereof until the earlier of (i) the Closing Date or (ii) termination of this Agreement under Article X, the Company shall not, and shall instruct each of its representatives (including investment bankers, attorneys and accountants) not to and the Stockholders shall not, directly or indirectly, enter into, solicit, initiate, conduct or continue any discussions or negotiations with, or encourage or respond to any inquiries or proposals by, or provide any information to, or otherwise cooperate in any other way with, any Person or group, other than Buyer and its representatives, concerning any sale of all or any substantial portion of the Assets or the Business of, or of any shares of capital stock or other securities of, the Company or any of its Subsidiaries, or any merger, consolidation, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Subsidiaries (each such transaction being referred to herein as a "Proposed Acquisition Transaction"). The Company and the Stockholders hereby represent that neither they nor any of their respective representatives are presently engaged in discussions or negotiations with any party other than Buyer with respect to any Proposed Acquisition Transaction. The Company and the Stockholders agree not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which any of them is a party.
6.5 Confidentiality. The provisions dealing with the maintenance of confidentiality with respect to documents provided to Buyer in connection with the transactions contemplated hereby in the letter of intent dated December 28, 1999 between Buyer and the Company (the "Letter of Intent") are hereby incorporated herein by reference. Unless and until the Closing has been consummated, Buyer shall hold, and shall cause its counsel, accountants and other representatives to hold, in confidence all confidential data and information relating to the Company and its Subsidiaries made available to Buyer, together with all analyses, compilations, studies and other documents and records prepared by Buyer or any of its representatives which
contain or otherwise reflect or are generated from such information, as set forth in the Letter of Intent. If the transactions contemplated by this Agreement are not consummated, Buyer agrees to keep confidential all data and information relating to the Company and its Subsidiaries or the Business, and upon written request of the Company, to return or cause to be returned to the Company all written materials and all copies that contain any such confidential data or to certify to the Company that such materials have been destroyed. Notwithstanding the foregoing, Buyer may disclose this Agreement and the information and data in Buyer's possession in connection therewith (i) to the extent such disclosure is required by law, (ii) to Quad-C, Inc. and its counsel, accountants and other representatives and (iii) to any financial institution providing financing to Buyer in connection with the transactions contemplated hereby and its counsel, accountants and other representatives.
6.6 No Disclosure; Public Announcements. Prior to Closing, without the prior consent of the other party, (i) except to the extent required by law, neither party will, and each party will direct its directors, officers, employees, representatives and advisors not to, disclose to any other Person (except Buyer's lenders and their counsel) the fact that discussions or negotiations are taking place concerning the transactions contemplated hereby or the existence of this Agreement or any of the terms, conditions or other facts with respect thereto and (ii) except for filings required by law, neither party will issue any press release or otherwise make any public statements with respect to this Agreement and the transactions contemplated hereby.
6.7 Expenses. Except as set forth in Section 2.9 or otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such costs and expenses.
6.8 Interim Financial Statements. From the date hereof through the Closing Date, the Company shall provide to Buyer (i) as soon as practicable, but in any event, no later than 15 days after the end of each four week accounting period, the unaudited balance sheet and statements of income, cash flows and stockholders' equity for the Company and its Subsidiaries for the immediately preceding month certified by the chief financial officer of the Company and (ii) within three days after the end of each weekly accounting period, weekly sales reports on a per store basis.
6.9 Efforts to Consummate. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate, as promptly as practicable, the transactions contemplated hereby, including the obtaining of all necessary consents, waivers, authorizations, orders and approvals of third parties, whether private or governmental, required of it to enable it to comply with the conditions precedent to consummating the transactions contemplated by this Agreement. Each party agrees to cooperate fully with the other party in assisting it to comply with this Section 6.9. Without limiting the generality of the foregoing, (i) the Company agrees to cause its Personnel to provide all reasonable cooperation in connection with the arrangement of any financing as Buyer shall request and (ii) each party hereto shall defend and cooperate with each other party in defending any legal proceedings, whether judicial or administrative and whether brought derivatively or on behalf of third parties, challenging this Agreement or the consummation of the transactions contemplated hereby. Except as set forth in Schedule 6.9, no consideration, whether such
consideration shall consist of the payment of money or shall take any other form, for any consent, waiver or agreement necessary to the consummation of the transactions contemplated hereby shall be given or promised by the Company without the prior written approval of Buyer. Notwithstanding the foregoing, nothing contained herein shall require (i) any party hereto or any of its respective Affiliates to sell, transfer, divest or otherwise dispose of any of its respective business, assets or properties in connection with this Agreement or any of the transactions contemplated hereby or (ii) any party hereto to initiate any litigation, make any substantial payment or incur any material economic burden (including as a result of any divestiture), except for payments a party presently is contractually obligated to make, to obtain any consent, waiver, authorization, order or approval.
6.11 Further Assurances. At the Closing or from time to time thereafter, the parties hereto shall execute and deliver such other instruments and shall take such other actions as the other reasonably may request in order to consummate, complete and carry out the transactions contemplated by this Agreement.
6.12 HSR Act. The Company and Buyer shall, as promptly as practicable after the date hereof, submit and cause their respective ultimate parent entities to submit all documents, reports and notifications, and satisfy all requests for additional information, if any, pursuant to the HSR Act.
6.13 Tax Treatment; Plan of Reorganization. Buyer, Sub, the Company, and the Stockholders agree to treat the Merger as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. This Agreement is intended to constitute a "plan of reorganization" within the meaning of Section 1.368-2(g) of the Treasury Regulations promulgated under the Internal Revenue Code. During the period from the date of this Agreement through the Effective Time, unless the parties shall otherwise agree in writing, none of the Stockholders or the Company or any of its Subsidiaries shall knowingly take or fail to take any action which action or failure to act would jeopardize qualification of the Merger as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.
6.14 Form 5500 Filings. Prior to the Effective Time, the Company will file all delinquent Form 5500 series filings with respect to the Pension Plans with the Internal Revenue Service under the Internal Revenue Service's delinquent filer voluntary compliance program. The Company will pay all costs and penalties associated with such filing.
6.15 Tax Matters. The following provisions shall govern the allocation of responsibility as between Buyer, the Company and the Stockholders for certain Tax matters following the Effective Time:
taxable period that begins before and ends after the Effective Time shall be taken into account as though the relevant Taxable period ended immediately prior to the Effective Time. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Company and its Subsidiaries.
(i) Buyer, the Company and its Subsidiaries and the Stockholders shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company, its Subsidiaries and the Stockholders agree (A) to retain all books and records with respect to Tax matters pertinent to the Company and its Subsidiaries relating to any taxable period beginning before the Effective Time until the later of one year following the expiration of the statute of limitations (and, to the extent notified by Buyer or the Stockholders, any extensions thereof) of the respective taxable periods or the resolution of any audit, litigation, investigation or other proceeding with respect to Taxes, and to abide by all record retention agreements entered into with any Taxing Authority, and (B) to give the other party reasonable written notice, prior to transferring, destroying or discarding any such books and records and, if the other party so requests, the Company and its Subsidiaries or the Stockholders, as the case may be, shall allow the other party to take possession of such books and records.
(ii) Buyer and the Stockholders further agree, upon request, to use their best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).
(iii) Buyer and the Stockholders further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Section 6043 of the Internal Revenue Code and all Treasury department regulations promulgated thereunder.
6.16 Delivery of Reports to the Company and Access to Officers. Buyer agrees that it shall deliver to the Company prior to the Closing Date, all reports and analyses prepared by any of Buyer's accountants, attorneys or consultants or by any of Quad-C, Inc.'s accountants, attorneys or consultants. Buyer shall permit the Company reasonable access to its officers for the purpose of interviewing such officers regarding their knowledge of matters relating to the Company.
6.17 Valuation Items. The parties hereby agree and acknowledge that the items specifically described (including amounts related thereto) in Schedule 6.17 were taken into account for the purpose of Buyer's valuation of the Company. Accordingly, notwithstanding any other provision herein to the contrary, in no event shall the Stockholders be required to indemnify or reimburse any Buyer Indemnified Party in connection with costs or expenses incurred by Buyer or the Company relating to any such item, except to the extent such costs and expenses exceed the amounts set forth on Schedule 6.17 with respect to each such item.
6.18 Retained Assets. Prior to the Closing Date, the Company shall distribute the properties and assets identified on Schedule 6.18 to the Stockholders; provided, however, that the fair market value of such properties and assets shall not exceed $100,000 and the parties agree that the fair market value of such assets and properties shall be equal to the net book value of such property and assets. The effect of the distribution of such assets shall be taken into account in the preparation of the Closing Balance Sheet.
6.19 Books and Records. The Company, its Subsidiaries and the Stockholders agree (A) to retain all books and records with respect to matters pertinent to the Company and its Subsidiaries relating to indemnification obligations of the Stockholders pursuant to Article IX until the later of one year following the expiration of the survival periods of such indemnification obligations set forth in Article IX (and, to the extent notified by Buyer or the Stockholders, any extensions thereof) or the resolution of any litigation, investigation or other proceeding with respect to such matters, and (B) to give the other party reasonable written notice, prior to
transferring, destroying or discarding any such books and records and, if the other party so requests, the Company and its Subsidiaries or the Stockholders, as the case may be, shall allow the other party to take possession of such books and records.
6.20 Company Schedules. The parties hereby acknowledge that the "Company Schedules" (which shall include Schedule 2.9(b), all of the Schedules enumerated in Article III, all of the Schedules enumerated in Article IV, Schedule 6.2, Schedule 6.9, Schedule 6.17, Schedule 6.18 and Schedule 8.9) have not been completed and delivered to Buyer as of the date of this Agreement. The Company will use its best efforts, and will cause its counsel to use its best efforts, to deliver completed Company Schedules, and copies of all documents referenced therein, to Buyer and its counsel as soon as practicable, but in no event later than February 28, 2000. Buyer, its counsel and its financial advisors shall have two business days following receipt of such completed Company Schedules, and all documents referenced therein, to review such Company Schedules and documents and to comment thereon. The Company Schedules shall in all respects be subject to final acceptance and approval by Buyer in its sole discretion. If and when the Company Schedules are accepted and approved by Buyer, Buyer will notify the Company in writing of such acceptance and approval, at which time the Company Schedules shall be deemed final for all purposes under this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions contemplated by this Agreement shall be subject, in the sole discretion of Buyer, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Buyer in accordance with Section 11.8:
7.2 Performance of this Agreement. The Company shall have, in all material respects, performed all covenants and agreements and complied with all conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date.
7.3 Consents and Approvals. All registrations, filings, applications, notices, consents, orders, approvals, qualifications, waivers and Licenses and Permits listed in Schedule 3.4 or otherwise necessary to effect the transactions contemplated hereby shall have been filed, made or obtained and all waiting periods specified by law with respect thereto shall have expired
or been terminated. The waiting period under the HSR Act shall have expired or been terminated.
7.4 Injunction, Litigation, etc. No Actions by any Governmental Authority or any other Person shall have been instituted or threatened for the purpose of enjoining or preventing, or which question the validity or legality of, the transactions contemplated hereby and which could reasonably be expected to damage Buyer materially if the transactions contemplated hereby are consummated.
7.5 Legislation. No statute, rule or regulation shall have been proposed (and reasonably believed will be enacted) or enacted which prohibits or might prohibit, restrict or materially delay the consummation of the transactions contemplated by this Agreement.
7.6 Proceedings. All corporate proceedings of the Company that are required in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to Buyer and its counsel.
7.7 Closing Deliveries. Buyer shall have received, at or prior to the Closing, the following:
(i) a certificate of the Company executed by the Company's Secretary certifying as of the Closing Date (A) a true and correct copy of the Certificate or Articles of Incorporation of the Company, (B) a true and correct copy of the Bylaws of the Company, (C) a true and correct copy of the resolutions of the board of directors of the Company and the Stockholders authorizing the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby and (D) incumbency matters;
(ii) a certificate of the Company executed by the chief executive officer and the chief financial officer of the Company certifying that, as of the Closing Date, the conditions set forth in Sections 7.1, 7.2, 7.3 and 7.8 have been satisfied;
(iii) a certificate of each Stockholder certifying
that, as of the Closing Date, the conditions set forth in
Section 7.1 have been satisfied;
(iv) a copy of the Articles of Incorporation of the Company and all amendments thereto, each certified as of a recent date by the Secretary of State of the State of Delaware or other appropriate governmental official;
(v) a certificate of the appropriate Secretary of State or other appropriate governmental official certifying the good standing of the Company in Delaware and all other states where it is qualified to do business;
(vi) all other documents and certificates required to be delivered by the Company pursuant to the terms of this Agreement.
7.8 Material Change. There shall not have been any Material Adverse Change with respect to the Company and its Subsidiaries since the date of this Agreement, nor any event or condition which, with the passage of time, the giving or receipt of notice or the occurrence or nonoccurrence of any other circumstance, action or event, would reasonably be expected to result in any Material Adverse Change.
7.9 Quad-C Investment. The transactions contemplated by that certain Stock Subscription Agreement, dated as of the date of this Agreement, by and among Red Robin International, Inc., RR Investors, LLC and RR Investors II, LLC shall have been or will be simultaneously consummated.
7.10 Shareholders Agreement; Registration Rights Agreement. RR Investors, LLC and its Affiliates, Skylark Company, Ltd. and its Affiliates, Gerald Kingen and the Stockholders shall have entered into the Shareholders Agreement and the Registration Rights Agreement substantially in the forms of Exhibits C and D hereto.
7.11 Master Agreement; Stock Purchase and Sale Agreement. The Master Agreement among Buyer, Skylark Company, Ltd. and certain other shareholders of Buyer dated as of March 10, 1996 shall be terminated by the parties thereto. The Stock Purchase and Sale Agreement dated December 29, 1986, among Skylark Company, Ltd. and certain shareholders of Buyer shall be terminated by the parties thereto.
7.12 Employment Agreement. Michael J. Snyder shall have executed and delivered to Buyer the Employment Agreement, substantially in the form of Exhibit E.
7.13 Due Diligence Review. Buyer shall be satisfied, in its sole discretion, with the results of its continuing due diligence review of the Company and its Assets, businesses, operations and Personnel.
7.14 Opinion of Financial Advisor. Buyer shall have received an opinion from Banc of America Securities LLC as of the date of this Agreement and as of the Closing Date to the effect that the transactions contemplated by this Agreement are fair to Buyer's shareholders from a financial point of view.
7.15 Escrow Agreement. The Stockholders and the Escrow Agent shall have executed and delivered to Buyer the Escrow Agreement, substantially in the form of Exhibit J.
7.16 Minimum Debenture Merger Consideration. The Stockholders shall have elected to receive, pursuant to Section 2.8, Debenture Merger Consideration in an amount in excess of any outstanding amounts under any notes or other obligations of any of the Stockholders to the Company as of the Closing Date.
7.17 Dissenting Stockholders. There shall be no dissenting stockholders pursuant to Section 262 of the DGCL.
7.18 Refinancing of Debt. Buyer shall have entered into a new credit facility to refinance its existing credit facilities with Japanese banks upon terms and conditions reasonably satisfactory to Buyer, the Company and the Stockholders.
7.19 Assets. The properties and assets set forth in Schedule 3.15 shall have been or will simultaneously be transferred to the Company and shall be owned by the Company as of the Effective Time.
7.20 Tax Free Reorganization Treatment. Neither the Company, any of its Subsidiaries nor any of the Stockholders shall have taken or agreed to take any action, nor does the Company, any of its Subsidiaries or the Stockholders have any knowledge of any fact or circumstance, that would prevent the Merger or any other transactions contemplated by this Agreement from qualifying as a "reorganization" within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code. Neither the Company, any of its Subsidiaries nor the Stockholders shall have taken any position on any federal, state or local income or franchise tax return, or taken any other tax reporting position that is inconsistent with the treatment of the Merger as a reorganization within the meaning of Internal Revenue Code Section 368(a)(2)(D), unless otherwise required by a "determination" (as defined in Section 1313(a)(1)) of the Internal Revenue Code or by applicable state or local income or franchise tax law. No event, fact or circumstance shall have occurred or been brought to the attention of Buyer that would, or in Buyer's reasonable judgment would, prevent the Merger or any other transactions contemplated by this Agreement from qualifying as a "reorganization" within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code.
7.21 Approval of the Company Schedules. Buyer shall have accepted and approved, in its sole discretion, final Company Schedules.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
AND THE STOCKHOLDERS
The obligation of the Company and the Stockholders to consummate the transactions contemplated by this Agreement shall be subject, in the sole discretion of the Company, to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Company in accordance with Section 11.8.
8.2 Performance of this Agreement. Buyer and Sub shall have, in all material respects, performed all covenants and agreements and complied with all conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date.
8.3 Consents and Approvals. All registrations, filings, applications, notices, consents, orders, approvals, qualifications or waivers listed in Schedule 5.3 or otherwise necessary to effect the transactions contemplated hereby shall have been filed, made or obtained and all waiting periods specified by law with respect thereto shall have expired or been terminated. The waiting period under the HSR Act shall have expired or been terminated.
8.4 Injunction, Litigation, etc. No Actions by any Governmental Authority or any other Person shall have been instituted or threatened for the purpose of enjoining or preventing, or which question the validity or legality of, the transactions contemplated hereby and which could reasonably be expected to damage the Company materially if the transactions contemplated hereby are consummated.
8.5 Legislation. No statute, rule or regulation shall have been proposed (and reasonably believed will be enacted) or enacted which prohibits or might prohibit, restrict or materially delay the consummation of the transactions contemplated this Agreement.
8.6 Proceedings; Certificates. All company proceedings of Buyer that are required in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Company and its counsel.
8.7 Closing Deliveries. The Company shall have received, at or prior to the Closing, the following:
(i) a certificate of Buyer and Sub executed by the Secretary of Buyer and Sub, respectively, certifying as of the Closing Date (A) a true and correct copy of the Articles of Incorporation of Buyer and Sub, (B) a true and correct copy of the Bylaws of Buyer and Sub, (C) a true and correct copy of the resolutions of the board of directors of Buyer and Sub authorizing the execution, delivery and performance of this Agreement by Buyer and Sub and the consummation of the transactions contemplated hereby and (D) incumbency matters;
(ii) a certificate of Buyer and Sub executed by the Chief Financial Officer of Buyer and Sub, respectively, certifying that, as of the Closing Date, the conditions set forth in Sections 8.1, 8.2, and 8.3 with respect to Buyer and Sub have been satisfied;
(iii) a copy of the Articles of Incorporation of Buyer and Sub and all amendments thereto, each certified as of a recent date by the Secretary of State of the State of Nevada or other appropriate governmental official;
(iv) a certificate of the appropriate Secretary of State or other appropriate governmental official certifying the good standing of Buyer and Sub in Nevada and in all other states where it is qualified to do business; and
(v) all other documents and certificates required to be delivered by Buyer or Sub pursuant to the terms of this Agreement.
8.8 Tax Free Reorganization Treatment. Neither Buyer nor Sub shall have taken or agreed to take any action, nor does Buyer or Sub have any knowledge of any fact or circumstance, that would prevent the Merger or any other transactions contemplated by this Agreement from qualifying as a "reorganization" within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code. Neither Buyer nor Sub shall have taken any position on any federal, state or local income or franchise tax return, or taken any other tax reporting position that is inconsistent with the treatment of the Merger as a reorganization within the meaning of Internal Revenue Code Section 368(a)(2)(D), unless otherwise required by a "determination" (as defined in Section 1313(a)(1)) of the Internal Revenue Code or by applicable state or local income or franchise tax law. No event, fact or circumstance shall have occurred or been brought to the attention of the Company or the Stockholders that would, or in the Company's or the Stockholders' reasonable judgment would, prevent the Merger or any other transactions contemplated by this Agreement from qualifying as a "reorganization" within the meaning of Section 368(a)(2)(D) of the Internal Revenue Code.
8.9 Releases. Buyer shall have obtained a release of all guaranties and assurances set forth on Schedule 8.9, by any Stockholder of indebtedness or lease obligations of the Company, any of its Subsidiaries or Buyer or Buyer shall have agreed to indemnify the Stockholders for any liability arising under such guaranties and assurances in a form reasonably satisfactory to Buyer and the Stockholders.
8.10 Merger Consideration. Buyer shall have delivered the Stock Merger Consideration and the Cash Merger Consideration or Debenture Merger Consideration to the Stockholders pursuant to Section 2.8.
8.11 Quad-C Investment. The transactions contemplated by that certain Stock Subscription Agreement, dated as of the date of this Agreement, by and among Red Robin International, Inc., RR Investors, LLC and RR Investors II, LLC shall have been or will be simultaneously consummated.
8.12 Master Agreement; Stock Purchase and Sale Agreement. The Master Agreement among Buyer, Skylark Company, Ltd. and certain other shareholders of Buyer dated as of March 10, 1996 shall be terminated by the parties thereto. The Stock Purchase and Sale Agreement dated December 29, 1986, among Skylark Company, Ltd. and certain shareholders of Buyer shall be terminated by the parties thereto.
8.13 Shareholders Agreement; Registration Rights Agreement. RR Investors, LLC and its Affiliates, Skylark Company, Ltd. and its Affiliates, Gerald Kingen and the Stockholders shall have entered into the Shareholders Agreement and the Registration Rights Agreement substantially in the forms of Exhibits C and D hereto.
8.14 Employment Agreement. Buyer shall have executed and delivered to Michael J. Snyder the Employment Agreement, substantially in the form of Exhibit E.
8.15 Refinancing of Debt. Buyer shall have entered into a new credit facility to refinance its existing credit facilities with Japanese banks upon terms and conditions reasonably satisfactory to Buyer, the Company and the Stockholders.
8.16 Indenture. Buyer and the Trustee shall have executed the Indenture, substantially in the form of Exhibit I.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.2 Indemnification by the Stockholders.
(a) From and after the Closing, subject to the limitations contained in this Article IX, the Stockholders, severally, but not jointly, will indemnify and hold harmless Buyer, its Affiliates, Surviving Corporation, each of their respective Subsidiaries, partners, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the "Buyer Indemnified Parties") from and against, and pay or reimburse the Buyer Indemnified Parties for, any and all Covered Liabilities actually incurred or paid by the Buyer Indemnified Parties as a result of:
(ii) the nonfulfillment, nonperformance or other breach of any covenant or agreement of the Company contained in this Agreement;
(iii) any Controlled Group Liability;
(iv) any liability or obligation, whether civil or criminal, arising out of or related to any Action required to be set forth in Schedule 3.12, but which is not set forth therein;
(v) any Employee Plan; and
(vi) any pre-Closing Taxes.
(b) From and after the Closing, subject to the limitations contained in this Article IX, each of the Stockholders will severally, but not jointly, indemnify and hold harmless the Buyer Indemnified Parties from and against, and pay or reimburse the Buyer Indemnified Parties for, any and all Covered Liabilities actually incurred or paid by the Buyer Indemnified Parties as a result of:
(ii) the nonfulfillment, nonperformance or other breach of any covenant or agreement of such Stockholder contained in this Agreement.
(c) The indemnity provided for in this Section 9.2 is not limited to matters asserted by third parties against any Buyer Indemnified Party, but includes Covered Liabilities actually incurred or sustained by any Buyer Indemnified Party in the absence of third party claims.
9.3 Indemnification by Buyer.
(a) From and after the Closing, subject to the limitations contained in this Article IX, Buyer will indemnify and hold harmless the Stockholders and each of their respective Affiliates, partners, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the "Stockholder Indemnified Parties") from and against, and pay or reimburse the Stockholder Indemnified Parties for, any and all Covered Liabilities actually incurred or paid by the Stockholder Indemnified Parties as a result of:
qualification contained in or otherwise applicable to such representation or warranty shall be disregarded; and
(ii) the nonfulfillment, nonperformance or other breach of any covenant or agreement of Buyer contained in this Agreement.
(b) The indemnity provided for in this Section 9.3 is not limited to matters asserted by third parties against any Stockholder Indemnified Party, but includes Covered Liabilities actually incurred or sustained by any Stockholder Indemnified Party in the absence of third-party claims.
9.4 Notice and Defense of Claims.
(c) If the claim for indemnification involves a matter other than a Third Party Claim, the indemnifying party shall have 30 days after delivery of a Claim Notice to object to such claim by delivery of a written notice of such objection to such indemnified party specifying in reasonable detail the basis for such objection and in the case of any objection by the Stockholder Agent to claims for indemnification pursuant to Section 9.2(a) or any Stockholder to claims for indemnification pursuant to Section 9.2(b), as the case may be, such objection shall be delivered to the Escrow Agent at the time of delivery to the indemnified party. Failure timely to so object shall constitute a final and binding acceptance of the claim for indemnification by the indemnifying party, and the claim shall be paid in accordance with the further provisions hereof. If an objection is timely interposed by the indemnifying party, then the indemnified party and the indemnifying party shall negotiate in good faith for a period of 30 days from the date the indemnified party receives such objection prior to commencing any arbitration, formal legal action, suit or proceeding with respect to such claim for indemnification.
(f) A "Final Determination" of a claim shall be (i) a judgment of any court determining the validity of a disputed claim, if no appeal is pending from such judgment or if the time to appeal therefrom has elapsed (it being understood that the indemnified party shall have no obligation to appeal); or (ii) an award of any arbitrator or arbitration panel determining the validity of such disputed claim, if there is not pending any motion to set aside such award or if the time within which to move to set such award aside has elapsed; or (iii) a written termination of the dispute with respect to such claim signed by all of the parties thereto or their attorneys; or (iv) a written acknowledgment of the indemnifying party that it no longer disputes the validity of
such claim; or (v) such other evidence of final determination of a disputed claim as shall be reasonably acceptable to the parties.
9.5 Limitations on Indemnification.
9.6 Calculation of Covered Liabilities.
forth in Section 9.5, the Covered Liabilities shall be calculated net of any insurance proceeds received by the indemnified party.
9.7 Exclusive Remedy. Except for post-closing covenants and actions grounded in fraud, the parties hereto acknowledge and agree that in the event the Closing occurs, the indemnification provisions in this Article IX shall be the exclusive remedy of Buyer and the Stockholders with respect to the transactions contemplated by this Agreement. With respect to post-closing covenants and actions grounded in fraud, (i) the right of a party to be indemnified and held harmless pursuant to the indemnification provisions in this Agreement shall be in addition to and cumulative of any other remedy of such party at law or in equity and (ii) no such party shall, by exercising any remedy available to it under this Article IX, be deemed to have elected such remedy exclusively or to have waived any other remedy, whether at law or in equity, available to it
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior to the Closing:
(i) by the mutual written consent of the Company, Buyer and the Stockholders;
(iv) by the Company, the Stockholders or Buyer if the Closing has not occurred by April 30, 2000.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices required to be given hereunder shall be in writing and shall be deemed to have been given if (i) delivered personally or by documented courier or delivery service, (ii) transmitted by facsimile during normal business hours or (iii) mailed by registered or certified mail (return receipt requested and postage prepaid) to the following listed persons at the addresses and facsimile numbers specified below, or to such other persons, addresses or facsimile numbers as a party entitled to notice shall give, in the manner hereinabove described, to the others entitled to notice:
(a) If to the Company, to:
The Snyder Group Company 5575 DTC Parkway, Suite 370 Englewood, Colorado 80111 Attention: Michael J. Snyder Facsimile No.: 303-846-6013
with a copy to:
Name: Powers & Therrien, P.S.
3502 Tieton Drive
Yakima, Washington 98902
Attention: Keith Therrien and Les Powers
Facsimile No.: 509-453-0745
(b) If to Buyer or Sub, to:
Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: John Grant Facsimile No.: 303-846-6073
with a copy to:
O'Melveny & Myers LLP 610 Newport Center Drive, 17th Floor Newport Beach, California 92660 Attention: Thomas J. Leary Facsimile No.: 949-823-6994
(c)if to the Stockholders, to:
Michael J. Snyder, the Stockholder Agent The Snyder Group Company 5575 DTC Parkway, Suite 370 Englewood, Colorado 80111 Facsimile No.: 303-846-6013
If given personally or by documented courier or delivery service, or transmitted by facsimile, a notice shall be deemed to have been given when it is received. If given by mail, it shall be deemed to have been given on the third business day following the day on which it was posted.
11.2 Interpretation. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. For purposes of this Agreement, the words "includes" and "including" shall mean "including without limitation." As used herein, "knowledge of the Company" shall mean the actual knowledge of the executive officers of the Company identified in Schedule 11.2(a) hereto after reasonable inquiry of other Personnel of the Company and its Subsidiaries, "knowledge of Buyer" shall mean the actual knowledge of the executive officers of Buyer identified in Schedule 11.2(b) hereto after reasonable inquiry of other Personnel of Buyer and "knowledge of the Stockholders" shall mean the actual knowledge of the Stockholders after due inquiry. All accounting terms not defined in this Agreement shall have the meaning determined by GAAP. All capitalized terms defined herein are equally applicable to both the singular and plural forms. The language in all parts of this Agreement shall be construed, in all case, according to its fair meaning. The parties acknowledge that each party and its counsel have reviewed this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
11.4 No Third Party Beneficiaries. Except as set forth in Article IX, nothing in this Agreement (whether expressed or implied) is intended to confer upon any person other than the
parties hereto, any rights or remedies under or by reason of this Agreement nor is anything in this Agreement intended to relieve or discharge the liability of any party hereto, nor shall any provision hereof give any person any right of subrogation against, or action over against any party. Without limiting the generality of the foregoing, nothing contained herein shall confer any third party beneficiary right (actual or implied) upon any employee of the Company or any of its Subsidiaries or obligate the Company or any of its Subsidiaries to continue any such employee in its employ for any specified period of time or at any specified salary, wages or benefits after the Closing Date.
11.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party hereto will assign its rights or delegate its obligations under this Agreement without the express prior written consent of each other party hereto.
11.6 Severability. In the event that this Agreement or any other instrument referred to herein, or any of their respective provisions, or the performance of any such provision, is found to be invalid, illegal or unenforceable under applicable law now or hereafter in effect, the parties shall be excused from performance of such portions of this Agreement as shall be found to be invalid, illegal or unenforceable under the applicable laws or regulations without, to the maximum extent permitted by law, affecting the validity of the remaining provisions of the Agreement. Should any method of termination of this Agreement or a portion thereof be found to be invalid, illegal or unenforceable, such method shall be reformed to comply with the requirements of applicable law so as, to the greatest extent possible, to allow termination by that method. Nothing herein shall be construed as a waiver of any party's right to challenge the validity of such law.
11.7 Amendment. This Agreement may be amended, modified or supplemented at any time by the parties hereto. This Agreement may be amended only by an instrument in writing signed by each of the parties hereto.
11.8 Extension; Waiver. At any time prior to the Closing Buyer or the Company may (i) extend the time for the performance of any of the obligations of the other party hereto, (ii) waive a breach of a representation or warranty of the other party hereto, or (iii) waive compliance by the other party hereto with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in a written instrument signed by the party giving the extension or waiver. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
11.9 Disclosure Schedules. Certain of the representations and warranties set forth in this Agreement contemplate that there will be attached schedules setting forth information that might be "material" or have a "Material Adverse Effect on the Company and its Subsidiaries." The Company may, at its option, include in such schedules items that are not material or are not likely to have a Material Adverse Effect on the Company and its Subsidiaries in order to avoid any misunderstanding, and any such inclusion shall not be deemed to be an acknowledgment or representation that such items are material or would have a Material Adverse Effect
on the Company and its Subsidiaries, to establish any standard of materiality or Material Adverse Effect on the Company and its Subsidiaries, or to define further the meaning of such terms for purposes of this Agreement
11.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.11 Jurisdiction; Waiver of Jury Trial. The parties hereto irrevocably submit to the exclusive jurisdiction of the United States District Court for the District of Nevada (or, if subject matter jurisdiction in that court is not available, in the Eighth Judicial District Court for the County of Clark) over any dispute arising out of or relating to this Agreement or any agreement or instrument contemplated hereby or entered into in connection herewith or any of the transactions contemplated hereby or thereby. Each party hereby irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection that they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum in connection therewith. THE PARTIES HERETO WAIVE THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING SEEKING ENFORCEMENT OF SUCH PARTY'S RIGHTS UNDER THIS AGREEMENT.
11.12 Governing Law. This Agreement shall be governed in all respects by the laws of the State of Nevada without regard to any laws or regulations relating to choice of laws (whether of the State of Nevada or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Nevada.
11.13 Stockholder Agent.
(a) Michael J. Snyder is hereby appointed by the Stockholders to act
as the Stockholders' agent (the "Stockholder Agent") for purposes of (i)
asserting and/or responding to, on behalf of all of the Stockholders, any
indemnification claims under Article IX, (ii) instituting and/or coordinating
any legal action (including, if the Stockholder Agent in his sole discretion
shall determine it is necessary or appropriate, the legal defense of any claim
for indemnification sought by Buyer hereunder in respect thereof), (iii)
asserting, by means of a Dispute Notice, any disagreement in connection with the
Closing Balance Sheet or Buyer's proposed adjustment, if any, of the Stock
Merger Consideration pursuant to Section 2.9, (iv) accepting any certificates or
notices delivered by Buyer to the Stockholders pursuant to this Agreement, (v)
executing written instructions to the Escrow Agent and (vi) taking any action on
behalf of the Stockholders, in response to any certificate or notice from Buyer
or otherwise, that the Stockholder Agent determines is necessary or appropriate.
Accordingly, Buyer agrees (i) to provide any certificate and/or notice required
or permitted to be given hereunder to the Stockholders to the Stockholder Agent,
(ii) to utilize the Stockholder Agent for purposes of asserting and resolving
indemnification claims pursuant to Article IX, (iii) to prepare and deliver to
the Stockholder Agent a Closing Balance Sheet and Buyer's proposed adjustment,
if any, to the Stock Merger Consideration pursuant to Section 2.9, and (iv) to
utilize the Stockholder Agent for purposes of resolving any Dispute Notice
received by Buyer in connection with the Closing Balance Sheet and Buyer's
proposed adjustment, if any, to the Stock Merger Consideration. Notwithstanding
(b) Michael J. Snyder may, in his sole discretion, resign as the Stockholder Agent, provided that Michael J. Snyder shall give Buyer 20 days' prior written notice of his inability or unwillingness to serve as the Stockholder Agent hereunder. If Michael J. Snyder is unable to or unwilling to act as the Stockholder Agent, a majority in interest of the Stockholders shall be entitled to appoint a substitute agent(s) for such purpose. Michael J. Snyder shall have no liability whatsoever to any of the Stockholders, the Surviving Corporation or Buyer in acting as the Stockholder Agent except for actions taken in manifest bad faith. Buyer shall be entitled to rely on the authority of the Stockholder Agent for all purposes provided for herein, and Buyer shall have no liability to the Stockholders for the failure of the Stockholder Agent to perform any action or satisfy any obligation provided for herein.
11.14 Stockholders Covenant. Whenever in this Agreement the Company is obligated to take any action, the Stockholders shall cause the Company to take the action that is required.
11.15 Attorney's Fees. In the event of any Action for breach of this Agreement or misrepresentation by any party, the prevailing party shall be entitled to reasonable attorney's fees, costs and expenses incurred in such Action. Attorney's fees incurred in enforcing any judgment in respect of this Agreement are recoverable as a separate item. The preceding sentence is intended to be severable from the other provisions of this Agreement and to survive any judgment and, to the maximum extent permitted by law, shall not be deemed merged into any such judgment.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ James P. McCloskey ------------------------------------- Name: JAMES P. McCLOSKEY ----------------------------------- Title: V P, CFO and Secretary ---------------------------------- |
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
By: /s/ James P. McCloskey ------------------------------------- Name: JAMES P. McCLOSKEY ---------------------------------- Title: V P and Secretary ---------------------------------- |
THE SNYDER GROUP COMPANY,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE STOCKHOLDERS
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE SNYDER GROUP COMPANY,
a Delaware corporation
By: /s/ Michael J. Snyder ------------------------------------- Name: MICHAEL J. SNYDER ----------------------------------- Title: President ---------------------------------- |
THE STOCKHOLDERS
/s/ Michael J. Snyder ---------------------------------------- Michael J. Snyder |
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE SNYDER GROUP COMPANY,
a Delaware corporation
By: /s/ Steve Snyder ------------------------------------- Name: Steve Snyder ----------------------------------- Title: Vice President ---------------------------------- |
THE STOCKHOLDERS
/s/ Stephen Snyder Trustee ---------------------------------------- Stephen Snyder, individually and as the Trustee of the Stephen S. Snyder Trust |
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE SNYDER GROUP COMPANY,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE STOCKHOLDERS
/s/ Louise Snyder ---------------------------------------- Louise Snyder, individually and as the Trustee of the Louise Snyder Trust |
/s/ Mike Woods -------------------------------------- Mike Woods /s/ Bob Merullo -------------------------------------- Bob Merullo (sic) |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By: __________________________________
Name:_________________________________
Title:________________________________
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By: /s/ George D. Hansen ----------------------------------- Name:_________________________________ Title:________________________________ /s/ George D. Hansen -------------------------------------- George D. Hansen |
/s/ Beverly C. Brown -------------------------------------- Beverly C. Brown (Cook) |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By:___________________________________
Name:_________________________________
Title:________________________________
/s/ George D. Hansen -------------------------------------- George D. Hansen /s/ Deborah Hansen -------------------------------------- Deborah Hansen |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By:____________________________________
Name:__________________________________
Title:_________________________________
/s/ George D. Hansen --------------------------------------- George D. Hansen |
/s/ Beverly C. Brown --------------------------------------- Beverly C. Brown (Cook) |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By:________________________________________
Name:______________________________________
Title:_____________________________________
/s/ George D. Hansen ------------------------------------------- George D. Hansen /s/ Deborah Hansen ------------------------------------------- Deborah Hansen |
/s/ L.V. Brown, Jr. P/R for L.V. Brown, Jr. by George D. Hansen Durable Power of Attorney for L.V. Brown, Jr. ------------------------------------------- L.V. Brown, Jr. |
The following exhibits and schedules to the Agreement and Plan of Merger have been omitted and shall be furnished supplementally to the Commission upon request:
Exhibit A - Stockholders Exhibit B - Form of Shareholders Agreement Exhibit C - Form of Registration Rights Agreement Exhibit D - Form of Employment Agreement Exhibit E - Estimated Closing Balance Sheet Exhibit F - Form of Debenture Exhibit G - Form of Indenture Exhibit H - Form of Escrow Agreement Exhibit I - Merger Agreement Schedule 2.9(b) - Variations from GAAP Schedule 3.1 - Organization and Qualification Schedule 3.2 - Capitalization Schedule 3.4 - Consents and Approvals Schedule 3.5 - Non-Contravention Schedule 3.6 - Environmental Matters Schedule 3.7 - Licenses and Permits Schedule 3.8 - The Company's Compliance Schedule 3.9 - GAAP Schedule 3.10 - Absence of Changes Schedule 3.11 - Undisclosed Liabilities Schedule 3.12 - Litigation Schedule 3.13 - Real Property Schedule 3.14 - Personal Property Schedule 3.15 - Sufficiency of Assets Schedule 3.17 - Intellectual Property Schedule 3.18 - Contracts Schedule 3.19 - Insurance Schedule 3.20 - Labor Matters Schedule 3.21 - Employee Plans Schedule 3.22 - Tax Matters Schedule 3.23 - Transactions with Certain Persons Schedule 3.24 - Suppliers Schedule 3.25 - Banking Relationships Schedule 4.1 - Company Common Stock Ownership Schedule 4.2 - Enforceability Schedule 4.3 - Stockholder Compliance Schedule 4.4 - Third Party Options Schedule 5.3 - Consents and Approvals Schedule 6.2 - Forbearances Schedule 6.9 - Efforts to Consummate Schedule 6.17 - Valuation Items Schedule 6.18 - Retained Assets Schedule 8.9 - Releases |
Schedule 11.2(a)- The Company's Executive Officers Schedule 11.2(b)- Buyer's Executive Officers
EXHIBIT 2.4
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of this 23rd day of January, 2001, by and among Red Robin International, Inc., a Nevada corporation ("Red Robin"), Red Robin Gourmet Burgers, Inc., a Delaware corporation and a wholly-owned subsidiary of Red Robin ("RRGB"), and Red Robin Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of RRGB ("RRMS").
WHEREAS, Red Robin desires to create a new holding company structure by effecting a merger whereby RRMS will merge with and into Red Robin, with (a) Red Robin continuing as the surviving corporation of such merger and (b) each outstanding share (or any fraction thereof) of the common stock of Red Robin, par value $.001 per share ("Red Robin Common Stock") being converted in such merger into a like number of shares of the common stock of RRGB, par value $.001 per share, ("RRGB Common Stock"), all in accordance with the terms of this Agreement (the "Merger") and the provisions of the Delaware General Corporation Law and the Nevada General Corporation Law;
WHEREAS, the Boards of Directors of Red Robin, RRGB and RRMS have approved this Agreement and the Merger upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
MERGER
ARTICLE II
ARTICLES OF INCORPORATION; BYLAWS
ARTICLE III
DIRECTORS AND OFFICERS
ARTICLE IV
EFFECTIVE TIME OF THE MERGER
As used in this Agreement, the "Effective Time" of the Merger shall mean the date on which a Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware and Articles of Merger have been duly filed with the Secretary of State of the State of Nevada.
ARTICLE V
CONVERSION
(a) Conversion of Red Robin Common Stock. Each share of Red Robin Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into and thereafter represent one duly issued, fully paid and nonassessable share of RRGB Common Stock.
(b) Conversion of Common Stock of RRMS. Each share of the common stock of RRMS issued and outstanding immediately prior to the Effective Time shall be converted into and thereafter represent one duly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation.
(c) Cancellation of Common Stock of RRGB. Each share of RRGB Common Stock that is owned by Red Robin immediately prior to the Merger shall automatically be cancelled and retired and shall cease to exist.
(d) Rights of Certificate Holders. From and after the Effective Time, holders of certificates formerly evidencing Red Robin Common Stock shall cease to have any rights as stockholders of Red Robin, except as provided by law; except, however, that such holders shall have the rights set forth in Section 5.02 herein.
ARTICLE VI
CONDITIONS TO THE MERGER
The obligations of the parties hereto to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or prior to the Effective Time, of each of the following conditions:
ARTICLE VII
MISCELLANEOUS
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer as of the date first above written.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ Michael J. Snyder ---------------------------- Michael J. Snyder President |
RED ROBIN MERGER SUB, INC.,
a Delaware corporation
By: /s/ Michael J. Snyder ---------------------------- Michael J. Snyder President |
RED ROBIN GOURMET BURGERS, INC.,
a Delaware corporation
By: /s/ Michael J. Snyder ---------------------------- Michael J. Snyder President |
Exhibit 2.5
STOCK PURCHASE AGREEMENT
Dated as of December 19, 2001
by and among
WESTERN FRANCHISE DEVELOPMENT, INC., a California corporation,
DENNIS E. GARCELON and E. MARLENA GARCELON,
Trustees of the Garcelon Trust dated January 6, 1992,
and SAMUEL WINSTON GARCELON as Sellers,
and
RED ROBIN INTERNATIONAL, INC.,
A Nevada corporation, as Buyer
This STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of December 19, 2001, is entered into by and among RED ROBIN INTERNATIONAL, INC., a Nevada corporation ("Buyer") on the one hand, and WESTERN FRANCHISE DEVELOPMENT, INC, a California corporation (the "Corporation") and DENNIS E. GARCELON and E. MARLENA GARCELON, Trustees of the Garcelon Trust dated January 6, 1992, and SAMUEL WINSTON GARCELON (the "Shareholders"), on the other hand, with reference to the following facts. The Buyer, the Corporation and the Shareholders are sometimes referred to collectively herein as the "parties." The Corporation and the Shareholders are sometimes referred to collectively herein as "Selling Parties."
A. The Corporation is engaged in the operation of a restaurant business pursuant to a franchise agreement, area development agreements, license/franchise agreements, and the Phoenix agreements with its franchisor, Red Robin International.
B. As of the closing of the transactions contemplated herein, the Shareholders will own all of the issued and outstanding capital stock of the Corporation (the "Corporation's Stock").
C. Buyer wishes to acquire from the Shareholders all of the Corporation's Stock;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties, provisions and covenants herein contained, the parties hereto agree as follows:
1. PURCHASE OF THE CORPORATION'S STOCK
Corporate Furniture & Equipment (including a corporate automobile) and also subtracting Short-Term Portion Liabilities and Long-Term Portion Liabilities.
The Corporation's accountants, Blanding, Boyer & Rockwell (the "Accountants"), shall deliver to Buyer a calculation of the Total Equity of the Corporation as of the Closing within 30 days following the Closing. The Total Equity calculation prepared by the Accountants shall be conclusive and binding on the parties for purposes of calculating any adjustment to the Purchase Price unless Buyer notifies the Shareholders in writing (a "Dispute Notice"), within 10 days of Buyer's receipt of the Total Equity calculation, of any disagreements therewith (stating with reasonable specificity the basis for any such disagreement). During such 10-day period, the Accountants shall give Buyer and its accountants or other representatives access to all work papers related to the preparation of the Total Equity calculation. Buyer and the Shareholders shall negotiate in good faith to resolve any disagreements concerning the Total Equity calculation as promptly as practicable. If any disagreement concerning the Total Equity calculation is not resolved by Buyer and the Shareholders within 10 days following the Shareholders' receipt of the Dispute Notice, Buyer and the Shareholders shall promptly engage, on standard terms and conditions for a matter of such nature, a nationally recognized firm of independent accountants to resolve the disputed amounts. The engagement agreement with the independent accountants shall require the independent accountants to make their determination with respect to the items in dispute within 10 days following their appointment. Buyer and the Shareholders (as a group) shall share the costs of the fees and expenses of such independent accountants equally. The resolution by the independent accountants of any dispute concerning the Total Equity calculation shall be final, binding and conclusive upon the parties for purposes of any adjustment of the Purchase Price under this Section 1.2.
It is anticipated that Buyer shall elect to treat this purchase as an asset purchase under the provisions of Internal Revenue Code Section 338. If such election is made by Buyer, Buyer and Shareholders shall agree upon a fair allocation of the Purchase Price with respect to the assets of the Corporation. Shareholders and Buyer shall cooperate in executing any and all necessary documents in connection with the Section 338 election.
2. CLOSING
The closing of the transactions contemplated herein (the "Closing") shall take place on January 14, 2002 (the "Closing Date"), following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the respective Parties will take at the Closing itself). The Closing shall take place at the offices of Gagen, McCoy, McMahon & Armstrong, 279 Front Street, Danville, California. For accounting and tax reporting purposes, the Closing shall be deemed effective as of 12:01 a.m. on January 14, 2002 (the "Effective Date").
At the Closing, the respective parties shall make the following deliveries:
to be withheld. No audit or other examination of any tax return of the Corporation is presently in progress, nor has the Corporation been notified of any requests for such an audit or other examination.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Corporation and the Shareholders that each of the following representations and warranties is true as of the Signing Date and will be true as of the Closing Date, and agrees that such representations and warranties shall survive the Closing:
(a) result in the material breach of any of the terms or conditions of, or constitute a default under, or allow for the acceleration or termination of, or in any manner release any party from any obligation under, require any consent under, or result in any lien, claim, or encumbrance on Buyer's assets under any mortgage, lease, note, bond, indenture, or contract, agreement, license or other instrument or obligation of any kind or nature to which Buyer is a party, or by which Buyer, or any of his assets, is or may be bound or affected; or
(b) violate any law or any order, writ, injunction or decree of any court, administrative agency or governmental authority, known to Buyer, or require the approval, consent or permission of any governmental or regulatory authority.
enforceable against Buyer in accordance with its terms. Buyer has full power, legal right and authority to enter into and perform his obligations under this Agreement and to carry on his business as presently conducted. No consent of, approval by, filing with, or notice to any governmental authority or any other person or entity is required for Buyer to execute, deliver, and perform this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and the fulfillment of and compliance with the terms and conditions hereof do not and will not, after the giving of notice, or the lapse of time or otherwise: (a) violate any provisions of any judicial or administrative order, award, judgment or decree applicable to Buyer; or (b) conflict with, result in a breach of or constitute a default under any material agreement or instrument to which Buyer is a party or by which he is bound.
(a) The representations and warranties set forth in Section 3 shall be true and correct in all material respects at and as of the Closing Date;
(b) The Selling Parties shall have performed and complied with all of their covenants hereunder in all material respects through the Closing;
(c) There shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;
(d) All actions to be taken by the Selling Parties in connection with consummation of the transactions contemplated by this Agreement and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Buyer;
(e) The Shareholders shall have caused each officer and director of the Corporation to deliver a resignation as an officer and/or director of the Corporation.
(f) The Shareholders shall have delivered to Buyer a Certificate of Non-Foreign Status setting forth the home address, social security number and a statement as to residency status of the Shareholders, dated the Closing Date and duly executed by each Shareholder under penalty of perjury.
(g) Buyer shall have completed its Due Diligence investigation of the Corporation and the Shareholders, to Buyer's satisfaction in Buyer's sole discretion, by no later than thirty (30) days after the execution of this Agreement or the day before the Closing Date, whichever shall come first (the Due Diligence period).
(h) The Corporation's lessors shall have provided their consent to an assignment of the Corporation's leases to Buyer.
(a) The representations and warranties set forth in Section 4 above shall be true and correct in all material respects at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of his covenants hereunder in all material respects through the Closing;
(c) There shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement;
(d) All actions to be taken by Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the requisite Selling Parties;
(e) Buyer shall have tendered for delivery to the Shareholders the Purchase Price in accordance with Section 1.2.
(f) The Corporation's franchisor shall have approved the terms and conditions of this Agreement and have approved the transfer of the franchise rights from the Corporation to Buyer.
(g) The Corporation's lessors shall have provided consents to the assignment of all the Corporation's leases to the Buyer.
Notwithstanding the foregoing, Buyer shall make no contact with Corporation's lessors without the prior written consent of Corporation. Corporation will initiate
contact with Corporation's lessors upon Buyer's indication of approval of Corporation's financial information, and real estate leases.
(a) As soon as Buyer becomes aware of any Potential Claim, Buyer shall, by no later than thirty (30) days after Buyer first becomes aware of said Potential Claim, provide the Shareholders with written notice of said Potential Claim. As part of its written notice to the Shareholders, Buyer shall supply the Shareholders with reasonable backup documentation supporting its Potential Claim. A Potential Claim shall be deemed invalid if written notice thereof is not received by Shareholders (i) within thirty (30) days after Buyer first became aware of said Potential Claim and (ii) by no later than one (1) year after the Closing, even if said one (1) -year date is less than ten (10) days after Buyer first became aware of said Potential Claim.
(b) Within thirty (30) days after Buyer provides written notice of a Potential Claim to the Shareholders, Shareholders and Buyer will attempt to reach agreement on whether the Potential Claim is a Valid Claim and, if they are in agreement that the Potential Claim is a Valid Claim, the amount attributable to the Valid Claim. If the Shareholders and Buyer are unable to reach agreement within said thirty (30) -day period, then any controversy or claim arising out of or relating to the Potential Claim shall be settled and resolved by binding arbitration in accordance with this provision, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Any one party to this Agreement may initiate arbitration by delivering written notice thereof to the other party. Such written notice shall state the intent of the party to have the controversy represented by the Potential Claim resolved by arbitration, shall specify the Potential Claim, and shall designate an arbitrator who shall not have an economic, social or other relationship to the party requesting arbitration ("independent" arbitrator). Delivery may be effected by depositing a notice of such intention addressed to each party, sent by registered mail, return receipt requested, sealed and postage prepaid in the United States Mail, by facsimile transmission, or by personal delivery. Arbitration shall be by the arbitrator so designated unless the other party to whom notice has been delivered requests arbitration by three independent arbitrators within ten (10) days after receipt of the notice of arbitration and designation of arbitrator. If such a request is made, the party making it shall designate a second independent arbitrator and the two arbitrators so designated shall select a third independent arbitrator. The arbitration shall be conducted by the arbitrator(s) pursuant to the provisions of the California Code of Civil Procedure relating to civil arbitrations and the Rules of Court for the California Superior Court, as may be amended and existing from time to time. A decision of any two arbitrators shall be sufficient to constitute an enforceable award under the provisions of this section. The costs incurred in the arbitration, including the fees paid to the arbitrator(s) shall be shared equally by the parties. The arbitrator(s) shall be entitled to retain legal counsel in connection with the arbitration of the dispute submitted to arbitration at the joint expense of the parties during the arbitration proceeding.
If any party to this Agreement refuses to cooperate voluntarily and without court order in the arbitration process described herein, then, provided that notice of the time and place of the arbitration hearing is given to such party, the arbitration shall proceed in the absence of
such party. Any award made by arbitration shall be final and binding on each party to this Agreement, and at the election of any party to the arbitration, a judgment on the arbitration award may be entered in any court having jurisdiction thereof. The arbitrator(s) shall be empowered to award costs and reasonable attorney's fees in connection with any matter submitted to the arbitrator(s) for determination.
(a) With the mutual consent of Buyer and the Shareholders;
(b) By the Shareholders, if by the Closing Date any of the conditions provided in Section 5.2 shall not have been satisfied, complied with or performed and the Shareholders shall not have waived such failure of satisfaction, noncompliance or performance;
(c) By Buyer, if by the Closing Date any of the conditions provided in
Section 5.1 shall not have been satisfied, complied with or performed and
Buyer shall not have waived such failure of satisfaction, noncompliance or
nonperformance.
(d) By either of the Shareholders or Buyer, if the Closing does not occur by 11:59 p.m. (Pacific Time) on January 27, 2002, unless such failure is due to a delay or default on the part of the party seeking to terminate the Agreement.
(e) By either party upon a material breach of a representation or warranty, or a failure to perform in any material respect any covenant of such party in this Agreement, unless such breach or default has been cured in all material respects within ten (10) days after written notice of such breach or default specifying such breach or default in reasonable detail is given to the party who committed such breach or default.
(f) In the event of any termination pursuant to this Section 9.1 (other than pursuant to Section 9.1(a)), written notice setting forth the reasons for termination shall be given by the terminating party to the other.
(g) If this Agreement shall be terminated as herein set forth, Buyer, the Corporation and the Shareholders agree that they will remain obligated under and comply with the provisions of this Agreement regarding confidential and proprietary information set forth in Section 6.2.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
If to the Shareholders: At the addresses set forth on Schedule A. With a copy to: Gregory L. McCoy, Esq. Gagen, McCoy, McMahon & Armstrong 279 Front Street Danville, CA 94526 Phone: (925) 837-0585 Facsimile: (925) 838-5985 e-mail: glmccoy@gmmalaw.com ------------------- If to Buyer: Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Greenwood Village, CO 8011 Attn: John Grant, Esq. Facsimile: (303) 846-6067 With a copy to: Brandi R. Steege, Esq. O'Melveny & Myers LLP 610 Newport Center Dr., 17th Floor Newport Beach, CA 92660 Facsimile: (949) 823-6994 |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by persons there unto duly authorized as of the date first above written.
THE CORPORATION: WESTERN FRANCHISE DEVELOPMENT, INC., A California corporation By: /s/ Dennis Garcelon --------------------------- Dennis Garcelon, President By: /s/ Marlena Garcelon --------------------------- Marlena Garcelon, Secretary 15 |
THE SHAREHOLDERS: /s/ Dennis E. Garcelon ------------------------------------ Dennis E. Garcelon, Trustee of The Garcelon Trust dated January 6, 1992 /s/ E. Marlena Garcelon ------------------------------------ E. Marlena Garcelon, Trustee of The Garcelon Trust dated January 6, 1992 /s/ Samuel Winston Garcelon ------------------------------------ Samuel Winston Garcelon BUYER: RED ROBIN INTERNATIONAL, INC., A Nevada corporation By: --------------------------------- Title: ------------------------------ By: --------------------------------- Title: ------------------------------ |
THE SHAREHOLDERS: /s/ Dennis E. Garcelon ------------------------------------ Dennis E. Garcelon, Trustee of The Garcelon Trust dated January 6, 1992 /s/ E. Marlena Garcelon ------------------------------------ E. Marlena Garcelon, Trustee of The Garcelon Trust dated January 6, 1992 /s/ Samuel Winston Garcelon ------------------------------------ Samuel Winston Garcelon BUYER: RED ROBIN INTERNATIONAL, INC., A Nevada corporation By: /s/ Michael J. Snyder --------------------------------- Title: CEO ------------------------------ By: /s/ James McCloskey --------------------------------- Title: CFO ------------------------------ |
The following exhibits and schedules to the Stock Purchase Agreement have been omitted and shall be furnished supplementally to the Commission upon request:
Schedule A - Shareholders and Capitalization Schedule B - Financial Statements Schedule C - Claims, Suits and Proceedings Pending Against the Corporation or Threatened or Anticipated Schedule D - Depreciation, Schedule of Personal Property and Fixed Assets Schedule E - Permits and Licenses Schedule F - Personnel Schedule Schedule G - Restaurants Currently Operated by Corporation Schedule H - Brokers/Finders Compensation |
Exhibit 10.1
RED ROBIN INTERNATIONAL, INC.
RED ROBIN INTERNATIONAL, INC.
The purposes of this Incentive Stock Option and Nonqualified Stock Option Plan - 1990 (the "Plan") of Red Robin International, Inc., a Washington corporation (the "Company"), are (a) to insure the retention of the services of existing executive personnel, key employees and non-employee directors of the company or its affiliates; (b) to attract and retain competent new executive personnel and key employees; (c) to provide incentive to all such personnel, employees and non-employee directors to devote their utmost effort and skill to the advancement and betterment of the Company, by permitting them to participate in the ownership of the Company and thereby in the success and increased value of the Company; and (d) to allow franchisees of the Company and others with important business relationships with the Company, as may be specifically approved by the Board of directors of the Company, the opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.
The shares of stock subject to the incentive options having the terms and conditions set forth in Section 6 below (hereinafter "incentive options") and/or nonqualified options having the terms and conditions set forth in Section 7 below
(hereinafter "nonqualified options") and other provisions of the Plan shall be shares of the Company's authorized but unissued or reacquired common stock (herein sometimes referred to as the "Common Stock"). The total number of shares of the common Stock of the Company which may be issued under the Plan shall not exceed, in the aggregate, 441 shares. The limitations established by the preceding sentence shall be subject to adjustment as provided in Section 8 below. In the event that any outstanding incentive option or nonqualified option granted under the Plan can no longer under any circumstances be exercised, for any reason, the shares of Common Stock allocable to the unexercised portion of such incentive option or nonqualified option, as the case may be, may again be subject to grant under the Plan.
(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board") or by a committee (the "Committee") consisting of three
(3) or more persons, at least two of whom shall be directors of the Company, who
shall be appointed by, and serve at the pleasure of, the Board of Directors. No
person serving as a member of the Board or the Committee shall act on any matter
relating solely to such person's own interests under the Plan or any option
thereunder. For purposes of the Plan, the term "Administrator" shall mean the
Board, or if the Board delegates responsibility for any matter to the Committee,
the Committee. The Administrator may from time to time, in its discretion,
determine which persons shall be granted incentive options or nonqualified
options under the Plan, the terms thereof, and the number of shares for which an
incentive option or options or nonqualified option or options shall be granted.
(b) The Administrator shall have full and final authority to determine the persons to whom, and the time or times at which, incentive options or nonqualified options shall be granted, the number of shares to be represented by each incentive option and nonqualified option and the consideration to be received by the Company upon the exercise thereof; to interpret the Plan; to amend and rescind rules and regulations relating to the Plan; to determine the form and content of the incentive options or nonqualified options to be issued under
the Plan; to determine the identity capacity of any persons who may be entitled to exercise a participant's rights under any incentive option or nonqualified option under the Plan; to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any incentive option or nonqualified option in the manner and to the extent the board or Committee deems desirable to carry the Plan, incentive option or nonqualified option into effect; to accelerate the exercise date of any incentive option or nonqualified option; to provide for an option to the Company to repurchase any shares issued upon exercise of an option upon termination of employment; and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision interpretation or determination by the Administrator with respect to the application or administration of the Plan shall be final and binding on all participants.
voting power of all classes of stock of the Company or of its parent or subsidiary corporation.
relevant, the book value of such stock and the earnings of the Company. The exercise price shall be subject to adjustment as provided in Section 8 below.
Each incentive option granted pursuant to this Plan shall be evidenced by a written Incentive Option Agreement which shall specify that the options subject thereto are incentive options within the meaning of Section 422A of the Internal Revenue Code of 1986 as amended. The granting of an incentive option shall take place only when a written Incentive Option Agreement shall have been duly executed and delivered by or on behalf of the company to the optionee to whom such incentive option shall be granted. Neither anything contained in the Plan nor in any resolution adopted or to be adopted by the Administrator shall constitute the granting of any incentive option. The Incentive Option Agreement shall be in such form as the administrator shall, from time to time, recommend, but shall comply with and be subject to the following terms and conditions:
value of such shares determined at the date of such exercise in accordance with the provisions of Section 5 above; (iii) in the discretion of the Administrator, by the issuance of a promissory note in a form acceptable to the Administrator, or (iv) any combination of (i), (ii) or (iii) above.
exercised within such time shall become void and of no effect at the end of such time.
During the life of such person, the incentive option shall be exercisable only by him.
Each nonqualified option granted pursuant to this Plan shall be evidenced by a written Nonqualified Option Agreement which shall specify that the options subject thereto are nonqualified options. The granting of a nonqualified option shall take place only when this written Nonqualified Option
Agreement shall have been duly executed and delivered by or on behalf of the Company to the optionee to whom such nonqualified option shall be granted. Neither anything contained in the Plan nor in any resolution adopted or to be adopted by the Administrator shall constitute the granting of any nonqualified option. The Nonqualified Option Agreement shall be in such form as the Administrator shall, from time to time, recommend, but shall comply with and be subject to the following terms and conditions:
In the event that the outstanding shares of Common Stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of merger, consolidation or reorganization in which the Company is the surviving corporation of or a recapitalization, stock split, combination of shares, reclassification, reincorporation, stock dividend (in excess of 2%), or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Board of Directors in the aggregate number and kind of shares subject to this Plan, and the number and kind of shares and the price per share subject to outstanding incentive options and nonqualified options in order to preserve, but not to increase, the benefits to persons then holding incentive options and/or nonqualified options.
In the event that the Company at any time proposes to merge into, consolidate with or to enter into any other
reorganization (including the sale of substantially all of its assets) in which the Company is not the surviving corporation, or if the Company is the surviving corporation and the ownership of the outstanding capital stock of the Company following the transaction changes by 50% or more as a result of such transaction, the Plan and all unexercised incentive options and nonqualified options granted hereunder shall terminate, unless provision is made in writing in connection with such transaction for the continuance of the Plan and for the assumption of incentive options and nonqualified options theretofore granted, or the substitution for such incentive options and nonqualified options of new options covering shares of a successor corporation, with appropriate adjustments as to number and kind of shares and prices, in which event the Plan and the incentive options and nonqualified options theretofore granted or the new incentive options and nonqualified options substituted therefore, shall continue in the manner and under the terms so provided. If such provision is not made in such transaction for the continuance of the Plan and the assumption of incentive options and nonqualified options theretofore granted or the substitution for such incentive options and nonqualified options of new incentive options and nonqualified options covering the shares of a successor corporation, then the Administrator shall cause written notice of the proposed transaction to be given to the persons holding incentive options or nonqualified options not less than 30 days prior to
the anticipated effective date of the proposed transaction, and all incentive options and nonqualified options shall be accelerated and, concurrent with the effective date of the proposed transaction, such person shall have the right to exercise incentive options and nonqualified options in respect of any or all shares then subject thereto.
The Board of Directors of the Company may from time to time alter, amend, suspend or terminate the Plan in such respects as the board of Directors may deem advisable; provided, however, that no such alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any person under any incentive option or nonqualified option theretofore granted to him without his consent. Without limiting the generality of the foregoing, to the extent permitted by applicable law, the Board of Directors of the Company may alter or amend the plan to comply with requirements under the Internal Revenue Code relating to restricted stock options, incentive options, qualified options or other options which give the optionee more favorable tax treatment than that applicable to options granted under this Plan as of the date of its adoption. Upon any such alteration or amendment, to the extent permitted by applicable law, any outstanding option granted hereunder shall be subject to the more favorable tax treatment afforded to an optionee pursuant to such terms and conditions as the Administrator may determine.
Unless the Plan shall theretofore have been terminated, the Plan shall be effective on April 3, 1990, and shall terminate on April 2, 2000.
The proceeds received by the Company from the sale of Common Stock pursuant to incentive options and nonqualified options, except as otherwise provided herein, will be used for general corporate purposes.
The granting of an incentive option or nonqualified option shall impose no obligation upon the optionee to exercise such an incentive option or nonqualified option.
The Plan or the granting of any incentive option or nonqualified option thereunder shall not impose any obligation on the Company to continue the employment of any optionee.
Upon the granting of any incentive option or nonqualified option under this Plan, the optionee shall be entitled to receive such financial information as may from time to time be disclosed to the stockholders of the Company. Such financial information shall be in the form deemed appropriate by the Board of Directors for distribution to the stockholders.
Exhibit 10.2
RED ROBIN INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
Page 1. THE PLAN .............................................................. 1 1.1 Purpose ............................................................... 1 1.2 Administration ........................................................ 1 1.3 Participation ......................................................... 2 1.4 Shares Subject to the Plan ............................................ 2 1.5 Grant of Options ...................................................... 2 1.6 Exercise of Options ................................................... 2 1.7 Payment Forms ......................................................... 2 1.8 Cashless Exercises .................................................... 3 2. OPTIONS. .............................................................. 3 2.1 Grants ................................................................ 3 2.2 Option Price .......................................................... 3 2.3 Option Period ......................................................... 3 2.4 Exercise of Options ................................................... 3 2.5 Limitations on Grant of ISOs .......................................... 4 3. OTHER PROVISIONS ...................................................... 4 3.1 Rights of Eligible Persons, Participants and Beneficiaries ............ 4 3.2 Adjustments Upon Changes in Capitalization; Acceleration; Possible Early Termination of Options ................................. 5 3.3 Termination of Employment ............................................. 6 3.4 Government Regulations ................................................ 7 3.5 Tax Withholding ....................................................... 7 3.6 Amendment, Termination and Suspension ................................. 8 3.7 Effective Date of the Plan ............................................ 9 3.8 Term of the Plan ...................................................... 9 3.9 Governing Law ......................................................... 9 4. NON-EMPLOYEE DIRECTOR OPTIONS ......................................... 9 4.1 Participation ......................................................... 9 4.2 Option Grants ......................................................... 9 4.3 Option Price .......................................................... 10 4.4 Option Period ......................................................... 10 4.5 Exercise of Options ................................................... 10 4.6 Termination of Directorship ........................................... 11 4.7 Acceleration; Possible Early Termination of Options ................... 11 4.8 Adjustments ........................................................... 11 5. DEFINITIONS ........................................................... 11 5.1 Definitions ........................................................... 11 |
RED ROBIN INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
1. THE PLAN.
The purpose of this 1996 Stock Option Plan (the "Plan") is to promote the success of the Company by providing equity incentives to attract, motivate and retain key personnel. Capitalized terms are defined in Article 5.
Options may be granted only to Eligible Persons. An Eligible Person who has been granted an Option may, if otherwise eligible, be granted additional Options.
The Committee will determine the Eligible Persons to whom Options will be granted pursuant to Article 2, the terms and conditions of Options (which need not be identical) and the number of Shares subject to each Option. In addition, Non-Employee Directors may be granted NQSOs pursuant to Article 4. Each Option will be evidenced by an Option Agreement approved by the Committee. The grant of an Option is made on the Options Date.
An exercisable Option will be deemed to be exercised when the Secretary of the Company receives an executed Exercise Agreement from the Participant, together with payment of any required Purchase Price in accordance with Section 1.7, 1.8 or 4.3, as applicable. Options are exercisable only for whole shares. Fractional shares will be disregarded for all purposes under this Plan.
The Purchase Price of each Option must be paid in full at the time of each purchase in one or a combination of the following methods, to the extent authorized by the Committee or set forth in the Option Agreement: (a) cash or cashier's check payable to the Company, (b) if the Committee approves, a Note, or (c) if the Committee approves, by Shares already owned by the Participant. Any Shares delivered that were initially acquired upon exercise of an Option must have been owned by the Participant at least six months as of the
date of delivery. Shares used to satisfy the Purchase Price will be valued at their Fair Market Value on the exercise date.
Option Agreements may also provide that the Option may be exercised and payment can be made by delivering a properly executed exercise notice to the Company, together with irrevocable instructions to a bank or broker to promptly deliver to the Company the amount of sale proceeds necessary to pay the Purchase Price and, unless otherwise provided by the Committee, any applicable tax withholding under Section 3.5. The date of exercise will be deemed to be the date the Company receives the proceeds.
2. OPTIONS.
Options may be granted to any Eligible Person. Each Option must be designated by the Committee as either an NQSO or an ISO, and such intent will be indicated in the Option Agreement. ISOs may be granted only to Eligible Persons who are employed by the Company or a corporation that is a "parent" or "subsidiary" corporation within the meaning of Sections 424(e) and 424(f) of the Code, respectively.
The Purchase Price per Share covered by each Option will be determined by the Committee. In the case of ISOs the Purchase Price per Share must be at least 100% (110% in the case of persons described in Section 2.5.2) of the Fair Market Value of the Shares on the Option Date.
Each Option will expire on a date determined by the Committee, but not later than 10 years after the Option Date, and will be subject to earlier termination as set forth in this Plan or the Option Agreement.
An Option may become exercisable in whole or in part, on the date or dates specified in the Option Agreement and thereafter will remain exercisable until the earlier of the expiration or termination of the Option, or as otherwise set forth in this Plan. At least 100 Shares must be purchased at one time unless the number purchased is the total number at the time available for purchase under the Option.
3. OTHER PROVISIONS.
distribution or other exception to transfer restrictions authorized by the Committee, no benefit under, or interest in, this Plan or in any Option shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action shall be void. No such benefit or interest shall be, in any manner, liable for, or subject to, debts, contracts, liabilities, engagements or torts of any Eligible Person, Participant or Beneficiary. The Committee shall disregard any attempted transfer, assignment or other alienation prohibited by the preceding sentence or other applicable law and shall pay or deliver such cash or Shares in accordance with this Plan.
consummation of reorganization event described in Section 3.2.1 that results in an Event approved by the Board, and no provision has been made for the survival, substitution, exchange or other settlement of such Option, such Option shall thereupon terminate.
(a) Any Option, to the extent not exercised, will terminate and become null and void upon a termination of employment or service of the Participant, except as set forth in this Section or otherwise expressly provided in the Option Agreement. All Options shall be subject to earlier termination under Section 2.3, and any and all rights under an Option, to the extent not previously exercised, will expire immediately upon a termination of employment or service of the Participant for Cause. The Committee will be the sole judge of Cause.
(b) Unless otherwise expressly provided in the Option Agreement, a Participant will have the following time periods to exercise Options to the extent they were exercisable on the date of the Participant's termination of employment or service:
(i) If the Participant's employment or service terminates for any reason other than Cause, the Participant will have 90 days after the date of termination of employment or service to exercise any Option to the extent that it was exercisable as of such date;
(ii) If the Participant's employment or service terminates for Cause, the Option shall lapse immediately upon the Participant's termination of employment or service;
(iii) If the Participant's employment or service by the Company terminates by reason of Total Disability, or if the Participant suffers a Total Disability within 90 days of a termination of employment or service described in Section 6.3.1(b)(i), the Participant or the Participant's Personal Representative, as the case may be, will have six months after the date of Total Disability (or, if earlier, termination of employment or service), to exercise any Option to the extent that it was exercisable as of such date;
(iv) If the Participant dies while employed or engaged by the Company, or within 90 days after a termination of employment or service under Section 6.3.1(b)(i) or 6.3.1(b)(iii) above, the Participant's Beneficiary may exercise, at any time within six months after the date of the Participant's death (or, if earlier, termination of employment or service) any Option to the extent that was exercisable as of such date.
This Plan, the granting of Options, the issuance or transfer of Shares, and the payment of money, pursuant thereto are subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency (including, but not limited to, "no action" positions of the Commission) that may, in the judgment of the Committee, be necessary or advisable. Without limiting the generality of the foregoing, no Options may be granted, no Shares will be issued, and no cash payments may be made by the Company, pursuant to any such Option, unless and until, in each such case, all legal requirements applicable to the issuance or payment have been complied with. In connection with any stock issuance or transfer, the person acquiring the Shares must, if requested, give assurances satisfactory to the Committee in respect of such matters as the Committee deems desirable to assure compliance with all applicable legal requirements. A Participant will not be entitled to the privilege of stock ownership as to any Shares not actually issued to such Participant.
prior to satisfaction of the holding period requirements of Section 422 of the Code, the Company has the right at its option to require payment by cashier's check payable to the Company of, or to deduct from amounts payable in cash, the amount of any taxes that the Company may be required to withhold with respect to such transactions. If a tax is required to be withheld in connection with the issuance or transfer of Shares, the Participant may elect, with Committee approval, to have the Company reduce the number of such Shares issued or transferred by the number of Shares (valued at Fair Market Value) necessary to accomplish such withholding.
This Plan will be effective upon its approval by the Board, subject to approval by the stockholders of the Company within twelve months from the date of such Board approval.
Unless previously terminated by the Board, this Plan will terminate at the close of business on September 9, 2006, and no Options will be granted under it thereafter.
This Plan and all documents related hereto shall be governed by, and construed in accordance with, the laws of the state of incorporation of the Company. If any provision is held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions of this Plan will continue to be fully effective. It is the intent of the Company that this Plan and Options satisfy and be interpreted in a manner that satisfies the applicable requirements of Section 1361, et. seq., of the Code and regulations promulgated thereunder at any time that the Company has elected to be taxed as an S-Corporation thereunder. If any provision of this Plan or of any Option Agreement would otherwise frustrate or conflict with the intent expressed above, that provision to the extent possible shall be interpreted and deemed amended to avoid such conflict.
4. NON-EMPLOYEE DIRECTOR OPTIONS.
Options under this Article 4 shall be granted only to members of the Board who are not officers or employees of the Company ("Non-Employee Directors") and may be granted in addition to any other NQSOs granted to a Non-Employee Director pursuant to Article 2 of this Plan. In addition, Options under this Article 4 shall be evidenced by Option Agreements substantially in the Form of Exhibit A hereto.
After approval of this Plan by the stockholders of the Company, if any person who is not then an officer or employee of the Company shall become a director of the Company for the first time, there shall be granted automatically (without any action by the Board or the Committee) an NQSO (the grant date of which shall be the date such person takes office) to such person to purchase 5,000 shares of Common Stock. On each anniversary of the date on which a Non-
Employee Director receives (or, as described in the next sentence, is deemed to have received) his first NQSO pursuant to this Section 4.2, he shall have granted to him automatically (without any action by the Board or the Committee) an NQSO to purchase 1,000 shares of Common Stock provided he is still a Non-Employee Director on such date. For purposes of the preceding sentence, each person who was a Non-Employee Director immediately prior to the Annual Stockholders Meeting occurring during 1996 and who remains in office following such meeting, shall be deemed to have received his first NQSO under this Section as of the same date such person was treated as receiving his first NQSO under paragraph 3(c)(2) of the Company's 1990 Incentive Stock Option and Nonqualified Stock Option Plan. Non-Employee Directors who have been granted an NQSO under this Section 4.2 shall be referred to herein as "Non-Employee Director Participants".
The Purchase Price per share of the Common Stock covered by each NQSO granted pursuant to Section 4.2 shall be 100 percent of the Fair Market Value of the Common Stock on the date of such grant (the "Grant Date"). The Purchase Price of any shares purchased shall be paid in full at the time of each purchase in cash or by check or in shares of Common Stock valued at their Fair Market Value on the business day next preceding the date of exercise of the NQSO, or partly in such shares and partly in cash.
Each NQSO granted under this Article 4 and all rights or obligations thereunder shall expire on the tenth anniversary of the Grant Date and shall be subject to earlier termination as provided below. A Non-Employee Director Participant shall exercise an NQSO granted under this Article 4 by delivering to the Secretary of the Company a written notice stating the number of Shares to be purchased pursuant to the Option and accompanied by (i) delivery of an executed Exercise Agreement and (ii) payment made in accordance with and in a form permitted by Section 4.3 for the full Purchase Price of the Shares to be purchased.
Except as otherwise provided in Section 4.6 and 4.7, each Option granted under Section 4.2 shall become exercisable at the rate of 20% per annum commencing on the first anniversary of the Grant Date and each of the next four anniversaries thereof.
If a Non-Employee Director Participant's services as a member of the Board terminate by reason of death or Total Disability, an NQSO granted pursuant to Section 4.2 hereof held by such Non-Employee Director Participant shall immediately become and shall remain exercisable for one year after the date of such termination or until the expiration of the stated term of such NQSO, whichever occurs first. If a Non-Employee Director Participant's services as a member of the Board terminate for any other reason, any portion of an NQSO granted pursuant to Section 4.2 held by such Non-Employee Director Participant which is not then exercisable shall terminate and any portion of such Option which is then exercisable may be exercised for three months after the date of such termination or the balance of such NQSOs term, whichever period is shorter.
Each Option granted pursuant to this Article 4 shall be subject to acceleration upon the occurrence of certain events as provided in Section 3.2.2 of this Plan. To the extent that any Option granted under this Article 4 is not exercised prior to (i) a dissolution of the Company or (ii) a merger or other corporate event that the Company does not survive, and no provision is made for the assumption, conversion, substitution or exchange of the Option, the Option shall terminate upon the occurrence of such event.
The specific numbers of shares stated in the foregoing provisions of Section 4.2 and the consideration payable for such shares shall be subject to adjustment in certain events as provided in Section 3.2.1 of this Plan.
5. DEFINITIONS.
(a) The dissolution or liquidation of the Company;
(b) An agreement to merge or consolidate, or otherwise reorganize, with or into one or more entities other than Subsidiaries, as a result of which less than 50% of the outstanding voting securities of the surviving
or resulting entity are, or are to be, owned by former stockholders of the Company;
(c) The sale of substantially all of the Company's business assets to a person or entity that is not a Subsidiary; or
(d) A person or entity that is not a stockholder of the Company on the date this Plan is adopted by the Board acquires directly or indirectly 50% or more of the Company's outstanding voting securities.
(a) if the Shares are publicly traded: (i) if the Shares are listed or admitted to trade on a national securities exchange, the closing price of the Shares on the Composite Tape, as published in the Western Edition of The Wall Street Journal, of the principal national securities exchange on which the Shares are so listed or admitted to trade, on such date, or, if there is no trading of the Shares on such date, then the closing price of the Shares as quoted on such Composite Tape on the next preceding date on which there was trading in such Shares; (ii) if the Shares are not listed or admitted to trade on a national securities exchange, the last price for the Shares on such date, as furnished by the National Association of Securities Dealers, Inc. ("NASD") through the NASDAQ National Market Reporting System or a similar organization if the NASD is no longer reporting such information; (iii) if the Shares are not listed or admitted to trade on a national securities exchange and are not reported on the National Market Reporting System, the mean between the bid and asked price for the Shares on such date, as furnished by the NASD or a similar organization; or
(a) The principal of the note shall not exceed the amount required to be paid to the Company upon the exercise or receipt of such Option, and the note shall be delivered directly to the Company in consideration of such exercise or receipt.
(b) The term of the Note, including extensions, shall not exceed ten (10) years.
(c) The Note shall provide for full recourse to the Participant.
(d) The Note shall bear interest at a rate determined by the Committee, but not less than the interest rate necessary to avoid the imputation of interest under the Code.
(e) The unpaid principal balance of the Note shall become due and payable on the tenth day after the termination of employment or service of a Participant.
(f) If required by the Committee or by applicable law, the Note shall be secured by a pledge of any Shares financed thereby (and other collateral if required by the Committee).
(g) The terms shall conform with applicable rules and regulations of the Federal Reserve Board as then in effect.
Exhibit 10.3
AMENDED AND RESTATED
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
1. Purpose. The purpose of this Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan (the "Plan") is to further the long term stability and financial success of Red Robin Gourmet Burgers, Inc. (the "Company") by attracting and retaining key employees of the Company and its Subsidiaries and directors of the Company through the use of stock incentives. It is believed that ownership of Company Stock will stimulate the efforts of those employees and directors upon whose judgment and interest the Company is and will be largely dependent for the successful conduct of its business. It is also believed that Option Awards granted to such employees and directors under this Plan will strengthen their desire to remain with the Company and will further the identification of those employees' and directors' interests with those of the Company's shareholders.
2. Definitions. As used in the Plan, the following terms have the meanings indicated:
(a) "Applicable Withholding Taxes" means the aggregate amount of federal, state and local income and payroll taxes that the Company is required to withhold in connection with any exercise of a Nonstatutory Stock Option.
(b) "Board" means the board of directors of the Company.
(c) "Change of Control" means the closing date of any sale or other disposition of substantially all the Company Stock or assets of the Company other than in the ordinary course of business.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Board or the committee appointed by the Board as described under Section 12.
(f) "Company" means Red Robin Gourmet Burgers, Inc., a Nevada corporation.
(g) "Company Stock" means Common Stock, $0.001 par value, of the Company. If the par value of the Company Stock is changed, or in the event of a change in the capital structure of the Company (as provided in Section 11), the shares resulting from such a change shall be deemed to be Company Stock within the meaning of the Plan.
(h) "Control Transfer" means one or a series of related transactions as a result of which (i) any Third Party, or group of Third Parties acting in concert, acquires, directly or indirectly, a majority of the Company's voting shares (on a Fully-Diluted Basis), (ii) the Company consolidates with or merges into or with, or effects any plan of share exchange with, any Person and after giving effect to such consolidation or merger or plan of share exchange any Third Party or group of Third Parties acting in concert owns, directly or indirectly, a majority of the voting shares of the Person (on a Fully-Diluted Basis) surviving such consolidation or merger or (iii) in one transaction or a series of related transactions, all or substantially all of the assets of the Company are sold, leased, exchanged or otherwise transferred as an entirety to any Third Party or group of Third Parties acting in concert (the "Acquiring Persons") and after giving effect to such transaction any Third Party or group of Third Parties acting in concert owns, directly or indirectly, a majority of the voting shares of the Acquiring Persons (on a Fully-Diluted Basis).
(i) "Date of Grant" means the date on which an Option Award is granted by the Committee.
(j) "Disability" or "Disabled" means a condition determined in good faith by the Committee to be a Disability, with such determination to be conclusive.
(k) "Fair Market Value" means as of the Date of Grant (or, if there were no trades on the Date of Grant, the last preceding day on which Company Stock is traded) (i) if the Company Stock is traded on an exchange the average of the highest and lowest registered sales prices of the Company Stock at which it is traded on such day on the exchange on which it generally has the greatest trading volume, (ii) if the Company Stock is traded on the over-the-counter market, the average between the closing high bid and low asked prices as reported by NASDAQ, or (iii) if shares of Common Stock are not traded on any exchange or over-the-counter market, the fair market value shall be determined by the Committee using any reasonable method in good faith.
(l) "Nonstatutory Stock Option" means an Option that does not meet the requirements of Code section 422, or, even if meeting the requirements of Code section 422, is not intended to be an incentive stock option and is so designated.
(m) "Option" means a right to purchase Company Stock granted under the Plan, at a price determined in accordance with the Plan.
(n) "Option Award" means the award of an Option under the Plan.
(o) "Parent" means, with respect to any corporation, a parent of that corporation within the meaning of Code section 424(e).
(p) "Participant" means any employee or director who receives an Option Award under the Plan.
(q) "Shareholders Agreement" the shareholders agreement among the Company and certain of its shareholders dated May 11, 2000, as amended.
(r) "Subsidiary" means, with respect to any corporation, a subsidiary of that corporation within the meaning of Code section 424(f).
(s) "Third Party" means a Person who was not (i) a shareholder of the Company on April 30, 2000, (ii) a Permitted Transferee (as defined in the Shareholders Agreement) of a transferor who was, or whose predecessor in interest was, a shareholder of the Company on April 30, 2000 or (iii) an Affiliate of the Company or any shareholder or (iv) an employee of the Company on the date such person became a shareholder.
3. General. Only Nonstatutory Stock Options may be granted under Option Awards pursuant to the Plan.
4. Stock. Subject to Section 11 of the Plan, there shall be reserved for issuance under the Plan an aggregate of 2,836,500 shares of Company Stock; which shall be authorized, but unissued shares. Shares allocable to Options or portions thereof granted under the Plan that expire or otherwise terminate unexercised may again be subjected to an Option Award under the Plan. The Committee is expressly authorized to make an Option Award to a Participant conditioned upon the surrender for cancellation of an Option granted under an existing Option Award. For purposes of determining the number of shares that are available for Option Awards under the Plan, such number shall include the number of shares surrendered by an optionee or retained by the Company in payment of Applicable Withholding Taxes.
5. Eligibility.
(a) All present and future employees of the Company (or any Parent or Subsidiary of the Company, whether now existing or hereafter created or acquired) whom the Committee determines to be key employees shall be eligible to receive Option Awards under the Plan. All present and future directors of the Company shall also be eligible to receive Option Awards under the Plan. The Committee shall have the power and complete discretion, as provided in Section 12, to select eligible persons to receive Option Awards and to determine for each such selected person the terms and conditions and the number of shares to be allocated to him or her as part of each Option Award.
(b) The grant of an Option Award shall not obligate the Company or any Parent or Subsidiary of the Company to pay any person any particular amount of remuneration, to continue the employment or service of any person after the grant or to make further grants to the person at any time thereafter.
6. Stock Options.
(a) Whenever the Committee deems it appropriate to grant Options, notice shall be given to the Participant stating the number of shares for which Options are granted, the Option price per share, and the conditions to which the grant and exercise of the Options are subject. This notice, when duly accepted in writing by the Participant, shall become a stock option agreement between the Company and the Participant.
(b) The exercise price of shares covered by an Option may be less than the Fair Market Value of such shares on the Date of Grant, as determined by the Committee.
(c) Options may be exercised in whole or in part at such times as may be specified by the Committee in the Participant's stock option agreement.
(d) The Committee may, in its discretion, grant Options that by their terms become fully exercisable upon a Change of Control, notwithstanding other conditions on exercisability in the stock option agreement.
7. Method of Exercise of Options.
(b) The Company may place on any certificate representing Company Stock issued upon the exercise of an Option any legend deemed desirable by the Company's counsel to comply with federal or state securities laws, and the Company may require a customary written indication of the Participant's investment intent. Until the Participant has made any required payment, including any Applicable Withholding Taxes, and has had issued a certificate for the shares of Company Stock acquired, he or she shall possess no shareholder rights with respect to the shares.
(c) Each Participant shall agree as a condition of the exercise of an Option to pay to the Company, or make arrangements satisfactory to the Company regarding the payment to the Company of, Applicable Withholding Taxes. Until such amount has been paid or arrangements satisfactory to the Company have been made, no stock certificate shall be issued upon the exercise of an Option.
(d) As an alternative to making a cash payment to the Company to satisfy Applicable Withholding Taxes, the Committee may establish procedures permitting the
Participant to elect to deliver shares of Company Stock (valued at Fair Market Value on the date of delivery) that have been held by the Participant for more than six months that would satisfy all or a specified portion of the Federal, state and local tax liabilities of the Participant arising in the year the Option Award becomes subject to tax. Any such election shall be made only in accordance with procedures established by the Committee.
8. Nontransferability of Options. Options by their terms, shall not be transferable except by will or by the laws of descent and distribution or to the Participant's spouse or children or a family limited partnership, trust or other similar entity solely for the benefit of the Participant's spouse or children (a "Permitted Transferee"), and shall be exercisable, during the Participant's lifetime, only by the Participant or by his or her guardian, duly authorized attorney-in-fact or other legal representative or by the Permitted Transferee to whom they have been transferred.
9. Effective Date of the Plan. The effective date of the Plan is May 11, 2000.
10. Termination, Modification, Change. If not sooner terminated by the Board, this Plan shall terminate at the close of business on April 15, 2010. No Option Awards shall be granted under the Plan after its termination. The Board may terminate the Plan or may amend the Plan in such respects as it shall deem advisable. A termination or amendment of the Plan shall not, without the consent of the Participant, adversely affect a Participant's rights under an Option Award previously granted to him.
11. Change in Capital Structure.
(a) In the event of a stock dividend, stock split or combination of shares, recapitalization or merger in which the Company is the surviving corporation or other change in the Company's capital stock (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the Company), the number and kind of shares of stock or securities of the Company to be subject to the Plan and to Options then outstanding or to be granted thereunder, the maximum number of shares or securities which may be delivered under the Plan, the exercise price and other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons. If the adjustment would produce fractional shares with respect to any unexercised Option, the Committee may adjust appropriately the number of shares covered by the Option so as to eliminate the fractional shares.
(b) In the event of a Control Transfer, each outstanding Option that either has theretofore vested or becomes vested by reason of such Control Transfer and is not exercised prior to the consummation of the Control Transfer, shall, as determined by the Committee, either (i) be honored or assumed or new rights substituted therefor, or (ii) be canceled in exchange for a payment in cash of an amount equal to the excess, if any, of the net proceeds to be received per Common Share in the Control Transfer over the exercise price for the Option.
(c) Notwithstanding anything in the Plan to the contrary, the Committee may take the foregoing actions without the consent of any Participant, and the Committee's determination shall be conclusive and binding on all persons for all purposes.
12. Administration of the Plan. The Plan shall be administered by the Committee, which shall consist of not less than two members of the Board, who shall be appointed by the Board. In the absence of appointment of the Committee, the entire Board shall constitute the Committee. The Committee shall have general authority to impose any limitation or condition upon an Option Award the Committee deems appropriate to achieve the objectives of the Option Award and the Plan and, without limitation and in addition to powers set forth elsewhere in the Plan, shall have the following specific authority:
(a) The Committee shall have the power and complete discretion to determine (i) which eligible persons shall receive Option Awards, (ii) the number of shares of Company Stock to be covered by each Option Award, (iii) the exercise price of Nonstatutory Stock Options; (iv) the Fair Market Value of Company Stock, (v) the time or times when an Option Award shall be granted, (vi) whether an Option Award shall become vested over a period of time and when it shall be fully vested, (vii) when Options may be exercised, (viii) whether a Disability exists, (ix) the manner in which payment will be made upon the exercise of Options, (x) conditions relating to the length of time before disposition of Company Stock received upon the exercise of Options is permitted, (xi) whether to approve a Participant's election to deliver shares of already owned Company Stock to satisfy Applicable Withholding Taxes, (xii) notice provisions relating to the sale of Company Stock acquired under the Plan, and (xiii) any additional requirements relating to Option Awards that the Committee deems appropriate. The Committee shall have the power to amend the terms of previously granted Option Awards so long as the terms as amended are consistent with the terms of the Plan and provided that the consent of the Participant is obtained with respect to any amendment that would be detrimental to him or her.
(b) The Committee may adopt rules and regulations for carrying out the Plan. The interpretation and construction of any provision of the Plan by the Committee shall be final and conclusive. The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present. Any action may be taken by a written instrument signed by all of the members, and any action so taken shall be fully effective as if it had been taken at a meeting.
(d) The Board from time to time may appoint members previously appointed and may fill vacancies, however caused, in the Committee.
13. Notice. All notices and other communications required or permitted to be given under this Plan shall be in writing and shall be deemed to have been duly given if delivered personally or mailed first class, postage prepaid, as follows (a) if to the Company - at its principal business address to the attention of the Chief Executive Officer; (b) if to any Participant - at the last address of the Participant known to the sender at the time the notice or other communication is sent.
14. Interpretation. The terms of this Plan shall be governed by the laws of the State of Colorado.
IN WITNESS WHEREOF, the Company has caused this Amended and Restated Plan to be executed this 23rd day of October, 2000.
RED ROBIN GOURMET BURGERS, INC.
By: /s/ James P. McCloskey ----------------------------- James P. McCloskey Chief Financial Officer |
Exhibit 10.7
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
AMONG
RED ROBIN GOURMET BURGERS, INC.
SKYLARK COMPANY, LTD
RR INVESTORS, LLC
RR INVESTORS II, LLC
MICHAEL J. SNYDER
AND
CERTAIN OTHER SHAREHOLDERS
Dated as of August 9, 2001
Table of Contents
Page 1. Definitions ......................................................... 1 2. Holding Co. Board of Directors ...................................... 5 (a) Constitution of the Board ..................................... 5 (b) Board Action .................................................. 7 (c) Committees .................................................... 9 (d) Expenses ...................................................... 9 (e) Directors Insurance ........................................... 9 (f) Board of Subsidiaries ......................................... 9 (g) Operating Co. Board of Directors .............................. 9 3. Restrictions on Transfer of Covered Shares .......................... 10 (a) Transfer of Covered Shares .................................... 11 (b) First Refusal Right ........................................... 11 (c) Permitted Transfers ........................................... 12 (d) Termination of Restrictions ................................... 13 (e) Securities Laws ............................................... 13 (f) Prohibited Transfer ........................................... 13 (g) Improper Transfer ............................................. 14 4. Right to Compel Sale or Public Offering ............................. 14 (a) Right to Compel Sale or Public Offering ....................... 14 (b) Compelled Sale ................................................ 14 (c) Compelled Sale Notice ......................................... 15 (d) Rule 506 ...................................................... 17 (e) Public Offering ............................................... 18 (f) Appraisal Option .............................................. 18 5. The Holding Company's Right to Purchase Covered Shares Upon Involuntary Transfer ................................................ 19 6. Pre-emptive Rights .................................................. 20 7. Legend .............................................................. 20 8. Transfer or Issuance ................................................ 21 (a) Transfer ...................................................... 21 (b) Issuance ...................................................... 21 |
9. Representation and Warranty of Shareholders ......................... 21 10. Miscellaneous ....................................................... 21 (a) Amendment and Waiver .......................................... 21 (b) Information Rights ............................................ 21 (c) Severability .................................................. 22 (d) Entire Agreement .............................................. 22 (e) Successors and Assigns ........................................ 22 (f) Counterparts .................................................. 22 (g) Remedies ...................................................... 22 (h) Notices ....................................................... 23 (i) Governing Law ................................................. 25 (j) Descriptive Headings .......................................... 25 (k) Termination ................................................... 25 |
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
This AMENDED AND RESTATED SHAREHOLDERS AGREEMENT (this "Agreement") is made and entered into this 9 day of August, 2001 by and among Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Holding Company"), the Persons, including Skylark Company, Ltd., a Japan corporation ("Skylark"), listed in Schedule A (the "Skylark Holders"), RR Investors, LLC, a Virginia limited liability company ("Investors I"), RR Investors II, LLC, a Virginia limited liability company ("Investors II" and together with Investors I, "Investors"), Michael J. Snyder ("Snyder") and each of the Persons listed in Schedule B hereto (together with Snyder, the "Snyder Group") and each of the Persons listed in Schedule C hereto (the "Existing Shareholders"). The Skylark Holders, Investors, the Snyder Group, the Existing Shareholders and the Option Executives, and their respective successors and permitted assigns (including any Related Transferees), are collectively referred to as the "Shareholders" and individually as a "Shareholder."
On May 11, 2000, Red Robin International, Inc., a Nevada corporation and a wholly owned subsidiary of the Holding Company (the "Operating Company"), and the Shareholders entered into that certain Shareholders Agreement (the "Shareholders Agreement") to, among other things, provide for the governance of the Operating Company and to specify and limit the manner and terms upon which the Covered Shares (as hereinafter defined) shall or may be transferred.
On January 23, 2001, the Operating Company, the Holding Company and Red Robin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Holding Company ("RRMS"), entered into a Merger Agreement (the "Merger Agreement") to provide for a corporate reorganization of the Operating Company whereby RRMS would be merged with and into the Operating Company (the "Merger"), with (a) the Operating Company continuing as the surviving corporation of such merger, and (b) each outstanding share (or any fraction thereof) of the common stock of the Operating Company being converted in such merger into a like number of shares of the common stock of the Holding Company, par value $0.001 per share.
Concurrently with the consummation of the Merger in accordance with the terms of the Merger Agreement, the parties hereto desire to amend and restate, in its entirety, the Shareholders Agreement in order to add the Holding Company as a party hereto in substitution of the Operating Company, to provide for the governance of the Holding Company and to specify and limit the manner and terms upon and by which the Covered Shares shall or may be transferred.
The parties to this Agreement hereby agree as follows:
1. Definitions. Terms defined in this Agreement shall have the meaning ascribed to them in this Agreement, in addition, as used in this Agreement, the following terms shall have the following respective meanings, whether used in the singular or the plural:
"Affiliate" of any Person means any other Person directly or indirectly controlling (including all directors and officers of such Person) or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Appraisal Purchasers" has the meaning set forth in Section 4(f)(ii).
"Appraisal Shares" has the meaning set forth in Section 4(f)(i).
"Bona Fide Offer" has the meaning set forth in Section 3(b).
"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Richmond, Virginia, New York, New York, or Denver, Colorado are authorized by law to close.
"Common Shares" means the Holding Company's common stock, $0.001 par value.
"Compelled Sale" has the meaning set forth in Section 4(a).
"Control Transfer" means one or a series of related transactions as a result of which (i) any Third Party, or group of Third Parties acting in concert, acquires, directly or indirectly, a majority of the Holding Company's Voting Shares (on a Fully-Diluted Basis), (ii) the Holding Company consolidates with or merges into or with, or effects any plan of share exchange with, any Person and after giving effect to such consolidation or merger or plan of share exchange any Third Party or group of Third Parties acting in concert owns, directly or indirectly, a majority of the Voting Shares of the Person (on a Fully-Diluted Basis) surviving such consolidation or merger or (iii) in one transaction or a series of related transactions, all or substantially all of the assets of the Holding Company and its Subsidiaries are sold, leased, exchanged or otherwise transferred as an entirety to any Third Party or group of Third Parties acting in concert (the "Acquiring Persons") and after giving effect to such transaction any Third Party or group of Third Parties acting in concert owns, directly or indirectly, a majority of the Voting Shares of the Acquiring Persons (on a Fully-Diluted Basis).
"Covered Shares" means, without duplication, (A) the Common Shares purchased or otherwise acquired by the Shareholders, which as of a date of determination are outstanding, (B) the Underlying Shares (or the instrument pursuant to which such Underlying Shares are issuable) which as of such date are outstanding (or, in the case of such instrument, may at such time be exercised), and (C) any equity securities referred to in clauses (A) and (B) above issued or issuable directly or indirectly with respect to the Shares, which as of such date are outstanding, by way of share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation, plan of share exchange or other reorganization. For purposes of this Agreement, a Person will
be deemed to be a holder or owner of Covered Shares whenever such Person has the right, other than pursuant to the terms of this Agreement, to acquire such Covered Shares (by conversion, exercise of warrant or option or otherwise, but disregarding any legal restrictions (other than imposed pursuant to this Agreement) upon the exercise of such right), whether or not such right has been exercised. As to any particular shares constituting Covered Shares, such shares will cease to be Covered Shares when they have been sold pursuant to a Public Sale.
"Duly Endorsed" means duly endorsed in blank by the Person or Persons in whose name a share certificate is registered or accompanied by a duly executed share assignment separate from the certificate with, in the case of a Person other than the Skylark Holders, Investors and the Snyder Group, the signature(s) thereon guaranteed by a commercial bank or trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.
"Executive Stock Options" means the options to purchase Common Shares awarded to Option Executives pursuant to the Stock Option Plans.
"Fair Market Value" per Common Share means, as of any date, the fair market value per Common Share as of such date, calculated on a Fully-Diluted Basis and determined in good faith by the Holding Co. Board of Directors.
"Fully-Diluted Basis" means, without duplication, all outstanding Common Shares and all Underlying Shares.
"Funded Debt" means, as of any date, without duplication, with respect to any Person, (i) all indebtedness for borrowed money or for the deferred purchase of property, (ii) the face amount of all letters of credit, banker's acceptances and other credit facilities issued for the account of such Person and, without duplication, all drafts drawn thereunder, (iii) all indebtedness secured by any lien on any property owned by such Person, to the extent attributable to such Person's interest in such property even though such Person has not assumed or become liable for the payment thereof, (iv) lease obligations of such Person which, in accordance with generally acceptable accounting principles, should be capitalized, (v) obligations with respect to any conditional sale agreement or title retention agreement and (vi) guarantees by such Person of the Funded Debt of another Person, but excluding in each case trade and other accounts payable in the ordinary course of business.
"Holding Co. Board of Directors" means the board of directors of the Holding Company.
"HSR Act" means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended.
"Involuntary Transfer" means any transfer of title or beneficial
ownership of Covered Shares (other than a transfer pursuant to Section
3(c)(iii)) upon default, foreclosure, forfeit, divorce, court order, or
otherwise than upon a voluntary decision on the part of a Shareholder.
"Offeror" has the meaning set forth in Section 3(b).
"Operating Company" means Red Robin International, Inc., a Nevada corporation and a wholly owned subsidiary of the Holding Company.
"Operating Co. Board of Directors" means the board of directors of the Operating Company.
"Option Executives" means employees of the Holding Company or its Subsidiaries who are awarded Executive Stock Options.
"Permitted Transferee" means the holder of Covered Shares where such shares were acquired pursuant to a transfer permitted by Section 3(c) hereof.
"Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association or organization, joint venture, government or department or agency thereof, or other entity of whatever nature.
"Public Offering" means any sale of Common Shares pursuant to a registered public offering under the Securities Act.
"Public Sale" means any Public Offering or any sale of Common Shares to the public pursuant to Rule 144 effected through a broker or dealer.
"Qualified Public Offering" means a Public Sale of Common Shares which, when aggregated with all previous Public Sales of Common Shares, results in at least 20% of the Common Shares outstanding on a Fully-Diluted Basis being held by Persons other than Shareholders and their respective Affiliates and gross proceeds of at least $30 million.
"Related Transferee" has the meaning set forth in Section 3(c).
"Rule 144" means Rule 144 promulgated by the Securities and Exchange Commission under the Securities Act as such rule may be amended from time to time, or any similar rule then in force.
"Securities Act" means the United States Securities Act of 1933, as amended from time to time.
"Securities and Exchange Commission" means the United States Securities and Exchange Commission and includes any federal governmental body or agency succeeding to the functions thereof.
"Senior Debt Facility" means the credit facility of the Operating Company pursuant to and substantially in accordance with that certain Loan Agreement, dated as of September 6, 2000, by and among the Operating Company, FINOVA Capital Corporation, and certain financial institutions from time to time parties thereto, as the
same shall be amended, amended and restated, supplemented, restructured or otherwise modified from time to time (in whole or in part and without limitation as to terms, conditions or covenants and without regard to the principal amount thereof) and in effect, including all related notes, collateral documents, guaranties, instruments and agreements entered into in connection therewith, and any successive restructurings, renewals or refundings thereof.
"Shareholder" has the meaning set forth in the Recitals.
"Skylark Holders" means the Persons listed in Schedule A.
"Stock Option Plans" means the Holding Company's Employee Stock Option Plan, 1990, Employee Stock Option Plan, 1996 and the 2000 Management Performance Common Stock Option Plan pursuant to which options to purchase Common Shares are to be awarded to certain employees of the Holding Company or its Subsidiaries and any other stock option plan or other equity-based employee benefit plans approved by the Holding Co. Board of Directors after the date of this Agreement.
"Subsidiary" means, with respect to any Person, any corporation of which an aggregate of 50% or more of the outstanding share capital or capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, capital stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned by such Person and/or one or more Subsidiaries of such Person.
"Third Party" means a Person who was not (i) a party to this Agreement immediately after the date hereof, (ii) a Permitted Transferee of a transferor who was, or whose predecessor in interest was, a party to this Agreement immediately after the date hereof or (iii) an Affiliate of the Holding Company or any Shareholder or (iv) an employee of the Holding Company or any of its Subsidiaries on the date such person became a Shareholder.
"Underlying Shares" means, as the context requires, all Common Shares issuable upon exercise of any then outstanding options (including the Executive Stock Options), warrants, convertible or exchangeable securities or other similar instruments or rights.
"Voting Shares" means shares of the class or classes having general voting power under ordinary circumstances to elect at least a majority of the board of directors of a corporation (irrespective of whether or not at the time shares of any other class or classes shall have or might have voting power by reason of the happening of any contingency).
2. Holding Co. Board of Directors.
(a) Constitution of the Board. Each Shareholder shall appear in person or by proxy at any annual or special meeting of shareholders for the purpose of obtaining a
quorum and shall vote or cause the vote of the Covered Shares and any other Voting Shares of the Holding Company over which he or it has voting control, either in person or by proxy, and will take all other necessary or desirable action within his control (whether in his capacity as a shareholder, director or officer of the Holding Company or otherwise), and the Holding Company shall take all necessary or desirable action within its control, in order to cause:
(i) the Holding Co. Board of Directors to consist of five members;
(ii) so long as the Skylark Holders, their Affiliates and the Skylark Holders' or their Affiliates' Related Transferees hold collectively at least a number of Common Shares equal to 90% of the Common Shares held by them as of May 11, 2000 (as such number is equitably adjusted to reflect stock splits, stock dividends, recapitalizations and reclassifications), the election of two directors designated by the Skylark Holders, and so long as the Skylark Holders, their Affiliates and the Skylark Holders' or their Affiliates' Related Transferees hold collectively at least a number of Common Shares equal to 50% of the Common Shares held by them as of May 11, 2000 (as such number is equitably adjusted to reflect stock splits, stock dividends, recapitalizations and reclassifications), the election of one director designated by the Skylark Holders ("Skylark Directors");
(iii) so long as Investors, its Affiliates and Investors' or its Affiliates' Related Transferees hold collectively at least a number of Common Shares equal to 90% of the Common Shares held by them as of May 11, 2000 (as such number is equitably adjusted to reflect stock splits, stock dividends, recapitalizations and reclassifications), the election of two directors designated by Investors, and so long as Investors, its Affiliates and Investors' or its Affiliates' Related Transferees hold collectively at least a number of Common Shares equal to 50% of the Common Shares held by them as of May 11, 2000 (as such number is equitably adjusted to reflect stock splits, stock dividends, recapitalizations and reclassifications), the election of one director designated by Investors ("Investors Directors"); provided that so long as Investors is entitled to -------- designate one or more directors pursuant to this Section 2(a)(iii) and Quad-C Partners V, L.P., a Delaware limited partnership, directly or indirectly holds any Common Shares, it shall be entitled to designate one of the Investors Directors;
dividends, recapitalizations and reclassifications), the election of one director designated by the Snyder Group;
(v) so long as Skylark, Investors, Snyder or the Snyder Group is entitled to designate directors pursuant to this Section 2(a), the removal, with or without cause, of any director designated by the Skylark Holders, Investors, Snyder or the Snyder Group, as the case may be, only at the respective written request of the Skylark Holders, Investors, Snyder or the Snyder Group, as the case may be; and
(vi) in the event that any director designated by the Skylark Holders , Investors or the Snyder Group pursuant to this Section 2(a) ceases for any reason to serve as a member of the Holding Co. Board of Directors during his term of office, the resulting vacancy on the Holding Co. Board of Directors to be filled by a representative designated by the Skylark Holders, Investors or the Snyder Group, as the case may be, hereunder (so long as the Skylark Holders, Investors or the Snyder Group, as the case may be, is entitled to designate the director pursuant to this Section 2).
(b) Board Action.
(i) At all meetings of the Holding Co. Board of Directors, a majority of the number of the directors then in office, including in any case at least one Skylark Director and at least one Investors Director, shall constitute a quorum for the transaction of business thereat. Except as expressly otherwise provided in this Agreement, the vote of a majority of the directors present at a meeting of the Holding Co. Board of Directors with respect to which notice thereof pursuant to the by-laws of the Holding Company as in effect on the date hereof shall have been duly given and at which a quorum is present shall be the act of the Holding Co. Board of Directors.
(ii) During the term of this Agreement, (A) so long as Investors, its Affiliates and Investors' or its Affiliates' Related Transferees hold in excess of 25% of the outstanding Voting Securities of the Holding Company, without the approval of at least one Investors Director, and (B) so long as Skylark guarantees or provides other similar credit support for any of the long-term debt of the Holding Company or its Subsidiaries, without the approval of at least one Skylark Director, neither the Holding Company nor any of its Subsidiaries shall:
(A) enter into or make material modifications to any agreement or transaction or series of related transactions with any Affiliate;
(B) effect a recapitalization or an increase or reduction in the amount of its equity securities or the creation of any additional class of capital stock or the issuance of additional shares of capital stock or securities convertible into, exchangeable for or granting the right to acquire (with or without the payment of consideration) capital stock other
than pro rata among the holders of Common Shares except pursuant to the exercise of Executive Stock Options;
(C) acquire (including by merger) stock or assets of another Person that will not be operated as a "Red Robin" restaurant or a reasonable extension, development or expansion thereof or ancillary thereto;
(D) except as approved in connection with the Annual Budget (as defined below) under clause (I) or (J), acquire (including by merger) stock or assets of another Person that will be operated as a "Red Robin" restaurant or a reasonable extension, development or expansion thereof or ancillary thereto for a purchase price in excess of $7 million;
(E) sell, lease, exchange, transfer or otherwise dispose of, directly or indirectly, in a single transaction or series of related transactions, a significant portion of the assets of the Holding Company or any of its Subsidiaries;
(F) except as permitted under clause (C) or (D) above, merge, consolidate or effect a share exchange with, or sell all or any significant portion of the outstanding capital stock to, any other Person;
(G) incur or guaranty any material Funded Debt in excess of $5 million or any modifications or amendment to any agreement governing the extension or guaranty thereof (other than the incurrence under the terms of the Senior Debt Facility or any agreement previously approved by the Holding Co. Board of Directors or the Operating Co. Board of Directors or the incurrence of Funded Debt permitted under any such agreement);
(H) enter into or acquire a business that is not (1)
substantially in the business conducted by the Holding Company or any
of its Subsidiaries on the date hereof or (2) a reasonable extension,
development or expansion thereof or ancillary thereto;
(I) approve the annual operating and capital expenditure budget (the "Annual Budget");
(J) expend, or commit to expend, in any fiscal year of the Holding Company, capital expenditures materially in excess of the amount provided in the Annual Budget;
(K) commence a voluntary case or consent to the entry of an order for relief against it in an involuntary case under Chapter 7 or Chapter 11 of the United States Bankruptcy Code; or
(L) other than amendments permitted by the second proviso of the first sentence of Section 11(a), amend this Agreement or the Certificate of Incorporation of the Holding Company in a manner which would adversely affect the rights and obligations of Investors, the Skylark Holders or the Snyder Group, as the case may be, or amend the by-laws of the Holding Company in a manner that is in conflict with the applicable provisions of this Agreement;
(c) Committees. The Holding Co. Board of Directors may establish committees, including an Executive Committee, which shall have such authority as shall be delegated by the Holding Co. Board of Directors from time to time. So long as the Skylark Holders, their Affiliates and the Skylark Holders' or their Affiliates' Related Transferees hold collectively at least 25% of the Common Shares or Skylark guarantees or provides other similar credit support for any of the long-term debt of the Holding Company or any of its Subsidiaries, at least one Skylark Director shall be a member of each committee. So long as Investors, its Affiliates or Investors' and its Affiliates' Related Transferees hold collectively at least 25% of the Common Shares, at least one director designated by Investors shall be a member of each committee.
(d) Expenses. The Holding Company will pay the reasonable out-of-pocket expenses incurred by each director in connection with attending the meetings of the Holding Co. Board of Directors and any committee thereof.
(e) Directors Insurance. The Holding Company will provide errors and omissions insurance for the benefit of the directors of the Holding Company.
(g) Operating Co. Board of Directors. Notwithstanding anything to the contrary herein, the Holding Company, as the sole shareholder of the Operating Company, shall take all necessary or desirable action within its control, in order to cause:
(i) the Operating Co. Board of Directors to consist of three members;
(ii) so long as the Skylark Holders, their Affiliates and the Skylark Holders' or their Affiliates' Related Transferees hold collectively at least a number of Common Shares equal to 50% of the Common Shares held by them as of May 11, 2000 (as such number is equitably adjusted to reflect stock splits, stock dividends, recapitalizations and reclassifications), the election of one director designated by the Skylark Holders;
(v) so long as Skylark, Investors, Snyder or the Snyder Group is entitled to designate directors pursuant to this Section 2(g), the removal, with or without cause, of any director designated by the Skylark Holders, Investors, Snyder or the Snyder Group, as the case may be, only at the respective written request of the Skylark Holders, Investors, Snyder or the Snyder Group, as the case may be; and
(vi) in the event that any director designated by the Skylark Holders , Investors or the Snyder Group pursuant to this Section 2(g) ceases for any reason to serve as a member of the Operating Co. Board of Directors during his term of office, the resulting vacancy on the Operating Co. Board of Directors to be filled by a representative designated by the Skylark Holders, Investors or the Snyder
Group, as the case may be, hereunder (so long as the Skylark Holders, Investors or the Snyder Group, as the case may be, is entitled to designate the director pursuant to this Section 2(g)).
3. Restrictions on Transfer of Covered Shares.
(a) Transfer of Covered Shares. No Shareholder will, voluntarily or involuntarily, directly or indirectly, sell, transfer, assign, pledge, donate, or otherwise encumber or dispose of any interest in any Covered Shares (a "Transfer") except (i) pursuant to a Transfer to the Holding Company, a Public Sale, a Compelled Sale pursuant to the provisions of Section 4, or to a Permitted Transferee pursuant to Section 3(c), or (ii) pursuant to the provisions of Section 3(b). (The Transfers described in Section 3(a)(i) are referred to as "Exempt Transfers" and all other Transfers are referred to as "Non-Exempt Transfers.").
(b) First Refusal Right.
(i) If any Shareholder (an "Offeror") shall receive a written offer from a third party (the "Bona Fide Offer") to purchase any of its Covered Shares that would constitute a Non-Exempt Transfer and desires to accept the same, then, at least 25 Business Days before making any such Non-Exempt Transfer (the "First Offer Election Period"), the Transferor will deliver a written notice accompanied by a copy of the Bona Fide Offer (the "First Offer Notice") to the Holding Company and to all other Shareholders (the "Offerees"). The First Offer Notice will specify the proposed number of Covered Shares to be the subject of such Transfer (the "Offered Shares") and disclose in reasonable detail the proposed terms and conditions of the Transfer. Unless otherwise agreed by the Offeror, the purchase price for any such Transfer must be payable solely in cash at the closing of the transaction. For purposes of this Section 3(b), the value of any securities or other non-cash consideration to be received by the Offeror as part of the Non-Exempt Transfer shall be established by an independent appraisal or an opinion of a nationally recognized investment banking or valuation firm obtained at the expense of the Offeror.
(ii) The Holding Company and the Offerees shall have the right
to purchase all (but not less than all) of the Offered Shares, at the
price and on the terms specified in the First Offer Notice (the "First
Offer Right") by delivering written notice of such election (the "First
Offer Election Notice") to the Offeror as provided in this Section
3(b)(ii). Within 25 Business Days after receipt of the First Offer
Notice (the "Election Period"), the Holding Company shall give written
notice to the Offeror and the Offerees of the number of Offered Shares
it has elected to purchase. If the Holding Company does not elect to
purchase all of the Offered Shares within the Election Period, the
Offerees, within five Business Days after the expiration of the
Election Period, shall give written notice to the Holding Company and
the Offeror of the number of Offered Shares they have elected to
purchase. Each Offeree shall be entitled to elect to purchase his pro
rata portion of the Offered Shares that the Holding Company has not
elected to
(iv) Notwithstanding the foregoing, unless the Offeror shall have consented to the purchase of less than all of the Offered Shares, no Offeree may purchase any Offered Shares unless all of the Offered Shares are to be purchased.
(c) Permitted Transfers. The restrictions contained in this Section 3 will not apply with respect to:
(i) any Transfer by a Shareholder that is a corporation, partnership, limited liability company or unincorporated association which is a distribution in kind to all of its shareholders, partners or members in accordance with the terms of the applicable governing instruments;
(ii) any Transfer by will or otherwise pursuant to the laws of succession, distribution and descent;
(iii) any Transfer by the Skylark Holders or Investors to any employee or Affiliate of the Skylark Holders or Investors or of an Affiliate thereof, or to the spouse or children of any such employee or a family limited partnership, a trust or trusts or other similar entity solely for the benefit of such employee and /or such employee's spouse or children;
(iv) any Transfer to an Affiliate of the transferor;
(v) any Transfer required by a regulatory authority having jurisdiction over the transferor; and
(vi) any Transfer by a Shareholder to that Shareholder's spouse or children or to a family limited partnership, a trust or trusts or other similar entity solely for the benefit of that Shareholder and/or that Shareholder's spouse or children;
(d) Termination of Restrictions. The restrictions on the Transfer of Covered Shares set forth in this Section 3 will continue with respect to each Covered Share until, in the case of the restriction contained in Section 3(e), the date on which such Covered Share has been transferred in a Public Sale, and in the case of all other restrictions, the earlier of (i) the date on which such Covered Share has been transferred in a Public Sale or (ii) the date this Agreement is terminated pursuant to Section 11(k) hereof.
(e) Securities Laws. In addition to any other restriction on Transfer herein, each Shareholder agrees that (i) subject to the terms and conditions of this Agreement, prior to making any Transfer of any of the Covered Shares, the Shareholder will give notice to the Holding Company describing the manner of such proposed Transfer and, if required by the Holding Company, (ii) the Shareholder will not effect any Transfer until either: (A) the Shareholder has delivered to the Holding Company an opinion, in a form acceptable to the Holding Company, of securities counsel acceptable to the Holding Company to the effect that no registration of the Covered Shares under the Securities Act or registration or qualification under the securities or "blue sky" laws of any state or province is required in connection with such proposed Transfer, or (B) a registration statement under the Securities Act covering such proposed Transfer has been filed by the Holding Company with the Securities and Exchange Commission and has become effective under the Securities Act and compliance with applicable state and provincial securities or "blue sky" laws has been effected.
(f) Prohibited Transfer. Notwithstanding anything herein to the contrary, except pursuant to a Compelled Sale or a Control Transfer approved by the Holding Co.
Board of Directors, Covered Shares may not be Transferred to any Person that directly, or indirectly through one or more Affiliates, is engaged in a business similar to the business conducted by the Holding Company or any of its Subsidiaries or is a competitor of the Holding Company or any of its Subsidiaries.
(g) Improper Transfer. Any attempt to Transfer any Covered Shares which is not in accordance with this Agreement shall be null and void, and the Holding Company shall not give any effect to such attempted Transfer in the share records of the Holding Company.
4. Right to Compel Sale or Public Offering.
(a) Right to Compel Sale or Public Offering.
(i) In the event that at the time of the notice referred to in paragraph (c) of this Section 4 there shall not have been a Qualified Public Offering and Investors and its Affiliates and Investors' and its Affiliates' Related Transferees continue to hold at least 25% of the outstanding Common Shares, after April 30, 2005, Investors shall be entitled to give notice to the Holding Company, the Skylark Holders and Snyder that it (the "Compelling Holder") proposes either (i) to make a Control Transfer (whether pursuant to a share sale, plan of share exchange, merger, consolidation, or sale, lease, exchange or transfer of all or substantially all of the assets of the Holding Company and its Subsidiaries) (the "Compelled Sale") or (ii) to cause the Holding Company to effect a Public Offering.
(ii) In the event that at the time of the notice referred to in
paragraph (c) of this Section 4 there shall not have been a Qualified
Public Offering and the Skylark Holders and their Affiliates and the
Skylark Holders' and their Affiliates' Related Transferees continue to
hold at least 25% of the outstanding Common Shares, after April 30,
2005, the Skylark Holders shall be entitled to give notice to the
Holding Company, Investors and Snyder that it (the "Compelling Holder")
proposes either (i) to make a Control Transfer (whether pursuant to a
share sale, plan of share exchange, merger, consolidation, or sale,
lease, exchange or transfer of all or substantially all of the assets
of the Holding Company and its Subsidiaries) (the "Compelled Sale") or
(ii) to cause the Holding Company to effect a Public Offering.
(iii) In the event that at the time of the notice referred to in paragraph (c) of this Section 4, (A) Snyder is not the Chief Executive Officer of the Holding Company and the Operating Company, (B) there shall not have been a Qualified Public Offering and (C) the Snyder Group and their Related Transferees continue to hold at least 10% of the outstanding Common Shares, after April 30, 2005, Snyder shall be entitled to give notice to the Holding Company, Investors and the Skylark Holders that it (the "Compelling Holder") proposes either (i) to make a Control Transfer (whether pursuant to a share sale, plan of share exchange, merger, consolidation, or sale, lease, exchange or transfer of all or substantially all
of the assets of the Holding Company and its Subsidiaries) (the "Compelled Sale") or (ii) to cause the Holding Company to effect a Public Offering.
(b) Compelled Sale. In the event the Compelling Holder elects to make a Control Transfer, the Compelling Holder shall have the right, exercisable as set forth below, to require the Holding Company and each of the other Shareholders (the "Compelled Holders") to sell the number of Covered Shares (including Underlying Shares and whether vested or unvested) then held by them calculated as follows:
(i) The number of Covered Shares which the Compelling Holder may require each Compelled Holder to sell shall be determined by the Compelling Holder, but shall be no greater than the product of (A) the total number of Covered Shares (including Underlying Shares) proposed to be sold in the Control Transfer (including Covered Shares of any Compelled Holders proposed to be so sold), times (B) a fraction, the numerator of which shall be the total number of Covered Shares (including Underlying Shares) then held by such Compelled Holder, and the denominator of which shall be the total number of the then outstanding Covered Shares (calculated on a Fully-Diluted Basis) (such product, the "Maximum Compelled Sale"). Notwithstanding the foregoing, each Compelled Holder shall be entitled, at its election, to include in the Compelled Sale at least such number of Covered Shares held by such Compelled Holder multiplied by the fraction, the numerator of which shall be the number of Covered Shares proposed to be sold by the Compelling Holder and the denominator of which shall be the total number of Covered Shares held by the Compelling Holder.
(ii) Subject to the last sentence of Section 4(c)(iii), the consideration to be received by the Compelled Holder for Covered Shares sold pursuant to this Section 4 shall be the same consideration per share to be received by the Compelling Holder, and the terms and conditions of such sale by the Compelled Holders shall be the same as those upon which the Compelling Holders sell their Covered Shares.
Notwithstanding anything contained in this Section 4, the Compelling Holders shall have full and absolute discretion to effect or not to effect a sale of Covered Shares pursuant to this Section 4, and there shall be no liability on the part of the Compelling Holder to any Compelled Holder if such sale is not consummated for whatever reason.
(c) Compelled Sale Notice. The Compelling Holder shall cause the terms of the Compelled Sale to be reduced to writing and shall provide written notice (the "Compelled Sale Notice") of such Compelled Sale to the other Shareholders as follows:
(i) The Compelled Sale Notice shall contain written notice of the exercise of the Compelling Holder's rights pursuant to Section 4(a) hereof, setting forth the consideration per share to be paid by the purchaser in such Control Transfer (and in the event the consideration consists in part or in whole of consideration other than cash, a description of the non-cash component of the
consideration, together with the Compelling Holders' reasonable estimate (supported by an independent appraisal or opinion of a nationally recognized investment banking or valuation firm) of the fair market value of such non-cash component), the other terms and conditions of the Compelled Sale, and the number of Covered Shares with respect to which such Compelling Holder are exercising their rights under this Section 4. Seven Business Days before the date the Compelling Holder has advised the Compelled Holders is the expected date of execution of the agreement pursuant to which the Compelled Sale is to be effected, but not sooner than ten Business Days after delivery of the notice, each Compelled Holder shall deliver to the Holding Company, to be held for sale, or return in the event the Compelled Sale is not consummated, upon the terms of this Section 4, the certificate or certificates representing Covered Shares held by such Compelled Holder, Duly Endorsed, together with a limited power-of-attorney authorizing the Compelling Holder or any one of them to take all actions necessary to sell or otherwise dispose of the Covered Shares to be sold pursuant to such Compelled Sale. In the event that a Compelled Holder should fail to deliver such certificate or certificates as aforesaid, the Holding Company shall cause the books and records of the Holding Company to show that such Covered Shares are bound by the provisions of this Section 4(b) and that such Covered Shares shall be Transferred only to the purchaser in such Control Transfer upon surrender for Transfer by the Compelled Holder thereof.
(ii) During the course of negotiating and prior to effecting a Compelled Sale, the Compelling Holder shall consult with such of the Compelled Holders whose representatives are members of the Holding Co. Board of Directors and shall keep them informed with respect to developments relating to the Compelled Sale.
Holder agrees to waive any dissenters, appraisal or similar rights in connection with such merger or share exchange.
(d) Rule 506. If the Holding Company or the Compelling Holder enters into any negotiation or transaction for which Rule 506 under the Securities Act (or any similar rule then in effect) promulgated by the Securities and Exchange Commission or other securities regulatory authority may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the Compelled Holders will, at the request of the Compelling Holder, appoint a purchaser representative (as such term is defined in Rule 501 under the Securities Act) reasonably acceptable to
the Compelling Holder. If any Compelled Holder appoints the purchaser representative designated by the Compelling Holder, the Holding Company will pay the fees of such purchaser representative, but if any Compelled Holder declines to appoint the purchaser representative designated by the Compelling Holders, such Compelled Holder will appoint another purchaser representative (reasonably acceptable to the Compelling Holder), and such Compelled Holder will be responsible for the fees of the purchaser representative so appointed.
(e) Public Offering. In the event the Compelling Holder elects to cause the Holding Company to effect a Public Offering, the Compelling Holder shall have the rights of the Requesting Holder pursuant to section 2(a) of the Registration Rights Agreement, dated as of May 11, 2000, among the Holding Company, the Skylark Holders, Investors, Snyder and certain other holders of Common Shares, as amended, and the additional right to cause the Holding Company to include in such registration statement and issue and sell in the Public Offering pursuant thereto such number of Common Shares as the Compelling Holder shall determine in addition to such number of Common Shares it elects to include therein for its own account.
(f) Appraisal Option.
(i) Notwithstanding the foregoing, within 20 Business Days
after receipt of the Compelled Sale Notice or a notice of Public
Offering, the Skylark Holders and/or Snyder, in the case of a Compelled
Sale Notice by Investors, Investors and/or Snyder, in the case of a
Compelled Sale Notice by the Skylark Holders, and the Skylark Holders
and/or Investors, in the case of a Compelled Sale Notice by Snyder, may
cause the Holding Company to engage a nationally recognized independent
investment banking firm or other nationally recognized appraisal firm
selected by it that is acceptable to the Compelling Holder and the
Compelled Holders (the "Appraisal Firm") to issue a report (the
"Appraisal Report") within thirty days setting forth its determination
of the price at which a Compelled Sale or Public Offering, as the case
may be, of the Holding Company could be effected for cash and the net
before tax proceeds that would be distributable to the holders of the
Holding Company's equity securities from such Compelled Sale or Public
Offering (the "Appraised Value"). Once the Appraised Value has been
determined as contemplated by the preceding sentence of this Section
4(f), a copy thereof shall be delivered to Investors, the Skylark
Holders and Snyder. Within ten days after receipt of the Appraisal
Report, the Compelling Holder shall give notice to the Skylark Holders,
Snyder and/or Investors, as the case may be, and the Holding Company
whether or not it wishes to proceed with the Compelled Sale or Public
Offering. If the Compelling Holder gives notice that it does not wish
to proceed with the Compelled Sale or Public Offering, notice thereof
shall be given to the Shareholders, and the Compelling Holder shall not
be entitled give notice of a new Compelled Sale or Public Offering
pursuant to this Section 4 until at least 180 days after it gave the
notice not to proceed contemplated by this sentence. If the Compelling
Holder gives notice that it wishes to proceed with the Compelled Sale
or Public Offering, subject to paragraph (ii) of this Section 4(f), the
Skylark Holders, Snyder and/or
Investors and/or their respective Related Transferees, as the case may be, shall have the right, for a period of thirty calendar days after receipt of such notice, to give notice to the Compelling Holder of its or their election to purchase (either alone, with the Holding Company, or with other Persons designated by it or them, as the case may be) from the Compelling Holder and its Affiliates and their Related Transferees at a closing within thirty days after the date of such notice all, but not less than all (unless the Compelling Holder shall otherwise consent), of the equity securities of the Holding Company held by the Compelling Holder and its Affiliates and their Related Transferees (the "Appraisal Shares") for a total consideration equal to the net before tax proceeds that would have been distributed to the Compelling Holder and its Affiliates and their Related Transferees in exchange for the Appraisal Shares based upon the Appraisal Report, in which event the Compelling Holder and its Affiliates and their Related Transferees shall be obligated to sell the Appraisal Shares to the purchaser at the closing. In the event the Skylark Holders, Snyder and/or Investors, as the case may be, and their respective Related Transferees do not give notice to purchase, or the purchase is not closed, within the thirty-day period set forth herein, the Compelling Holder shall be entitled to proceed with the Compelled Sale or Public Offering pursuant to this Section 4.
5. The Holding Company's Right to Purchase Covered Shares Upon Involuntary Transfer. In the event of any Involuntary Transfer of Covered Shares, the Holding Company shall have the right (which right shall be assignable as determined by the Holding Co. Board of Directors) to purchase such Covered Shares pursuant to this Section 5. Upon the Involuntary Transfer of any Covered Shares of any Shareholder, such Shareholder shall promptly (but in no event later than two Business Days after such Involuntary Transfer) furnish written notice to the Holding Company indicating that the Involuntary Transfer has occurred, specifying the name of the Person to whom such Covered Shares have been Transferred (the "Involuntary Transferee") and giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer. Upon the receipt of such notice, and for 90 days thereafter (or at any time in the event such notice has not been given), the Holding Company shall have the right to purchase, and the Involuntary Transferee shall have the obligation to sell, all or any portion of the Covered Shares acquired by the Involuntary Transferee for a
purchase price equal to the lesser of (i) the Fair Market Value of such Covered Shares on the date of Transfer to the Involuntary Transferee and (ii) the amount of the indebtedness or other liability that gave rise to the Involuntary Transfer plus the excess, if any, of the cost per share of such Covered Shares over the amount of such indebtedness or other liability that gave rise to the Involuntary Transfer. Notwithstanding the foregoing, the Holding Co. Board of Directors may, for good cause shown by the Shareholder who made the Involuntary Transfer, determine that payment of a purchase price equal to the Fair Market Value of such Covered Shares on the date of Transfer to the Involuntary Transferee, if higher than the price determined pursuant to clause (ii) above, would be appropriate under the circumstances and direct that payment be made in such amount.
6. Pre-emptive Rights. Each Shareholder hereby waives any pre-emptive right it may have to subscribe for or purchase Common Shares issued to Investors pursuant to the Subscription Agreement and with respect to any Common Shares which may be issued by the Holding Company in the future.
7. Legend. Each certificate evidencing Covered Shares and each certificate issued in exchange for or upon the transfer of any Covered Shares (if such shares remain Covered Shares upon such transfer) will be stamped or otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OR WILL BE ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAW, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE ACT AND SUCH BLUE SKY LAWS AND UNTIL THE ISSUER OF SUCH SECURITIES SHALL HAVE RECEIVED THE WRITTEN OPINION OF COUNSEL ACCEPTABLE TO IT TO THAT EFFECT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT DATED AS OF __________ __, 2001, AMONG RED ROBIN GOURMET BURGERS, INC. (THE " HOLDING COMPANY") AND SHAREHOLDERS THEREOF, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, PURSUANT TO THE TERMS OF WHICH THE TRANSFER OF SUCH SECURITIES IS RESTRICTED. SUCH AGREEMENT ALSO PROVIDES FOR VARIOUS OTHER LIMITATIONS AND OBLIGATIONS, AND ALL OF THE TERMS THEREOF ARE INCORPORATED BY REFERENCE HEREIN. A COPY OF SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE HOLDING COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
The legend set forth in the first paragraph above shall be removed from the certificates evidencing any shares which are sold in a Public Sale.
The legend set forth in the second paragraph above shall be removed from the certificates evidencing any shares which cease to be Covered Shares.
8. Transfer or Issuance.
(a) Transfer. Prior to transferring any Covered Shares (other than in a Public Sale, a sale in connection with an initial Public Offering, or a Control Transfer) to any Person, the Transferring Shareholder will cause the prospective transferee to execute and deliver counterparts of this Agreement to the Holding Company.
(b) Issuance. Prior to the issuance of any Common Shares or any right with respect thereto to any Person who is not a party to this Agreement, the Holding Company will cause such Person to execute and deliver counterparts of this Agreement to the Holding Company.
9. Representation and Warranty of Shareholders. Each of the Shareholders hereby represents and warrants (i) that it is not a party to any contract or agreement (other than subscription agreements or agreements with its Affiliates), including any voting trust or other voting arrangement, whereby (A) any of the Covered Shares or any interest therein held by such party on the date hereof is to be offered, sold, assigned, pledged, hypothecated, or otherwise transferred (as used in this Section 9 only, a "transfer") or (B) any Person has been granted any rights inconsistent or in conflict with the provisions of this Agreement and (ii) that no such party has any present intention so to transfer any Covered Shares or any interest therein to any Person other than Permitted Transferees.
10. Miscellaneous.
(b) Information Rights. The Holding Company will furnish to each Shareholder, so long as such Shareholder and its Affiliates holds at least ten percent of
the outstanding shares of any class of Voting Shares, the following information:
(i) within 15 days after the end of each four week accounting period of the
Holding Company, the summary consolidated financial statements of the Holding
Company (certified by the chief financial officer of the Holding Company) for
such period, accompanied by a copy of the report, if any, provided by management
to the Holding Co. Board of Directors, discussing the revenues and operations of
the Holding Company and its Subsidiaries for such period; (ii) within 90 days
after the end of each fiscal year of the Holding Company, its annual audited
consolidated financial statements, accompanied by the report thereon by the
Holding Company's independent accountants, accompanied by a copy of the report,
if any, provided by management to the Holding Co. Board of Directors, discussing
the revenues and operations of the Holding Company and its Subsidiaries for such
year; (iii) promptly after filing, copies of any documents filed by the Holding
Company or its Subsidiaries with the Securities and Exchange Commission; (iv)
promptly after mailing or otherwise sending to its senior lenders, copies of all
materials so mailed or sent thereto; and (v) any other information such Investor
reasonably shall request.
(c) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
(d) Entire Agreement. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
(e) Successors and Assigns.
(i) This Agreement will bind and inure to the benefit of and be enforceable by the Holding Company and its successors and assigns and the Shareholders, any subsequent holders of Covered Shares and the respective heirs, administrators, executors, representatives, successors and permitted assigns of each of them, so long as they hold Covered Shares.
(ii) By subscribing to this Agreement, each Person that becomes a holder of Covered Shares hereby agrees, as of the date such Person becomes a holder of Covered Shares, to be bound by all of the terms and provisions hereof, which provisions shall be binding upon the heirs, executors, administrators, successors and permitted assigns of such Person.
(f) Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement.
(g) Remedies. The Shareholders will be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages will not be an adequate remedy for any breach of the provisions of this Agreement and that any Shareholder may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any violation of the provisions of this Agreement.
(h) Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed effective and given upon actual delivery if presented personally, one Business Day after the date sent if sent by prepaid telegram, overnight courier services, telex or by facsimile transmission, or five Business Days if mailed by certified or registered mail, return receipt requested and postage prepaid, which shall be addressed to the following addresses:
If to the Holding Company:
Red Robin Gourmet Burgers, Inc.
5575 DTC Parkway, Suite 110
Greenwood Village, Colorado 80111
U.S.A.
Attention: Michael J. Snyder
and John W. Grant
Facsimile: 303-846-6073
with a copy to:
O'Melveny & Myers LLP
610 Newport Center Drive, 17/th/ Floor
Newport Beach, California 92660
U.S.A.
Attention: Thomas J. Leary
Facsimile: 949-823-6994
If to Skylark or the Skylark Holders, to:
16F Green-Tower Building
6-14-1 Nishi Shinjuku-ku
Tokyo
JAPAN
Attention: Tasuku Chino
Facsimile: 03 (3349) 8244
with a copy to:
O'Melveny & Myers LLP
610 Newport Center Drive, 17/th/ Floor
Newport Beach, California 92660
U.S.A.
Attention: Thomas J. Leary
Facsimile: 949-823-6994
If to Investors, to:
RR Investors, LLC
RR Investors II, LLC
c/o Quad-C, Inc.
230 East High Street
Charlottesville, Virginia 22902
U.S.A.
Attention: Edward T. Harvey, Jr.
Facsimile: 804-979-1145
with a copy to:
McGuire, Woods, Battle & Boothe LLP
One James Center
Richmond, Virginia 23219
U.S.A.
Attention: Leslie A. Grandis
Facsimile: 804-775-1061
If to Snyder, to:
Michael J. Snyder
Red Robin Gourmet Burgers, Inc.
5575 DTC Parkway, Suite 110
Greenwood Village, Colorado 80111
U.S.A.
Facsimile No.: 303-846-6013
with a copy to:
Powers & Therrien, P.S.
3502 Tilton Drive
Yakima, Washington 98902
U.S.A.
Attention: Keith Therrien
and Leslie Powers
Facsimile No.: 509-453-0745
If to any other Shareholder:
to the address specified in the corporate records of the Holding Company.
or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.
(i) Governing Law. The corporation laws of the State of Delaware will govern all questions concerning the relative rights of the Holding Company and the Shareholders. All other questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance the internal law of the State of Colorado, without giving effect to any choice of law or conflict of law provisions (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado.
(j) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
(k) Termination. The provisions of this Agreement will terminate
automatically and be of no further force and effect upon the earlier to occur of
(i) the consummation of a Qualified Public Offering or (ii) the consummation of
a Control Transfer. Notwithstanding the foregoing, in the event the Holding
Company enters into an agreement to merge with or into any other Person or
adopts any other plan of recapitalization, consolidation, reorganization or
other restructuring transaction as a result of which the Shareholders and their
respective Permitted Transferees shall own less than a majority of the
outstanding voting power of the entity surviving such transaction, this
Agreement shall terminate.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Shareholders Agreement on the day and year first above written.
RED ROBIN GOURMET BURGERS, INC.
By: /s/ Michael J. Snyder --------------------------------------- Michael J. Snyder President |
SKYLARK COMPANY, LTD.
By:_______________________________________
Name:
Title:
KIWAMU YOKOKAWA
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:_______________________________________
Name:
Title:
HIBARI GUAM CORPORATION
By:_______________________________________
Name:
Title:
RR INVESTORS, LLC
By:_______________________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Shareholders Agreement on the day and year first above written.
RED ROBIN GOURMET BURGERS, INC.
By:_______________________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By: /s/Yasutaka Ito --------------------------------------- Name: Yasutaka Ito Title: President |
KIWAMU YOKOKAWA
/s/ Kiwamu Yokokawa ------------------------------------------ Kiwamu Yokokawa |
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By: /s/ Tadashi Yokokawa --------------------------------------- Name: Tadashi Yokokawa Title: President |
HIBARI GUAM CORPORATION
By: /s/ Masataka Yamashita --------------------------------------- Name: MASATAKA YAMASHITA Title: PRESIDENT |
RR INVESTORS, LLC
By:_______________________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Shareholders Agreement on the day and year first above written.
RED ROBIN GOURMET BURGERS, INC.
By:_______________________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By:_______________________________________
Name:
Title:
KIWAMU YOKOKAWA
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:_______________________________________
Name:
Title:
HIBARI GUAM CORPORATION
By:_______________________________________
Name:
Title:
RR INVESTORS, LLC
By: /s/ Edward T. Harvey, Jr. --------------------------------------- Edward T. Harvey, Jr. President |
RR INVESTORS II, LLC
By: /s/ Edward T. Harvey, Jr. ------------------------------------------- Edward T. Harvey, Jr. President |
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
RR INVESTORS II, LLC
By:___________________________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
/s/ Michael J. Snyder ---------------------------------------------- Michael J. Snyder |
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
RR INVESTORS II, LLC
By:___________________________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
/s/ Stephen S. Snyder ---------------------------------------------- Stephen S. Snyder, as trustee of The Stephen S. Snyder Intervivos Trust |
THE LOUISE A. SNYDER
INTERVIVOS TRUST
/s/ Louise A. Snyder ---------------------------------------------- Louise A. Snyder, as trustee of The Louise A. Snyder Intervivos Trust |
MICHAEL E. WOODS
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
RR INVESTORS II, LLC
By:___________________________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
/s/ Michael E. Woods ---------------------------------------------- Michael E. Woods |
ROBERT MERULLO
/s/ Robert Merullo ---------------------------------------------- Robert Merullo |
SHAMROCK INVESTMENT COMPANY
/s/ George D. Hansen ------------------------------------------- Name: Title: |
GEORGE D. HANSEN
/s/ George D. Hansen ------------------------------------------- George D. Hansen |
DEBORAH HANSEN
/s/ Deborah Hansen ------------------------------------------- Deborah Hansen |
BEVERLY C. BROWN
/s/ Beverly C. Brown ------------------------------------------- Beverly C. Brown |
L.V. BROWN, JR.
/s/ George D. Hansen for L.V. Brown, Jr. ------------------------------------------- LV. Brown, Jr. |
GERALD R. KINGEN
Title:
GEORGE D. HANSEN
DEBORAH HANSEN
BEVERLY C. BROWN
L.V. BROWN, JR.
GERALD R. KINGEN
/s/ Gerald R. Kingen ------------------------------------------- Gerald R. Kingen |
Schedule A
Skylark Company, Ltd.
Kiwamu Yokokawa
Gaishoku System Kenkyujo Company, Ltd.
Hibari Guam Corporation
Schedule B
Michael J. Snyder
Stephen S. Snyder Intervivos Trust
Louise A. Snyder Intervivos Trust
Michael E. Woods
Robert Merullo
Shamrock Investment Company, a Washington general partnership
George D. Hansen
Deborah Hansen
Beverly C. Brown
L.V. Brown, Jr.
Schedule C
Gerald R. Kingen
Exhibit 10.8
REGISTRATION RIGHTS AGREEMENT
AMONG
RED ROBIN INTERNATIONAL, INC.
AND
CERTAIN HOLDERS OF ITS COMMON SHARES
Dated as of May 11, 2000
TABLE OF CONTENTS
Page 1. Definitions ..................................................... 1 2. Registration under Securities Act ............................... 3 3. Rule 144 ........................................................ 15 4. Amendments and Waivers .......................................... 15 5. Notices ......................................................... 15 6. Binding Agreement ............................................... 16 7. Nominees for Beneficial Owners .................................. 16 8. Descriptive Headings ............................................ 16 9. Specific Performance ............................................ 16 10. Governing Laws .................................................. 16 11. Third Party Beneficiaries ....................................... 17 12. Counterparts .................................................... 17 13. Severability .................................................... 17 14. Entire Agreement ................................................ 17 |
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made as of May 11, 2000, among RED ROBIN INTERNATIONAL, INC., a Nevada corporation, the Persons, including SKYLARK COMPANY, LTD., a Japan corporation ("Skylark"), listed in Schedule A (collectively the "Skylark Holders"), RR INVESTORS, LLC, a Virginia limited liability company ("Investors I"), RR INVESTORS II, LLC, a Virginia limited liability company ("Investors II, and together with Investors I, "Investors"), each of the Persons listed in Schedule B hereto (the "Other Shareholders") and each of the Persons listed in Schedule C hereto (the "Snyder Group"). The parties hereof, other than the Company, are collectively referred to as the "Shareholders" and individually as a "Shareholder."
The Shareholders are holders of shares of common stock, $0.001 par value (the "Common Shares") of the Company.
In consideration of the parties entering into the agreements and carrying out the transactions herein described, and for other good and valuable consideration, the parties agree as follows:
1. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings:
"Affiliate" of any Person means any other Person directly or indirectly controlling (including all directors and officers of such Person) or controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control" when used with respect to any Person, means (i) with respect to any Person having voting shares or their equivalent and elected directors, managers or Persons performing similar functions, the possession, directly or indirectly, of the power to vote 10% or more of the shares or their equivalent having ordinary voting power of such Person or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting shares or their equivalent, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Commission" means the Securities and Exchange Commission or any other United States agency at the time administering the Securities Act.
"Common Shares" has the meaning set forth in the Recitals.
"Exchange Act" means the Securities Exchange Act of 1934, or any similar United States statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
"Executive" means an individual who is an employee of the Company or any of its subsidiaries.
"Executive Stock Options" means the options to purchase Common Shares awarded to Option Executives pursuant to the Stock Option Plans.
"Initial Public Offering" means the first Public Offering under which Common Shares are sold to the public.
"Long-Form Registration" means registration under the Securities Act (hereinafter defined) on Form S-1 or similar long form adopted by the Commission for registration of securities under the Securities Act.
"Option Executives" shall have the meaning provided in the Stock Option Plans.
"Person" means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof.
"Public Offering" means any primary or secondary public offering of Common Shares pursuant to an effective registration statement under the Securities Act other than a registration statement on a form registering the types of transactions generally eligible for registration on Form S-4 or S-8 or any successor or similar form.
"Public Sale" means any Public Offering or any sale of Common Shares to the public pursuant to Rule 144 effected through a broker or dealer.
"Quad-C Holders" means Investors and any Person who is the transferee of Investors of Registrable Securities in compliance with the Shareholders Agreement other than in a Public Sale.
"Registrable Securities" means any outstanding Common Shares issued to
any Shareholder, including, without limitation, (i) any Common Shares issued
upon the exercise by the Option Executives of Executive Stock Options and (ii)
any securities issued or issuable with respect to any such Common Shares by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been distributed in accordance
with such registration statement, (ii) they have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) they shall have been otherwise transferred and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force or (iv) they shall have
ceased to be outstanding.
"Registration Expenses" means all expenses incident to the Company's performance of or compliance with Section 2, including, without limitation, (i) all registration, filing and NASD fees, (ii) all fees and expenses of complying with securities or blue sky laws, (iii) all word processing, duplicating and printing expenses, (iv) messenger and delivery expenses, (v) the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance; (vi) the reasonable fees and disbursements for one counsel chosen by the holders of a majority of the Registrable Securities initially requesting registration; (vii) premiums and other costs of policies of insurance against liabilities arising out of the public offering of the Registrable Securities being registered (if the Company elects to obtain any such insurance), and (viii) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding underwriting discounts and commissions and transfer taxes, if any.
"Requesting Holder" means, in respect of any registration pursuant to
Section 2 hereof, any holder of Registrable Securities who gives notice to the
Company of its request to include Registrable Securities in such registration.
"Rule 144" means Rule 144 promulgated by the Commission under the Securities Act as such rule may be amended from time to time, or any similar rule then in force.
"Securities Act" means the Securities Act of 1933, or any similar United States statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.
"Shareholders Agreement" means the Shareholders Agreement entered into among the Company and its holders of Common Shares dated as of the date hereof, as amended from time to time.
"Skylark Holders" means the Persons listed in Schedule A hereto.
"Snyder Group" means the Persons listed in Schedule C hereto.
"Stock Option Plans" means the Company's Employee Stock Option Plan, 1990, Employee Stock Option Plan, 1996 and the 2000 Management Performance Common Stock Option Plan pursuant to which options to purchase common equity membership interests in the Company may be awarded to certain employees of the Company and its Subsidiaries and any other stock option plans approved by the Board of Directors of the Company after the date of this Agreement.
2. Registration under Securities Act.
(a) Registration on Request.
Shares and Snyder requests in writing that the Company effect the registration of the Initial Public Offering under the Securities Act of a specified number of the Registrable Securities held by the Snyder Group, and specifying the intended method of disposition thereof, the Company will promptly give written notice of such requested registration to all registered holders of Registrable Securities, and thereupon the Company, in accordance with the provisions of Section 2(c) hereof, will use its best efforts to effect the registration under the Securities Act of:
(A) the Registrable Securities held by the Quad-C Holders or the Skylark Holders, as the case may be, which the Company has been so requested to register for disposition in accordance with the intended method or methods of disposition stated in such request, and
(B) all other Registrable Securities which the Company has been requested to register by the Requesting Holders by written request given to the Company within 20 days after the giving of such written notice by the Company,
Securities that were to have been sold thereunder, other than as a result of any breach by any holder of its obligations thereunder or hereunder.
(b) Incidental Registration.
(c) Registration Procedures. Whenever the holders of Registrable Securities have requested that Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of disposition, and pursuant thereto the Company will as expeditiously as possible:
(ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement continuously effective for a period of either (A) not more than 180 days or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer or (B) such shorter period as will terminate when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;
(iii) furnish to each Requesting Holder such number of conformed copies of such registration statement and of each such amendments and supplements thereto (in each case including all exhibits, but only one copy thereof to each such
Requesting Holder), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents in order to facilitate the disposition of the Registrable Securities owned by such Requesting Holder, as such Requesting Holder may reasonably request;
(v) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities, and cooperate and assist with any filings to be made with the NASD;
(vi) promptly notify each seller of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and at the request of any such seller promptly prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made;
(vii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;
(viii) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement;
(ix) cause all such Registrable Securities covered by such registration statement to be listed on each national securities exchange on which similar securities of the Company are then listed and, if such Registrable Securities are not already so listed, to be listed on the Nasqaq National Market System ("National Market"), use its best efforts to secure designation of all such Registrable Securities covered by such Registration Statement as a "Nasdaq National Market System Security" within the meaning of Rule 11Aa2-1 under the Exchange Act or failing that, to secure Nasdaq Market authorization for such Registrable Securities and. Without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with the NASD;
(x) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a split or a combination of stock or units);
(xi) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information and participate in due diligence sessions reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;
(xii) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any common stock included in such registration statement for sale in any jurisdiction, the Company will use its best efforts promptly to obtain the withdrawal of such order;
(xiii) obtain one or more "cold comfort" letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the Company's independent public accountants in customary form and covering such matters of the type customarily covered by "cold comfort" letters as the holders of a majority of the Registrable Securities being sold reasonably request;
(xiv) provide a legal opinion of the Company's outside counsel, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement
thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature; and
(xv) use its best efforts to cause its officers to support the marketing of the Registrable Securities being sold (including, without limitation, their participation in "road shows" as may be reasonably requested by the underwriters administering the offering and sale of such Registrable Securities) to the extent reasonably possible taking into account such officers' responsibilities to manage the Company's business.
Each holder of Registrable Securities agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in clause (vi) of this Section 2(c), such holder will forthwith discontinue such holder's disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by clause (vi) of this Section 2(c) and, if so directed by the Company, such holder will use its best efforts to deliver to the Company all copies, other than permanent file copies then in such holder's possession, of the prospectus relating to such Registrable Securities current at the time of receipt of such notice.
(d) Underwritten Offerings.
other terms as are generally prevailing in agreements of this type, including, without limitation, indemnities to the effect and to the extent provided in Section 2(f).
(e) Holdback Agreements.
(i) Each holder of Registrable Securities agrees for the benefit of the Company not to effect any sale or distribution of any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act (or any similar provision then in force), during the seven days before and the 180 days after any underwritten registration pursuant to Section 2(a) or 2(b) has become effective, except as part of such underwritten registration.
(ii) The Company agrees (A) without the consent of the managing underwriter not to effect any public sale or distribution of its equity securities or securities convertible into or exchangeable or exercisable for any of such securities during the seven days before and the 180 days after any underwritten registration pursuant to Section 2(a) or 2(b) has become effective, except as part of such underwritten registration and except pursuant to registrations on Form S-4 or S-8, or any successor or similar forms thereto or pursuant to an unregistered offering to employees of the Company or its Subsidiaries pursuant to an employee benefit plan as defined in Rule 405 of Regulation C under the Securities Act, and (B) to use its reasonable best efforts to cause each holder of at least two percent of its Common Shares (on a fully-diluted basis) or any securities convertible into or exchangeable or exercisable for any of its Common Shares, whether outstanding on the date of this Agreement or issued at any time after the date of this Agreement (other than any such securities acquired in a public offering including any distribution to the public pursuant to Rule 144), to agree not to effect any such public sale or distribution of such securities during such period, except as part of any such registration if permitted, unless the underwriters managing such underwritten registration otherwise agree.
(f) Indemnification.
unless in the reasonable judgment of such counsel a conflict of interest may exist between such indemnified party and any other indemnified party in respect of such claim.
(g) Participation in Underwritten Registrations. No Person may participate in any underwritten registration hereunder unless (i) such Person agrees to sell such Person's securities on the basis provided in any underwriting arrangements reasonably approved
3. Rule 144. If the Company shall have filed a registration statement which has become effective pursuant to Section 12 of the Exchange Act or a registration statement which has become effective pursuant to the Securities Act, the Company will use its best efforts to file the reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, will, upon the request of the Quad-C Holders or any other holder of more than five percent of the Registrable Securities make publicly available other information) and will take such further action as the Quad-C Holders or such other holders may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission.
5. Notices. All communications provided for hereunder shall be in writing and shall be delivered personally or by facsimile or telex or sent by first-class mail and addressed to such Shareholder at the address that such Shareholder shall have furnished to the Company in writing, and if to the Company, to:
Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: Michael J. Snyder and John W. Grant Facsimile: 303-846-6073
with a copy to:
O'Melveny & Myers LLP
610 Newport Center Drive, 17/th/ Floor
Newport Beach, California 92660
Attention: Thomas J. Leary
Facsimile: 949-823-6994
6. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the holders of Registrable Securities as such shall be for the benefit of and enforceable by any subsequent holder of any Registrable Securities who acquires such shares in compliance with the applicable provisions of the Shareholders Agreement, subject to the provisions respecting the minimum numbers or percentages of shares of Registrable Securities required in order to be entitled to certain rights, or take certain actions, contained herein.
7. Nominees for Beneficial Owners. In the event that Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its option and by written notice to the Company, be treated as the holder of such Registrable Securities for purposes of any request or other action by any holder or holders of Registrable Securities pursuant to this Agreement (or any determination of any percentage of Registrable Securities held by any holder or holders of Registrable Securities contemplated by this Agreement).
8. Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for reference only and shall not limit or otherwise affect the meaning hereof.
9. Specific Performance. The parties hereto recognize and agree that money damages may be insufficient to compensate the holders of any Registrable Securities for breaches by the Company of the terms hereof and, consequently, that the equitable remedy of specific performance of the terms hereof will be available in the event of any such breach.
10. Governing Laws. All questions concerning the construction, validity and interpretation of this agreement will be construed and enforced in accordance with, and the rights of the parties shall be governed by, the internal laws, and not the law of conflicts, of the State of Colorado.
11. Third Party Beneficiaries. Each of the parties hereto acknowledges and agrees that any Person who is a holder of Registrable Securities as defined herein and who is not a party hereto shall have the rights granted to holders of Registrable securities as intended hereby and for the purposes of exercising such rights shall be a third party beneficiary hereof and entitled to enforce such rights whether or not such Person or such Person's transferor is then a party to this Agreement.
12. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.
13. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the holders of Registrable Securities shall be enforceable to the fullest extent permitted by law.
14. Entire Agreement. This Agreement is intended by the parties hereto as a final expression of their agreement and intended to be a complete and exclusive statement of their agreement and understanding in respect to the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By: /s/ M. J. Snyder ------------------------------- Michael J. Snyder President |
SKYLARK COMPANY, LTD.
By:_______________________________
KIWANU YOKAWA
By:_______________________________
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:_______________________________
HIBARI GUAM
By:_______________________________
RR INVESTORS, LLC
By:_______________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By:______________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By: /s/ T. Chino ------------------------------ Tasuku Chino |
KIWANU YOKAWA
By:______________________________
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:______________________________
HIBARI GUAM
By:______________________________
RR INVESTORS, LLC
By:______________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By:______________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By:______________________________
KIWANU YOKAWA
By:/s/ Kiwanu Yokoawa ------------------------------ |
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:______________________________
HIBARI GUAM
By:______________________________
RR INVESTORS, LLC
By:______________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By:______________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By:_______________________________
KIWANU YOKAWA
By:_______________________________
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:/s/ T. Yokokawa ------------------------------- Tadashi Yokokawa |
HIBARI GUAM
By:_______________________________
RR INVESTORS, LLC
By:_______________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By:_______________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By:_______________________________
KIWANU YOKAWA
By:_______________________________
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:_______________________________
HIBARI GUAM
By:/s/ T. Niibori ------------------------------- Tadashi Niibori |
RR INVESTORS, LLC
By:_______________________________
Edward T. Harvey, Jr.
President
IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By:_______________________________
Michael J. Snyder
President
SKYLARK COMPANY, LTD.
By:_______________________________
KIWANU YOKAWA
By:_______________________________
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:_______________________________
HIBARI GUAM
By:_______________________________
RR INVESTORS, LLC
By: /s/ Edward T. Harvey, Jr. ------------------------------- Edward T. Harvey, Jr. President |
RR INVESTORS II, LLC
By: /s/ Edward T. Harvey, Jr. ------------------------------- Edward T. Harvey, Jr. President |
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
RR INVESTORS II, LLC
By:_______________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
/s/ Michael J. Snyder -------------------------------- Michael J. Snyder |
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
RR INVESTORS II, LLC
By:____________________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
/s/ Stephen S. Snyder --------------------------------------- The Stephen S. Snyder Intervivos Trust, by Stephen S. Snyder, Trustee |
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
RR INVESTORS II, LLC
By:___________________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
/s/ Louise A. Snyder -------------------------------------- The Louise A. Snyder Intervivos Trust, by Louise A. Snyder, Turstee |
MICHAEL E. WOODS
RR INVESTORS II, LLC
By:_______________________________
Edward T. Harvey, Jr.
President
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
THE LOUISE A. SNYDER
INTERVIVOS TRUST
MICHAEL E. WOODS
/s/ Michael E. Woods -------------------------------- Michael E. Woods |
ROBERT MERULLO
/s/ Robert Merullo ---------------------------------- Robert Merullo |
SHAMROCK INVESTMENT COMPANY
GEORGE D. HANSEN
DEBORAH HANSEN
BEVERLY C. BROWN
L.V. BROWN, JR.
GERRY KINGEN
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
/S/ George D. Hansen, C.O.O. ------------------------------------ Shamrock Investment Company |
GEORGE D. HANSEN
DEBORAH HANSEN
BEVERLY C. BROWN
L.V. BROWN, JR.
GERRY KINGEN
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
GEORGE D. HANSEN
/s/ George D. Hansen -------------------------------- George D. Hansen |
DEBORAH HANSEN
BEVERLY C. BROWN
L.V. BROWN, JR.
GERRY KINGEN
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
GEORGE D. HANSEN
DEBORAH HANSEN
/s/ Deborah A. Hansen ------------------------------ Deborah Hansen |
BEVERLY C. BROWN
L.V. BROWN, JR.
GERRY KINGEN
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
GEORGE D. HANSEN
DEBORAH HANSEN
BEVERLY C. BROWN
/s/ Beverly C. Brown ------------------------------ Beverly C. Brown |
L.V. BROWN, JR.
GERRY KINGEN
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
GEORGE D. HANSEN
DEBORAH HANSEN
BEVERLY C. BROWN
L.V. BROWN, JR.
/s/ LV. Brown, Jr. --------------------------------- LV. Brown, Jr. |
GERRY KINGEN
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
GEORGE D. HANSEN
DEBORAH HANSEN
BEVERLY C. BROWN
L.V. BROWN, JR.
GERRY KINGEN
/s/ Gerry Kingen ------------------------------- Gerry Kingen |
Schedule A
Skylark Company, Ltd.
Kiwanu Yokawa
Gaishoku System Kenkyujo Company, Ltd.
Hibari Guam Corporation
Schedule B
Gerald R. Kingen
Schedule C
Michael J. Snyder
Stephen S. Snyder Intervivos Trust
Louise A. Snyder Intervivos Trust
Michael E. Woods
Robert Merullo
Shamrock Investment Company, a Washington general partnership
George D. Hansen
Deborah Hansen
Beverly C. Brown
L. V. Brown, Jr.
Exhibit 10.9
FIRST AMENDMENT
TO
REGISTRATION RIGHTS AGREEMENT
This First Amendment to Registration Rights Agreement (this "Amendment") is entered into as of August 9, 2001, by and among Red Robin Gourmet Burgers, Inc., a Delaware corporation ("RRGB"), Red Robin International, Inc., a Nevada corporation ("RRI"), the Persons, including Skylark Company, Ltd., a Japan corporation ("Skylark"), listed in Schedule A hereto, RR Investors, LLC, a Virginia limited liability company ("Investors I"), RR Investors II, LLC, a Virginia limited liability company ("Investors II"), each of the Persons listed in Schedule B hereto (the "Other Shareholders"), and each of the Persons listed in Schedule C hereto (the "Snyder Group Shareholders"). The parties hereto, other than RRGB, are collectively referred to herein as the "Shareholders" and individually as a "Shareholder."
A. Pursuant to that certain Registration Rights Agreement, dated as of May 11, 2000, by and among RRI and the Shareholders, RRI granted certain registration and other rights with respect to the common stock, $0.001 par value per share, of RRI (the "Common Stock") owned by the Shareholders;
B. On January 23, 2001, RRI, RRGB and Red Robin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of RRGB ("RRMS"), entered into a Merger Agreement (the "Merger Agreement") to provide for a corporate reorganization of RRI whereby RRMS would be merged with and into RRI (the "Merger"), with (a) RRI continuing as the surviving corporation of such merger, and (b) each outstanding share (or any fraction thereof) of the Common Stock being converted in such merger into a like number of shares of the common stock of RRGB, par value $0.001 per share;
C. Concurrently with the consummation of the Merger in accordance with the terms of the Merger Agreement, the parties hereto desire to enter into this Amendment in order to provide that RRGB will replace RRI as a party to the Registration Rights Agreement and will accept and assume all of the rights and obligations of RRI set forth in the Registration Rights Agreement;
NOW, THEREFORE, taking into account the foregoing recitals, and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Joinder. RRGB hereby agrees (i) to replace RRI as a party to the Registration Rights Agreement with the same force and effect as if it had been an original signatory thereto, and (ii) to accept and assume all of the rights and obligations of RRI set forth in the Registration Rights Agreement.
2. Amendment to Registration Rights Agreement. The Registration Rights Agreement is amended by deleting each reference to "Red Robin International, Inc." and inserting "Red Robin Gourmet Burgers, Inc." in its place, and by deleting each reference to "the Company" and inserting "the Holding Company" in its place.
3. Ratification of Registration Rights Agreement.
(a) Except as specifically amended by this Amendment, the Registration Rights Agreement shall remain in full force and effect and the Shareholders hereby reaffirm all of the provisions of the Registration Rights Agreement as amended by this Amendment.
(b) On and after the date hereof, each reference in the Registration Rights Agreement to "this Agreement", "hereunder", "hereof", "herein", or words of similar import referring to the Registration Rights Agreement, and each reference in any other document to the Registration Rights Agreement, "thereunder", "thereof", or words of similar import referring to the Registration Rights Agreement, will mean and be a reference to the Registration Rights Agreement, as amended by this Amendment.
4. Governing Law. The validity, meaning and effect of this Amendment shall be determined in accordance with the laws of the State of Colorado applicable to contracts made and to be performed in that state.
5. Further Assurances. The parties hereto agree to execute such other documents and perform such other acts as may be necessary or desirable to carry out the purposes of this Amendment.
6. Counterparts. This Amendment may be executed in counterparts, each of which when so executed and delivered shall be deemed to be an original for all purposes, but all such counterparts shall constitute but one in the same instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to be duly executed and delivered as of the date set forth above.
RRGB:
RED ROBIN GOURMET BURGERS, INC.,
a Delaware corporation
By: /s/ Michael J. Snyder ----------------------------------- Name: Title |
RRI:
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ Michael J. Snyder ----------------------------------- Name: Title: |
SHAREHOLDERS:
SKYLARK COMPANY, LTD.
By:___________________________________
Name:
Title:
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By:___________________________________
Name:
Title:
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to be duly executed and delivered as of the date set forth above.
RRGB:
RED ROBIN GOURMET BURGERS, INC.,
a Delaware corporation
By:_______________________________
Name:
Title
RRI:
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By:_______________________________
Name:
Title:
SHAREHOLDERS:
SKYLARK COMPANY, LTD.
By: /s/ Yasutaka Ito ------------------------------- Name: Yasutaka Ito Title: President |
GAISHOKU SYSTEM KENKYUJO
COMPANY, LTD.
By: /s/ Tadashi Yokokawa ------------------------------- Name: Tadashi Yokokawa Title: President |
HIBARI GUAM CORPORATION
By: /s/ M. Yamashita ---------------------------------- Name: Masataka Yamashita Title: President |
RR INVESTORS, LLC
By:__________________________________
Edward T. Harvey, Jr.
President
RR INVESTORS II, LLC
By:__________________________________
Edward T. Harvey, Jr.
President
KIWAMU YOKOKAWA
/s/ Kiwamu Yokokawa ------------------------------------- Kiwamu Yokokawa |
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
HIBARI GUAM CORPORATION
By:___________________________________
Name:
Title:
RR INVESTORS, LLC
By:___________________________________
Edward T. Harvey, Jr.
President
RR INVESTORS II, LLC
By:___________________________________
Edward T. Harvey, Jr.
President
KIWAMU YOKOKAWA
MICHAEL J. SNYDER
/s/ Michael J. Snyder -------------------------------------- Michael J. Snyder |
THE STEPHEN SNYDER
INTERVIVOS TRUST
HIBARI GUAM CORPORATION
By:___________________________________________
Name:
Title:
RR INVESTORS, LLC
By:/s/ Edward T. Harvey ------------------------------------------- Edward T. Harvey, Jr. President |
RR INVESTORS II, LLC
By:/s/ Edward T. Harvey ------------------------------------------- Edward T. Harvey, Jr. President |
KIWAMU YOKOKAWA
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
HIBARI GUAM CORPORATION
By:____________________________________
Name:
Title:
RR INVESTORS, LLC
By:____________________________________
Edward T. Harvey, Jr.
President
RR INVESTORS II, LLC
By:____________________________________
Edward T. Harvey, Jr.
President
KIWAMU YOKOKAWA
MICHAEL J. SNYDER
THE STEPHEN SNYDER
INTERVIVOS TRUST
/s/ Stephen S. Snyder --------------------------------------- Stephen S. Snyder, as trustee of the Stephen S. Snyder Intervivos Trust |
THE LOUISE A. SNYDER
INTERVIVOS TRUST
/s/ Louise A. Snyder --------------------------------------------- Louise A. Snyder, as trustee of The Louise A. Snyder Intervivos Trust |
MICHAEL E. WOODS
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
Title:
GEORGE D. HANSEN
DEBORAH HANSEN
THE LOUISE A. SNYDER
INTERVIVOS TRUST
Snyder Intervivos Trust
MICHAEL E. WOODS
/s/ Michael E. Woods --------------------------------------------- Michael E. Woods |
ROBERT MERULLO
/s/ Robert Merullo --------------------------------------------- Robert Merullo |
SHAMROCK INVESTMENT COMPANY
Title:
GEORGE D. HANSEN
DEBORAH HANSEN
THE LOUISE A. SNYDER
INTERVIVOS TRUST
Snyder Intervivos Trust
MICHAEL E. WOODS
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
/s/ George D. Hansen --------------------------------------------- Name: Title: |
GEORGE D. HANSEN
/s/ George D. Hansen --------------------------------------------- George D. Hansen |
DEBORAH HANSEN
/s/ Deborah Hansen --------------------------------------------- Deborah Hansen |
THE LOUISE A. SNYDER
INTERVIVOS TRUST
Snyder Intervivos Trust
MICHAEL E. WOODS
ROBERT MERULLO
SHAMROCK INVESTMENT COMPANY
/s/ George D. Hansen --------------------------------------------- Name: Title: |
GEORGE D. HANSEN
/s/ George D. Hansen --------------------------------------------- George D. Hansen |
DEBORAH HANSEN
/s/ Deborah Hansen --------------------------------------------- Deborah Hansen |
BEVERLY C. BROWN
/s/ Beverly C. Brown --------------------------------------------- Beverly C. Brown |
L.V. BROWN, JR.
/s/ George D. Hansen for L.V. Brown, Jr. --------------------------------------------- LV. Brown, Jr. |
GERALD KINGEN
BEVERLY C. BROWN
L.V. BROWN, JR.
GERALD KINGEN
/s/ Gerald R. Kingen --------------------------------------------- Gerald R. Kingen |
Schedule A Skylark Holders
Skylark Co., Ltd.
Kiwamu Yokokawa
Gaishoku System Kenkyujo Company, Ltd.
Hibari Guam Corporation
Schedule B Other Shareholders
Gerald R. Kingen
Schedule C Snyder Group Shareholders
Michael J. Snyder
Stephen S. Snyder Intervivos Trust
Louise A. Snyder Intervivos Trust
Michael E. Woods
Robert Merullo
Shamrock Investment Company, a Washington general partnership
George D. Hansen
Deborah Hansen
Beverly C. Brown
L.V. Brown, Jr.
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 11th day of May, 2000, by and between RED ROBIN INTERNATIONAL, INC., a Nevada corporation (the "Company"), and MICHAEL J. SNYDER (the "Executive").
The Company has, simultaneously with the execution and delivery of this Agreement entered into (i) an Agreement and Plan of Merger dated as of February 18, 2000 (the "Merger Agreement") pursuant to which it will acquire all of the outstanding common stock of the Snyder Group Company, a Delaware corporation (the "Acquisition") and (ii) a Stock Subscription Agreement dated as of February 18, 2000 (the "Subscription Agreement") pursuant to which it will issue to RR Investors, LLC and RR Investors II, LLC an aggregate of 12,500,000 for an aggregate consideration of $25,000,000 (the "Stock Issuance," and together with the Acquisition, the "Transaction");
The Board of Directors of the Company have determined that it will be in the best interests of the Company and its shareholders to retain the employment of the Executive as the Chairman, Chief Executive Officer and President of the Company after the Transaction and the Executive desires to serve in that capacity; and
The Company and the Executive desire to set forth in a written agreement the terms and conditions under which the Executive will continue to be employed by the Company after the Closing of the Transaction.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and the Executive agrees to, and shall, serve the Company, on the terms and conditions set forth in this Agreement, for the period commencing immediately after the Closing of the Transaction and ending on the fifth anniversary of such date (the "Employment Period"). The Employment Period will be automatically extended at the end of the initial term and on each one year anniversary thereafter for an additional one year unless, not less than 90 days before the end of such term, either the Company or the Executive gives written notice to the other that the Employment Period will not be extended, in which event the Employment Period shall end, and the Executive's employment hereunder shall terminate, upon the expiration of the then-current term.
2. Position and Duties.
(a) During the Employment Period, the Executive shall be the Chairman, Chief Executive Officer and President of the Company with such duties and responsibilities as are assigned to him by the Board of Directors of the Company (the "Board") consistent with his position as Chairman, Chief Executive Officer and President of the Company.
(b) During the Employment Period, and excluding any reasonable periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote all of his skill, knowledge and working time to the business and affairs of the Company and shall perform his services primarily at the Company's headquarters, wherever the Board may from time to time designate them to be, but in any case, within a 50-mile radius of Denver,
Colorado, and to the extent necessary to discharge the responsibilities assigned to the Executive under this Agreement, use the Executive's best efforts to carry out such responsibilities faithfully and efficiently.
3. Compensation.
cost of such flight will be appropriately allocated between the two uses; provided that the stopover by the Executive in cities of residence which are substantially in the line of flight of the business purpose, will not be deemed personal use. Any disagreements on the allocation of flight costs will be reviewed and discussed with the Executive Committee.
4. Termination of Employment.
5. Obligations of the Company Upon Termination.
investment banking or appraisal firm selected by the Company and reasonably satisfactory to the Executive's estate.
6. Confidential Information. The Executive shall not disclose to any person or entity or use, any information not in the public domain, in any form, acquired by the Executive while he was employed or associated with the Company or, if acquired following the termination of such association, such information which, to the Executive's knowledge, has been acquired, directly or indirectly, from any person or entity owing a duty of confidentiality to the Company, relating to the Company or its business. The Executive agrees and acknowledges that all of such information, in any form, and copies and extracts thereof are and shall remain the sole and exclusive property of the Company, and the Executive shall on request return to the Company the originals and all copies of any such information provided to or acquired by the Executive in connection with his association with the Company, and shall return to the Company all files, correspondence and/or other communications received, maintained and/or originated by the Executive during the course of such association.
subject to the non-competition covenants in the Area Development Agreements and Franchise Agreements with the Company) so long as such entity operates only restaurants operated as "Red Robin" restaurants pursuant to franchise agreements with the Company and (ii) so long as such activities do not adversely affect Executive's ability to devote his entire working effort as the Chairman, Chief Executive Officer and President of the Company so long as he is so employed, consulting with and giving advise to entities permitted by clause (i) of this proviso. Territory means North America and the territories of the United States in the Caribbean, including Puerto Rico.
8. No Interference. During the Restrictive Period, the Executive shall not,
without the prior written approval of the Company, directly or indirectly
through any other Person (i) induce or attempt to induce any employee of the
Company at the level of assistant store manager or higher to leave the employ of
the Company, or in any way interfere with the relationship between the Company
and any employee thereof, (ii) hire any Person who was an employee of the
Company at the level of assistant store manager or higher within twelve months
after such Person's employment with the Company was terminated for any reason or
(iii) induce or attempt to induce any supplier or other business relation of the
Company to cease doing business with the Company, or in any way interfere with
the relationship between any such supplier or business relation and the Company.
9. Return of Documents. In the event of the termination of Executive's employment for any reason, Executive shall deliver to the Company all of (i) the property of each of the Company or any of its subsidiaries and (ii) non-personal documents and data of any nature and in whatever medium of the Company or any of its subsidiaries, and he shall not take with him any such property, documents or data or any reproduction thereof, or any documents containing or pertaining to any Confidential Information.
10. Reasonableness of Restrictions. The Executive agrees that the covenants set forth in Sections 6, 7 and 8 are reasonable with respect to their duration, geographical area and scope. In the event that any of the provisions of Sections 6, 7 or 8 relating to the geographic or temporal scope of the covenants contained therein or the nature of the business or activities restricted thereby shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such court deems enforceable, such provision shall be deemed to be replaced herein by the maximum restriction deemed enforceable by such court.
11. Injunctive Relief. The parties hereto agree that the Company would suffer irreparable harm from a breach by the Executive of any of the covenants or agreements contained herein, for which there is no adequate remedy at law. Therefore, in the event of the actual or threatened breach by the Executive of any of the provisions of this Agreement, the Company, or their respective successors or assigns, may, in addition and supplementary to other rights and remedies existing in their favor, apply to any court of law or equity of competent jurisdiction for specific performance, injunctive or other relief in order to enforce compliance with, or prevent any violation of, the provisions hereof. and that, in the event of such a breach or threat thereof, the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited hereby or such other relief as may be required to specifically enforce any of the covenants contained herein.
12. Extension of Restricted Periods. In addition to the remedies the Company may seek and obtain pursuant to this Agreement, the restricted periods set forth herein shall be extended by any and all periods during which the Executive shall be found by a court to have been in violation of the covenants contained herein.
13. Definitions. As used herein, unless the context otherwise requires, the following terms have the following respective meanings:
"Cause" means with respect to the termination by the Company of the Executive as an employee of the Company or a Subsidiary of the Company:
(i) continual or deliberate neglect by the Executive in the performance of his material duties;
(ii) failure by the Executive to devote substantially all of his working time to the business of the Company and its Subsidiaries;
(iii) the Executive's engaging willfully in misconduct in connection with the performance of any of his duties, including, without limitation, the misappropriation of funds or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or its Subsidiaries;
(iv) the Executive's willful failure to follow the lawful directives of the Board of Directors of the Company in any material respect, or violation, in a material respect, of any code or standard of behavior generally applicable to employees of the Company or its Subsidiaries;
(v) the Executive's breach of the material provisions of this Agreement or any other non-competition, non-interference, non-disclosure, confidentiality or other similar agreement executed by the Executive with the Company or any of its Subsidiaries or other active disloyalty to the Company or any of its Subsidiaries (including, without limitation, aiding a competitor or unauthorized disclosure of confidential information); or
(vi) the Executive's engaging in conduct which is reasonably likely to result in material injury to the reputation of the Company or any of its Subsidiaries, including, without limitation, commission of a felony, fraud, embezzlement or other crime involving moral turpitude;
provided that with respect to the events set forth in clauses (i), (ii), (iii) and (iv), the Executive shall have been given written notice of the act, omission or event constituting Cause and shall not have cured such act, omission or event within 30 days after the giving of such notice.
"Disability" means permanent disability or permanent incapacity of the Executive as defined in the Company's disability insurance policy applicable to the Executive, or in the absence of such definition, as determined by the Board of Directors in good faith.
"EBITDA" has the meaning given to such term in Exhibit E.
"Substantial Breach" means with respect to the termination by the Executive of his employment by the Company or a Subsidiary of the Company:
(i) a reduction in the Executive's Annual Base Salary;
(iii) sale of the stock (other than pursuant to a public offering) or assets of the Company resulting in a Person who is not a Shareholder or affiliate or Permitted Transferee (as defined in the Shareholders Agreement among the Company and its Shareholders) of a Shareholder on the date hereof owning more than a majority of the outstanding shares of common stock of the Company and the acquiring Person or the Company does not assume or reaffirm its obligations to the Executive under this Agreement;
14. Choice of Law; Disputes; Resolution.
(a) All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Colorado, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Colorado or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Colorado. Resolution of any and all disputes arising from or in connection with this Agreement, whether based on contract, tort, or otherwise (collectively, "Disputes"), shall be exclusively governed by and settled in accordance with the provisions of this Section.
(b) The parties hereto shall use all reasonable efforts to settle all Disputes without resorting to arbitration. If any Dispute remains unsettled after 30 days' good faith effort to resolve the Dispute, a party hereto may commence proceedings hereunder by delivering a written notice from one to the other such party (the "Demand") providing
reasonable description of the Dispute to the others and expressly requesting arbitration hereunder, which arbitration shall be final, conclusive and binding upon the parties, their successors and assigns.
(c) The arbitration shall be conducted in Denver, Colorado by three arbitrators acting by majority vote (the "Panel") appointed pursuant to the commercial arbitration rules of the American Arbitration Association, as amended from time to time (the "AAA Rules"). If an arbitrator so selected becomes unable to serve, his or her successors shall be similarly selected or appointed. The arbitration shall be conducted pursuant to the AAA Rules. Notwithstanding the foregoing: (i) each party shall provide to the other, reasonably in advance of any hearing, copies of all documents which a party intends to present in such hearing; and (ii) each party shall be allowed to conduct reasonable discovery through written requests for information, document requests, requests for stipulation of fact and depositions, the nature and extent of which discovery shall be determined by the parties; provided that if the parties cannot agree on the terms of such discovery, the nature and extent thereof shall be determined by the Panel which shall taken into account the needs of the parties and the desirability of making discovery expeditious and cost effective. The award shall be in writing and shall specify the factual and legal basis for the award. The parties hereto agree that monetary damages may be inadequate and that any party by whom this Agreement is enforceable shall be entitled to seek specific performance of the arbitrators' decision from a court of competent jurisdiction, in addition to any other appropriate relief or remedy; provided that no claimed or actual breach of any provision of this Agreement that survives the execution hereof shall be cause for rescission of this Agreement, the only remedies shall be claims for damages that were approximately caused by the breach, or specific performance. Any arbitration award shall be binding and enforceable against the parties hereto and judgment may be entered thereon in any court of competent jurisdiction.
15. Expenses. Each party will pay their own costs and expenses (including court costs, fees of arbitration proceedings, and reasonable attorneys' fees) incurred as a result of any claim, action or proceeding arising out of, or challenging the validity or enforceability of, this Agreement or any provision hereof.
16. Taxes. The Company may withhold from any payments made under this Agreement all federal, state, city or other applicable taxes as shall be required pursuant to any law, governmental regulation or ruling.
17. Entire Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith (including the Non-Interference, Non-Disclosure and Non-Competition Agreement among the Company, the Executive and others) embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
18. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Board of Directors of the Company (or a person expressly authorized thereby) and the Executive, and no course of conduct or failure or delay in
enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
19. Miscellaneous.
(i) If to the Company, to:
Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: Board of Directors and John W. Grant Facsimile No.: 303-846-6073
with a copy to:
O'Melveny & Myers LLP 610 Newport Center Drive, 17th Floor Newport Beach, California 92660 Attention: Thomas J. Leary Facsimile No.: 949-823-6994
(ii) If to the Executive, to:
Michael J. Snyder Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Facsimile No.: 303-846-6013
with a copy to:
Powers & Therrien, P.S.
3502 Tilton Drive
Yakima, Washington 98902
Attention: Keith Therrien
and Leslie Powers
Facsimile No.: 509-453-0745
If given personally or by documented courier or delivery service, or transmitted by facsimile, a notice shall be deemed to have been given when it is received. If given by mail, it shall be deemed to have been given on the third business day following the day on which it was posted.
20. Effectiveness. This Agreement shall become effective upon consummation of the Transaction. If the Merger Agreement or the Subscription Agreement is terminated in accordance with its terms, this Agreement shall automatically be deemed to have been terminated and shall thereafter be of no force or effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By: /s/ James P. McCloskey ------------------------------------- James P. McCloskey Chief Financial Officer |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
/s/ Michael J. Snyder ------------------------------------- Michael J. Snyder |
The following exhibits and schedules to the Employment Agreement have been omitted and shall be furnished supplementally to the Commission upon request:
Exhibit A - Authorization Limits Exhibit B - Annual Incentive Compensation Plan Exhibit 1-Red Robin International and Subsidiaries Annual Incentive Compensation Plan for Key Management Management Group Participants Exhibit C - Option Grant Letter (400,000 shares) Exhibit D - Option Grant Letter (1,100,000 shares) Schedule 1 - Restaurants That May Be Closed |
Exhibit 10.11
RED ROBIN INTERNATIONAL / MIKE WOODS
EMPLOYMENT AGREEMENT
Position: Vice President of Franchise Development Responsible for: 1. Assisting existing franchisees in developing additional sites. 2. Developing new franchisees in both domestic and international markets. 3. Adding value to franchisor/franchisee relationship by providing tools and techniques to enable both parties to improve the profitability of their operations. Salary: $125,000 per year, paid monthly, and subject to annual performance adjustments. Bonus: 1. For the calendar year 1997, a bonus will be earned at the rate of 5% of Initial Franchise Fees, as paid. This bonus will be paid within 60 days of receipt of Initial Franchise Fees throughout the year. 2. In addition to the bonus earned in #1 for 1997, a discretionary bonus will be paid as determined by the President. Total potential will be $15,000. This bonus will be paid by February 15, 1998. 3. 1998 and beyond - bonus plan will be negotiated. Stock Options: 125,000 incentive Stock Options will be granted at an exercise price of $2.00 per share and shall expire ten (10) years from the date the option is granted, or ninety (90) days from termination, whichever is earlier. Stock Option available for exercising shall be subject to a four-year vesting period, as defined in the plan. -1- |
Other Provisions: In the event that at least 50% of the Company's shares outstanding are transferred to new owners due to merger, sale or other consolidation, all vesting shall immediately accelerate to 100%. Expenses: All reasonable business expenses provided for or reimbursed by RRI. Severance: Year 1: If terminated without cause prior to the end of the first year, a six-month severance at the current base salary will be paid monthly. Year 2 and beyond: If terminated without cause after the first year, severance at the then current base salary will be paid monthly for a term of one year. Benefits: Participates in all benefit plans available to senior executives of RRI. Other: RRI understands that Woods has an employment arrangement with The Snyder Group Co. |
Signed and dated this 7 day of January 1997.
/s/ Mike Snyder ---------------------------- Mike Snyder President Red Robin International /s/ Mike Woods ---------------------------- Mike Woods |
EXHIBIT 10.12
NON-INTERFERENCE, NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
AMONG
RR INVESTORS, LLC,
RR INVESTORS II, LLC
RED ROBIN INTERNATIONAL, INC.
AND
MICHAEL J. SNYDER
TABLE OF CONTENTS
Page 1. Confidentiality and Non-Competition.....................................1 2. Covenant Not to Compete.................................................1 3. Nondisclosure of Confidential Information...............................2 4. No Interference.........................................................2 6. Injunctive Relief.......................................................2 7. Extension of Restricted Periods.........................................3 8. Successors; Binding Agreement...........................................3 9. Waiver and Modification.................................................3 10. Severability............................................................3 11. Governing Law; Submission to Jurisdiction...............................4 12. Notices.................................................................4 13. Captions and Section Headings...........................................5 14. Entire Agreement........................................................5 15. Counterparts............................................................5 16. No Strict Construction..................................................5 |
NON-INTERFERENCE, NON-DISCLOSURE AND
NON-COMPETITION AGREEMENT
THIS NON-INTERFERENCE, NON-DISCLOSURE AND NON-COMPETITION AGREEMENT is made and entered into this 11th day of May, 2000, among RR INVESTORS, LLC, a Virginia limited liability company ("Investors I"), RR INVESTORS II, LLC, a Virginia limited liability company ("Investors II, and together with Investors I, the "Buyer"), RED ROBIN INTERNATIONAL, INC., a Nevada corporation (the "Company") and MICHAEL J. SNYDER (the "Executive").
Buyer has agreed to acquire (the "Acquisition") newly issued shares of common stock of the Company pursuant to a certain Stock Subscription Agreement dated as of February 18, 2000, among Buyer and the Company (the "Subscription Agreement"). The execution and delivery of this Non-Interference, Non-Disclosure and Non-Competition Agreement is a condition to the closing of the Acquisition, and the Executive acknowledges that Buyer and its investors are relying on the covenants of the Executive contained herein in proceeding with the Acquisition.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
1. Confidentiality and Non-Competition. The Executive acknowledges that (i) the agreements and covenants contained herein are essential to protect the Company's business and assets and (ii) by virtue of his past association with the Company, the Executive has obtained such knowledge, know-how, training and experience and there is a substantial probability that such knowledge, know-how, training and experience could be used to the substantial advantage of a competitor of the Company and to the Company's substantial detriment. The Executive also acknowledges that Buyer has entered into the Subscription Agreement and will consummate the purchase contemplated thereby, and that investors have invested in Buyer, in reliance, in part, on the covenants made by the Executive herein.
shall not prohibit the Executive from (i) owning a passive equity interest in an entity (including Mach Robin LLC, a Washington limited liability company, subject to the non-competition covenants in the Area Development Agreements and Franchise Agreements with the Company) so long as such entity operates only restaurants operated as "Red Robin" restaurants pursuant to franchise agreements with the Company and (ii) so long as such activities do not adversely affect Executive's ability to devote his entire working effort as the Chairman, Chief Executive Officer and President of the Company so long as he is so employed, consulting with and giving advise to entities permitted by clause (i) of this proviso. Territory means North America and the territories of the United States in the Caribbean, including Puerto Rico.
3. Nondisclosure of Confidential Information. The Executive shall not disclose to any person or entity or use, any information not in the public domain, in any form, acquired by the Executive while he was employed or associated with the Company or, if acquired following the termination of such association, such information which, to the Executive's knowledge, has been acquired, directly or indirectly, from any person or entity owing a duty of confidentiality to the Company, relating to the Company or its business. The Executive agrees and acknowledges that all of such information, in any form, and copies and extracts thereof are and shall remain the sole and exclusive property of the Company, and the Executive shall on request return to the Company the originals and all copies of any such information provided to or acquired by the Executive in connection with his association with the Company, and shall return to the Company all files, correspondence and/or other communications received, maintained and/or originated by the Executive during the course of such association.
4. No Interference. During the Restrictive Period, the Executive shall not, without the prior written approval of Buyer, directly or indirectly through any other Person (i) induce or attempt to induce any employee of the Company at the level of assistant store manager or higher to leave the employ of the Company, or in any way interfere with the relationship between the Company and any employee thereof, (ii) hire any Person who was an employee of the Company at the level of assistant store manager or higher within twelve months after such Person's employment with the Company was terminated for any reason or (iii) induce or attempt to induce any supplier or other business relation of the Company to cease doing business with the Company, or in any way interfere with the relationship between any such supplier or business relation and the Company.
5. Reasonableness of Restrictions. The Executive agrees that the covenants set forth in Sections 2, 3 and 4 are reasonable with respect to their duration, geographical area and scope. In the event that any of the provisions of Sections 2, 3 or 4 relating to the geographic or temporal scope of the covenants contained therein or the nature of the business or activities restricted thereby shall be declared by a court of competent jurisdiction or arbitral panel to exceed the maximum restrictiveness such court or arbitral panel deems enforceable, such provision shall be deemed to be replaced herein by the maximum restriction deemed enforceable by such court or arbitral panel.
6. Injunctive Relief. The parties hereto agree that Buyer and the Company would suffer irreparable harm from a breach by the Executive of any of the covenants or agreements
contained herein, for which there is no adequate remedy at law. Therefore, in the event of the actual or threatened breach by the Executive of any of the provisions of this Agreement, Buyer or the Company, or their respective successors or assigns, may, in addition and supplementary to other rights and remedies existing in their favor, apply to any court of law or equity of competent jurisdiction for specific performance, injunctive or other relief in order to enforce compliance with, or prevent any violation of, the provisions hereof, and that, in the event of such a breach or threat thereof, Buyer and the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited hereby or such other relief as may be required to specifically enforce any of the covenants contained herein.
7. Extension of Restricted Periods. In addition to the remedies Buyer and the Company may seek and obtain pursuant to this Agreement, the restricted periods set forth herein shall be extended by any and all periods during which the Executive shall be found by a court to have been in violation of the covenants contained herein.
8. Successors; Binding Agreement. This Agreement shall inure to the benefit of Buyer, the Company and their Affiliates, successors and assigns, and shall be binding upon the Executive and his legal representatives and assigns. Buyer and the Company may assign or transfer their rights hereunder to any of their Affiliates or to a successor entity in the event of merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company or of the Business or a part thereof.
10. Severability. Whenever possible each provision and term of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or term of this Agreement shall be held to be prohibited by or wholly invalid under such applicable law, then (i) such provision or term shall be ineffective only to the extent of such provision or invalidity, without invalidating or affecting in any manner whatsoever the remainder of such provision or term or the remaining provisions or terms of this Agreement and (ii) the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.
11. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAW THEREOF.
(b) EACH OF THE PARTIES HERETO CONSENTS AND AGREES TO THE JURISDICTION OF ANY PROVINCIAL OR FEDERAL COURT SITTING IN THE CITY OR COUNTY OF DENVER, COLORADO, AND WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN.
12. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed effective and given upon actual delivery if presented personally, one business day after the date sent if sent by prepaid telegram, overnight courier service, telex, or by facsimile transmission or five business days after the date sent if sent by certified or registered mail, postage prepaid, return receipt requested, which shall be addressed:
In the case of the Company, to:
Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: John W. Grant Facsimile No.: 303-846-6073
with a copy to:
O'Melveny & Myers LLP 610 Newport Center Drive, 17th Floor Newport Beach, California 92660 Attention: Gary J. Singer Facsimile No.: 949-823-6994
In the case of Buyer, to:
RR Investors, LLC.
RR Investors II, LLC
c/o Quad-C, Inc.
230 East High Street
Charlottesville, Virginia 22902
Attention: Edward T. Harvey, Jr.
Telecopier: (804-979-1145
and to:
McGuire, Woods, Battle & Boothe LLP
One James Center
Richmond, Virginia 23219
Attention: Leslie A. Grandis
Telecopier: 804-775-1061
In the case of the Executive:
Michael J. Snyder
Red Robin International, Inc.
5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
Facsimile No.: 303-846-6013
with a copy to:
Powers & Therrien, P.S.
3502 Tilton Drive
Yakima, Washington 98902
Attention: Keith Therrien
and Leslie Powers
Facsimile No.: 509-453-0745
or, in each case, to such other address as may be designated in writing by any such party.
13. Captions and Section Headings. Captions and section headings herein are for convenience only, are not a part hereof and shall not be used in construing this Agreement.
14. Entire Agreement. This Agreement, constitutes the entire understanding and agreement of the parties hereto regarding the subject matter hereof.
15. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
16. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
RR INVESTORS, LLC
By its manager
Quad-C Management, Inc.
By: /s/ Edward T. Harvey, Jr. -------------------------------- Edward T. Harvey, Jr. Vice President |
RR INVESTORS II, LLC
By its manager
Quad-C Management, Inc.
By: /s/ Edward T. Harvey, Jr. -------------------------------- Edward T. Harvey, Jr. Vice President |
RED ROBIN INTERNATIONAL, INC.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
RR INVESTORS, LLC
By its manager
Quad-C Management, Inc.
Vice President
RR INVESTORS II, LLC
By its manager
Quad-C Management, Inc.
Vice President
RED ROBIN INTERNATIONAL, INC.
By: /s/James P.McCloskey -------------------------------- James P.McCloskey Chief Financial Officer |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
RR INVESTORS, LLC
By its manager
Quad-C Management, Inc.
Vice President
RR INVESTORS II, LLC
By its manager
Quad-C Management, Inc.
Vice President
RED ROBIN INTERNATIONAL, INC.
/s/ Michael J. Snyder ------------------------------------ Michael J. Snyder |
EXHIBIT 10.13
CONSULTING SERVICES AGREEMENT
This Agreement is made as of May 11, 2000, between RED ROBIN INTERNATIONAL, INC., a Nevada corporation (the "Company") and QUAD-C MANAGEMENT, INC., a Delaware corporation (the "Consultant").
RECITALS
A. The Company is engaged in the business of the operation and franchising of the "Red Robin" casual restaurant dining business (the "Business").
B. Contemporaneously with the execution hereof investment funds and Affiliates of Consultant have acquired shares of common stock ("Common Shares") of the Company and have entered into a Shareholders Agreement dated as of the date hereof with the Company (the "Shareholders Agreement"). Capitalized terms used, but not defined, herein have the meaning given to such terms in the Shareholders Agreement.
C. Consultant has expertise in the management and operation of businesses.
NOW, THEREFORE, in consideration of the agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
(i) support, negotiation and analysis of financing alternatives, including, without limitation, in connection with acquisitions, capital expenditures and refinancing of existing indebtedness;
(ii) identification, support, negotiation and analysis of acquisitions and dispositions;
(iii) finance functions, including assistance in the preparation of financial projections, and monitoring of compliance with financing agreements;
(iv) strategic planning functions, including evaluating major strategic alternatives; and
(v) providing persons to serve as directors of the Company and its subsidiaries.
(a) During the term of this Agreement, subject to the provisions of the Company's senior credit facility, the Company shall pay Consultant an aggregate of $200,000.00 per year (the "Consulting Services Fee"), payable in equal quarterly installments in arrears on the last business day of each quarter, prorated on a daily basis for any partial calendar year during the term of this Agreement. The Consulting Services Fee may, in the sole discretion of a majority of the members of the Company's Board of Directors who are not affiliated with Consultant, be increased but may not be decreased without the prior written consent of Consultant. If any employee of Consultant shall be elected to serve on the Board of Directors of the Company (a "Designated Director"), in consideration of the Consulting Services Fee being paid to Consultant, Consultant shall cause such Designated Director to waive any and all compensation, including without limitation, fees, stock options, equity participation and other incentives, to which such director would otherwise be entitled as a director for any period for which the Consulting Services Fee or any installment thereof is paid and for which such Designated Director continues to be employed by Consultant.
(b) The Company shall also reimburse Consultant for all reasonable out-of-pocket expenses incurred by Consultant in the performance of services hereunder, including, without limitation, any reasonable fees and expenses of legal, accounting or other professional advisors to Consultant in connection with the services provided hereunder. Such expenses shall be reimbursed promptly upon receipt by the Company, as the case may be, of expense statements or other supporting documentation.
(c) Nothing herein shall prevent Consultant from receiving from the Company a transaction fee in connection with the consummation by the Company or any of its subsidiaries of (i) an acquisition of an additional business (ii) a divestiture and/or (iii) a financing or refinancing, in each case, in such amount as shall be determined by a majority of the members of the Company's Board of Directors who are not affiliated with Consultant.
(a) The Company agrees that it shall indemnify, defend and hold harmless Consultant, its successors and assigns and its directors, officers, shareholders, employees, agents, advisors, representatives and controlling persons (within the meaning of the Securities Act of 1933, as amended) and their respective successors and assigns (collectively, "Indemnitees") from and against any and all claims, obligations, liabilities, causes of action, actions, suits, proceedings, investigations, judgments, decrees, losses, damages, fees, costs and expenses (including without limitation interest, penalties and fees and disbursements of attorneys, accountants, investment bankers and other professional advisors) (collectively, "Obligations"), whether incurred with respect to third parties or otherwise, in any way resulting from, arising out of or in connection with, based upon or relating to, the performance of the services hereunder, except to the extent that any such Obligation is found in a final judgment by a court having jurisdiction to have resulted from the gross negligence, willful misconduct or bad faith of an Indemnitee.
(b) The Company hereby agrees to advance costs and expenses, including attorneys' fees, incurred by Consultant (acting on its own behalf or, if requested by any such Indemnitee other than itself, on behalf of such Indemnitee) or any Indemnitee in defending any claim relating to any Obligation in advance of the final disposition of such claim within 30 days of receipt from Consultant of (i) a notice setting forth the amount of such costs and expenses and (ii) an undertaking by or on behalf of Consultant or such Indemnitee to repay amounts so advanced if it shall ultimately be determined that Consultant or such Indemnitee is not entitled to be indemnified by the Company as authorized by this Agreement.
(c) The foregoing right to indemnity shall be in addition to any rights that any Indemnitee may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of the engagement. The Company hereby consents to personal jurisdiction and to service and venue in any court in which any claim which is subject to this Agreement is brought against any Indemnitee.
If to the Company, to:
Red Robin International, Inc.
5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
Attention: Michael J. Snyder
and John W. Grant
with a copy to:
O'Melveny & Myers LLP
610 Newport Center Drive, 17th Floor
Newport Beach, California 92660
Attention: Thomas J. Leary
If to Consultant, to:
Quad-C, Inc.
230 East High Street
Charlottesville, Virginia 22902
Attention: Edward T. Harvey, Jr.
with a copy to:
McGuire, Woods, Battle & Boothe LLP
One James Center
Richmond, Virginia 23219
Attention: Leslie A. Grandis
The date of delivery, or the date of mailing, of any such notice shall be deemed to be the date on which the same was given. Any of the parties may change its address for the purpose of notice by giving like notice in accordance with the provisions of this Section.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF the parties have entered into this Agreement as of the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
By: /s/Michael J. Snyder ----------------------------------- Name: Michael J. Snyder Title: President |
QUAD-C MANAGEMENT, INC.
Title: Vice President
IN WITNESS WHEREOF the parties have entered into this Agreement as of the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
QUAD-C MANAGEMENT, INC.
By: /s/Edward T. Harvey, Jr. ----------------------------------- Name: Edward T. Harvey, Jr. Title: Vice President |
EXHIBIT 10.14
ESCROW AGREEMENT
This Escrow Agreement (this "Agreement") is entered into as of May 11, 2000, by and among Red Robin International, Inc., a Nevada corporation ("Buyer"), Red Robin Holding Co., Inc., a direct wholly owned subsidiary of Buyer incorporated under the laws of Nevada ("Merger Sub"), the stockholders of The Snyder Group Company, a Delaware corporation (the "Company") listed on the attached Schedule I (the "Stockholders") and Harris Trust Company of California as Escrow Agent (the "Escrow Agent").
BACKGROUND
A. The respective Boards of Directors of Buyer and the Company and the Stockholders have approved the merger of the Company with and into Merger Sub (the "Merger"), upon the terms and subject to the conditions set forth in an Agreement and Plan of Merger (the "Merger Agreement").
B. Concurrently with the execution of the Merger Agreement and as an inducement to Buyer to enter into the Merger Agreement, Buyer, Merger Sub, and the Stockholders desire to enter into this Agreement as security for the accurateness and completeness of the representations, warranties, covenants, agreements and indemnities made by the Company and the Stockholders in the Merger Agreement and to satisfy any adjustments to the Stock Merger Consideration pursuant to Section 2.9 of the Merger Agreement. Unless otherwise defined in this Agreement, capitalized words will have the meanings ascribed to them in the Merger Agreement.
AGREEMENT
In consideration of the mutual promises contained herein and for other good and valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound, the parties agree as follows:
Agent by any of the Stockholders in exchange for the release of Buyer Common Stock shall constitute the escrow assets (the "Escrow Assets"). At any time during which the Escrow Agent holds any Buyer Common Stock of any of the Stockholders, each such Stockholder shall have the option, upon notice to the Escrow Agent and Buyer 3 days prior to the delivery of cash to the Escrow Agent, to deposit cash with the Escrow Agent in exchange for all or a part of such Stockholder's Buyer Common Stock, at which time the Escrow Agent shall release Buyer Common Stock to such Stockholder. For purposes of determining the number of shares of Buyer Common Stock to be released to any Stockholder that deposits cash with the Escrow Agent in exchange for the release of all or a part of such Stockholder's Buyer Common Stock, the value of each share of Buyer Common Stock shall be $2.00, subject to adjustment pursuant to Section 7. Any cash received by the Escrow Agent for release of all or a part of such Stockholder's Buyer Common Stock shall become a part of the Escrow Assets.
(a) If the Escrow Agent receives written instructions from the Stockholder Agent to release Escrow Assets to Buyer with a value equal to a portion or all of the amount of any reduction in the Merger Consideration determined in accordance with Section 2.9 of the Merger Agreement, the Escrow Agent shall immediately disburse Escrow Assets to Buyer in the amount specified in the Stockholder Agent's written instructions.
(b) If the Escrow Agent receives written instructions from Buyer (i) setting forth the amount of any reduction in the Merger Consideration finally determined in accordance with Section 2.9 of the Merger Agreement, (ii) stating that Buyer has not received payment from the Stockholders of the amount of such reduction within three days of the date of final determination and (iii) instructing the Escrow Agent to disburse Escrow Assets to Buyer with a value equal to any portion or all of the amount of such reduction, the Escrow Agent shall immediately disburse Escrow Assets to Buyer in the amount specified in Buyer's written instructions.
(c) If at the time of any disbursement pursuant to this Section 4, the Escrow Assets are comprised of both cash and Buyer Common Stock, Buyer shall instruct the Escrow Agent to make such disbursement from either the cash, Buyer Common Stock, or any combination of cash and Buyer Common Stock.
(d) The Escrow Agent shall have no duty or obligation to verify that the amount specified in any written instructions delivered to the Escrow Agent pursuant to Section 4(a) or 4(b) was determined in accordance with Section 2.9 of the Merger Agreement.
(a) On the earlier of (i) eighteen months following the Closing Date
or (ii) a date certified to the Escrow Agent by Buyer that is 60 days
after Buyer's auditors have delivered a signed audit report with
respect to the Company's fiscal year 2000 (the "First Stockholder
Release Date"), the Escrow Agent shall disburse to each Stockholder
40% of the balance of the Escrow Assets that are owned by each such
Stockholder as of the First Stockholder Release Date, unless the
Escrow Agent and the Stockholder Agent have received one or more Claim
Notices from any Buyer Indemnified Party setting forth, in reasonable
detail, (i) the amount of any Covered Liabilities due to such Buyer
Indemnified Party from the Stockholders under Section 9.2(a) of the
Merger Agreement, and (ii) a description of the factual basis therefor
(a "Company Indemnity Claim"). With respect to each Stockholder, if
the Pro Rata Percentage (as defined below) obligation of such
Stockholder for the aggregate amount of any Company Indemnity Claim(s)
set forth in Claim Notice(s) as of the First Stockholder Release Date
is less than 40% of the balance of the Escrow Assets owned by such
Stockholder as of such date, the Escrow Agent shall pay to such
Stockholder the amount of the difference between such Stockholder's
Pro Rata Percentage obligation for the aggregate amount of such
Company Indemnity Claim(s) and 40% of the balance of the Escrow Assets
owned by such Stockholder as of the First Stockholder Release Date,
and the Escrow Agent shall retain the amount of such Company Indemnity
Claim(s) as part of the Escrow Assets to be held by the Escrow Agent
pursuant to this Escrow Agreement. The amount retained by the Escrow
Agent in connection with such Company Indemnity Claim(s), if any,
shall be the "Retained Amount". Notwithstanding the foregoing, if the
Escrow Agent and any of the Stockholders have received one or more
Claim Notices from any Buyer Indemnified Party setting forth, in
reasonable detail, (i) the amount of any Covered Liabilities due to
such Buyer Indemnified Party from such Stockholder under Section
9.2(b) of the Merger Agreement, and (ii) a description of the factual
basis therefor (a "Stockholder Indemnity Claim"), then any
disbursement by the Escrow Agent to such Stockholder pursuant to this
Section 5(a) shall be reduced by the aggregate amount of such
Stockholder Indemnity Claim(s) and such amount shall be retained by
the Escrow Agent as part of the Retained Amount.
(b) On the second anniversary of the Closing Date, the Escrow Agent shall disburse to each Stockholder 50% of the balance of the Escrow Assets that are owned by each such Stockholder as of such date, unless the Escrow Agent and the Stockholder Agent have received one or more Claim Notices from any Buyer Indemnified Party setting forth, in reasonable detail, a Company Indemnity Claim. With respect to each Stockholder, if the Pro Rata Percentage obligation of
such Stockholder for the aggregate amount of any Company Indemnity
Claim(s) set forth in Claim Notice(s) at the second anniversary of the
Closing Date is less than 50% of the balance of the Escrow Assets
owned by such Stockholder as of such date, the Escrow Agent shall pay
to such Stockholder the amount of the difference between such
Stockholder's Pro Rata Percentage obligation for the aggregate amount
of such Company Indemnity Claim(s) and 50% of the balance of the
Escrow Assets owned by such Stockholder as of such date, and the
Escrow Agent shall retain the amount of such Company Indemnity
Claim(s) as part of the Escrow Assets to be held by the Escrow Agent
pursuant to this Escrow Agreement. The amount retained by the Escrow
Agent in connection with such Company Indemnity Claim(s), if any,
shall be the "Retained Amount". Notwithstanding the foregoing, if the
Escrow Agent and any of the Stockholders have received one or more
Claim Notices from any Buyer Indemnified Party setting forth, in
reasonable detail, a Stockholder Indemnity Claim, then any
disbursement by the Escrow Agent to such Stockholder pursuant to this
Section 5(b) shall be reduced by the aggregate amount of such
Stockholder Indemnity Claim(s) and such amount shall be retained by
the Escrow Agent as part of the Retained Amount.
(c) On the earlier of (i) the third anniversary of the Closing Date or
(ii) the closing of an initial public offering of Buyer's capital
stock or the sale of 100% of Buyer's capital stock or substantially
all of the assets of Buyer (written notification of the date of any
such closing to be delivered to the Escrow Agent by Buyer) (the "Final
Stockholder Release Date"), the Escrow Agent shall disburse to each
Stockholder the remaining balance of the Escrow Assets that are owned
by each such Stockholder as of the Final Release Date, unless the
Escrow Agent and the Stockholder Agent have received one or more Claim
Notices from any Buyer Indemnified Party setting forth a Company
Indemnity Claim. With respect to each Stockholder, if the Pro Rata
Percentage obligation of such Stockholder for the aggregate amount of
any Company Indemnity Claim(s) set forth in such Claim Notice(s) as of
the Final Stockholder Release Date is less than the balance of the
Escrow Assets owned by such Stockholder as of the Final Stockholder
Release Date, the Escrow Agent shall pay to such Stockholder the
amount of the difference between such Stockholder's Pro Rata
Percentage obligation for the aggregate amount of such Company
Indemnity Claim(s) and the balance of the Escrow Assets owned by such
Stockholder as of the Final Stockholder Release Date, and the Escrow
Agent shall retain the amount of such Company Indemnity Claim(s) as
part of the Escrow Assets to be held by the Escrow Agent pursuant to
this Escrow Agreement. The amount retained by the Escrow Agent in
connection with such Company Indemnity Claim(s), if any, shall be the
"Retained Amount". Notwithstanding the foregoing, if the Escrow Agent
and any of the Stockholders have received one or more Claim Notices
from any Buyer Indemnified Party setting forth, in reasonable detail,
a Stockholder Indemnity Claim, then any disbursement by the Escrow
Agent to such Stockholder pursuant to this Section 5(c) shall be
reduced by the aggregate amount of such Stockholder Indemnity Claim
and such amount shall be retained by the Escrow Agent as part of the
Retained Amount.
(d) To settle any Company Indemnity Claim by any Buyer Indemnified Party against the Stockholders or any Stockholder Indemnity Claim by any Buyer Indemnified Party against any Stockholder, the Escrow Agent may disburse to such Buyer Indemnified Party any portion of the Escrow Assets (including any Retained Amount) owned by the Stockholders (on a Pro Rata Percentage basis) or such Stockholder, respectively:
(i) at any time upon receipt by the Escrow Agent of a written instruction executed by such Buyer Indemnified Party and the Stockholder Agent in the case of a Company Indemnity Claim or such Stockholder in the case of a Stockholder Indemnity Claim setting forth the amount of the Escrow Assets to be so disbursed;
(ii) within 30 days following receipt by the Escrow Agent of a Claim Notice, provided that, during such 30-day period, the Escrow Agent shall not have received: (A) a written objection to the disbursement from the Stockholder Agent in connection with any Company Indemnity Claim (a "Company Objection") or a written objection to the disbursement from such Stockholder in connection with any Stockholder Indemnity Claim (a "Stockholder Objection), which such Company Objection or Stockholder Objection shall describe in reasonable detail the factual basis therefor and shall be delivered to such Buyer Indemnified Party and the Escrow Agent; or (B) a written instruction from such Buyer Indemnified Party that such Buyer Indemnified Party has received an amount in cash to settle such claims by Buyer Indemnified Party; or
(iii) unless the Escrow Agent has received a written instruction from such Buyer Indemnified Party that such Buyer Indemnified Party has received an amount in cash to settle such claim prior to receipt by the Escrow Agent of the items set forth below, within three days following receipt by the Escrow Agent of:
(a) a judgment of any court determining the validity of a disputed claim by such Buyer Indemnified Party, and certification by Buyer that no appeal is pending from such judgment or that the time to appeal therefrom has elapsed;
(b) an award of any arbitrator or arbitration panel determining the validity of a disputed claim by such Buyer Indemnified Party, and certification by Buyer that there is not pending any motion to set aside such award or that the time within which to move to set such award aside has elapsed;
(c) a written termination of any Company Objection in connection with any Company Indemnity Claim or any
Stockholder Objection in connection with any Stockholder Indemnity Claim signed by all of the parties thereto or their attorneys; or
(d) a written acknowledgement by the Stockholder Agent with respect to any Company Indemnity Claim or such Stockholder with respect to any Stockholder Indemnity Claim that the validity of any claim by such Buyer Indemnified Party is no longer disputed.
(e) The Escrow Agent shall disburse to each Stockholder (on a Pro Rata Percentage basis) any part or all of the Retained Amount owned by such Stockholder that has been retained by the Escrow Agent in connection with any Company Indemnity Claim made by any Buyer Indemnified Party and, to each Stockholder, any part or all of the Retained Amount owned by each such Stockholder that has been retained by the Escrow Agent in connection with any Stockholder Indemnity Claim:
(i) at any time upon receipt by the Escrow Agent of a written instruction executed by such Buyer Indemnified Party and the Stockholder Agent in connection with any Company Indemnity Claim or such Stockholder in connection with any Stockholder Indemnity Claim setting forth the amount of the Retained Amount to be so disbursed; or
(ii) within three days following receipt by the Escrow Agent of:
(a) a judgment of any court determining that such Buyer Indemnified Party is not entitled to any or all of the disputed claim by such Buyer Indemnified Party, and certification by the Stockholder Agent in connection with any Company Indemnity Claim or such Stockholder in connection with any Stockholder Indemnity Claim that no appeal is pending from such judgment or that the time to appeal therefrom has elapsed;
(b) an award of any arbitrator or arbitration panel determining that such Buyer Indemnified Party is not entitled to any or all of the disputed claim by such Buyer Indemnified Party, and certification by the Stockholder Agent in connection with any Company Indemnity Claim or such Stockholder in connection with any Stockholder Indemnity Claim that there is not pending any motion to set aside such award or that the time within which to move to set such award aside has elapsed; or
(c) a written withdrawal by such Buyer Indemnified Party of any Company Indemnity Claim or Stockholder Indemnity Claim by such Buyer Indemnified Party.
(f) Upon receipt by the Escrow Agent of written instructions from Buyer stating that any Stockholder has paid its Pro Rata Percentage obligation of any Company Indemnity Claim in immediately available funds, the Escrow Agent shall disburse Buyer Common Stock to such Stockholder from such Stockholder's Escrow Assets in the amount of the Company Indemnity Claim paid by such Stockholder as set forth in Buyer's written instructions. Upon receipt by the Escrow Agent of written instructions from Buyer stating that any Stockholder has paid any Buyer Indemnified Party the amount of any Stockholder Indemnity Claim in immediately available funds, the Escrow Agent shall disburse to such Stockholder Buyer Common Stock from the Escrow Assets owned by such Stockholder in the amount of such claim.
(g) If at the time of any disbursement pursuant to this Section 5, the Escrow Assets owned by the Stockholder(s) are comprised of both cash and Buyer Common Stock, Buyer shall instruct the Escrow Agent to make such disbursement from either the cash, Buyer Common Stock, or any
combination of cash and Buyer Common Stock.
Michael J. Snyder 41.0003087373% Stephen S. Snyder, trustee 20.5001543686% Louise A. Snyder, trustee 20.5001543686% Michael E. Woods 3.9993350274% Robert Merullo 3.9993350274% Shamrock Investment Co. 7.9333602489% George D. Hansen 0.5046666825% Deborah Hansen 0.4939796233% Beverly C. Brown 0.5343529579% L.V. Brown, Jr. 0.5343529579% |
(a) The Stockholders shall be entitled to exercise any and all voting and other consensual rights pertaining to the Escrow Assets or any part thereof for any purpose not inconsistent with the terms of this Agreement, the Merger Agreement and the Shareholders Agreement.
(b) Any and all distributions of stock or any securities of Buyer Common Stock issued in respect thereof (including, without limitation, any shares issued pursuant to any stock dividend, stock split, reverse stock split, combination or reclassification thereof) shall be the property of the Stockholders and shall be deposited with the Escrow Agent and shall be treated as Escrow Assets pursuant to the terms of this Agreement. Cash dividends or other property distributed in respect of Buyer Common Stock and interest paid in respect of cash held in the Escrow Assets shall be delivered to the Stockholders and shall not be deposited with or retained by the Escrow Agent.
(a) The Escrow Agent may act upon any written notice, certificate, instrument, request, waiver, consent, paper, or other document that the Escrow Agent in good faith reasonably believes to be genuine and to have been made, sent, signed, prescribed, or presented by the proper person or persons. The Escrow Agent shall not be liable for any action taken or omitted by it in connection with the performance of its duties and obligations hereunder, except for its own gross negligence or willful misconduct. The Escrow Agent shall be under no obligation to institute or defend any action, suit or legal proceeding in connection with this escrow or this Agreement unless it is indemnified to its satisfaction by the party or parties who desire that it undertake such action.
(b) The Escrow Agent shall be under no obligation or liability for failure to inform any Buyer Indemnified Party or any of the Stockholders regarding any transaction or facts within the Escrow Agent's knowledge, even though the same
may concern the matters described herein, provided they do not prevent or interfere with the Escrow Agent's compliance with this Agreement, nor shall the Escrow Agent be liable for the sufficiency, correctness or genuineness as to form, manner of execution or validity of any instrument deposited, nor as to identity, authority, or rights of any person executing the same, except as above provided.
(c) Should the Escrow Agent during or after the term of the escrow receive or become aware of any conflicting demands or claims with respect to the Escrow Assets or the rights of any of the parties hereto, or any money or property deposited herein or affected hereby, the Escrow Agent shall have the right to discontinue any or all further acts on its part until such conflict is resolved to its and the parties' satisfaction, and the Escrow Agent shall have the further right to commence or defend any action or proceeding for the determination of such conflict. In the event the Escrow Agent should file suit in interpleader, it shall be fully released and discharged from all further obligations under this Agreement.
(d) The Escrow Agent may consult with legal counsel satisfactory to it in connection with any dispute, the construction of any provision of this Agreement or the duties and obligations of the Escrow Agent under this Agreement and shall be fully protected in taking or omitting to take any other action in reliance on the advice of such counsel.
(e) Buyer and the Stockholders agree jointly and severally, and as to each of the Stockholders, severally and not jointly, to indemnify the Escrow Agent and hold it harmless from and against any loss, liability, expenses (including, without limitation, reasonable attorneys' fees and expenses), claim or demand arising out of or in connection with the performance of its obligations in accordance with the provisions of this Escrow Agreement, except for the gross negligence or willful misconduct of the Escrow Agent. The costs and expenses of enforcing this right of indemnification shall be paid by Buyer and the Stockholders, jointly and severally, and as to each of the Stockholders, severally and not jointly. These indemnities shall survive the resignation of the Escrow Agent or the termination of this Escrow Agreement.
(f) The Escrow Agent shall have no duties except those specifically set forth in this Agreement and shall not be subject to, nor have any liability or responsibility under, any other agreement or document the parties hereto may be responsible for, even if same is referenced herein.
the performance of its duties and obligations hereunder, including, but not limited to, any suit in interpleader brought by the Escrow Agent. The compensation, fees, costs and expenses of the Escrow Agent shall be paid by Buyer (except as may otherwise be determined in any Action).
(b) Any corporation or association into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party shall be and become the successor Escrow Agent under this Escrow Agreement, vested with title to the Escrow Assets and having all the powers, discretions, rights, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance.
(a) Michael J. Snyder is hereby appointed by the Stockholders to act as the Stockholders' agent (the "Stockholder Agent") with respect to the escrow provisions set forth in this Agreement. The Stockholder Agent will be constituted and appointed as agent and attorney-in-fact for each Stockholder to give and receive notices and communications, to authorize delivery to any Buyer Indemnified Party of Buyer Common Stock or cash from the Escrow Assets in satisfaction of Company Indemnity Claims or Stockholder Indemnity Claims by such Buyer Indemnified Party, to object to such deliveries, to agree to, negotiate, enter into settlements and compromises of, and comply with orders of courts and awards of arbitrators with respect to such Company Indemnity Claims or Stockholder Indemnity Claims, to authorize delivery to any Buyer Indemnified Party of Buyer Common Stock or cash from the Escrow Assets in satisfaction of any reduction in the Merger Consideration, and to take all actions necessary or appropriate in the judgment of the Stockholder Agent for the accomplishment of
the foregoing. Notices or communications to or from the Stockholder Agent will constitute notice to or from each of the Stockholders. A decision, act, consent or instruction of the Stockholder Agent will constitute a decision of all the Stockholders, and will be final, binding and conclusive upon each of the Stockholders, and the Escrow Agent and any Buyer Indemnified Party may rely upon any decision, act, consent or instruction of the Stockholder Agent as being the decision, act, consent or instruction of each and all of the Stockholders.
(b) Michael J. Snyder may, in his sole discretion, resign as the Stockholder Agent, provided that Michael J. Snyder shall give Buyer 20 days' prior written notice of his inability or unwillingness to serve as the Stockholder Agent hereunder. If Michael J. Snyder is unable to or unwilling to act as the Stockholder Agent, a majority in interest of the Stockholders shall be entitled to appoint a substitute agent(s) for such purpose. Michael J. Snyder shall have no liability whatsoever to any of the Stockholders, Merger Sub, any Buyer Indemnified Party or the Escrow Agent in acting as the Stockholder Agent except for actions taken in manifest bad faith. Any Buyer Indemnified Party and the Escrow Agent shall be entitled to rely on the authority of the Stockholder Agent for all purposes provided for herein, and any Buyer Indemnified Party and the Escrow Agent shall have no liability to the Stockholders for the failure of the Stockholder Agent to perform any action or satisfy any obligation provided for herein. The Escrow Agent and any Buyer Indemnified Party are hereby relieved from any liability to any Person for acts done by them in accordance with any decision, act, consent or instruction of the Stockholder Agent.
(c) Each Stockholder agrees to pay all costs and expenses, including those of any legal counsel or other professional retained by the Stockholder Agent, in connection with the acceptance or administration of the Stockholder Agent's duties hereunder.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
a Nevada corporation
By:/s/ James P. McCloskey ----------------------------------- James P. McCloskey Chief Financial Officer |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: John Grant Facsimile No.: 303-846-6073
RED ROBIN HOLDING CO.,
a Nevada corporation
By:/s/ James P. McCloskey ----------------------------------- James P. McCloskey Chief Financial Officer |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: John Grant Facsimile No.: 303-846-6073
THE STOCKHOLDERS
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
Attention: Michael J. Snyder
Facsimile No.: 303-846-6013
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on the day and year first above written.
RED ROBIN INTERNATIONAL, INC.
a Nevada corporation
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: John Grant Facsimile No.: 303-846-6073
RED ROBIN HOLDING CO.,
a Nevada corporation
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: John Grant Facsimile No.: 303-846-6073
THE STOCKHOLDERS
/s/ Michael J. Snyder -------------------------------------- Michael J. Snyder |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: Michael J. Snyder Facsimile No.: 303-846-6013
/s/ Stephen Snyder -------------------------------------------------- Stephen Snyder, individually and as the Trustee of the Stephen S. Snyder Intervivos Trust |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
/s/ Louise Snyder -------------------------------------------------- Louise Snyder, individually and as the Trustee of the Louise Snyder Intervivos Trust |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
/s/ Michael E. Woods -------------------------------------------------- Michael E. Woods |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
/s/ Robert Merullo -------------------------------------------------- Robert Merullo |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
By: /s/ George D. Hansen --------------------------------- Name: George D. Hansen ------------------------------- Title: C.O.O. ------------------------------ |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
/s/ George D. Hansen ------------------------------------ George D. Hansen |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
/s/ Deborah Hansen ------------------------------------ Deborah Hansen |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
SHAMROCK INVESTMENT COMPANY
a Washington general partnership
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
/s/ Beverly C. Brown ------------------------------------ Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013 |
/s/ L.V. Brown, Jr. ---------------------------------------- L.V. Brown, Jr. |
Address: 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 c/o Michael J. Snyder Facsimile No.: 303-846-6013
HARRIS TRUST COMPANY
OF CALIFORNIA, as Escrow Agent
Address: 601 South Figueroa Street #4900 Los Angeles, California 90017 Attention: Escrow Division Facsimile No.: (213) 239-0631
Address: 5575 DTC Parkway, Suite 110
Englewood, Colorado 80111
c/o Michael J. Snyder
Facsimile No.: 303-846-6013
HARRIS TRUST COMPANY
OF CALIFORNIA, as Escrow Agent
By: /s/ Esther Cervantes ------------------------------------ Esther Cervantes Tittle: Vice President |
Address: 601 South Figueroa Street #4900 Los Angeles, California 90017 Attention: Escrow Division Facsimile No.: (213) 239-0631
EXHIBIT 10.15
FIRST AMENDMENT
TO
ESCROW AGREEMENT
This First Amendment to Escrow Agreement (this "Amendment") is entered into as of August 9, 2001, by and among Red Robin Gourmet Burgers, Inc., a Delaware corporation ("RRGB"), Red Robin International, Inc., a Nevada corporation and a wholly owned subsidiary of RRGB ("Buyer"), Red Robin West, Inc., a Nevada corporation and a wholly owned subsidiary of Buyer ("Merger Sub"), the former stockholders of The Snyder Group Company, a Delaware corporation (the "Company"), set forth on the signature page hereto (the "Stockholders") and The Bank of New York as Escrow Agent (the "Escrow Agent"). Unless otherwise defined in this Amendment, capitalized words used herein shall have the meanings ascribed to them in that certain Escrow Agreement, dated as of May 11, 2000, by and among Buyer, Merger Sub, the Stockholders and the Escrow Agent (the "Escrow Agreement")
A. Pursuant to the Escrow Agreement, the Stockholders deposited 2,500,000 shares of the common stock of Buyer, par value $0.001 per share (the "Escrow Shares") with the Escrow Agent as security for the accurateness and completeness of the representations, warranties, covenants, agreements and indemnities made by the Company and the Stockholders in that certain Agreement and Plan of Merger, dated as of February 18, 2000, by and among, Buyer, Merger Sub and the Company (the "Agreement and Plan of Merger"), and to satisfy any adjustments to the Stock Merger Consideration pursuant to Section 2.9 of the Agreement and Plan of Merger.
B. On January 23, 2001, Buyer, RRGB and Red Robin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of RRGB ("RRMS"), entered into a Merger Agreement (the "Merger Agreement") to provide for a corporate reorganization of Buyer whereby RRMS would be merged with and into Buyer (the "Merger"), with (a) Buyer continuing as the surviving corporation of such merger, and (b) each outstanding share (or any fraction thereof) of the common stock of Buyer being converted in such merger into a like number of shares of the common stock of RRGB, par value $0.001 per share ("RRGB Common Stock").
C. Pursuant to a letter dated May 31, 2001 delivered by Buyer to the Escrow Agent in accordance with Section 5 of the Escrow Agreement, Buyer instructed the Escrow Agent to release 40% of the balance of the Escrow Shares currently owned by each Stockholder (the "Release").
D. The parties hereto desire to enter into this Amendment in order to (i) substitute shares of RRGB Common Stock for the Escrow Shares that currently comprise a portion of the Escrow Assets and (ii) effect the Release.
E. NOW, THEREFORE, taking into account the foregoing recitals, and in consideration of the mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Substitution of Escrow Assets. The parties acknowledge and agree that
(i) the Escrow Shares deposited with the Escrow Agent pursuant to Section 2 of
the Escrow Agreement have been cancelled in accordance with the Merger
Agreement, (ii) an equal number of shares of RRGB Common Stock have been
automatically substituted therefor, and (iii) RRGB shall hereby withhold from
delivery to the Escrow Agent that number of shares of RRGB Common Stock
necessary to effect the Release, which RRGB shall deliver to each Stockholder in
accordance with the Escrow Agreement.
2. No Surrender of Certificates. Until surrendered for transfer or exchange, each outstanding stock certificate deposited with the Escrow Agent that, immediately prior to the effective time of the Merger, evidenced the Escrow Shares shall be deemed and treated for all purposes to evidence the ownership of that number of shares of RRGB Common Stock equal to the number of Escrow Shares represented by such outstanding stock certificate.
3. Parties. The Escrow Agreement is amended by deleting each reference to "Red Robin Holding Co., Inc." and inserting "Red Robin West, Inc." in its place, and by deleting each reference to "Harris Trust Company of California" and inserting "The Bank of New York" in its place.
4. Ratification of Escrow Agreement. Except as specifically amended by this Amendment, the Escrow Agreement shall remain in full force and effect and the parties hereto hereby reaffirm all of the provisions of the Escrow Agreement as amended by this Amendment.
5. Governing Law. The validity, meaning and effect of this Amendment shall be determined in accordance with the laws of the State of California applicable to contracts made and to be performed in that state.
6. Further Assurances. The parties hereto agree to execute such other documents and perform such other acts as may be necessary or desirable to carry out the purposes of this Amendment.
7. Counterparts. This Amendment may be executed in counterparts, each of which when so executed and delivered shall be deemed to be an original for all purposes, but all such counterparts shall constitute but one in the same instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to be duly executed and delivered as of the date set forth above.
RRGB:
RED ROBIN GOURMET BURGERS, INC.,
a Delaware corporation
By: /s/ James P. McCloskey ----------------------------------------------- Name: James P. McCloskey Title Vice President & Chief Financial Officer |
BUYER:
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ James P. McCloskey ----------------------------------------------- Name: James P. McCloskey Title:Vice President & Chief Financial Officer |
MERGER SUB:
RED ROBIN WEST, INC.,
a Nevada corporation
By: /s/ James P. McCloskey ----------------------------------------------- Name: James P. McCloskey Title:Vice President & Chief Financial Officer |
THE STOCKHOLDERS
IN WITNESS WHEREOF, the undersigned parties have caused this Amendment to be duly executed and delivered as of the date set forth above.
RRGB:
RED ROBIN GOURMET BURGERS, INC.,
a Delaware corporation
By: /s/ James P. McCloskey ----------------------------------------------- Name: James P. McCloskey Title Vice President & Chief Financial Officer |
BUYER:
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ James P. McCloskey ----------------------------------------------- Name: James P. McCloskey Title:Vice President & Chief Financial Officer |
MERGER SUB:
RED ROBIN WEST, INC.,
a Nevada corporation
By: /s/ James P. McCloskey ----------------------------------------------- Name: James P. McCloskey Title:Vice President & Chief Financial Officer |
THE STOCKHOLDERS
/s/ Michael J. Snyder -------------------------------------------------- Michael J. Snyder |
/s/ Stephen Snyder -------------------------------------------------- Stephen Snyder, individually and as the Trustee of the Stephen S. Snyder Intervivos Trust /s/ Louise Snyder -------------------------------------------------- Louise Snyder, individually and as the Trustee of the Louise Snyder Intervivos Trust |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
Title:
/s/ Michael E. Woods -------------------------------------------------- Michael E. Woods /s/ Robert Merullo -------------------------------------------------- Robert Merullo |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
Title:
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By: /s/ George D. Hansen ---------------------------------------------- Name: Title: /s/ George D. Hansen -------------------------------------------------- George D. Hansen /s/ Deborah Hansen -------------------------------------------------- Deborah Hansen /s/ Beverly C. Brown -------------------------------------------------- Beverly C. Brown /s/ George D. Hansen for L.V. Brown, Jr. -------------------------------------------------- L.V. Brown, Jr. |
THE BANK OF NEW YORK, as Escrow Agent
By: /s/ STEPHEN M BRUCE ---------------------------------------------- Name: STEPHEN M BRUCE Title: ASSISTANT VICE PRESIDENT |
Exhibit 10.16
MEMORANDUM AGREEMENT
This Memorandum Agreement (this "Agreement"), dated May 10, 2001, is entered into by and among The Snyder Group Company, a Delaware corporation ("SGC"), each former shareholder of SGC listed on Schedule A hereto (the "Former Shareholders"), Red Robin International, Inc., a Nevada corporation ("Red Robin"), Red Robin West, Inc. (formerly Red Robin Holding Co., Inc.), a Nevada corporation and a wholly owned subsidiary of Red Robin ("Red Robin West"), Rodney Bench (the "Indenture Trustee"), as trustee of that certain Trust Indenture Agreement, dated May 11, 2000, by and between Red Robin and the Indenture Trustee (the "Trust Indenture"), and Bunch Grass Leasing, LLC ("Bunch Grass Leasing").
RECITALS
A. On May 11, 2000, SGC merged with and into Red Robin West pursuant to that certain Agreement and Plan of Merger, dated February 18, 2000, by and among Red Robin, Red Robin West, SGC and the Former Shareholders, as amended by that certain Closing Agreement and Amendment to Merger Agreement, dated as of May 11, 2000, by and among Red Robin, Red Robin West, SGC and the Former Shareholders (as so amended, the "Plan of Merger");
B. The Plan of Merger provided for the delivery to the Former Shareholders
of merger consideration equal to (i) an aggregate of 5,480,152 shares of Red
Robin's common stock, par value $0.001 per share (the "Shares") and (ii) an
amount in debentures issued by Red Robin pursuant to the Trust Indenture (the
"Debentures") and/or cash equal to an aggregate of $10,960,301, allocated in the
manner provided in the Plan of Merger and subject to adjustment pursuant to
Section 2.9 of the Plan of Merger;
C. Pursuant to that certain Sinking Fund Agreement, dated September 6, 2000, by and between Red Robin and the Indenture Trustee, Red Robin established a sinking fund for the payment and performance of the Debentures, which was subsequently assigned to Bunch Grass Leasing pursuant to that certain Assignment and Assumption Agreement, dated September 6, 2000, by and among Bunch Grass Leasing, Red Robin and the Indenture Trustee;
D. The Former Shareholders desire to amend the Plan of Merger and the Trust Indenture as more fully described herein to correct certain errors that occurred in connection with the allocation of the Shares and the Debentures to certain of the Former Shareholders listed on Schedule B hereto, and, subject to the conditions set forth herein, Red Robin has agreed to such amendment; and
E. Red Robin, SGC and the Former Shareholders have agreed that the adjustment to the Merger Consideration calculated pursuant to Section 2.9 of the Plan of Merger is equal to $112,000 (the "Merger Consideration Adjustment"), which the parties agree shall be payable to the Former Shareholders in accordance with this Agreement.
Now, therefore, pursuant to provisions in the Plan of Merger and the Trust Indenture and in consideration of the mutual promises contained herein, the parties agree as follows:
(a) In order to effect a correction of the Merger Consideration
consisting of common stock of Red Robin to which certain Shareholders were
entitled to pursuant to the Plan of Merger, concurrent with the closing of
the transactions contemplated by this Agreement, (i) each Shareholder
listed on Schedule B hereto agrees to surrender, or cause to be
surrendered, to Red Robin the Shares issued to such Shareholder pursuant to
Section 2.8 of the Plan of Merger and delivered to FINOVA Capital
Corporation, a Delaware corporation (the "Lender"), pursuant to that
certain Stock Pledge Agreement, dated September 6, 2000, by and among the
Lender, Red Robin and certain shareholders of Red Robin (the "Finova
Pledged Shares"), (ii) Red Robin agrees to mark the Finova Pledged Shares
"cancelled," (iii) Red Robin agrees to issue to each such Shareholder that
number of shares of common stock of Red Robin, par value $0.001 per share,
set forth opposite such Shareholder's name on Schedule C hereto (the
"Corrected Pledged Shares"), representing a portion of the shares of common
stock of Red Robin to which such Shareholder was entitled to pursuant to
the Plan of Merger, and (iv) in exchange for the Finova Pledged Shares,
each such Shareholder agrees to deliver, or cause to be delivered, the
Corrected Pledged Shares to the Lender.
(b) Red Robin and the Shareholders listed on Schedule B hereto acknowledge and agree that in order to effect the reallocation of the Merger Consideration no action is required with respect to (i) the Shares issued to such Shareholders in connection with the Plan of Merger and deposited with the Bank of New York, as Escrow Agent, pursuant to that certain Escrow Agreement, dated May 11, 2000, by and among Red Robin, Red Robin West, the Former Shareholders and the Escrow Agent (the "Escrow Shares"), as set forth on Schedule D hereto, or (ii) the Shares pledged by Michael J. Snyder to Red Robin (the "Red Robin Pledged Shares"), as set forth on Schedule E hereto. Red Robin and each Shareholder listed on Schedule B hereto further acknowledge and agree that the Corrected Shares set forth on Schedule F hereto represent the portion of the Merger Consideration consisting of common stock of Red Robin to which such Shareholders was entitled to pursuant to the Plan of Merger.
(c) The reallocation of the Merger Consideration resulting herefrom shall be effective as of the effective date of the closing of the transactions contemplated by the Plan of Merger.
(a) Concurrent with the transactions contemplated by this Agreement,
(i) each Shareholder listed on Schedule B hereto agrees to surrender, or
cause to be surrendered, to the Indenture Trustee and/or Bunch Grass
Leasing, as agent for and successor to Red Robin with respect to the
Debentures, the Debentures issued to such Shareholder at the closing of the
transactions contemplated by the Plan of Merger, (ii) the Indenture Trustee
and/or Bunch Grass Leasing agree to mark such Debentures "cancelled," and
(iii) the Indenture Trustee and/or Bunch Grass Leasing agree to issue to
each such Shareholder that number of debentures set forth opposite such
Shareholder's name on Schedule G hereto (the "Corrected Debentures"). The
parties hereto acknowledge and agree that this Section 2 shall not alter or
affect the satisfaction and release of Red Robin pursuant to Section 3 of
that certain Assignment and Assumption Agreement, dated September 6, 2000,
by and among Red Robin, the Indenture Trustee and Bunch Grass Leasing.
(b) The reallocation of the Merger Consideration resulting herefrom shall be effective as of the effective date of the closing of the transactions contemplated by the Plan of Merger.
(a) Red Robin, SGC and the Former Shareholders acknowledge and agree that the Merger Consideration Adjustment calculated pursuant to Section 2.9 of the Plan of Merger equals $112,000 and has been finally determined in accordance with the Plan of Merger. Concurrent with the closing of the transactions contemplated by this Agreement and in fulfillment of Red Robin's obligations under Section 2.9 of the Plan of Merger: (A) Red Robin agrees to (i) issue to each Former Shareholder that number of shares of the common stock of Red Robin, par value $0.001 per share, set forth opposite such Former Shareholder's name on Schedule H hereto (the "Additional Shares"), (ii) deposit with the Indenture Trustee or Bunch Grass Leasing an amount in cash equal to $37,739.94, and (iii) deliver by cash or certified funds to each Former Shareholder the amount set forth opposite such Former Shareholder's name on Schedule I hereto (the "Additional Cash Consideration"); and (B) Bunch Grass Leasing and/or the Indenture Trustee agrees to issue to each Shareholder listed on Schedule B hereto that number of debentures listed opposite such Shareholder's
name on Schedule J hereto (the "Additional Debentures"). The parties acknowledge and agree that the performance of the obligations set forth in this Section 4(a) are deemed to be in full and complete satisfaction of the obligations of Red Robin pursuant to Section 2.9 of the Plan of Merger.
(b) The Merger Consideration Adjustment resulting herefrom shall be effective as of the date hereof.
In witness whereof the parties have set forth their hands, effective as indicated herein.
Red Robin International, Inc., a Nevada corporation
By: /s/ James P. McCloskey ------------------------------------- James P. McCloskey, Chief Financial Officer |
The Snyder Group Company, a Delaware corporation
Red Robin West, Inc., a Nevada corporation
By: /s/ James P. McCloskey ------------------------------------- James P. McCloskey, Chief Financial Officer |
Bunch Grass Leasing, LLC, a Nevada limited liability company
In witness whereof the parties have set forth their hands, effective as indicated herein.
Red Robin International, Inc., a Nevada corporation
The Snyder Group Company, a Delaware corporation
By: /s/ Stephen Snyder ------------------------------------- Stephen Snyder, Vice President |
Red Robin West, Inc., a Nevada corporation
Bunch Grass Leasing, LLC, a Nevada limited liability company
In witness whereof the parties have set forth their hands, effective as indicated herein.
Red Robin International, Inc., a Nevada corporation
The Snyder Group Company, a Delaware corporation
Red Robin West, Inc., a Nevada corporation
Bunch Grass Leasing, LLC, a Nevada limited liability company
By: /s/ Rodney Bench ------------------------------------- Rodney Bench, Manager /s/ Rodney Bench ---------------------------------------- Rodney Bench, trustee of the Trust Indenture dated as of May 11, 2000 |
In witness whereof the parties have set forth their hands, effective as indicated herein.
Red Robin International, Inc., a Nevada corporation
The Snyder Group Company, a Delaware corporation
Red Robin West, Inc., a Nevada corporation
Bunch Grass Leasing, LLC, a Nevada limited liability company
/s/ Michael J. Snyder ---------------------------------------- Michael J. Snyder |
The Stephen S. Snyder Intervivos Trust
By: /s/ Stephen Snyder ------------------------------------- Stephen Snyder, Trustee |
The Louise Snyder Intervivos Trust
By: /s/ Louise Snyder ------------------------------------- Louise Snyder, Trustee |
Shamrock Investment Company,
a Washington general partnership
Title:
The Stephen S. Snyder Intervivos Trust
The Louise Snyder Intervivos Trust
/s/ Michael E. Woods ---------------------------------------- Michael E. Woods /s/ Robert Merullo ---------------------------------------- Robert Merullo |
Shamrock Investment Company, a Washington general partnership
Title:
The Stephen S. Snyder Intervivos Trust
The Louise Snyder Intervivos Trust
Shamrock Investment Company,
a Washington general partnership
By: /s/ George D. Hansen ------------------------------------- Name: Title: /s/ George D. Hansen ---------------------------------------- George D. Hansen /s/ Deborah Hansen ---------------------------------------- Deborah Hansen /s/ Beverly C. Brown ---------------------------------------- Beverly C. Brown |
The Stephen S. Snyder Intervivos Trust
The Louise Snyder Intervivos Trust
Shamrock Investment Company,
a Washington general partnership
Title:
/s/ L.V. Brown, Jr. ---------------------------------------- L.V. Brown, Jr. |
Schedule A
Former Shareholders
Michael J. Snyder
Stephen S. Snyder, as trustee of the Stephen S. Snyder Intervivos Trust
Louise A. Snyder, as trustee of the Louise A. Snyder Intervivos Trust
Michael E. Woods
Robert Merullo
Shamrock Investment Company, a Washington general partnership
George D. Hansen
Deborah Hansen
Beverly C. Brown
L.V. Brown, Jr.
Schedule B
Shareholders with Reallocations
Michael J. Snyder
Stephen S. Snyder, as trustee of the Stephen S. Snyder Intervivos Trust
Louise A. Snyder, as trustee of the Louise A. Snyder Intervivos Trust
Schedules C, D, E, F, G
Schedule H, I and J Merger Consideration Adjustment Schedule H Schedule I Schedule J Additional Cash Additional Former Shareholder Additional Shares Consideration Debentures M. Snyder 11,485 $ 4,100.03 $18,869.97 S. Snyder Trust 5,743 $ 2,050.02 $ 9,434.98 L. Snyder Trust 5,743 $ 2,050.02 $ 9,434.98 M. Woods 1,120 $ 2,240.59 -0- R. Merullo 1,120 $ 2,240.59 -0- Shamrock 2,222 $ 4,444.59 -0- G. Hansen 141 $ 282.73 -0- D. Hansen 138 $ 276.75 -0- B. Brown 150 $ 299.37 -0- L. Brown 150 $ 299.37 -0- ------ ---------- ---------- TOTAL 28,012 $18,284.06 $37,739.94 |
Exhibit 10.17
LOAN AGREEMENT
among
THE FINANCIAL INSTITUTIONS FROM
TIME TO TIME PARTIES HERETO,
as Lenders,
FINOVA CAPITAL CORPORATION,
as Agent for the Lenders,
and
RED ROBIN INTERNATIONAL, INC. AND ITS SUBSIDIARIES,
as Borrowers
September 6, 2000
4.2 Performance; No Default........................................................................27 ----------------------- 4.3 Quad-C Investment..............................................................................27 ----------------- 4.4 Snyder Group Merger............................................................................27 ------------------- 4.5 Delivery of Documents..........................................................................27 --------------------- 4.6 Opinions of Counsel............................................................................29 ------------------- 4.7 Licenses.......................................................................................29 -------- 4.8 Financial Reports; Other Information and Inspections...........................................29 ---------------------------------------------------- 4.9 Security Interests.............................................................................29 ------------------ 4.10 Insurance; Survey..............................................................................29 ----------------- 4.10.1 Business, Flood and Key Man Life Insurance............................................29 ------------------------------------------ 4.10.2 Title Insurance.......................................................................29 --------------- 4.10.3 Premiums..............................................................................30 -------- 4.10.4 Survey................................................................................30 ------ 4.11 Approval of Instruments and Security Interests; Consents.......................................30 -------------------------------------------------------- 4.12 Use of Assets..................................................................................30 ------------- 4.13 Environmental Matters..........................................................................30 --------------------- 4.14 Material Adverse Change........................................................................31 ----------------------- 4.15 Indebtedness to be Refinanced..................................................................31 ----------------------------- 4.16 Fees and Expenses..............................................................................31 ----------------- ARTICLE V REPRESENTATIONS AND WARRANTIES.........................................................................31 ------------------------------ 5.1 Existence and Power............................................................................31 ------------------- 5.2 Authority......................................................................................31 --------- 5.3 Equity Interests and Related Matters...........................................................31 ------------------------------------ 5.3.1 Equity Interests......................................................................31 ---------------- 5.3.2 Restrictions..........................................................................31 ------------ 5.4 Binding Agreements.............................................................................32 ------------------ 5.5 Business and Property of Borrowers.............................................................32 ---------------------------------- 5.5.1 Business and Property.................................................................32 --------------------- 5.5.2 Licenses..............................................................................32 -------- 5.5.3 Operating Agreements..................................................................32 -------------------- 5.5.4 Facility Sites........................................................................32 -------------- 5.5.5 Leases................................................................................33 ------ 5.5.6 Real Estate...........................................................................33 ----------- 5.5.7 Operation and Maintenance of Equipment................................................33 -------------------------------------- 5.6 Title to Property; Liens.......................................................................33 ------------------------ 5.7 Projections and Financial Statements...........................................................33 ------------------------------------ 5.7.1 Financial Statements..................................................................33 -------------------- 5.7.2 Projections...........................................................................34 ----------- 5.8 Litigation.....................................................................................34 ---------- 5.9 Defaults in Other Agreements; Consents; Conflicting Agreements.................................34 -------------------------------------------------------------- 5.10 Taxes..........................................................................................34 ----- 5.11 Compliance with Applicable Laws................................................................34 ------------------------------- 5.12 Patents, Trademarks, Franchises, Agreements....................................................35 ------------------------------------------- 5.13 Regulatory Matters.............................................................................35 ------------------ 5.14 Environmental Matters..........................................................................35 --------------------- |
5.15 Application of Certain Laws and Regulations....................................................35 ------------------------------------------- 5.15.1 Investment Company Act................................................................35 ---------------------- 5.15.2 Holding Company Act...................................................................35 ------------------- 5.15.3 Foreign or Enemy Status...............................................................35 ----------------------- 5.15.4 Regulations as to Borrowing...........................................................36 --------------------------- 5.16 Margin Regulations.............................................................................36 ------------------ 5.17 Other Indebtedness.............................................................................36 ------------------ 5.18 No Misrepresentation...........................................................................36 -------------------- 5.19 Employee Benefit Plans.........................................................................36 ---------------------- 5.19.1 No Other Plans........................................................................36 -------------- 5.19.2 ERISA and Code Compliance and Liability...............................................36 --------------------------------------- 5.19.3 Funding...............................................................................37 ------- 5.19.4 Prohibited Transactions and Payments..................................................37 ------------------------------------ 5.19.5 No Termination Event..................................................................37 -------------------- 5.19.6 ERISA Litigation......................................................................37 ---------------- 5.20 Employee Matters...............................................................................37 ---------------- 5.20.1 Collective Bargaining Agreements; Grievances..........................................37 -------------------------------------------- 5.20.2 Claims Relating to Employment.........................................................37 ----------------------------- 5.21 Burdensome Obligations.........................................................................37 ---------------------- 5.22 Insurance......................................................................................38 --------- 5.23 Snyder Group Merger Instruments................................................................38 ------------------------------- ARTICLE VI AFFIRMATIVE COVENANTS..................................................................................38 --------------------- 6.1 Legal Existence; Good Standing.................................................................38 ------------------------------ 6.2 Inspection.....................................................................................38 ---------- 6.3 Financial Statements and Other Information.....................................................38 ------------------------------------------ 6.3.1 Quarterly Statements and Agings.......................................................38 ------------------------------- 6.3.2 Annual Statements.....................................................................39 ----------------- 6.3.3 Compliance Certificates...............................................................39 ----------------------- 6.3.4 Accountants' Certificate..............................................................39 ------------------------ 6.3.5 Audit Reports.........................................................................40 ------------- 6.3.6 Business Plans........................................................................40 -------------- 6.3.7 Notice of Defaults; Loss..............................................................40 ------------------------ 6.3.8 Notice of Suits; Adverse Events.......................................................40 ------------------------------- 6.3.9 Reports to Shareholders, Creditors and Governmental Bodies............................40 ---------------------------------------------------------- 6.3.10 ERISA Notices and Requests............................................................41 -------------------------- 6.3.11 Other Information.....................................................................41 ----------------- 6.4 Reports to Governmental Bodies and Other Persons...............................................42 ------------------------------------------------ 6.5 Maintenance of Licenses and Other Agreements...................................................42 -------------------------------------------- 6.6 Insurance......................................................................................42 --------- 6.6.1 Maintenance of Insurance..............................................................42 ------------------------ 6.6.2 Claims and Proceeds...................................................................42 ------------------- 6.6.3 Application of Proceeds...............................................................43 ----------------------- 6.7 Future Leases..................................................................................43 ------------- 6.8 Future Acquisitions of Real Property...........................................................44 ------------------------------------ 6.9 Environmental Matters..........................................................................44 --------------------- |
6.10 Compliance with Laws...........................................................................44 -------------------- 6.11 Taxes and Claims...............................................................................44 ---------------- 6.12 Maintenance of Properties......................................................................45 ------------------------- 6.13 Governmental Approvals.........................................................................45 ---------------------- 6.14 Payment of Indebtedness........................................................................45 ----------------------- 6.15 Additional Borrowers...........................................................................45 -------------------- 6.15.1 Notice of Additional Borrowers........................................................45 ------------------------------ 6.15.2 Joinder Agreement.....................................................................45 ----------------- 6.15.3 Pledge Agreement......................................................................45 ---------------- 6.15.4 Other Documents.......................................................................45 --------------- 6.15.5 Opinion of Counsel....................................................................46 ------------------ 6.16 Inactive Subsidiaries..........................................................................46 --------------------- 6.17 Excluded Collateral............................................................................46 ------------------- 6.18 Interest Rate Protection.......................................................................46 ------------------------ ARTICLE VII NEGATIVE COVENANTS.....................................................................................46 ------------------ 7.1 Borrowing......................................................................................46 --------- 7.2 Liens..........................................................................................47 ----- 7.3 Merger and Acquisition.........................................................................47 ---------------------- 7.4 Contingent Liabilities.........................................................................47 ---------------------- 7.5 Dividends and Distributions....................................................................47 --------------------------- 7.6 Payments of Indebtedness for Borrowed Money....................................................47 ------------------------------------------- 7.7 Investments, Loans.............................................................................47 ------------------ 7.8 Fundamental Business Changes...................................................................48 ---------------------------- 7.9 Development of New Stores......................................................................48 ------------------------- 7.10 Facility Sites.................................................................................48 -------------- 7.11 Sale or Transfer of Assets.....................................................................48 -------------------------- 7.12 Amendment of Certain Agreements................................................................48 ------------------------------- 7.13 Acquisition of Additional Properties...........................................................49 ------------------------------------ 7.14 Issuance of Capital Stock......................................................................49 ------------------------- 7.15 Transactions with Affiliates...................................................................49 ---------------------------- 7.16 Compliance with ERISA..........................................................................49 --------------------- 7.17 Fiscal Year....................................................................................50 ----------- 7.18 Debt Service Coverage Ratio....................................................................50 --------------------------- 7.19 Fixed Charge Coverage Ratio....................................................................50 --------------------------- 7.20 Leverage Ratio.................................................................................50 -------------- ARTICLE VIII DEFAULT AND REMEDIES...................................................................................51 -------------------- 8.1 Events of Default..............................................................................51 ----------------- 8.1.1 Default in Payment....................................................................51 ------------------ 8.1.2 Breach of Covenants...................................................................51 ------------------- 8.1.3 Breach of Warranty....................................................................51 ------------------ 8.1.4 Default Under Other Indebtedness for Borrowed Money...................................51 --------------------------------------------------- 8.1.5 Bankruptcy............................................................................51 ---------- |
8.1.6 Judgments.............................................................................52 --------- 8.1.7 Impairment of Licenses; Other Agreements..............................................52 ---------------------------------------- 8.1.8 Collateral............................................................................52 ---------- 8.1.9 Plans.................................................................................52 ----- 8.1.10 Change in Management or Control.......................................................53 ------------------------------- 8.1.11 Corporate Reorganization..............................................................53 ------------------------ 8.2 Acceleration of Borrowers' Obligations.........................................................53 -------------------------------------- 8.3 Remedies on Default............................................................................53 ------------------- 8.3.1 Enforcement of Security Interests.....................................................53 --------------------------------- 8.3.2 Other Remedies........................................................................53 -------------- 8.4 Application of Funds...........................................................................54 -------------------- 8.4.1 Expenses..............................................................................54 -------- 8.4.2 Borrower's Obligations................................................................54 ---------------------- 8.4.3 Surplus...............................................................................54 ------- 8.5 Performance of Borrowers' Obligations..........................................................54 ------------------------------------- ARTICLE IX ADDITIONAL LENDERS AND PARTICIPANTS; THE AGENT.........................................................55 ---------------------------------------------- 9.1 Assignment to Other Lenders....................................................................55 --------------------------- 9.1.1 Assignment............................................................................55 ---------- 9.1.2 Effect of Loan Assignment.............................................................55 ------------------------- 9.1.3 Register..............................................................................55 -------- 9.1.4 Substitution of Notes.................................................................55 --------------------- 9.1.5 Inspections...........................................................................56 ----------- 9.2 Participations.................................................................................56 -------------- 9.3 Set Off and Sharing of Payments................................................................56 ------------------------------- 9.4 Appointment of Agent...........................................................................56 -------------------- 9.5 Delegation of Duties...........................................................................56 -------------------- 9.6 Nature of Duties; Independent Credit Investigation.............................................57 -------------------------------------------------- 9.7 Instructions from Lenders......................................................................57 ------------------------- 9.8 Exculpatory Provisions.........................................................................57 ---------------------- 9.9 Reimbursement and Indemnification by Lenders of Agent..........................................57 ----------------------------------------------------- 9.10 Reliance by Agent..............................................................................58 ----------------- 9.11 Notice of Default..............................................................................58 ----------------- 9.12 Release of Collateral..........................................................................58 --------------------- 9.13 Lenders in Their Individual Capacities.........................................................58 -------------------------------------- 9.14 Holders of Notes...............................................................................58 ---------------- 9.15 Successor Agent................................................................................58 --------------- 9.16 Delivery of Information........................................................................59 ----------------------- 9.17 Beneficiaries..................................................................................59 ------------- ARTICLE X CLOSING................................................................................................59 ------- |
ARTICLE XI EXPENSES AND INDEMNITY.................................................................................59 ---------------------- 11.1 Attorney's Fees and Other Fees and Expenses....................................................59 ------------------------------------------- 11.1.1 Fees and Expenses for Preparation of Loan Instruments.................................59 ----------------------------------------------------- 11.1.2 Fees and Expenses in Enforcement of Rights or Defense of Loan Instrument..............59 ------------------------------------------------------------------------ 11.2 Indemnity......................................................................................60 --------- 11.2.1 Brokerage Fees........................................................................60 -------------- 11.2.2 General...............................................................................60 ------- 11.2.3 Operation of Collateral; Joint Venturers..............................................60 ---------------------------------------- 11.2.4 Environmental Indemnity...............................................................60 ----------------------- ARTICLE XII MISCELLANEOUS..........................................................................................61 ------------- 12.1 Notices........................................................................................61 ------- 12.2 Survival of Loan Agreement; Indemnities........................................................62 --------------------------------------- 12.3 Further Assurance..............................................................................62 ----------------- 12.4 Taxes and Fees.................................................................................62 -------------- 12.5 Severability...................................................................................62 ------------ 12.6 Waivers and Amendments.........................................................................62 ---------------------- 12.7 Modification of Loan Instruments...............................................................63 -------------------------------- 12.8 Captions.......................................................................................63 -------- 12.9 Successors and Assigns.........................................................................63 ---------------------- 12.10 Remedies Cumulative............................................................................63 ------------------- 12.11 Entire Agreement; Conflict.....................................................................63 -------------------------- 12.12 Applicable Law.................................................................................63 -------------- 12.13 Jurisdiction and Venue.........................................................................63 ---------------------- 12.14 Waiver of Right to Jury Trial..................................................................64 ----------------------------- 12.15 Time of Essence................................................................................64 --------------- 12.16 Estoppel Certificate...........................................................................64 -------------------- 12.17 Consequential Damages..........................................................................64 --------------------- 12.18 Counterparts...................................................................................64 ------------ 12.19 No Fiduciary Relationship......................................................................64 ------------------------- 12.20 Notice of Breach by Agent and Lenders..........................................................64 ------------------------------------- 12.21 Confidentiality................................................................................65 --------------- 12.22 Governmental Approval..........................................................................65 --------------------- 12.23 Publicity......................................................................................65 --------- 12.24 Joint and Several Liability; Rights of Contribution............................................65 --------------------------------------------------- |
Exhibit 1.1(A) - Form of Assignment and Acceptance Agreement Exhibit 1.1(B) - Form of Compliance Certificate Exhibit 1.1(C) - Form of Landlord's Agreement for Leasehold Mortgage Stores Exhibit 1.1(D) - Form of Landlord's Agreement for Non-Leasehold Mortgage Stores Schedule 5.3.1 - Borrower Equity Interests Schedule 5.3.2 - Restrictions Schedule 5.5.1 - Business and Property Schedule 5.5.2 - License Agreements Schedule 5.5.3 - Operating Agreements Schedule 5.5.4 - Facility Sites, including Excluded Stores Schedule 5.5.5 - Leases, including Excluded Leases Schedule 5.5.6 - Real Estate, including Excluded Real Estate Schedule 5.7.1 - Financial Statements Schedule 5.8 - Litigation Schedule 5.9 - Defaults in Other Agreements; Consents; Conflicting Agreements Schedule 5.10 - Taxes Schedule 5.12 - Patents, Trademarks, Franchises, Agreements Schedule 5.13 - Regulatory Matters Schedule 5.17 - Existing Indebtedness as of the Closing Date Schedule 5.19.1 - Employee Benefit Plans Schedule 7.9 - New Stores |
This LOAN AGREEMENT, dated as of September 6, 2000, is among RED ROBIN INTERNATIONAL, INC., a Nevada corporation ("Red Robin"), RED ROBIN DISTRIBUTING COMPANY, INC., a Colorado corporation ("RR Distributing Sub"), RED ROBIN HOLDING CO., INC., a Nevada corporation ("RR Holding Sub"), RED ROBIN OF BALTIMORE COUNTY, INC., a Maryland corporation ("RR Baltimore Sub"), RED ROBIN OF ANNE ARUNDEL COUNTY, INC., a Maryland corporation ("RR Anne Arundel Sub"), each Additional Borrower (as defined below), the financial institutions from time to time parties hereto, as Lenders, and FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), in its individual capacity as a Lender, and as agent for all Lenders from time to time parties hereto. All capitalized terms used herein are defined in Section 1.1 below.
A. Borrowers desire to borrow $50,000,000 from Lenders to repay the Indebtedness to be Refinanced, to pay transaction costs and for working capital.
B. Borrowers are under common management, ownership and control. Accordingly, it is to the direct financial benefit of Borrowers jointly and severally to incur the obligations provided for herein.
C. Lenders have agreed to make the Loan upon the terms and subject to the conditions herein set forth.
NOW THEREFORE, it is agreed as follows:
(i) for the Red Robin Fiscal Quarter ending on the last Sunday of the fortieth week of 2000, EBITDA, Operating Cash Flow, Non-Financed Capital Expenditures, Debt Service or Rent Expense, as applicable, for such Red Robin Fiscal Quarter divided by 3 and multiplied by 13;
(ii) for the two Red Robin Fiscal Quarters ending on the last Sunday of Red Robin Fiscal Year 2000, EBITDA, Operating Cash Flow, Non-Financed Capital Expenditures, Debt Service or Rent Expense, as applicable, for such period divided by 6 and multiplied by 13;
(iii) for the three Red Robin Fiscal Quarters ending on the last Sunday of the sixteenth week of 2001, EBITDA, Operating Cash Flow, Non-Financed Capital Expenditures, Debt Service or Rent Expense, as applicable, for such period divided by 10 and multiplied by 13.
Bonnyville: Bonnyville Construction Company, a Colorado corporation.
Excluded Real Estate, (D) the Real Estate Held for Sale and (E) the Unencumbered Property, (ii) the Borrower Subsidiary Capital Stock, (iii) the Pledged Red Robin Capital Stock, (iv) upon and after the consummation of the Corporate Reorganization, the Red Robin Capital Stock and (v) all proceeds of the foregoing.
------ -- seq.), the Clean Air Act (42 U.S.C.Section 7901 et seq.), the National --- ------ |
(i) for the Red Robin Fiscal Quarter ending on the last Sunday of the fortieth week of 2000, the ratio of (i) Annualized Operating Cash Flow for such Red Robin Fiscal
Temecula, California (Site No. 158), 10101 Brook Road, Glen Allen, Virginia (Site No. 153), 1553 Rio Road East, Charlottesville, Virginia (Site No. 157) and 428 Plaza Drive, West Covina, California (Site No. 160) now or hereafter granted to secure the GE Indebtedness.
(i) Loan Agreement;
(ii) Note;
(iii) Security Instruments;
(iv) Closing Certificate;
(v) Solvency Certificate;
(vi) Notice of Borrowing;
(vii) Fee Letter Agreement;
(viii) Uniform Commercial Code financing statements required by Agent; and
(ix) such other instruments and documents as Agent reasonably may require in connection with the transactions contemplated by this Loan Agreement.
(A) losses from sales, exchanges and other dispositions of Property and other non-recurring losses not in the ordinary course of business;
(B) interest paid or accrued on Indebtedness, including, without limitation, interest on Capitalized Leases that is imputed in accordance with GAAP;
(C) depreciation and amortization of assets;
(D) income taxes which are accrued, but not paid;
(E) Pre-Opening Expenses;
(F) Quad-C Fees which are accrued, but not paid, for such period; and
(G) any other non-cash item deducted in determining such net income;
(A) gains from sales, exchanges and other dispositions of Property and other non-recurring gains not in the ordinary course of business;
(B) proceeds of Business Insurance, other than business interruption insurance;
(C) Quad-C Fees paid in cash for such period on account of Quad-C Fees accrued and unpaid for a preceding period; and
(i) the Security Interests;
(ii) the Purchase Money/Capitalized Lease Indebtedness Liens, the AEI Indebtedness Liens, the Orix Indebtedness Liens, the MetLife Indebtedness Liens, the Captec Indebtedness Liens, the Bonnyville Indebtedness Liens and the GE Indebtedness Liens;
(iii) Liens for taxes or assessments and similar charges, which either are (A) not delinquent or (B) being contested diligently and in good faith by appropriate proceedings, and as to which the applicable Borrower has set aside reserves on its books in accordance with GAAP;
(iv) statutory Liens, such as mechanic's, materialman's, warehouseman's, carrier's or other like Liens, incurred in good faith in the ordinary course of business, provided that the underlying obligations relating to such Liens are paid in the ordinary course of business, or are being contested diligently and in good faith by appropriate proceedings and as to which the applicable Borrower has set aside reserves on its books in accordance with GAAP, or the payment of which obligations are otherwise secured in a manner reasonably satisfactory to Agent;
(v) zoning ordinances, easements, licenses, reservations, provisions, covenants, conditions, waivers or restrictions on the use of Property and other title exceptions, in each case, that are reasonably acceptable to Agent;
(vi) Liens in respect of judgments or awards with respect to which no Event of Default would exist pursuant to subsection 8.1.6; and
(vii) Liens to secure payment of insurance premiums (A) to be paid in accordance with applicable laws in the ordinary course of business relating to payment of worker's compensation, or (B) that are required for the participation in any fund in
connection with worker's compensation, unemployment insurance, old-age pensions or other social security programs.
(i) the Purchase Money/Capitalized Lease Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii) and (iv) of the definition of Permitted Liens that are accorded priority to the Security Interests by law; and
(iii) the Permitted Liens described in clauses (v) and (vii) of the definition of Permitted Liens, subject to the limitations or requirements set forth therein.
be created as a result of the incurrence of any Indebtedness for Borrowed Money described in clause (ii) of this definition.
Lenders, all Lenders, and (ii) at any time when there are more than two Lenders, Lenders who in the aggregate hold not less than 66 2/3of the Principal Balance.
(i) not less than 30 days prior to the date upon which Borrowers desire to make such prepayment, Borrowers shall have delivered to Agent notice of their intention to prepay, which notice shall state the prepayment date and the amount and portion of the Principal Balance to be prepaid;
(ii) such prepayment shall be in a minimum amount of $1,000,000 or integral multiples of $100,000 in excess thereof; and
(iii) concurrently with any such prepayment, Borrowers shall pay to Agent, for the benefit of the applicable Lenders, (A) any Prepayment Premium required in connection with such prepayment required under the applicable provisions of Article II, (B) accrued and unpaid interest on the portion of the Principal Balance being prepaid to the date on which Agent is in receipt of Good Funds and (C) any other sums which are due and payable pursuant to the terms of any of the Loan Instruments.
equal to a percentage of the amount of the Principal Balance prepaid,
determined in accordance with the following schedule:
Percentage of Principal Period of Prepayment Balance Prepaid -------------------- ----------------------- Fourth Loan Year 4.0% Fifth Loan Year 3.0% Sixth Loan Year 2.0% Seventh Loan Year and Thereafter 1.0% |
"Make Whole Date" shall mean the date the Borrowers' Obligations are accelerated.
"Make Whole Payment Stream" shall mean the scheduled monthly installments of principal and interest payable under subsection 2.1.6.
"Make Whole Rate" shall mean 9.87% per annum.
021000089, Credit: FINOVA Capital Corporation, Credit Account No. 4076-9092, Reference Red Robin or to such other account as Agent shall notify Borrowers. All such payments shall be made without setoff, recoupment or counterclaim.
Lender shall only be entitled to additional compensation for any such costs incurred from and after the date that is 180 days prior to the date Borrowers receives such demand. A certificate as to the amount of such increased cost, and setting forth in reasonable detail the calculation thereof, shall be submitted to Borrowers by such Lender, and shall be conclusive absent manifest error. Each Lender will promptly notify Borrowers of any event of which it has knowledge that would entitle such Lender to additional compensation under this subsection 2.6.3. No Lender shall request any additional compensation under this subsection 2.6.3 unless it is generally making similar requests of other borrowers similarly situated, and each Lender agrees to use a reasonable basis for calculating amounts allocable hereunder.
Borrowers' Obligations shall be secured by a Lien upon all of the Collateral, which Lien at all times shall be superior and prior to all other Liens, except Permitted Prior Liens. Provided no Event of Default then exists and is continuing, upon the consummation of the Corporate Reorganization, at the sole cost and expenses of Red Robin and pursuant to release documents in form and substance reasonably satisfactory to Red Robin, Agent shall release (i) the Red Robin Holders from their respective obligations under the Red Robin Pledge Agreement and (ii) the Security Interests in the Pledged Red Robin Capital Stock granted to Agent pursuant to the Red Robin Pledge Agreement.
The obligation of Lenders to disburse the Loan shall be subject to the satisfaction or waiver of all of the following conditions on or before the Closing Date in a manner, form and substance satisfactory to Agent:
(a) the Loan Instruments (other than the Substitute Pledge Agreement);
(b) a good standing certificate for each Borrower from the State in which each such Borrower is organized and each State in which any Store owned or operated by such Borrower is located, each dated a recent date prior to the Closing Date;
(c) certified copies of (i) the articles or certificate of incorporation of each Borrower, together with all amendments thereto, certified by the Secretary of State of the State in which such Borrower is located as of a recent date prior to the Closing Date; (ii) the by-laws of each Borrower, certified as of the Closing Date by the corporate secretary of such Borrower and (iii) resolutions adopted by the board of directors of each Borrower authorizing the execution and delivery of the Instruments and the consummation of the transactions contemplated thereby, certified as of the Closing Date by the corporate secretary of such Borrower;
(d) signature and incumbency certificates of the officers of each Borrower;
(e) a certificate of merger from the Delaware Secretary of State and the Nevada Secretary of State reflecting the consummation of the Snyder Group Merger, certified by the Delaware Secretary of State and the Nevada Secretary of State, as applicable, and copies of such of the Snyder Group Merger Instruments as are required to be and in fact were filed with the Delaware Secretary of State and the Nevada Secretary of State in connection with the Snyder Group Merger;
(f) certified copies or executed originals of each of the following:
(1) the Quad-C Investment Instruments;
(2) the Snyder Group Merger Instruments;
(3) the Sinking Fund Assignment Instruments;
(4) the Equity Instruments;
(5) the Leases;
(6) the Snyder Employment Instruments;
(7) the Quad-C Consulting Agreement;
(8) the AEI Indebtedness Instruments;
(9) the Orix Indebtedness Instruments;
(10) the MetLife Indebtedness Instruments;
(11) the Captec Indebtedness Instruments;
(12) the Bonnyville Indebtedness Instruments; and
(13) the GE Indebtedness Instruments existing as of the Closing Date; and
(14) the Purchase Money/Capitalized Lease Indebtedness Instruments existing as of the Closing Date;
(g) a Landlord's Agreement from the Landlord under each Lease;
(h) Pay-Off Letters from each holder of Indebtedness to be Refinanced, together with such UCC termination statements and other Lien releases as are necessary to release any Liens securing the Indebtedness to be Refinanced; and
(i) such other instruments, documents, certificates, consents, waivers and opinions as Agent reasonably may request.
Borrowers jointly and severally represent and warrant to Agent and Lenders as follows:
and (B) the portion thereof consisting of a leasehold estate and (ii) a valid leasehold estate in each portion of its Property which consists of a leasehold estate. All of such Property is free and clear of all Liens, except Permitted Liens. Upon the proper filing with the appropriate Governmental Bodies of appropriate Uniform Commercial Code financing statements, the applicable Loan Instruments will create valid and perfected Liens in the Property described therein, subject only to Permitted Liens and subject in priority only to Permitted Prior Liens.
delivery and performance of the terms of the Instruments will not constitute a default under, or result in the creation or imposition of, or obligation to create, any Lien upon the Property of any Borrower pursuant to the terms of any such mortgage, indenture, contract or agreement.
generally, that reasonably could be expected to have a Material Adverse Effect that has not expressly been disclosed to Agent in writing.
Until all of Borrowers' Obligations are paid and performed in full each Borrower agrees that they will:
(a) a copy of the consolidated balance sheet of the Borrowers as of the end of such Red Robin Fiscal Quarter,
(b) consolidated statements of operations, EBITDA and Operating Cash Flow of the Borrowers for such Red Robin Fiscal Quarter, for the preceding four Red Robin Fiscal Quarters and for the period from the beginning of the then current Red Robin Fiscal Year to the end of such Red Robin Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding year,
(c) the consolidating financial statements of each Store used in preparing the financial statements described in (a) and (b) above, and
(d) an aging of the Borrowers' outstanding accounts payable and accounts receivable as of the end of such Red Robin Fiscal Quarter,
all in reasonable detail, containing such information as Lenders reasonably may require, and certified by the Chief Financial Officer of each Borrower as complete and correct, subject to normal year-end adjustments.
(a) the consolidated balance sheet of the Borrowers as of the end of such Red Robin Fiscal Year and the statements of operations, cash flows, shareholders' equity (collectively, the "Basic Financial Statements"), EBITDA and Operating Cash Flow of the Borrowers for such Red Robin Fiscal Year setting forth in each case in comparative form the corresponding figures for the preceding Red Robin Fiscal Year,
(b) an opinion of the Accountants which shall accompany the Basic
Financial Statements, which opinion shall be unqualified as to going
concern and scope of audit, stating that (i) the examination by the
Accountants in connection with such Basic Financial Statements has
been made in accordance with generally accepted auditing standards,
(ii) such Basic Financial Statements have been prepared in conformity
with GAAP and in a manner consistent with prior periods, and (iii)
such Basic Financial Statements fairly present in all material
respects the financial position and results of operations of the
Borrowers, and
(c) a report from the Accountants stating that, in their opinion, the statements of EBITDA and Operating Cash Flow are fairly stated in accordance with the provisions of this Loan Agreement.
propose to take in respect thereof, or (iii) any event shall occur which has or is reasonably likely to have a Material Adverse Effect.
(a) Promptly upon becoming available, copies of all financial statements, reports, notices and other statements sent or made available generally by any Borrower to its shareholders with respect to the overall financial performance of the Borrowers, of all regular and periodic reports and all registration statements and prospectuses filed by any Borrower with any securities exchange or with the Securities and Exchange Commission or any Governmental Body succeeding to any of its functions, and of all statements generally made available by the Borrowers or others concerning material developments in the business of the Borrowers.
(b) Promptly upon becoming available, copies of any periodic or special reports filed by any Borrower with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Borrower, or if copies thereof are requested by any Lender, and copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Borrower.
(a) With reasonable promptness, and in any event within 30 days after occurrence of any of the following, notice and/or copies of: (i) the establishment of any new Employee Benefit Plan, Pension Plan or Multiemployer Plan; (ii) the commencement of contributions to any Employee Benefit Plan, Pension Plan or Multiemployer Plan to which any Borrower or any of its ERISA Affiliates was not previously contributing or any increase in the benefits of any existing Employee Benefit Plan, Pension Plan or Multiemployer Plan; (iii) each funding waiver request filed with respect to any Employee Benefit Plan and all communications received or sent by any Borrower or any ERISA Affiliate with respect to such request; and (iv) the failure of any Borrower or any of its ERISA Affiliates to make a required installment or payment under Section 302 of ERISA or Section 412 of the Code by the due date.
(b) With reasonable promptness but in any event within 10 days of
becoming aware of the occurrence of or forthcoming occurrence of any
(i) Termination Event or (ii) "prohibited transaction," as such term
is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder, a
notice specifying the nature thereof, what action the Borrowers have
taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event within 10 days after the occurrence of any of the following, copies of: (i) any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code; (ii) all notices received by any Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (iii) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Borrower or any ERISA Affiliate with the Internal Revenue Service with respect to each Pension Plan; and (iv) all notices received by any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA; and written notice within two Business Days of any Borrower's or any ERISA Affiliate's filing of or intention to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA.
(a) Immediate notice of any material change in, or termination of, the employment of Snyder, any change in the location of any Property of any Borrower which is material to or necessary for the continued operation of such Borrower's business, any change in the name of any Borrower, any sale or purchase of Property outside the regular course of business of any Borrower, and any change in the business or financial affairs of any Borrower, which change reasonably could be expected to have a Material Adverse Effect.
(b) Promptly upon request therefor, such other information and reports relating to the past, present or future financial condition, operations, plans and projections of the Borrowers as Lenders reasonably may request from time to time.
(c) Drafts of any Equity Instruments anticipated to be entered into after the Closing Date at least 5 Business Days' prior to the execution and delivery of same and copies of any Equity Instruments entered into after the Closing Date concurrently with the execution and delivery of same.
(a) if no Event of Default exists and is continuing and the amount of such proceeds is $50,000 or less, shall be held by Agent and applied to pay for the cost of repair or replacement of the Property which was the subject of such loss, damage, destruction or other casualty; and
(b) if no Event of Default exists and is continuing and the amount of such proceeds exceeds $50,000, or if any Event of Default exists and is continuing, at the option of Agent may be (i) applied to the payment of Borrowers' Obligations or (ii) held by Agent and applied to pay for the cost of repair or replacement of the Property which was the subject of such loss, damage, destruction or other casualty.
(a) made available to pay for the cost of repair or replacement of the Property which was the subject of such loss, damage, destruction or other casualty, such proceeds shall be made available in the manner and under such reasonable and customary conditions as Agent may require, including, without limitation, at the option of Agent (i) the prior approval of Agent of any plans and specifications, the project budget, the project schedule, the contractor and the construction contract to be entered into with respect to such repair or restoration and any changes or amendments thereto, (ii) evidence that the amount of such proceeds, together with any funds deposited by Borrowers with Agent for such purpose, will be sufficient to complete the repair or restoration in accordance with the approved plans and specifications and (iii) the execution and delivery of a customary construction loan escrow agreement among Agent, Borrowers and a title company acceptable to Agent providing for disbursement of funds to pay the costs of such repair or replacement free and clear of mechanics and materialmans liens and any other Liens other than Permitted Liens; or
(b) applied to the payment of Borrowers' Obligations, such
proceeds shall be applied to Borrowers' Obligations in the following
order of priority: (i) first, to the payment of any and all sums which
then are due and payable pursuant to the terms of the Loan
Instruments, other than the Principal Balance and interest accrued
thereon, (ii) next to accrued and unpaid interest on the Principal
Balance until all such accrued and unpaid interest is paid in full and
(iii) then to the Principal Balance in the inverse order of the
maturity of the installments thereof.
unaffiliated third party of any Borrower prior to the second anniversary of the Closing Date, within 30 days after the second anniversary of the Closing Date.
Until all of Borrowers' Obligations are paid and performed in full, no Borrower shall:
owned by a Borrower, the purchase contract for such real estate and an Environmental Phase I Report for such real estate. Agent shall be deemed to have given its consent to the development of the New Stores described on Schedule 7.9.
with the Quad-C Investment, (iii) the payment of up to $100,000 per year to each of Gerry Kingen and Joe Ide and (iv) any transaction in the ordinary course of business which is on terms no less favorable to such Borrower than would be attainable on an arm's-length basis by such Borrower from anyone not an Affiliate of any Borrower.
(i) Permit the occurrence of any Termination Event which would result in a liability to the Borrowers or any ERISA Affiliate in excess of $250,000;
(ii) Permit the present value of all benefit liabilities under all Pension Plans to exceed the current value of the assets of such Pension Plans allocable to such benefit liabilities by more than $50,000;
(iii) Permit any accumulated funding deficiency in excess of $250,000 (as defined in Section 302 of ERISA and Section 412 of the Code) with respect to any Pension Plan, whether or not waived;
(iv) Fail to make any contribution or payment to any Multiemployer Plan which the Borrowers or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto which results in or is likely to result in a liability in excess of $250,000;
(v) Engage, or with its knowledge or acquiescence, permit any Borrower or any ERISA Affiliate to engage, in any "prohibited transaction" as such term is defined in Section 406 of ERISA or Section 4975 of the Code for which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code in excess of $250,000 is imposed;
(vi) Permit the establishment of any Employee Benefit Plan providing post-retirement welfare benefits or establish or amend any Employee Benefit Plan which establishment or amendment could result in liability to any Borrower or any ERISA Affiliate or increase the obligation of any Borrower or any ERISA Affiliate to a Multiemployer Plan which liability or increase, individually or together with all similar liabilities and increases, is material to any Borrower or any ERISA Affiliate; or
(vii) Fail, or with its knowledge or acquiescence, permit any Borrower or any ERISA Affiliate to fail, to establish, maintain and operate each Employee Benefit Plan in compliance in all material respects with ERISA, the Code and all other applicable laws and regulations and interpretations thereof.
accounting periods.
Period Ratio ------ ----- 49 |
Period Ratio ------ ----- Closing Date - December 31, 2000 4.50:1.00 January 1, 2001 - December 30, 2001 4.00:1.00 December 31, 2001 - December 29, 2002 3.50:1.00 December 30, 2002 - Maturity Date 3.00:1.00 |
(a) If Borrowers shall fail to maintain their respective corporate existence or if any Borrower shall fail to observe or perform any covenant or agreement contained in Section 6.2, 6.9, 6.10, 6.11, 6.13 through 6.18 or in Article VII;
(b) If any Borrower shall fail to observe or perform any covenant or agreement contained in Section 6.5 or 6.6 and such failure shall continue for 5 Business Days; or
(c) If any Borrower shall fail to observe or perform any covenant
or agreement (other than those referred to in subparagraphs (a) and
(b) above or specifically addressed elsewhere in this Section 8.1)
made by such Person in any of the Loan Instruments to which such
Person is a party, and such failure shall continue for a period of 30
days.
(a) If any Borrower shall (i) generally not be paying its debts as they become due, (ii) file, or consent, by answer or otherwise, to the filing against it of a petition for relief or reorganization or arrangement or any other petition in bankruptcy or insolvency under the laws of any jurisdiction, (iii) make an assignment for the benefit of creditors, (iv) consent to the appointment of a custodian, receiver, trustee or other officer with similar powers for it or for any substantial part of its Property, or (v) be adjudicated insolvent.
(b) If any Governmental Body of competent jurisdiction shall enter an order appointing, without consent of the applicable Borrower, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its Property, or if an order for relief shall be entered in any case or proceeding for liquidation or reorganization or otherwise to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of a Borrower of any petition for any such relief shall be filed against it and such petition shall not be dismissed or stayed within 60 days.
time in good faith be prosecuting an appeal or proceeding for review and in respect of which a stay of execution or appropriate appeal bond shall have been obtained pending such appeal or review.
the Red Robin Capital Stock shall cease to be pledged to Agent pursuant to the Substitute Pledge Agreement.
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrowers' Obligations at
that time outstanding automatically shall mature and become due, and
(b) any other Event of Default, the Required Lenders, at any time, at their option, without further notice or demand, may declare all of Borrowers' Obligations due and payable, whereupon Borrowers' Obligations immediately shall mature and become due and payable,
all without presentment, demand, protest or notice (other than notice of the declaration referred to in clause (b) above), all of which hereby are waived.
Without limiting the generality of the foregoing and without derogating from any right, remedy or other provision contained in this Loan Agreement or any other Loan Instrument, at any time from and after the acceleration of Borrowers' Obligations, Agent shall have the right to apply for and have a receiver appointed by a court of competent jurisdiction in any action taken by Agent to enforce the rights accorded to it or Lenders hereunder and thereunder in order to manage, protect and preserve the Collateral, or to sell or dispose of the Collateral, and to collect all revenues and profits thereof and apply the same as set forth in Section 8.4. To the extent not prohibited by applicable law, each Borrower hereby irrevocably consents to and waives any right to object to or otherwise contest to the appointment of a receiver as provided above. Each Borrower (i) grants such waiver and consent knowingly after having discussed the implications thereof with counsel, (ii) acknowledges that (A) the uncontested right to have a receiver appointed for the foregoing purposes is considered essential by Lenders in connection with the enforcement of their rights and remedies hereunder and under the other Loan Instruments and (B) the availability of such appointment as a remedy under the foregoing circumstances was a material factor in inducing Lenders to make the Loans to Borrowers and (iii) to the extent not prohibited by applicable law, agrees to enter into any and all stipulations in any legal actions, or agreements or other instruments in connection with the foregoing, and to cooperate fully with Agent and Lenders in connection with the assumption and exercise of control by any receiver over all or any portion of the Collateral.
without limitation, insurance proceeds, condemnation proceeds or proceeds from the sale of Collateral shall be applied to Borrowers' Obligations in the following order of priority:
assigned to such Assignee, provided, however, that (i) each Loan Assignment
shall be of a constant, and not a varying, percentage of all rights and
obligations of such Lender under this Loan Agreement, (ii) each Loan
Assignment shall not be less than $5,000,000 and shall be in integral
multiples of $1,000,000 in excess thereof, (iii) the parties to each such
Loan Assignment shall execute and deliver to the Agent an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and
(iv) the Assignee shall pay to Agent an assignment fee of $3,500.
The Closing Date shall be such date as the parties shall determine, and the Closing shall take place on such date, provided all conditions for the Closing as set forth in this Loan Agreement have been satisfied or otherwise waived by Agent. The Closing shall take place at the offices of Altheimer & Gray, 10 S. Wacker Drive, Suite 4000, Chicago, Illinois 60606, or such other place as the parties hereto shall agree. Unless the Closing occurs on or before September 15, 2000, this Loan Agreement shall terminate and be of no further force or effect and, except for any obligation of Borrowers to Agent pursuant to Article XI, none of the parties hereto shall have any further obligation to any other party.
commenced or threatened litigation, administrative proceeding, suit instituted by any Person or investigation under any law, including any federal securities law, the Bankruptcy Code, any relevant state corporate statute or any other securities law, bankruptcy law or law affecting creditors generally of any jurisdiction, or any regulation pertaining to any of the foregoing, or at common law or otherwise, relating, directly or indirectly, to the transactions contemplated by or referred to in, or any other matter related to, the Loan Instruments, whether or not Agent or any Lender is a party to such litigation, proceeding or suit, or is subject to such investigation, except to the extent any such loss, cost, liability, damage or expense is the direct result of any gross negligence or willful misconduct by Agent or any Lender
incurred by Agent or such Lender.
To Borrowers: Red Robin, Inc. Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 90111 Attention: James C. McCloskey Chief Financial Officer Telecopy No.: (303) 846-6013 60 |
Copy to: O'Melveny & Myers LLP 610 Newport Center Drive Newport Beach, California 92660 Attention: Gary Singer, Esq. Telecopy No.: (949) 823-6994 To Agent: FINOVA Capital Corporation 115 West Century Road Paramus, New Jersey 07693 Attention: Dan O'Donnell Vice President Telecopy No.: (201) 634-3497 Copy to: FINOVA Capital Corporation The FINOVA Corporate Center 4800 North Scottsdale Road Scottsdale, Arizona 85251-7623 Attention: Vice President, Law Telecopy No.: (480) 636-6444 Copy to: Altheimer & Gray 10 S. Wacker Drive, Suite 4000 Chicago, Illinois 60606 Attention: Michael L. Owen, Esq. Telecopy No.: (312) 715-4800 |
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 12.1 shall be deemed received
(i) if personally delivered, then on the Business Day of delivery, (ii) if sent
by telecopy before 2:00 p.m. Phoenix time, on the day sent if a Business Day or
if such day is not a Business Day or if sent after 2:00 p.m. Phoenix time, then
on the next Business Day, (iii) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent, or (iv) if sent by
registered or certified mail, on the earlier of the fifth Business Day following
the day sent or when actually received. Any notice by telecopy shall be followed
by delivery on the next Business Day by overnight, express carrier or by hand.
Loan Instruments and to protect Lenders' rights thereunder, including, without limitation, using its commercially reasonable best efforts in the event any Collateral is to be sold to secure the approval by any Governmental Body of any application required by such Governmental Body in connection with such sale, and not take any action inconsistent with such sale or the purposes of the Loan Instruments.
before proceeding against any such Person or to enforce or resort to any security, liens, collateral or other rights of Agent or Lenders. One or more successive actions may be brought against any Borrower and/or any other Person party to the Loan Instruments, either in the same action or in separate actions, as often as Lenders deem advisable, until all of Borrowers' Obligations are paid and performed in full.
transfer or assignment of any License, permit or authority issued by any Governmental Body, or a transfer of control over any such License, permit or authorization, if such assignment or transfer would require the prior approval of and/or notice to any Governmental Body, without such party first having notified such Governmental Body of any such assignment or transfer and, if required, obtaining the approval of such Governmental Body therefor.
(a) Borrowers' Obligations constitute the joint and several obligations of each Borrower secured by the Security Interests. Each Borrower acknowledges that the proceeds of the Loans are a direct and indirect benefit to all Borrowers. The provisions of this Section 12.24 shall in no way limit the obligations of any Borrower hereunder or under any of the other Loan Instruments and each Borrower shall remain liable to Agent and Lenders for the full amount of Borrowers' Obligations.
(b) Each Borrower agrees (subject to clause (c) below) that in the event a payment of any of Borrowers' Obligations shall be made by any Borrower or any asset of any Borrower shall be sold to satisfy a claim of Agent or any Lender to receive any such payment, each other Borrower (the "Contributing Borrower") shall indemnify such Borrower (the "Claiming Borrower") in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such asset, as the case may be, multiplied by a fraction, the numerator of which shall be the net worth of the Contributing Borrower on the date hereof and the denominator of which shall be the aggregate net worth of all Borrowers on such date. A Contributing Borrower making any payment to the Claiming Borrower pursuant hereto shall be subrogated to the rights of the Claiming Borrower to the extent of such payment.
(c) No Borrower shall exercise any rights which it may acquire by way
of subrogation hereunder to the rights of any other Borrower or otherwise
in equity or at law by any payment made hereunder or otherwise, nor shall
any Borrower seek or be entitled to seek any contribution or reimbursement
from any other Borrower in respect of payments made by such other Borrower
in respect of Borrowers' Obligations until Borrowers' Obligations have been
indefeasibly paid and performed in full. If any amounts shall be paid to
any Borrower on account of such subrogation or contribution rights at any
time prior to the date Borrowers' Obligations have been indefeasibly paid
and performed in full, such amount shall be held in trust for Agent and
Lenders, segregated from other funds of such Borrower, and shall, forthwith
upon receipt by such Borrower, be turned over to Agent in the exact form
received by such Borrower (duly endorsed by such Borrower to Agent, if
required), for application to Borrowers' Obligations in accordance with
Section 8.4 hereof.
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IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered by each of the parties hereto by a duly authorized officer of each such party on the date first set forth above.
RED ROBIN INTERNATIONAL, INC., a Nevada
corporation
By: /s/ James P. McCloskey ------------------------------------------- James P. McCloskey, Chief Financial Officer |
RED ROBIN HOLDING CO., INC., an Oregon
corporation, and RED ROBIN DISTRIBUTING
COMPANY, INC., a Colorado corporation
By: /s/ James P. McCloskey ------------------------------------------- James P. McCloskey, Vice President of each of the foregoing corporations |
RED ROBIN OF BALTIMORE COUNTY, INC., a Maryland corporation, and RED ROBIN OF ANNE ARUNDEL COUNTY, INC., a Maryland corporation
By: /s/ James P. McCloskey ------------------------------------------- James P. McCloskey, Treasurer of each of the foregoing corporations |
FINOVA CAPITAL CORPORATION, a Delaware corporation, in its individual capacity as a Lender and as Agent for all Lenders
By: /s/ Daniel O'Donnell ------------------------------------------- Daniel O'Donnell |
The following exhibits and schedules to the Loan Agreement have been omitted and shall be furnished supplementally to the Commission upon request:
Exhibit 1.1(A) - Form of Assignment and Acceptance Agreement Exhibit 1.1(B) - Form of Compliance Certificate Exhibit 1.1(C) - Form of Landlord's Agreement for Leasehold Mortgage Stores Exhibit 1.1(D) - Form of Landlord's Agreement for Non-Leasehold Mortgage Stores Schedule 5.3.1 - Borrower Equity Interests Schedule 5.3.2 - Restrictions Schedule 5.5.1 - Business and Property Schedule 5.5.2 - License Agreements Schedule 5.5.3 - Operating Agreements Schedule 5.5.4 - Facility Sites, including Excluded Stores Schedule 5.5.5 - Leases, including Excluded Leases Schedule 5.5.6 - Real Estate, including Excluded Real Estate Schedule 5.7.1 - Financial Statements Schedule 5.8 - Litigation Schedule 5.9 - Defaults in Other Agreements; Consents; Conflicting Agreements Schedule 5.10 - Taxes Schedule 5.12 - Patents, Trademarks, Franchises, Agreements Schedule 5.13 - Regulatory Matters Schedule 5.17 - Existing Indebtedness as of the Closing Date Schedule 5.19.1 - Employee Benefit Plans Schedule 7.9 - New Stores |
EXHIBIT 10.18
FIRST AMENDMENT TO LOAN INSTRUMENTS
This FIRST AMENDMENT TO LOAN INSTRUMENTS (this "Amendment"), dated as of August 9, 2001, is among RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holding Company"), RED ROBIN INTERNATIONAL, INC., a Nevada corporation ("Red Robin"), RED ROBIN DISTRIBUTING COMPANY, INC., a Colorado corporation ("RR Distributing Sub"), RED ROBIN WEST, INC., formerly Red Robin Holding Co., Inc., a Nevada corporation ("RR West Sub"), RED ROBIN OF BALTIMORE COUNTY, INC., a Maryland corporation ("RR Baltimore Sub"), RED ROBIN OF MONTGOMERY COUNTY, INC., a Maryland Corporation ("RR Montgomery Sub"), RED ROBIN OF ANNE ARUNDEL, COUNTY, INC., a Maryland corporation ("RR Anne Arundel Sub" which together with Red Robin, RR Distributing Sub, RR West Sub, RR Baltimore Sub and RR Montgomery Sub is referred to herein as "Original Borrowers") and FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), in its individual capacity and as agent for all Lenders (this and all other capitalized terms used but not elsewhere defined herein are defined in Section 2 below).
RECITALS:
A. Original Borrowers, Agent and Lenders entered into a Loan Agreement dated as of September 6, 2000 (the "Loan Agreement") pursuant to which Lenders agreed to make loans and other financial accommodations to Original Borrowers.
B. Concurrently herewith, (i) the Corporate Reorganization is being consummated, pursuant to which, among other things, Holding Company will become the sole holder of all the capital stock, options, warrants and other rights to acquire capital stock of Red Robin, and (ii) Red Robin formed RR Montgomery Sub.
C. Original Borrowers desire to cause Holding Company and RR Montgomery Sub to join with and into the Loan Instruments as additional borrowers together with Original Borrowers. Original Borrowers, together with Holding Company and RR Montgomery Sub are referred to herein as "Borrowers."
D. Agent and Lenders are willing to agree to the requests of Borrowers, subject to the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and subject to the terms and conditions hereof, Borrowers, Agent and Lenders agree as follows:
the foregoing, each of Holding Company and RR Montgomery Sub hereby agrees to be bound as a "Debtor" under the terms of that certain Security Agreement dated as of September 6, 2000 among the Original Borrowers and Agent (the "Security Agreement"), and further grants to Agent as Secured Party thereunder a security interest in all Property of such Debtor pursuant to the terms of the Security Agreement. Each Original Borrower consents to the foregoing joinder by Holding Company into the Loan Instruments.
Licenses and Operating Agreements required to conduct its business as now conducted."
(a) this Amendment;
(b) the Substitute Pledge Agreement;
(c) the RR Montgomery Sub Pledge Agreement;
(d) a good standing certificate for each Borrower from the State in which each such Borrower is organized and each State in which any Store owned or operated by such Borrower is located, each dated a recent date prior to the Effective Date;
(e) certified copies of (i) the articles or certificate of
incorporation of each Borrower, together with all amendments thereto,
certified by the Secretary of State of the State in which such
Borrower is located as of recent date prior to the Effective Date;
(ii) the by-laws of each Borrower certified as of the Effective Date
by the corporate secretary of such Borrower, and (iii) resolutions
adopted by the board of directors of each Borrower authorizing the
execution and delivery of the First Amendment and the related
documents and the consummation of the transactions contemplated
thereby, certified as of the Effective Date by the corporate secretary
of such Borrower;
(f) signature and incumbency certificates of the officers of each Borrower;
(g) a certificate of merger from the Delaware Secretary of State and the Nevada Secretary of State reflecting the consummation of the merger of RR Merger Sub with and into RRI, certified by the Delaware Secretary of State and the Nevada Secretary of State, as applicable and copies of such of the merger instruments as are required to be and in fact were filed with the Delaware Secretary of State of State and the Nevada Secretary of State in connection with the merger;
(h) certified copies or originals of the following:
(1) the First Amendment to Escrow Agreement;
(2) the Shareholder Agreement;
(3) the Registration Rights Agreement;
(4) such landlord consents to the Corporate Reorganization as are required by each Lease;
(6) the Corporate Reorganization Documents; and
(i) such other instruments, documents, certificates, consents, waivers and opinions as Lenders reasonably may request.
The date on which all of the conditions set forth in this Paragraph 4 have been satisfied is referred to herein as the "Effective Date."
Amendment and expect as previously disclosed to Agent in writing, to which such Borrower is a party are true and correct in all material respects as of the date hereof, and shall be deemed to be remade as of the date hereof. Each Borrower represents and warrants to Agent and Lenders that (i) such Borrower has full power and authority to execute and deliver this Amendment and to perform its obligations hereunder, (ii) upon the execution and delivery hereof, this Amendment will be valid, binding and enforceable upon such Borrower in accordance with its terms, (iii) the execution and delivery of this Amendment does not and will not contravene, conflict with, violate or constitute a default under (A) its articles of incorporation or by-laws, or (B) any applicable law, rule, regulation, judgment, decree or order or any agreement, indenture or instrument to which such Borrower is a party or is bound or which is binding upon or applicable to all or any portion of such Borrower's Property and (iv) as of the date hereof no Incipient Default or Event of Default exists.
shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Amendment.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Amendment has been executed and delivered by each of the parties hereto by a duly authorized officer of each such party on the date first set forth above.
RED ROBIN GOURMET BURGERS, INC., a
Delaware corporation
/s/ Michael J. Snyder ----------------------------------- Name: Michael J. Snyder Title: Chief Executive Officer & President |
RED ROBIN INTERNATIONAL, INC., a Nevada
corporation
/s/ Michael J. Snyder ----------------------------------- Name: Michael J. Snyder Title: Chief Executive Officer & President |
RED ROBIN DISTRIBUTING COMPANY, INC., a
Colorado corporation
/s/ Michael J. Snyder ----------------------------------- Name: Michael J. Snyder Title: Chief Executive Officer & President |
RED ROBIN WEST, INC., a Nevada corporation
/s/ Michael J. Snyder ----------------------------------- Name: Michael J. Snyder Title: Chief Executive Officer & President |
RED ROBIN OF BALTIMORE COUNTY, INC., a
Maryland corporation
/s/ John W. Grant ----------------------------------- Name: John W. Grant Title: President |
RED ROBIN OF ANNE ARUNDEL COUNTY,
INC., a Maryland corporation
/s/ John W. Grant ----------------------------------- Name: John W. Grant Title: President |
RED ROBIN OF MONTGOMERY COUNTY, INC.,
a Maryland corporation
/s/ John W. Grant ----------------------------------- Name: John W. Grant Title: President |
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By: /s/ Bernice H. Carr ----------------------------------- Name: Bernice H. Carr Title: Vice President Contract Administration |
The following schedule to the First Amendment to Loan Instruments has been omitted and shall be furnished supplementally to the Commission upon request:
Schedule 5.3.1 - Equity Interests
Exhibit 10.19
SECOND AMENDMENT TO LOAN INSTRUMENTS
This SECOND AMENDMENT TO LOAN INSTRUMENTS (this "Amendment"), dated as of January 31, 2002, is among RED ROBIN INTERNATIONAL, INC., a Nevada corporation ("Red Robin"), RED ROBIN DISTRIBUTING COMPANY, INC., a Colorado corporation ("RR Distributing Sub"), RED ROBIN WEST, INC., formerly Red Robin Holding Co., Inc., a Nevada corporation ("RR West Sub"), RED ROBIN OF BALTIMORE COUNTY, INC., a Maryland corporation ("RR Baltimore Sub"), RED ROBIN OF ANNE ARUNDEL, COUNTY, INC., a Maryland corporation ("RR Anne Arundel Sub") (Red Robin, RR Distributing Sub, RR West Sub, RR Baltimore Sub and RR Anne Arundel Sub hereinafter are referred to individually as an "Original Borrower" and collectively as "Original Borrowers"), RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holding Company"), RED ROBIN OF MONTGOMERY COUNTY, INC., a Maryland corporation ("RR Montgomery Sub"), WESTERN FRANCHISE DEVELOPMENT, INC., a California corporation ("Western Franchise Sub"), and FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), in its individual capacity and as agent for all Lenders (this and all other capitalized terms used but not elsewhere defined herein are defined in Section 2 below).
RECITALS:
A. Original Borrowers, Agent and Lenders entered into a Loan Agreement dated as of September 6, 2000 (the "Original Loan Agreement") pursuant and subject to the terms and conditions of which Lenders agreed to make loans and other financial accommodations to Original Borrowers.
B. Original Borrowers, Holding Company, RR Montgomery Sub, Agent and Lenders entered into a First Amendment to Loan Instruments dated as of August 9, 2001 (the "First Amendment") pursuant to which, among other things, Holding Company and RR Montgomery Sub joined with and into the Original Loan Agreement as additional Borrowers thereunder. The Original Loan Agreement, as amended by the First Amendment, hereinafter is referred to as the "Loan Agreement."
C. Red Robin has acquired all of the capital stock of Western Franchise Sub. Original Borrowers, Holding Company, RR Montgomery Sub and Western Franchise Sub desire to cause Western Franchise Sub to join with and into the Loan Instruments as an additional borrower thereunder. Original Borrowers, Holding Company and RR Montgomery Sub, together with Western Franchise Sub, hereinafter are referred to individually as a "Borrower" and collectively as "Borrowers."
D. Borrowers have requested that (i) Agent and Lenders permit Borrowers to incur up to an additional $15,000,000 of indebtedness for borrowed money for store development and acquisition and (ii) amend the Loan Agreement in certain respects to facilitate an initial public offering by Holding Company.
E. Agent and Lenders are willing to agree to the requests of Borrowers, pursuant and subject to the terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and subject to the terms and conditions hereof, Borrowers, Agent and Lenders agree as follows:
"(ii) the Purchase Money/Capitalized Lease Indebtedness Liens, the Orix Indebtedness Liens, the MetLife Indebtedness Liens, the Captec Indebtedness Liens, the Bonnyville Indebtedness Liens, the GE Indebtedness Liens and the Additional Third Party Indebtedness Liens;"
(a) prior to a Qualifying IPO, (i) the Investor Group shall cease to (A) own and control a majority of Holding Company Capital Stock or (B) have the ability to appoint a majority of the Board of Directors of Holding Company, or (ii) the control and veto rights granted to directors designated by Skylark Company, Ltd under the Shareholders Agreement are expanded; or
(b) after a Qualifying IPO, any "person" or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) (other than one or more members of the Investor Group) has become the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all securities that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), by way of merger, consolidation or otherwise, of a greater percentage than the Investor Group of the total voting power in the aggregate of all classes of capital stock of Holding Company then outstanding normally entitled to vote in elections of directors of Holding Company on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding securities of Holding Company convertible into or exercisable for such classes of capital stock (whether or not such securities are then currently convertible or exercisable); or
(c) after a Qualifying IPO, during any period of two consecutive calendar years, individuals who at the beginning of such period constituted the board of directors (or persons performing similar functions) of Holding Company together with any new members of such board of directors (i) elected by the Investor Group or (ii) whose elections by such board of directors or whose nominations for election by the stockholders of Holding Company was approved by a vote of a majority of the members of such board of directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the directors of Holding Company still in office; or
(d) the Investor Group ceases to own at least (i) 20% of the total voting power in the aggregate of all classes of capital stock of Holding Company then outstanding normally entitled to vote in elections of directors of Holding Company on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding securities of Holding Company convertible into or exercisable for such classes of capital stock (whether or not such securities are then currently convertible or exercisable) after a Qualifying IPO and prior to a Secondary Offering or (ii) 10% of the total voting power in the aggregate of all classes of capital stock of Holding Company then outstanding normally entitled to vote in elections of directors of Holding Company on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding securities of Holding Company convertible into or exercisable for such classes of capital stock (whether or not such securities are then currently convertible or exercisable) after a Secondary Offering; or
(e) after a Qualifying IPO, the Management Group ceases to own at least 5% of the total voting power in the aggregate of all classes of capital stock of Holding Company then outstanding normally entitled to vote in elections of directors of Holding Company on a fully-diluted basis after giving effect to the conversion and exercise of all outstanding securities of Holding Company convertible into or exercisable for such classes of capital stock (whether or not such securities are then currently convertible or exercisable); or
(f) Holding Company shall cease to own and control, directly or indirectly, all of the Borrower Subsidiary Capital Stock and Red Robin Capital Stock.
form)) of the common capital stock of Holding Company pursuant to an effective registration statement filed with the United States Securities of Exchange Commission in accordance with the Securities Act (whether alone or in conjunction with a secondary public offering).
schedule:
Percentage of Principal Period of Prepayment Balance Prepaid -------------------- --------------- Fourth Loan Year 4.0% Fifth Loan Year 3.0% Sixth Loan Year 2.0% 7 |
Seventh Loan Year and Thereafter 1.0% |
following schedule:
Percentage of Principal Period of Prepayment Balance Prepaid -------------------- --------------- Second Loan Year 4.0% Third Loan Year 4.0% Fourth Loan Year 4.0% Fifth Loan Year 3.0% Sixth Loan Year 2.0% Seventh Loan Year and Thereafter 1.0% |
"Upon the written request of Borrowers and at their sole cost and expense, Agent shall take such actions and execute such documents as Borrowers reasonably may request, including, without limitation, the execution and delivery of appropriate UCC-3 partial releases, in order to release the Security Interests, if any, on any Additional Third Party Collateral which is to become subject to an Additional Third Party Lien permitted hereunder as a result of the incurrence of Additional Third Party Indebtedness permitted hereunder."
to March 31, 2003 (i) an executed copy thereof, (ii) a Landlord's Agreement from the landlord under such lease, (iii) a first leasehold mortgage or leasehold deed of trust in form and substance substantially similar to the Leasehold Mortgages, (iv) a lender's policy of title insurance, in such form and amount and containing such endorsements as shall be reasonably satisfactory to Agent, (v) an ALTA/ACSM survey of the real estate demised under such lease, (vi) an Environmental Audit with respect to such real property and (vii) such other documents and assurances with respect to such lease as Agent may require."
(i) each item of Excluded Personal Property, each Excluded Lease, each parcel of Excluded Real Estate which secures the AEI Indebtedness, the Orix Indebtedness, the MetLife Indebtedness, the Captec Indebtedness, the Bonnyville Indebtedness or the GE Indebtedness, in each case within 30 days after the repayment of the applicable Indebtedness;
(ii) each item of Additional Third Party Collateral (A) within 30 days after March 31, 2003 if an Additional Third Party Indebtedness Lien has not been granted on such item of Additional Third Party Collateral by March 31, 2003 and (B) on which an Additional Third Party Indebtedness Lien is granted on or prior to March 31, 2003 within 30 days after the repayment of the related Additional Third Party Indebtedness unless such repayment is the result of a refinancing of short term (i.e., maturing less than one year from the date incurred) Additional Third Party Indebtedness with long term (i.e.,
maturing five or more years from the date incurred) Additional Third Party Indebtedness secured by such item of Additional Third Party Collateral; and
(iii) each parcel of the Real Estate Held for Sale which has not been sold to an unaffiliated third party of any Borrower prior to the second anniversary of the Closing Date, within 30 days after the second anniversary of the Closing Date."
(A) the aggregate principal amount thereof outstanding at any time after the Second Amendment Effective Date does not exceed $15,000,000;
(B) the aggregate principal amount thereof outstanding at any time prior to January 1, 2003 does not exceed $10,000,000;
(C) prior to incurring Additional Third Party Indebtedness in an aggregate principal amount outstanding in excess of $10,000,000, Borrowers demonstrate to the reasonable satisfaction of Agent that (1) Holding Company has consummated a Qualifying IPO and (2) the Leverage Ratio for the most recently ended Four Quarter Period was less than 2.75:1.00 assuming such Indebtedness had been incurred on the last day of such Four Quarter Period;
(D) the pricing and other terms of such Additional Third Party Indebtedness and the value of any Additional Third Party Collateral required to be pledged to secure such Additional Third Party Indebtedness are consistent with prevailing market terms applicable to Indebtedness for Borrowed Money of such character and type (it being understood and agreed that the parties hereto do not anticipate that all Additional Third Party Collateral must be pledged to secure the amounts of Additional Third Party Indebtedness permitted to be incurred under this Section 7.1);
(E) no Event of Default exists or would be created at the time any such Additional Third Party Indebtedness is incurred; and
(F) Borrowers provide to Agent copies of all applicable Additional Third Party Indebtedness Instruments prior to incurring such Additional Third Party Indebtedness."
(a) this Amendment;
(b) the Western Franchise Sub Pledge Agreement, together with the original stock certificates evidencing all of the Equity Interests of Western Franchise Sub and duly executed assignments separate from certificate with respect thereto;
(c) certified copies of (i) the articles or certificate of incorporation of each Borrower, together with all amendments thereto, certified by the corporate secretary of such Borrower as of the date hereof, (ii) the by-laws of each Borrower, together with all amendments thereto, certified as of the date hereof by the corporate secretary of such Borrower, and (iii) resolutions adopted by the board of directors of each Borrower authorizing the execution, delivery and performance of this Amendment, certified as of the date hereof by the corporate secretary of such Borrower;
(d) signature and incumbency certificates of the officers of each Borrower;
(e) evidence that the AEI Indebtedness Liens have been released;
(f) such other instruments, documents, certificates, consents, waivers and opinions as Lenders reasonably may request.
The date on which all of the conditions set forth in this Paragraph 4 have been satisfied is referred to herein as the "Effective Date."
Lenders and Borrowers. The Loan Instruments, as amended by this Amendment, contain the entire agreement among Lenders and Borrowers with respect to the transactions contemplated hereby.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Amendment has been executed and delivered by each of the parties hereto by a duly authorized officer of each such party on the date first set forth above.
RED ROBIN GOURMET BURGERS, INC.,
a Delaware corporation
By: /s/ James P. McCloskey ------------------------------------ Name: James P. McCloskey Title:Chief Financial Officer & Secretary |
RED ROBIN INTERNATIONAL, INC., a Nevada
corporation
By: /s/ James P. McCloskey ------------------------------------ Name: James P. McCloskey Title:Chief Financial Officer & Secretary |
RED ROBIN DISTRIBUTING COMPANY, INC., a
Colorado corporation
By: /s/ James P. McCloskey ------------------------------------ Name: James P. McCloskey Title:Chief Financial Officer & Secretary |
RED ROBIN WEST, INC., a Nevada corporation
By: /s/ James P. McCloskey ------------------------------------ Name: James P. McCloskey Title:Chief Financial Officer & Secretary |
RED ROBIN OF BALTIMORE COUNTY, INC., a
Maryland corporation
By: /s/ John W. Grant ------------------------------------ Name: John W. Grant Title:President |
RED ROBIN OF ANNE ARUNDEL COUNTY, INC., a
Maryland corporation
By: /s/ John W. Grant ------------------------------------ Name: John W. Grant Title:President |
RED ROBIN OF MONTGOMERY COUNTY, INC., a
Maryland corporation
By: /s/ John W. Grant ------------------------------------ Name: John W. Grant Title:President |
WESTERN FRANCHISE DEVELOPMENT, INC., a
California corporation
By: /s/ James P. McCloskey ------------------------------------ Name: James P. McCloskey Title:Chief Financial Officer & Secretary |
FINOVA CAPITAL CORPORATION, a Delaware
corporation
RED ROBIN OF ANNE ARUNDEL COUNTY, INC., a
Maryland corporation
RED ROBIN OF MONTGOMERY COUNTY, INC., a
Maryland corporation
WESTERN FRANCHISE DEVELOPMENT, INC., a
California corporation
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By: /s/ John Zakoworotny ------------------------------------ Name: John Zakoworotny Title:Vice President |
Schedule 1.1
1. Northeast corner of NW Civic Street and Division Street, Gresham, OR
(location # 351)
2. Southwest corner of SE Washington Street and SE 100th Avenue, Portland OR
(location # 145)
3. Roseville (Creekside), Town Center, Pad 6, Harding Boulevard and Antelope Creek Drive, Roseville, CA (location # 49)
4. 12227 Harbor Boulevard, Garden Grove, CA 92840 (location # 146)
5. 1. W. Flatiron Circle, Suite 504, Broomfield, CO (location # 20)
6. Crown Point, CO under development
7. Dulles Town Center, VA under development
8. Germantown, MD under development
9. Mesa, AZ under development
10. Peoria, AZ under development
11. Prescott, Arizona under development
12. The following New Stores which are the subject of the "Le Carnassier" acquisition:
6522 Strip Ave. NW, Canton, Ohio (Site No. 601) 17308 Chesterfield Airport Road, Chesterfield, MO (Site No. 615) 36565 Euclid Avenue, Willoughby, OH (Site No. 604)
13. The following New Stores which are the subject of the "Western Franchise Development" acquisition:
1274 El Camino Real, San Bruno, CA (Site No. 193) 4503 Rosewood Drive, Pleasanton, CA (Site No. 195)
2204 Bridgepointe Parkway, San Mateo, CA (Site No. 196)
The following exhibits and schedules to the Second Amendment to Loan Instruments have been omitted and shall be furnished supplementally to the Commission upon request:
Schedule 5.3.1 - Equity Interests Schedule 5.5.4 - Facility Sites Schedule 5.5.5 - Leases Schedule 5.5.6 - Real Estate |
Exhibit 10.21
MASTER LOAN AGREEMENT
This MASTER LOAN AGREEMENT (this "Agreement"), dated as of the 3rd day of November, 2000 is made by and between Red Robin International, Inc., a Nevada corporation ("Debtor"), whose address is 5575 DTC Parkway, Suite 110, Englewood, CO 80111 and General Electric Capital Business Asset Funding Corporation ("GE Capital") whose address is 10900 NE 4th Street, Suite 500, Bellevue, WA 98004, mailing address C-97550, Bellevue, WA 98009. GE Capital and Debtor may from time to time enter into written agreements in the form of security agreements and promissory notes pursuant to which GE Capital will make certain secured loans to Debtor. To facilitate such transactions, GE Capital and Debtor are entering into this Agreement, the terms and provisions of which shall be incorporated by reference in each such security agreement and promissory note.
NOW, THEREFORE, in consideration of the premises and the covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, Debtor and GE Capital hereby agree as follows:
Debtor may in good faith and by appropriate proceedings contest the application of any such rule, regulation or order in any reasonable manner that will not adversely affect GE Capital's security interest in any Collateral or subject the same to forfeiture or sale. Debtor will not permit any Collateral to be subject to any lien, charge or encumbrance except that of GE Capital and will keep the Collateral free and clear of any and all liens, charges, encumbrances, and adverse claims. Debtor will not sell, lease, rent, or otherwise dispose of any item of Collateral without the prior written consent of GE Capital.
personal financial statements and tax returns of any guarantor on an annual basis, and such information concerning its business as GE Capital may reasonably request.
If upon the occurrence of an Event of Default, GE Capital brings suit or otherwise incurs expenses for protection of GE Capital's rights, Debtor will pay GE Capital its legal fees, in a reasonable amount, together with GE Capital's collection expenses and court costs. In addition, from and after an Event of Default, Debtor shall be liable for interest on amounts due GE Capital hereunder at the rate of six (6%) percent over the rate payable by Debtor under the Term or Interim Notes then in effect; ("Default Interest") provided however, that Debtor shall not be assessed a late charge (as set forth in the Term and Interim Notes) during such period of time that Default Interest is accruing against Debtor as herein stated. The remedies herein provided in favor of GE Capital shall not be deemed to be exclusive but shall be cumulative and in addition to all other remedies available at law or equity.
General Electric Capital Red Robin International, Inc. Business Asset Funding Corporation By: /s/ Dawn Peretti By: /s/ Jim McCloskey ----------------------------------- ---------------------------------- Title: Dawn Peretti, Vice President Title: Jim McCloskey, CFO |
Exhibit 10.22
PROMISSORY NOTE SECURED BY PLEDGE OF STOCK
$300,000 June 30, 2000
On May 11, 2005, for value received, I, Michael J. Snyder ("Maker") promise to pay to the order of Red Robin International, Inc. ("Payee"), at 5575 DTC Parkway, Suite 110, Englewood, Colorado 80111, or at such other place as Payee may direct in writing prior to the due date, the sum of $300,000, with interest at 6.62 percent per annum compounded annually. If Payee achieves cumulative EBITDA for the 2001 and 2002 fiscal years of Payee of at least $46,983,000, all interest accrued under this Promissory Note shall be forgiven, and no additional interest shall accrue after the end of Payee's fiscal year 2002. Any amount unpaid when due shall bear interest at the greater of: (a) 6.62 percent per annum, or (b) the lower of the prime rate published in the Wall Street Journal (New York Edition) plus 2 percent per annum, or the highest rate that may be charged by law. Borrower may pre-pay this note in whole or in part at any time without penalty.
Pursuant to that certain Pledge Agreement of even date between Payee, as holder of the pledge, and Maker, as maker of the pledge, Maker has deposited with Payee as collateral security for payment of this Promissory Note 150,000 shares of common stock of Red Robin International, Inc. If Maker sells all or any portion of the shares of the common stock held by Payee (other than a sale which is a Permitted Transfer to a Related Transferee, as defined in the Shareholders Agreement, dated May 11, 2000, to which Maker is a party), the proceeds from the sale of the Shares after deduction of any taxes due thereon shall be paid to Payee and applied to the sums due under this Promissory Note.
The whole of the principal and any unpaid interest due under this Promissory Note shall immediately become due and payable to Payee upon the earlier of: (a) the due date stated above, or (b) the date Payee terminated Maker's employment for Cause, or the date Maker terminates his employment other than for Substantial Breach (as defined in the Employment Agreement described below) by Payee, (c) at such time as Maker becomes insolvent, (d) upon the appointment of an assignee for the benefit of creditors or of a receiver, trustee, or custodian for Maker, (e) the filing of a petition under any provision of the Bankruptcy Code either by or against Maker, or (f) at such time as Maker is unable to meet his obligations as they become due, without demand for payment and without notice to Maker.
Payee may transfer this Promissory Note to any other person, firm, or corporation, and may deliver the collateral to the transferee of such Promissory Note, who shall thereupon become vested with all the powers and rights given to the Payee in respect thereto, and Payee shall thereafter be forever relieved and discharged from any responsibility or liability in the matter.
In any action brought to enforce or to interpret this Promissory Note, the prevailing party in such action shall be entitled to recover from the losing party the prevailing party's
reasonable attorney's fees.
Maker hereby waives notice of dishonor and protest, presentment, and of impairment of recourse or collateral.
Capitalized terms used in this Promissory Note and not otherwise defined herein shall have the meanings assigned to them in the Employment Agreement between Red Robin International, Inc. and Michael J. Snyder, dated May 11, 2000, or in the other documents referred to therein.
This Promissory Note shall be enforced and interpreted under the laws of the state of Colorado. Any action brought to enforce or to interpret this Promissory Note shall be brought in the state or Federal court of appropriate jurisdiction closest to Payee's headquarters at the time the action is commenced.
Exhibit 10.23
PROMISSORY NOTE SECURED BY PLEDGE OF STOCK
$300,000 February 27, 2001
On May 11, 2005, for value received, I, Michael J. Snyder ("Maker") promise to pay to the order of Red Robin International, Inc. ("Payee"), at 5575 DTC Parkway, Suite 110, Englewood, Colorado 80111, or at such other place as Payee may direct in writing prior to the due date, the sum of $300,000, with interest at 6.62 percent per annum compounded annually. If Payee achieves cumulative EBITDA for the 2001 and 2002 fiscal years of Payee of at least $46,983,000, all interest accrued under this Promissory Note shall be forgiven, and no additional interest shall accrue after the end of Payee's fiscal year 2002. Any amount unpaid when due shall bear interest at the greater of: (a) 6.62 percent per annum, or (b) the lower of the prime rate published in the Wall Street Journal (New York Edition) plus 2 percent per annum, or the highest rate that may be charged by law. Borrower may pre-pay this note in whole or in part at any time without penalty.
Pursuant to that certain Pledge Agreement dated June 30, 2000, between Payee, as holder of the pledge, and Maker, as maker of the pledge, Maker has deposited with Payee as collateral security for payment of a Promissory Note in favor of Payee in the amount of $300,000, dated June 30, 2000, 150,000 shares of common stock of Red Robin International, Inc. Pursuant to a certain Pledge Agreement dated February 27, 2001, between Payee, as holder of the pledge, and Maker, as maker of the pledge, Maker has agreed that said common stock shall also be pledged to Payee as collateral security for payment of this Promissory Note. If Maker sells all or any portion of the shares of the common stock held by Payee (other than a sale which is a Permitted Transfer to a Related Transferee, as defined in the Shareholders Agreement, dated May 11, 2000, to which Maker is a party), the proceeds from the sale of the Shares after deduction of any taxes due thereon shall be paid to Payee and applied to the sums due under this Promissory Notes.
The whole of the principal and any unpaid interest due under this Promissory Note shall immediately become due and payable to Payee upon the earlier of: (a) the due date stated above, or (b) the date Payee terminated Maker's employment for Cause, or the date Maker terminates his employment other than for Substantial Breach (as defined in the Employment Agreement described below) by Payee, (c) at such time as Maker becomes insolvent, (d) upon the appointment of an assignee for the benefit of creditors or of a receiver, trustee, or custodian for Maker, (e) the filing of a petition under any provision of the Bankruptcy Code either by or against Maker, or (f) at such time as Maker is unable to meet his obligations as they become due, without demand for payment and without notice to Maker.
Payee may transfer this Promissory Note to any other person, firm, or corporation, and may deliver the collateral to the transferee of such Promissory Note, who shall thereupon become vested with all the powers and rights given to the Payee in respect thereto, and Payee shall thereafter be forever relieved and discharged from any responsibility or
liability in the matter.
In any action brought to enforce or to interpret this Promissory Note, the prevailing party in such action shall be entitled to recover from the losing party the prevailing party's reasonable attorney's fees.
Maker hereby waives notice of dishonor and protest, presentment, and of impairment of recourse or collateral.
Capitalized terms used in this Promissory Note and not otherwise defined herein shall have the meanings assigned to them in the Employment Agreement between Red Robin International, Inc. and Michael J. Snyder, dated May 11, 2000, or in the other documents referred to therein.
This Promissory Note shall be enforced and interpreted under the laws of the state of Colorado. Any action brought to enforce or to interpret this Promissory Note shall be brought in the state or Federal court of appropriate jurisdiction closest to Payee's headquarters at the time the action is commenced.
Exhibit 10.24
PLEDGE AGREEMENT
In order to induce Red Robin International, Inc., a Nevada corporation ("Red
Robin"), to loan Michael J. Snyder ("Snyder") the sums referenced in paragraph
3(f), "Loans," of that certain Employment Agreement between Red Robin and
Snyder, dated May 11, 2000, Snyder hereby agrees as follows:
1. Definitions.
When used herein, the terms set forth below shall be defined as follows:
(a) "Collateral" means the 150,000 shares of the common stock of Red Robin evidenced by certificate No. 154 and all additions thereto and substitutions therefore and all cash proceeds thereof in excess of any taxes payable by Snyder thereon.
(b) "Event of default" means: (i) any default with respect to payment or
performance of the Obligations; (ii) insolvency of any of Snyder; (iii) a
creditors committee is appointed to the business of Snyder; (iv) Snyder makes an
assignment for the benefit of creditors or a petition in bankruptcy or for
reorganization or to affect the plan of arrangement with creditors is filed by
or against Snyder; (v) Snyder applies for or permits the appointment of a
receiver or trustee for any or all of his property or assets, or any such
receiver or trustee has been appointed for any or all of his property or assets;
(vi) any of the above action or proceedings are commenced by or against Snyder;
(vii) a proceeding is filed or commenced by or against Snyder for dissolution or
liquidation; or (viii) Snyder dies.
(c) "Obligations" means all indebtedness arising under the Promissory Note and all liabilities of Snyder to Red Robin of every kind and description arising under said Promissory Note, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising, regardless of how the same arise out of the Promissory Note; including without limitation, all loans made by Red Robin to Snyder pursuant to the Employment Agreement (including any renewal or extension thereof), all undertakings to take or refrain from taking any action, and all interest, taxes, fees, charges, expenses and attorney fees chargeable to Snyder or incurred by Red Robin in connection with any transaction between Snyder and Red Robin arising out of the Promissory Note.
(d) "Promissory Note" means that certain Promissory Note Secured by Pledge of Stock executed of even date herewith in consideration of Red Robin's loan to Snyder of $300,000 pursuant to paragraph 3(f) of the Employment Agreement mentioned above.
2. Pledge of Collateral.
To secure the payment and performance of the Obligations, Snyder hereby pledges, assigns and transfers to Red Robin, and grants to Red Robin a continuing security interest in all of the Collateral.
3. Representations and Warranties.
The undersigned agrees to reimburse Red Robin on demand for all amounts paid or advanced by Red Robin for the purpose of preserving the Collateral or any part thereof and/or any liabilities or expenses incurred by Red Robin as the transferee or holder of the Collateral. Red Robin shall exercise reasonable care and custody in preserving the Collateral to the extent required by applicable statute and use commercially reasonable efforts to take any action in respect to the Collateral that Snyder reasonably requests in writing. Red Robin's failure to do any such act, however, shall not be deemed a failure to exercise reasonable care.
4. General Covenants.
Red Robin shall be under no duty to: (i) collect the Collateral or any proceeds thereof or give any notice with respect thereto; (ii) preserve the rights of Snyder with respect to the Collateral against third parties; (iii) sell or otherwise realize upon the Collateral; or (iv) seek payment of the Obligations from any particular source. Without limiting the generality of the foregoing, Red Robin shall not be obligated to take any action in connection with any conversion, call, rejection, retirement or any other event relating to the Collateral.
After payment of part of the Obligations, Red Robin may retain a proportionate share portion of the Collateral as security for any remaining Obligations and retain this Agreement as evidence of such security.
5. Rights and Remedies.
Red Robin shall have, among other rights and remedies, those provided in paragraph 5(a) at all times before and after an event of default occurs, and shall have all the rights and remedies enumerated in this Section 5 after an event of default occurs.
(a) Red Robin may, at its option, upon thirty days' notice to Snyder: (i)
transfer into its name or the name of its nominee any part of the Collateral;
(ii) demand, sue for, collect and receive all interest, dividends, including
liquidating dividends, and other proceeds thereof, and hold same as security for
payment of Obligations or, if cash proceeds, apply the portion of the cash
proceeds after deducting the amount of any taxes Snyder owes thereon, as payment
of the Obligations; or (iii) demand, sue for, collect or make any settlement or
compromise Red Robin deems desirable with respect to any Collateral.
(b) If any event of default occurs, and so long as it continues, Red Robin may declare all Obligations to be due and payable regardless of their terms, without notice, protest, presentment, or demand, all of which Snyder hereby expressly waives. While an event of default exists, Red Robin shall have, in addition to all rights and remedies contained herein and in other existing or future agreements, guaranties, notes, instruments, and documents executed by Snyder and delivered to Red Robin pertaining to this Agreement or to the Obligations all rights and remedies available to Red Robin under applicable law. Such additional rights and remedies shall include those of a secured party under the Uniform Commercial Code in force in the state of Colorado as of the date hereof. All of Red Robin's rights remedies shall be cumulative and non-exclusive to
the extent permitted by law.
6. General.
(a) Each reference herein to Red Robin shall be deemed to include the successors and assigns of Red Robin, and each reference to Snyder shall be deemed to include the heirs, administrators, legal representatives, successors and assigns of Snyder, all of whom shall be bound by the provisions hereof.
(b) No delay by Red Robin in exercising any rights or other failure to exercise the same shall operate as a waiver of such rights. No notice to Snyder or demand made upon Snyder by Red Robin shall be deemed a waiver of any Obligations or the right of Red Robin to take other or further action without notice or demand as provided herein. No modification or waiver of the provisions hereof shall be effective unless in writing signed by Red Robin, nor shall any waiver be applicable except in the specific instance or matter for which given.
(c) Snyder certifies and covenants that all acts, conditions and things required be done or performed as conditions precedent to the creation and issuance of this Agreement have been done or performed, and this Agreement is valid and legally binding upon Snyder in accordance with its terms.
(d) This Agreement is and shall be deemed to be a contract entered into and made under the laws of the state of Colorado. This Agreement shall in all respects be governed, construed, applied and enforced in accordance with laws of the state of Colorado. If Red Robin brings any action hereunder in any Colorado or federal court of record, Snyder consents to personal jurisdiction over him by such court or courts and agrees that service of process may be made upon him by delivering a copy of the summons and complaint to him in the manner and at the address specified in paragraph 6(h) hereof or in any other manner provided by law.
(e) IN ANY ACTION BROUGHT TO ENFORCE OR TO INTERPRET THIS AGREEMENT, SNYDER WAIVES THE RIGHT TO DEMAND TRIAL BY JURY.
(f) Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law. If any portion of this Agreement is declared invalid for any reason in any jurisdiction, such declaration shall have no effect upon the remaining portions, and this Agreement shall continue in effect as if this Agreement had been executed without the invalid portions.
(g) The section headings herein are included for convenience only and shall not be deemed to be part of this Agreement.
(h) Any notice that either party may or must give to the other shall mailed by United States Mail, return receipt requested, postage prepaid, or delivered by a national courier service to the address for the party provided below. If mailed, the notice shall be deemed received two business days after being deposited in the United States mail. If delivered via courier service, then the notice shall be deemed when signed for by the recipient. Either party may change its
address for notices to a new street address (but not a post office box or other address at which courier service is not accepted) by notifying the other party
in writing of the new street address.
Notices directed to Red Robin: Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, CO 80111 Attn: Legal Department Notices directed to Snyder: Michael J. Snyder 142 Capulin Place Castle Rock, CO 80104-9046 |
7. Assignment by Red Robin.
Red Robin may from time to time without notice to Snyder sell, assign, transfer or otherwise dispose of all or part of the Obligations and/or the Collateral therefore. In such event, each and every immediate and successive purchaser, assignee, transferee or holder of all or any part of the Obligations and/or the Collateral shall have the right to enforce this Agreement by legal action or otherwise, for its own benefit as fully as if such purchaser, assignee, transferee or holder were herein by name specifically given such rights. Red Robin's sale, assignment, transfer or disposal of part of the Obligations or Collateral shall not impair Red Robin's right to enforce this Agreement for its benefit as to the portion of the Obligations or Collateral that Red Robin has not sold, assigned, transferred or otherwise disposed of.
Snyder acknowledges that this Agreement and the Collateral may be transferred to Finova Capital Corporation or other party to secure a loan to Red Robin. If the Promissory Note shall be paid prior to the expiration of the security interest in the Collateral in favor of Finova Capital Corporation or other party, then Snyder authorizes Red Robin to transfer the Collateral to Finova Capital Corporation or such other party as may be designated to hold the Collateral under any present or future pledge agreement between Snyder and Finova Capital Corporation or other party.
Executed at Greenwood Village, Colorado, this 30th day of June 2000.
/s/ Michael J.Snyder -------------------- Michael J. Snyder |
Exhibit 10.25
PLEDGE AGREEMENT
In order to induce Red Robin International, Inc., a Nevada corporation ("Red
Robin"), to loan Michael J. Snyder ("Snyder") the sums referenced in paragraph
3(f), "Loans," of that certain Employment Agreement between Red Robin and
Snyder, dated May 11, 2000, Snyder hereby agrees as follows:
1. Definitions.
When used herein, the terms set forth below shall be defined as follows:
(a) "Collateral" means the 150,000 shares of the common stock of Red Robin evidenced by certificate No. 154 and all additions thereto and substitutions therefore and all cash proceeds thereof in excess of any taxes payable by Snyder thereon.
(b) "Event of default" means: (i) any default with respect to payment or
performance of the Obligations; (ii) insolvency of any of Snyder; (iii) a
creditors committee is appointed to the business of Snyder; (iv) Snyder makes an
assignment for the benefit of creditors or a petition in bankruptcy or for
reorganization or to affect the plan of arrangement with creditors is filed by
or against Snyder; (v) Snyder applies for or permits the appointment of a
receiver or trustee for any or all of his property or assets, or any such
receiver or trustee has been appointed for any or all of his property or assets;
(vi) any of the above action or proceedings are commenced by or against Snyder;
(vii) a proceeding is filed or commenced by or against Snyder for dissolution or
liquidation; or (viii) Snyder dies.
(c) "Obligations" means all indebtedness arising under the Promissory Note and all liabilities of Snyder to Red Robin of every kind and description arising under said Promissory Note, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising, regardless of how the same arise out of the Promissory Note; including without limitation, all loans made by Red Robin to Snyder pursuant to the Employment Agreement (including any renewal or extension thereof), all undertakings to take or refrain from taking any action, and all interest, taxes, fees, charges, expenses and attorney fees chargeable to Snyder or incurred by Red Robin in connection with any transaction between Snyder and Red Robin arising out of the Promissory Note.
(d) "Promissory Note" means that certain Promissory Note Secured by Pledge of Stock executed of even date herewith in consideration of Red Robin's loan to Snyder of $300,000 pursuant to paragraph 3(f) of the Employment Agreement mentioned above.
2. Pledge of Collateral.
To secure the payment and performance of the Obligations, Snyder hereby pledges, assigns and transfers to Red Robin, and grants to Red Robin a continuing security interest in all of the Collateral.
3. Representations and Warranties.
The undersigned agrees to reimburse Red Robin on demand for all amounts paid or advanced by Red Robin for the purpose of preserving the Collateral or any part thereof and/or any liabilities or expenses incurred by Red Robin as the transferee or holder of the Collateral. Red Robin shall exercise reasonable care and custody in preserving the Collateral to the extent required by applicable statute and use commercially reasonable efforts to take any action in respect to the Collateral that Snyder reasonably requests in writing. Red Robin's failure to do any such act, however, shall not be deemed a failure to exercise reasonable care.
4. General Covenants.
Red Robin shall be under no duty to: (i) collect the Collateral or any proceeds thereof or give any notice with respect thereto; (ii) preserve the rights of Snyder with respect to the Collateral against third parties; (iii) sell or otherwise realize upon the Collateral; or (iv) seek payment of the Obligations from any particular source. Without limiting the generality of the foregoing, Red Robin shall not be obligated to take any action in connection with any conversion, call, rejection, retirement or any other event relating to the Collateral.
The Collateral also stands as collateral security for that certain Promissory Note which Snyder gave to Red Robin on June 30, 2000, which is evidenced by a Pledge Agreement, also dated June 30, 2000. After payment of part of the Obligations under the Promissory Note and the Promissory Note of June 30, 2000, Red Robin may retain as security for any remaining Obligations a portion of the Collateral equal to the amounts remaining under both Promissory Notes using a value of $2.25 per share for said Red Robin common stock, and Red Robin may retain this Agreement as evidence of such security.
5. Rights and Remedies.
Red Robin shall have, among other rights and remedies, those provided in paragraph 5(a) at all times before and after an event of default occurs, and shall have all the rights and remedies enumerated in this Section 5 after an event of default occurs.
(a) Red Robin may, at its option, upon thirty days' notice to Snyder: (i)
transfer into its name or the name of its nominee any part of the Collateral;
(ii) demand, sue for, collect and receive all interest, dividends, including
liquidating dividends, and other proceeds thereof, and hold same as security for
payment of Obligations or, if cash proceeds, apply the portion of the cash
proceeds after deducting the amount of any taxes Snyder owes thereon, as payment
of the Obligations; or (iii) demand, sue for, collect or make any settlement or
compromise Red Robin deems desirable with respect to any Collateral.
(b) If any event of default occurs, and so long as it continues, Red Robin may declare all Obligations to be due and payable regardless of their terms, without notice, protest, presentment, or demand, all of which Snyder hereby expressly waives. While an event of default exists, Red Robin shall have, in addition to all rights and remedies contained herein and in other existing or future agreements, guaranties, notes, instruments, and documents executed by Snyder and
delivered to Red Robin pertaining to this Agreement or to the Obligations all rights and remedies available to Red Robin under applicable law. Such additional rights and remedies shall include those of a secured party under the Uniform Commercial Code in force in the state of Colorado as of the date hereof. All of Red Robin's rights remedies shall be cumulative and non-exclusive to the extent permitted by law.
6. General.
(a) Each reference herein to Red Robin shall be deemed to include the successors and assigns of Red Robin, and each reference to Snyder shall be deemed to include the heirs, administrators, legal representatives, successors and assigns of Snyder, all of whom shall be bound by the provisions hereof.
(b) No delay by Red Robin in exercising any rights or other failure to exercise the same shall operate as a waiver of such rights. No notice to Snyder or demand made upon Snyder by Red Robin shall be deemed a waiver of any Obligations or the right of Red Robin to take other or further action without notice or demand as provided herein. No modification or waiver of the provisions hereof shall be effective unless in writing signed by Red Robin, nor shall any waiver be applicable except in the specific instance or matter for which given.
(c) Snyder certifies and covenants that all acts, conditions and things required be done or performed as conditions precedent to the creation and issuance of this Agreement have been done or performed, and this Agreement is valid and legally binding upon Snyder in accordance with its terms.
(d) This Agreement is and shall be deemed to be a contract entered into and made under the laws of the state of Colorado. This Agreement shall in all respects be governed, construed, applied and enforced in accordance with laws of the state of Colorado. If Red Robin brings any action hereunder in any Colorado or federal court of record, Snyder consents to personal jurisdiction over him by such court or courts and agrees that service of process may be made upon him by delivering a copy of the summons and complaint to him in the manner and at the address specified in paragraph 6(h) hereof or in any other manner provided by law.
(e) IN ANY ACTION BROUGHT TO ENFORCE OR TO INTERPRET THIS AGREEMENT, SNYDER WAIVES THE RIGHT TO DEMAND TRIAL BY JURY.
(f) Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law. If any portion of this Agreement is declared invalid for any reason in any jurisdiction, such declaration shall have no effect upon the remaining portions, and this Agreement shall continue in effect as if this Agreement had been executed without the invalid portions.
(g) The section headings herein are included for convenience only and shall not be deemed to be part of this Agreement.
(h) Any notice that either party may or must give to the other shall mailed by United
States Mail, return receipt requested, postage prepaid, or delivered by a national courier service to the address for the party provided below. If mailed, the notice shall be deemed received two business days after being deposited in the United States mail. If delivered via courier service, then the notice shall be deemed when signed for by the recipient. Either party may change its address for notices to a new street address (but not a post office box or other address at which courier service is not accepted) by notifying the other party in
writing of the new street address.
Notices directed to Red Robin: Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, CO 80111 Attn: Legal Department Notices directed to Snyder: Michael J. Snyder 142 Capulin Place Castle Rock, CO 80104-9046 |
7. Assignment by Red Robin.
Red Robin may from time to time without notice to Snyder sell, assign, transfer or otherwise dispose of all or part of the Obligations and/or the Collateral therefore. In such event, each and every immediate and successive purchaser, assignee, transferee or holder of all or any part of the Obligations and/or the Collateral shall have the right to enforce this Agreement by legal action or otherwise, for its own benefit as fully as if such purchaser, assignee, transferee or holder were herein by name specifically given such rights. Red Robin's sale, assignment, transfer or disposal of part of the Obligations or Collateral shall not impair Red Robin's right to enforce this Agreement for its benefit as to the portion of the Obligations or Collateral that Red Robin has not sold, assigned, transferred or otherwise disposed of.
Snyder acknowledges that this Agreement and the Collateral may be transferred to Finova Capital Corporation or other party to secure a loan to Red Robin. If the Promissory Note shall be paid prior to the expiration of the security interest in the Collateral in favor of Finova Capital Corporation or other party, then Snyder authorizes Red Robin to transfer the Collateral to Finova Capital Corporation or such other party as may be designated to hold the Collateral under any present or future pledge agreement between Snyder and Finova Capital Corporation or other party.
Executed at Greenwood Village, Colorado, this 30th day of June 2000.
/s/ Michael J. Snyder --------------------- Michael J. Snyder |
Exhibit 10.26
AGREEMENT
AGREEMENT made this 15th day of July, 1998, between RED ROBIN, INTERNATIONAL, with its principal office at 5575 DTC Parkway, Suite 110, Englewood, Colorado, hereinafter referred to as the "Client" and MCCLAIN FINLON ADVERTISING, INC., with its principal office at 1440 Blake Street, Denver, Colorado, hereinafter referred to as the "Agency."
The Client wishes to engage the services of the Agency to advertise and promote the Client, its products and services to the public.
IT IS THEREFORE AGREED as follows:
a) Study and analyze the Client's business and products or services and survey the market therefor;
b) Develop an advertising program designed to meet the Client's needs and budgetary limitations;
c) Counsel the Client on its overall marketing program and make plans for a comprehensive program;
d) Determine and analyze the effect of the advertising used;
e) Plan, create, write and prepare layouts, copy and produce finished materials for advertisement and printed collateral of all types;
f) Provide, negotiate, arrange, and contract for any special talent required and for photography, models, special effects, layouts and artwork, and for printing, including any required engraving, electrotypes, typography, and any other necessary technical materials for use in the advertising program at the most favorable rates and terms available under the circumstances.
a) Analyze all advertising media and select those which are most suitable for use by the Client;
b) Make contracts with the advertising media for space or time and with others to carry out the advertising program and obtain the most favorable terms and rates available under the circumstances;
c) Check and follow up on all contracts with the various media for proper performance in the best interests of the Client, including the appearance, accuracy, date, time, position, size, extent, site, workmanship and mechanical production, as appropriate to the advertisements used;
d) Make timely payments to all persons or firms supplying goods or services in connection with the advertising program;
e) Advise and bill the Client for all remittances made by the Agency for the Client's account and maintain complete and accurate books and records in this regard.
In the event the Client, after having approved any planned advertising, cancels all or any part thereof, the Client shall pay for all costs incurred therefore to the date of cancellation and any unavoidable costs incurred thereafter, including any non-cancelable commitments for time or space.
period January 1, 1999 through December 31, 1999. The Agency agrees to a time investment of $35,000 in interim planning, brand and growth planning and creative services beginning June 1, 1998 through July 1, 1999.
Creative Services: The Agency will charge prevailing rates for the following:
Comprehensive layouts
Typography
Type Specification
Storyboards
Radio scripts
Final comprehensive layouts
Scans/stats
Color copies/computer outputs
a) Agency will use due care and will exercise its best judgment in preparing advertising and other services under this Agreement so as to avoid any
claims, proceedings or suits being instituted against Agency and/or the Client.
b) Agency will defend, indemnify and hold the Client and its affiliated entities, their officers and employees, and their successors and assigns, harmless from all claims, suits, losses, damages, expenses and costs, including court costs and reasonable attorney's fees, resulting from claims arising from the use, publication or broadcasting of any advertising materials prepared by Agency for the Client, provided that the Agency shall not be obligated to indemnify the Client for any such losses or claims to the extent relating to the negligence of the Client. Except as hereinafter provided, this indemnification shall not be diminished by reason of the Client's contribution to or approval of the material. This indemnification obligation of Agency shall survive the termination or expiration of this Agreement.
c) Where Agency has relied on facts or information supplied by the Client in support of any representation made in any commercial or other advertisement or where the Client has modified any advertising material prepared by Agency, the Client represents and warrants that it shall be solely responsible for the accuracy, completeness, and propriety of all information concerning its organization, services, products and competitors' products and services which the Client provides or makes available to the Agency in connection with the performance of Agency's services to the Client. The Client will indemnify and hold Agency, Agency's officers and employees harmless against any claim, suit, damages, losses, expenses and costs (including court costs and attorney's fees) resulting from the representation or modification, provided that Client shall not be obligated to indemnify Agency for any such losses or claims to the extent relating to the negligence of Agency, and further provided that the Client is given prompt written notice by Agency of the claim or suit for damages and further provided that the Client is given full control of the defense of the claim or suit, including any settlement thereof, and the full and complete cooperation of Agency in the defense thereof. This indemnification obligation of Client shall survive the termination or expiration of this Agreement.
d) Agency will maintain at all times during the term of this Agreement a policy of advertising liability insurance with a reputable insurance company. This policy will have limits of not less than One Million ($1,000,000) Dollars and will cover at a minimum the hazards of libel, slander, defamation,
copyright infringement, trademark infringement, invasion of privacy, piracy and plagiarism. Agency will provide at Client's request certificates of insurance evidencing such insurance coverage and providing that Client is listed as an additional named insured on such insurance policy.
or unreleased contracts only, to the Agency, as though this agreement had not been terminated.
a) All materials, artwork, photographs, research studies, commercials, slogans, musical themes and other creative ideas and materials of any nature that are created or produced and paid for by the Client any time, prior to or after execution of this Agreement, including drafts and intermediate editions which are retained by Agency, shall be the sole and exclusive property of the Client. Agency hereby assigns to the Client any and all right, title and interest it may have of claim to said materials.
Certain materials provided to the Agency by outside suppliers remain the property of that supplier in accordance with general trade practices. Such materials would include, but not be limited to, printing plates, negatives, film and tape masters or originals, and engraving.
b) However, at termination, any unused or unpublished advertising created by the Agency shall remain the property of the Agency, regardless of whether or not the physical embodiment of the creative work is in the Client's possession in the form of copy, art work, plates, film, or video tape, for example, unless it has been paid for by the Client.
c) Agency shall return all creative materials, artwork, photographs, video, research, copy, media affidavits, invoice ad slicks and other items retained
by Agency and which are paid for by the Client (whether created prior to or after the execution of this Agreement) to the Client or to its designee within ten (10) days of the Client's written request if the account is in good standing or within thirty (30) days from the termination of this Agreement and settlement of all outstanding invoices.
d) Agency shall notify the Client upon receipt of any request for the information or materials specified in this paragraph whether or not such request is made pursuant to legal, judicial, governmental or administrative motion or process.
a) McClain Finlon Advertising, Inc.
1440 Blake Street
Denver, CO 80202
With copy to: Cathey M. Finlon, Chairman and CEO
b) Red Robin International 5575 DTC Parkway, Suite 110 Englewood, CO 80111 With copy to: Doug Watson, Marketing Director
The addresses set forth above for the respective parties shall be the place where notices shall be sent, unless written notice of a change of address is given.
Upon termination of this Agreement, or upon request from the Client, Agency agrees to return promptly all Information and copies thereof to the Client and not to use the Information as the basis of future client services, research and development efforts or otherwise.
Provided Agency immediately informs Client in writing, this Agreement imposes no obligation upon the Agency with respect to Information which (a) was in the Agency's possession before receipt from the Client; (b) is or becomes a matter of public knowledge through no fault of the Agency; (c) is rightfully received by the Agency from a third party without a duty of confidentiality; (d) is disclosed by the Client to a third party without a duty of confidentiality on the third party; (e) was independently developed by the Agency prior to the Client; (f) is disclosed under operation of law; or (g) is disclosed by the Agency with the Client's prior written approval.
The Agency agrees not to grant access to the Information, in whole or in part, to any employee of the Agency, unless the employee has a need for such access.
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN.
RED ROBIN INTERNATIONAL MCCLAIN FINLON ADVERTISING, INC. By: /s/ Jim McCloskey By: /s/ Cathey McClain Finlon -------------------------- ---------------------------- Jim McCloskey Cathey McClain Finlon Chief Financial Officer Chairman and CEO 10 |
January 28, 1999 Mr. Jim McCloskey Chief Financial Officer Red Robin International 5575 DTC Parkway, Suite 110 Englewood, CO 80111 |
Dear Jim:
Red Robin International and McClain Finlon Advertising, Inc., agree to add the following to paragraph 4, Compensation, of the Agreement made on the 15th day of July 1998:
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN
RED ROBIN INTERNATIONAL MCCLAIN FINLON ADVERTSING, INC. By: /s/ Jim McCloskey By: /s/ Cathey McClain Finlon -------------------------- --------------------------------- Jim McCloskey Cathey McClain Finlon Chief Financial Officer Chairman and CEO |
Addendum
Addendum to Agreement made July 15th, 1998 between McClain Finlon Advertising, Inc., and Red Robin International.
Substitute for Paragraph 4. Compensation.
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN
RED ROBIN INTERNATIONAL MCCLAIN FINLON ADVERTISING, INC. By: /s/ Neil Culbertson By: /s/ Cathey M. Finlon ----------------------------- --------------------------------- Neil Culbertson Cathey M. Finlon Vice President of Marketing Chairman and CEO |
Addendum Dated: April 5, 2001
Addendum to Agreement made July 15th, 1998 between McClain Finlon Advertising, Inc., and Red Robin International.
Substitute for Paragraph 4. Compensation.
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN
RED ROBIN INTERNATIONAL MCCLAIN FINLON ADVERTISING, INC. By: /s/ Neil Culbertson By: /s/ Cathey M. Finlon ----------------------------- --------------------------------- Neil Culbertson Cathey M. Finlon Vice President of Marketing Chairman and CEO Date: 5/8/01 Date: 4/30/01 |
[PEPSI-COLA COMPANY LETTERHEAD]
EXHIBIT 10.27
*** Confidential treatment has been requested as to certain portions of this agreement. Such omitted confidential information has been designated by an asterisk and has been filed separately with the Securities and Exchange Commission pursuant to Rule 406, under the Securities and Exchange Act of 1933, as amended, and the Commission's rules and regulations promulgated under the Freedom of Information Act, pursuant to a request for confidential treatment.***
FOUNTAIN BEVERAGE SALES AGREEMENT
This fountain beverage agreement (this "Agreement") between Pepsi-Cola Company ("Pepsi-Cola"), a division of PepsiCo, Inc., a North Carolina corporation with its principal place of business at 700 Anderson Hill Road, Purchase, New York 10577, on its own behalf and on behalf of the Pepsi/Lipton Tea Partnership (the "Partnership"), and Red Robin International, Inc., a Nevada corporation with its principal place of business at 5575 DTC Parkway, Suite 110, Englewood, CO 80111, (the "Customer") which sets forth the understanding of the parties with respect to the purchase and promotion of Pepsi-Cola's and the Partnership's fountain beverage products by Customer's corporate-owned outlets only. Pepsi-Cola shall, by execution of separate and independent agreement(s) in the form of Annex A attached hereto, make available to Customer's franchisees and their respective franchise-owned outlets, similar programs and benefits.
At the end of Year Five, Pepsi-Cola will reconcile the Conversion Funds advanced to Customer as follows: Pepsi-Cola will multiply the number of Gallons purchased by Customer during Years One through Five by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Customer, or, if negative, will be immediately repaid to Pepsi-Cola.
At the end of each Year, Pepsi-Cola will reconcile the Business Development Funds advanced to Customer as follows: Pepsi-Cola will multiply the number of Gallons purchased by Customer during the Year by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Customer, or, if negative, will, at Pepsi-Cola's discretion, be either offset against amounts that may concurrently or thereafter become due to Customer under this Agreement or will be paid by Customer to Pepsi-Cola within 30 days following Pepsi-Cola's invoice therefor.
At the end of the Year One, Pepsi-Cola will reconcile the Merchandising Funds advanced to Customer as follows: Pepsi-Cola will multiply the number of Gallons purchased by Customer during Year One by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Customer, or, if negative, will be immediately repaid to Pepsi-Cola.
For Year Two through the remainder of the Term, amounts earned by Customer as Merchandising Funds shall be paid to Customer following the end of the Year. Amounts earned by Customer shall be spent to offset costs and expenses associated with at least two jointly approved merchandising programs per Year, including but not limited to brand logos on menus, branded glassware, patio umbrellas and charity sponsorships.
At the end of Year One, Pepsi-Cola will reconcile the Beverage Development Funds advanced to Customer as follows: Pepsi-Cola will multiply the number of Gallons purchased by Customer during Year One by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Customer, or, if negative, will be immediately repaid to Pepsi-Cola.
For Year Two through the remainder of the Term, amounts earned by Customer as Corporate Beverage Development Funds shall be paid to Customer following the end of the Year. Amounts earned by Customer shall be spent by Customer to offset costs and expenses associated with Customer's system-wide (to the benefit of Customer and its Franchisees, in aggregate) beverage development programs jointly approved by Customer and Pepsi-Cola.
At the end of the Term, Pepsi-Cola will reconcile the Growth Incentive Funds advanced to Customer as follows: Pepsi-Cola will multiply the number of Growth Gallons actually purchased by Customer for each Year of the Term and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Customer, or, if negative, will be immediately repaid to Pepsi-Cola.
For those Customer Outlets where fountain dispensing equipment is provided by Pepsi-Cola during the Term ("Pepsi-Cola Fountain Equipment"), then any and all amounts accrued by Pepsi-Cola for those particular Outlets ("Equipment Credits") shall be used by Pepsi-Cola to offset costs incurred by Pepsi-Cola in providing and installing Pepsi-Cola Fountain Equipment ("Equipment Costs"). At such time as Equipment Credits equal Equipment Costs for Outlets where Pepsi-Cola Fountain Equipment is installed, then at such time, legal title to such Pepsi-Cola Fountain Equipment shall be transferred to Customer.
For those Customer Outlets where Pepsi-Cola Fountain Equipment is not provided, and all fountain dispensing equipment is provided by Customer, any amounts accrued as Fountain Equipment Funds during a given Year for such Outlets shall be paid to Customer.
Each Year, each Customer Outlet shall be entitled, at no charge, to a maximum of four (4) service calls for the Pepsi-Cola Fountain Equipment, which shall include two (2) preventative maintenance calls. Service shall be made available to Customer Outlets seven days per week, twenty-four hours per day, via dispatch and /or answering machine.
All service and maintenance calls in excess of those specified above, as well as the costs of parts used, shall be charged to Customer at Pepsi-Cola's prevailing rates for service. Pepsi-Cola will provide services through its licensed bottlers or such other service providers as it may designate.
If the foregoing correctly sets forth our understanding, please sign below to confirm our agreement.
PEPSI-COLA COMPANY RED ROBIN INTERNATIONAL, INC. A Division of PepsiCo, Inc. By /s/ ILLEGIBLE By /s/ MICHAEL J. SNYDER ----------------------- ----------------------- Title: ILLEGIBLE Title: CEO -------------------- -------------------- Date: 2-2-00 Date: Feb. 2, 2000 --------------------- --------------------- |
FORM OF FRANCHISEE
FOUNTAIN BEVERAGE SALES AGREEMENT
This fountain beverage agreement (this "Agreement") between, on the one hand, Pepsi-Cola Company ("Pepsi-Cola"), a division of PepsiCo, Inc., a North Carolina corporation with its principal place of business at 700 Anderson Hill Road, Purchase, New York 10577, on its own behalf and on behalf of the Pepsi/Lipton Tea Partnership (the "Partnership"), and, on the other hand, __________, a _________ corporation with its principal place of business at ______________, (the "Franchisee"), as franchisee of Red Robin International, Inc. (its "Franchisor") sets forth the understanding of the parties with respect to the purchase and promotion of Pepsi-Cola's and the Partnership's fountain beverage products.
At the end of Year Five, Pepsi-Cola will reconcile the Conversion Funds advanced to Franchisee as follows: Pepsi-Cola will multiply the number of Gallons purchased by Franchisee during Years One through Five by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Franchisee, or, if negative, will be immediately repaid to Pepsi-Cola.
At the end of each Year, Pepsi-Cola will reconcile the Business Development Funds advanced to Franchisee as follows: Pepsi-Cola will multiply the number of Gallons purchased by Franchisee during the Year by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Franchisee, or, if negative, will, at Pepsi-Cola's discretion, be either offset against amounts that may concurrently or thereafter become due to Franchisee under this Agreement or will be paid by Franchisee to Pepsi-Cola within 30 days following Pepsi-Cola's invoice therefor.
At the end of the Year One, Pepsi-Cola will reconcile the Merchandising Funds advanced to Franchisee as follows: Pepsi-Cola will multiply the number of Gallons purchased by Franchisee during Year One by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Franchisee, or, if negative, will be immediately repaid to Pepsi-Cola.
For Year Two through the remainder of the Term, amounts earned by Franchisee as Merchandising Funds shall be paid to Franchisee following the end of the Year. Amounts earned by Franchisee shall be spent to offset costs and expenses associated with at least two jointly approved merchandising programs per Year, including but not limited to brand logos on menus, branded glassware, patio umbrellas and charity sponsorships.
At the end of Year One, Pepsi-Cola will reconcile the Beverage Development Funds advanced to Franchisee as follows: Pepsi-Cola will multiply the number of Gallons purchased by Franchisee during Year One by the above rate per Gallon and will compare that result with the amount advanced. The resulting amount, if positive, will be paid by Pepsi-Cola to Franchisee, or, if negative, will be immediately repaid to Pepsi-Cola.
For Year Two through the remainder of the Term, amounts earned by Franchisee as Beverage Development Funds shall be paid to Franchisee following the end of the Year. Amounts earned by Franchisee shall be spent by Franchisee to offset costs and expenses associated with Franchisee's system-wide (to the benefit of Franchisee and its Franchisees, in aggregate) beverage development programs jointly approved by Franchisee and Pepsi-Cola.
Each year throughout the Term, Pepsi Cola will offer Customer Growth Incentive Funds based on the incremental growth of Gallons. Each year will be a "Performance Period". The "Base Period" with respect to each Performance Period will be the immediately preceeding twelve-month period or Year. Pepsi-Cola and Customer will mutually agree as to the number of Gallons which will constitute the Base Period volume for the first Year of the Agreement. The number of Gallons purchased during each Performance Period will be compared with the number of Gallons purchased during the corresponding Base Period. If, and to the extent that, the number of Gallons purchased during any Performance Period exceeds the number of Gallons purchased during the corresponding Base Period, Pepsi Cola will pay Customer *** per gallon on all such eligible incremental Gallons.
For those Franchisee Outlets where fountain dispensing equipment is provided by Pepsi-Cola during the Term ("Pepsi-Cola Fountain Equipment"), then any and all amounts accrued by Pepsi-Cola for those particular Outlets ("Equipment Credits") shall be used by Pepsi-Cola to offset costs incurred by Pepsi-Cola in providing and installing Pepsi-Cola Fountain Equipment ("Equipment Costs"). At such time as Equipment Credits equal Equipment Costs for Outlets where Pepsi-Cola Fountain Equipment is installed, then title to such Pepsi-Cola Fountain Equipment shall be transferred to Franchisee.
For those Franchisee Outlets where Pepsi-Cola Fountain Equipment is not provided, and all fountain dispensing equipment is provided by Franchisee, any amounts accrued as Fountain Equipment Funds during a given Year for such Outlets shall be paid to Franchisee.
All service and maintenance calls in excess of those specified above, as well as the costs of parts used, shall be charged to Franchisee at Pepsi-Cola's prevailing rates for service. Pepsi-Cola will provide services through its licensed bottlers or such other service providers as it may designate.
If the foregoing correctly sets forth our understanding, please sign below to
confirm our agreement.
PEPSI-COLA COMPANY _____________________________ A Division of PepsiCo, Inc. As Franchisee of RED ROBIN INTERNATIONAL, INC. By _______________________ By __________________________ Title:____________________ Title:_______________________ Date:_____________________ Date:________________________ |
EXHIBIT 10.28
***Confidential treatment has been requested as to certain portions of this agreement. Such omitted confidential information has been designated by an asterisk and has been filed separately with the Securities and Exchange Commission pursuant to Rule 406 under the Securities and Exchange Act of 1933, as amended, and the Commission's rules and regulations promulgated under the Freedom of Information Act, pursuant to a request for confidential treatment.***
A
Sysco Corporation
Master Distribution Agreement
For
Red Robin International, Inc.
May 16, 2001
Table of Contents
1. Appointment of Distributor
2. Customer Service Provided by SYSCO
2.1 Account Executive
2.2 Item List
2.3 Policies and Procedures
3. Delivery Service Provided by SYSCO
4. Information Services Provided by SYSCO
4.1 Usage Reports
4.2 Direct Order Entry
4.3 Supporting Software
4.4 Third Party Providers
5. Pricing
5.1 Definition of Cost
5.2 Merchandising Services
5.3 Sell Price
5.4 Customer Contract Pricing
5.5 Substitutions
5.6 Adjustment in Margins for Unanticipated Problems
6. Supplier Agreements - Administration and Handling
6.1 Supplier Detail Form
6.2 Equivalent SYSCO Branded Product
6.3 Effectiveness of Additional Supplier Agreements
6.4 Administrative Maintenance of Supplier Agreements
6.5 Specifically Inventoried Proprietary Product - Effectiveness of
Pricing Changes
7. Price Verification
8. Proprietary and Special Order Products
8.1 Definition of Special Order Products
8.2 Definition of Proprietary Products
8.3 Stocking of Proprietary Products
8.4 Proprietary Product and Special Order Products Requirements
8.5 Customer Responsibility for Proprietary Products and Special
Order Products
9. Credit
9.1 Net Terms
9.2 Set Off
9.3 Service Charge; Collection Fees
9.4 Applications
9.5 Financial Information
9.6 Delivery Stoppage
10. Term
11. Termination
12. Arbitration and Waiver of Jury Trial Right
12.1 Arbitration
12.2 Waiver of Jury Trial Right
13. Perishable Agricultural Commodities
14. Miscellaneous
14.1 Assignment
14.2 Entire Agreement
14.3 Amendments
14.4 Notices
14.5 Donations
MASTER DISTRIBUTION AGREEMENT
Master Distribution Agreement (this "Agreement"), dated May 16, 2001, between SYSCO CORPORATION for itself and on behalf of those of its operating subsidiaries and/or divisions listed in Schedule 1 (collectively, "SYSCO") and Red Robin International, Inc. and each entity that owns or operates any of the establishments listed as Customer Locations on Schedule 1.
A. SYSCO performs regional and national marketing, freight management, consolidated warehousing, quality assurance and performance-based product marketing for suppliers of products to the foodservice distribution industry;
B. SYSCO performs purchasing, marketing, warehousing, quality assurance, product research and development, transportation and distribution services for foodservice customers directly and through its operating subsidiaries and divisions (collectively, "Operating Companies" and individually, "Operating Company"); and
C. Customer owns, operates, is a franchiser of, and/or acts as a group purchasing organization for the establishments listed in Schedule 1 (the "Customer Locations").
D. Customer desires to contract with SYSCO as its primary distributor for foodservice products (i.e., supplying 80% or more of such products) to all of its participating Customer Locations and SYSCO desires to perform these services.
In consideration of the mutual obligations set forth below, the parties agree as follows:
Customer appoints SYSCO to serve as its primary distributor to the Customer Locations of foodservice products within the product categories described in Schedule 2 ("Products"). By appointing SYSCO its "primary distributor" Customer agrees that each participating Customer Location will purchase not less than 80% of the dollar volume of such Customer Location's purchase requirements of Products in each Product category.
Products will include SYSCO(R) brand, national brand and other products stocked by SYSCO. SYSCO(R) brand products include all products under trademarks or tradenames owned by SYSCO as well as products under trademarks available exclusively to SYSCO(R) in foodservice distribution channels.
Each Operating Company will establish a delivery schedule for each Customer Location within its market area taking into consideration Customer needs and preferences and will use reasonable, good faith efforts to make on-time deliveries.
Applicable freight, in those cases where the invoice cost to the delivering Operating Company is not a delivered cost, means a reasonable freight charge to transport a Product from the Supplier (as defined below) to the Operating Company. Freight charges may include common or contract carrier charges imposed by the Product Supplier or a carrier, or charges billed by Alfmark, SYSCO's freight management service. Applicable freight for any Product will not exceed the rate charged by nationally recognized carriers operating between the same points, for the same quantity of product, and the same type of freight service.
these services and may also be compensated for these services and considers this compensation to be earned income. Receipt of such cost recovery or earned income does not reduce Cost and does not diminish SYSCO's commitment to provide competitive prices to its customers.
For Example, a Product with a Cost of $25.00 per case, a margin on sell of 10% and a promotional allowance on the face of the invoice of $.50 per case will
have a Sell Price calculated as follows:
Calculate base price from margin $25.00 = $25.00 = $27.78 ---------- ----------- (100%-10%) 90% Less promotional allowance shown the invoice (.50) ------ Sell Price $27.28 ====== |
(b) Duration of Sell Price - Costs for all Products are recalculated with the following frequencies:
1) Time of sale pricing - price sensitive products with volatile fluctuations in pricing (i.e. produce and fresh seafood);
2) Weekly pricing - commodity products which reflect declines and advances in Cost on a regular basis, as determined by SYSCO (i.e. most protein products) - will be in effect for seven consecutive days;
3) Monthly pricing - fairly stable pricing for extended periods (i.e. most canned products) - will be in effect to coincide with Red Robin's fiscal monthly calendar.
Variances can occur to the Customer's invoiced price due to starting and ending dates of Supplier Agreements, as detailed in Section 6 hereof (and the timing of when "Cost" is determined).
1) Time of Sale Pricing - day of invoicing;
2) Weekly Pricing - Thursday of the prior week;
3) Monthly Pricing - Seven days prior to the start of Red Robin's fiscal monthly calendar.
6.1 Customer will provide SYSCO with written evidence of the existence of any contractual agreements it has with any Supplier for the purchase of Products ("Supplier Agreements"), utilizing the SYSCO Supplier Detail Form (Schedule 3). Supplier Agreements include agreements for which the Supplier and Customer have agreed on off-invoice allowances for Customer ("Supplier Off-Invoice Allowances") or the guaranteed cost Supplier will charge distributor for Product to be resold to Customer ("Supplier Guaranteed Distributor Cost"). SYSCO will use the Supplier Guaranteed Distributor Cost (of which it has been notified appropriately) as the Cost of such Product when calculating its Sell Price, notwithstanding that the Cost of such Product to SYSCO otherwise varies. SYSCO will provide for a Supplier Off-Invoice Allowance for a Product by deducting such allowance value after the Sell Price of such Product is calculated in accordance with Section 5.3.
Customer will be allowed one (1) annual price verification at each delivering Operating Company for purchases made under this Agreement. The price verification will consist of reviewing computer reports documenting SYSCO's calculation of the Customer's invoice price and verification of the participating SYSCO Operating Company's delivered Cost. If requested, applicable Supplier invoices and accompanying freight invoices will also be made available. Price verification adjustments, if applicable, will be made utilizing the net of undercharges and overcharges to the Customer. The price verification process is subject to the following:
a. Customer must request a price verification in writing at least twenty
(20) business days prior to the suggested date of the price
verification. This request must identify the thirty (30) items to be
price verified and the period covered;
b. The date and time of price verification must be to the mutual agreement of both parties;
c. The price verification will be made at the delivering Operating Company's location;
d. Support for the price verification may not be removed from the delivering Operating Company location;
e. The period for which pricing is to be verified will not begin more than twelve (12) months prior to the date of the price verification, and will cover only one pricing period.
Due to the extensive time and complexity associated with price verification, SYSCO will not permit computer generated price matching or electronic audits by or on behalf of Customers or any Third Party Provider to be used in lieu of the above price verification procedure.
Due to the highly perishable nature of fresh produce, SYSCO will not honor proprietary status on any fresh produce item.
SYSCO Operating companies will stock 21 days of inventory on all proprietary items.
a) Suppliers of Proprietary Products and Special Order Products must provide SYSCO with SYSCO's required indemnity agreement and insurance coverage;
b) Proprietary Products and Special Order Products must have a valid UPC number assigned and a scanable UPC bar code on each sellable unit;
c) SYSCO utilizes several third party warehouses throughout the nation for the purpose of efficiently redistributing products ("Redistribution Warehouses"). Any Products placed into the Redistribution Warehouses must be inventoried on a consigned basis by either the Supplier or the Customer.
SYSCO reserves the right to modify payment terms for Customer or any company or entity which purchases Products under this Agreement as a franchisee or member of a group purchasing organization, in SYSCO's sole judgement, if any such entity's financial condition materially deteriorates or SYSCO becomes aware of circumstances that may materially and adversely impact such entity's ability to meet its financial obligations when due.
SYSCO will give Customer a (30) day written notice of a material default with thirty (30) days to cure within such thirty (30) day period.
Franchisee Customers which are franchisees or members of group purchasing organizations will normally be offered the standard credit terms offered hereunder. However, at the sole discretion of the servicing SYSCO Operating Company and based on the credit worthiness of the individual Customer Location (or the entity which owns or operates such Customer Location), terms other than that stated in this Agreement may be applied.
The term of this Agreement will begin on May 21, 2001, and will end at 5:00
p.m. Houston time on June 30, 2004.
This Agreement may be terminated prior to its ending date for the following:
(a) By either party for failure of the other party to comply with any material provision of this Agreement within sixty (60) days of such party's receipt of written notice describing said failure;
(b) By SYSCO immediately upon written notice to Customer if Customer's financial position deteriorates materially, determined by SYSCO in its sole judgment; or SYSCO becomes aware of any circumstances that, in SYSCO's sole judgement, materially impacts Customer's ability to meet its financial obligation when due;
(c) By SYSCO with respect to any Customer franchisee or a member of Customer's group purchasing organization, immediately upon written notice to such entity if its financial position deteriorates materially, determined by SYSCO in its sole judgment; or SYSCO becomes aware of any circumstances that, in SYSCO's sole judgment, materially impacts such entity's ability to meet its financial obligations when due;
(d) By SYSCO, if Customer (or any Customer franchisee or member of Customer's group purchasing organization) fails to meet its stated operational representations set out in Schedule 5. The margin schedule submitted is based on the Customer's operational representations concerning its service needs as stated in Schedule 2 including, but not limited to its anticipated purchase volumes, drop sizes, Product mix, location of Customer Locations, number of deliveries, information services/technology requirements, and number of Proprietary Products and Special Order Products as well as Customer's compliance with the payment and other obligations specified in this Agreement. If SYSCO determines at any time or times after ninety (90) days from the date of this Agreement that Customer (or any Customer franchisee or member of Customer's group purchasing organization) requires service which varies materially from the levels contemplated in Customer's representations made to SYSCO in negotiating this Agreement, SYSCO reserves the right to request an increase on the margin specified. SYSCO shall give written notice to Customer (or any Customer franchisee or member of Customer's group purchasing organization) of the proposed increase in the margin. If the parties are unable to agree on such an increase within 30 days after the date of the notice of such increase and Customer's (or any Customer franchisee or member of Customer's group purchasing organization) service requirements and/or contract compliance continues to vary from that contemplated or required by this Agreement, SYSCO may terminate this Agreement on thirty (30) days written notice to Customer (or any Customer franchisee or member of Customer's group purchasing organization).
Upon termination, Customer (or any Customer franchisee or member of Customer's group purchasing organization) agrees to fully comply with all of its obligations under this Agreement, including, without limitation to pay all invoices at the earlier of 1) the time they are due or 2) two weeks from the date of the last shipment to a Customer Location.
This Agreement may cover sales of "perishable agricultural commodities" as
those terms are defined by federal law. Generally, all fresh and frozen fruits
and vegetables which have not been processed beyond cutting, combining, and/or
steam blanching are considered perishable agricultural commodities as are oil
blanched french fried potato products. All perishable agricultural commodities
sold under this Agreement are sold subject to the statutory trust authorized by
Section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C.
499e(c)). The seller of these commodities retains a trust claim over these
commodities and all inventories of food or other products derived from these
commodities until full payment is received.
Executed as of the date set forth at the beginning of this Agreement.
SYSCO CORPORATION
20701 East Currier Road By: /s/ DEBBIE MARTIN Walnut, CA 91789 --------------------------------- Attention: Debbie Martin, Debbie Martin Regional V.P., Multi-Unit Sales Regional Vice President, Telephone: (909) 598-7883 Multi Unit Sales Facsimile: (909) 594-0565 Date:_______________________________ Copy to: ------- |
SYSCO Corporation
1390 Enclave Parkway
Houston, Texas 77077-2099
Attention: Operations Review Telephone: (281) 584-1390 Facsimile: (281) 584-1744 RED ROBIN INTERNATIONAL, INC. 5575 DTC Parkway, #110 By: /s/ RAY MASTERS Englewood, CO 80111 --------------------------------- Attention: Ray Masters Ray Masters Telephone: (303) 846-6029 Vice President, Purchasing Facsimile: (303) 846-6044 Date: 5-22-01 ------------------------------- |
SCHEDULE 2
TO
MASTER DISTRIBUTION AGREEMENT
CUSTOMER MARGINS
Product Category Margin 1. Healthcare *** 2. Dairy Products *** Exception: Cheddar Cheese *** All other Cheeses *** 3. Meats *** Exception: Hamburger *** 4. Seafood (fresh & frozen) 5. Poultry (CVP & frozen) *** 6. Frozen/Refrigerated Foods *** Exception: Fries 30# Case *** 36# Case *** 7. Canned & Dry *** Exception: Coke Products *** Dr. Pepper/7-UP *** 8. Paper & Disposables *** 9. Chemical/Janitorial (supplies & cleaning) *** Exception: Ecolab *** 10. Supplies & Equipment *** 11. Dispenser Beverage *** 12. Produce *** |
The SYSCO Corporation owns several specialty meat operations and manages a line of premium meat products that does not fall within the scope of this agreement. Premium meat products will be sold at prevailing market prices.
The SYSCO Corporation owns several specialty produce operations. Purchase
of products from said produce operations is not provided for in this agreement.
List of Omitted Exhibits and Schedules
The following exhibits and schedules to the Master Distribution Agreement between Red Robin International, Inc. and Sysco Corporation have been omitted and shall be furnished supplementally to the Commission upon request:
Schedule 1 - Operating Companies and Participating Customer Locations Schedule 3 - SYSCO Supplier Detail Form Schedule 4 - Customer Listing of Proprietary Products Schedule 5 - Customer Representations Schedule 6 - Customer Incentive Programs |
Exhibit 10.29
CREDIT AGREEMENT
Dated as of April 12, 2002
Between
RED ROBIN INTERNATIONAL, INC.,
as Borrower
and
U.S. BANK NATIONAL ASSOCIATION,
as Lender
CONTENTS
CREDIT AGREEMENT PAGE i
[EXECUTION COPY]
CREDIT AGREEMENT PAGE ii
[EXECUTION COPY]
ARTICLE 8. REPRESENTATIONS AND WARRANTIES........................................................41 8.1 Corporate Status......................................................................41 8.2 Power and Authority...................................................................41 8.3 No Violation of Agreements............................................................42 8.4 Recording and Enforceability..........................................................42 8.5 Litigation............................................................................42 8.6 Good Title to Properties..............................................................43 8.7 Licenses and Permits..................................................................43 8.8 [Reserved]............................................................................43 8.9 Properties in Good Condition..........................................................43 8.10 Financial Statements..................................................................43 8.11 Outstanding Indebtedness..............................................................44 8.12 Taxes.................................................................................44 8.13 License Fees..........................................................................44 8.14 Trademarks, Patents, Etc..............................................................44 8.15 Disclosure............................................................................44 8.16 Regulations T, U and X................................................................44 8.17 Names.................................................................................45 8.18 Condition of Property.................................................................45 8.19 Pension Plans.........................................................................45 8.20 Borrower and Subsidiaries.............................................................45 ARTICLE 9. EVENTS OF DEFAULT; REMEDIES...........................................................46 9.1 Events of Default.....................................................................46 9.2 Acceleration; Remedies................................................................48 ARTICLE 10. MISCELLANEOUS.........................................................................49 10.1 Notices...............................................................................49 10.2 Payment of Expenses and Taxes.........................................................49 10.3 Assignments and Participations in Loans...............................................50 10.4 Setoff................................................................................50 10.5 Waiver of Setoff......................................................................50 10.6 Fees and Commissions..................................................................50 10.7 Entire Agreement; Amendments and Waivers..............................................51 10.8 Severability..........................................................................51 10.9 Descriptive Headings..................................................................51 10.10 Governing Law.........................................................................51 10.11 Consent to Jurisdiction, Service, and Venue...........................................51 10.12 Successors and Assigns................................................................52 10.13 Waiver of Jury Trial..................................................................52 10.14 Counterparts..........................................................................52 10.15 Statutory Notice......................................................................53 |
CREDIT AGREEMENT PAGE iii
[EXECUTION COPY]
SCHEDULES
EXHIBITS
Exhibit A - Form of Revolving Credit Note; Section 2.3 Exhibit B - Form of Notice of Borrowing; Section 4.1(a) Exhibit C - Security Agreement; Section 5.1(c) Exhibit D - Guaranty of Parent; Section 5.1(d) Exhibit D-1 - Form of Subsidiary Guaranty; Section 5.1(e) Exhibit E - Form of Subsidiary Security Agreement Exhibit F - Opinion of Counsel for Borrower; Section 5.1(h) |
CREDIT AGREEMENT PAGE iv
[EXECUTION COPY]
CREDIT AGREEMENT
This credit agreement is made and entered into as of this 12th day of April, 2002, by and between RED ROBIN INTERNATIONAL, INC., a Nevada corporation ("Borrower"), and U.S. BANK NATIONAL ASSOCIATION ("Lender"). Capitalized terms have the meanings assigned in Section 1 hereof.
RECITALS:
WHEREAS Borrower desires that Lender extend certain credit facilities to Borrower which will be used to provide for the working capital requirements of Borrower;
WHEREAS Borrower is willing to grant to Lender a security interest in certain real property and in certain personal property located at or arising from the operation of certain of its restaurants in order to secure the credit facilities;
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Borrower and Lender agree as follows:
ARTICLE 1. DEFINITIONS, ETC.
1.1 Terms Defined
As used herein, the following terms have the meanings set forth below:
"Access Laws" means the Americans with Disabilities Act of 1990, all state and local laws relating to handicapped access, or any statute, rule, regulation, ordinance, or order of any Governmental Body adopted or enacted with respect thereto.
"Affiliate" means, with respect to any Person, a Person that now or hereafter, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Person. A Person shall be deemed to control a corporation or partnership if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management of such corporation or partnership, whether through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this credit agreement as it may be amended, supplemented, or otherwise modified from time to time.
"Applicable Law" means all applicable provisions and requirements of all
(a) constitutions, statutes, ordinances, rules, regulations, standards, orders,
and directives of any Governmental Bodies, (b) Governmental Approvals, and (c)
orders, decisions, decrees, judgments, injunctions, and writs of all courts and
arbitrators, whether such Applicable Laws presently exist, or are modified,
promulgated, or implemented after the date hereof.
CREDIT AGREEMENT PAGE 1
[EXECUTION COPY]
"Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute.
"Borrower" means Red Robin International, Inc., a Nevada corporation, and its successors and its permitted assigns under Section 10.3.
"Business Day" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of Washington or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.
"Capital Lease" means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person.
"Cash Flow Leverage Ratio" means of the end of any Fiscal Quarter, the ratio computed for the period of four consecutive Fiscal Quarters ending on the close of such Fiscal Quarter of (a) Funded Debt plus 6 times total rent and lease expense for such period to (b) EBITDAR for such period.
"Change in Control" means:
(a) at any time prior to an initial or secondary public offering of any class of capital stock of the Parent, the failure of the Investor Group, to own and exercise voting control over a sufficient number of the issued and outstanding shares of capital stock of the Parent together with freely exercisable warrants, options and securities convertible into capital stock of Parent which such shareholders have the financial capability (including borrowing capability) to reasonably exercise which collectively constitute (assuming that such warrants, options and other convertible securities have been exercised) 50% of the capital stock of the Parent on a fully diluted basis; or
(b) after a Qualifying IPO, any person or group of persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than the Investor Group, shall have acquired direct or indirect beneficial ownership (within the meaning of Rule 13D-3 promulgated by the Securities and Exchange Commission under said Act) of a percentage of the outstanding voting shares of common stock of the Parent equal to or greater than the lesser of (i) twenty-five percent (25%) and (ii) the percentage of such outstanding shares of the Parent then beneficially owned by the Investor Group; or
(c) at any time, a majority of the individuals who constitute the board of directors of the Parent shall not have been elected and approved by the Investor Group.
"Closing Date" means the date on or before April 30, 2002, on which Lender makes its initial Loan.
CREDIT AGREEMENT PAGE 2
[EXECUTION COPY]
"Collateral" means all the property, real or personal, tangible or intangible, now owned or hereafter acquired, in which Lender has been or is to be granted a Lien by Borrower or any other Person, to secure the Obligations.
"Commitments" means the commitment of Lender to make Loans as set forth in Sections 2.1.
"Compliance Certificate" has the meaning set forth in subsection 6.1(d) herein.
"Consolidated" means, as applied to any financial or accounting term with respect to any Person, such term determined on a consolidated basis in accordance with GAAP for the Person and all consolidated Subsidiaries of such Person.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (a) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (b)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, (c)
under Interest Rate Agreements, or (d) under any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap, or
other similar agreement or arrangement designed to protect such Person against
fluctuations in currency values. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of nonperformance by any other party or parties to any
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (i) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (ii) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclause
(i) or (ii) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Deed of Trust" means any deed of trust or mortgage granted by Borrower or any of its Subsidiaries in any interest in real property to secure the Obligations or such deed of trust or mortgage may be amended, supplemented, or otherwise modified from time to time.
CREDIT AGREEMENT PAGE 3
[EXECUTION COPY]
"Default" means any condition or event that constitutes an Event of Default or with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.
"Dollars" or "$" shall mean lawful money of the United States of America.
"EBITDAR" means, for a given period, net income, plus interest expense, plus income tax expense, plus depreciation expense plus amortization expense plus rent and lease expense, plus to the extent deducted from net income the amount of any prepayment penalties incurred as a result of extraordinary debt extinguishment concurrently with or after a Qualifying IPO, all of the foregoing determined on a Consolidated basis for Parent.
"Environmental Claim" means any written accusation, allegation, notice of violation, claim, demand, abatement order or other order or direction (conditional or otherwise) by any Governmental Body or any Person for any damage, including, without limitation, personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, in each case relating to, resulting from or in connection with Hazardous Materials and relating to Borrower, any of its Subsidiaries, any of their respective Affiliates or any Facility which in any case could reasonably be expected to have a Material Adverse Effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" means, as applied to any Person, (a) any corporation,
which is, or was at any time, a member of a controlled group of corporations
within the meaning of CREDIT AGREEMENT PAGE 4 [EXECUTION COPY] |
Section 414(b) of the Internal Revenue Code of which that Person is, or was at
any time, a member; (b) any trade or business (whether or not incorporated)
which is, or was at any time, a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Internal Revenue Code
for which that Person is, or was at any time, a member; and (c) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the
Internal Revenue Code of which that Person, any corporation described in clause
(a) above or any trade or business described in clause (b) above is, or was at
any time, a member.
"Event of Default" has the meaning set forth in Section 9.1 herein.
"Executive Officer" means, as to any corporation, its chairman of the board, chief executive officer, president, chief operating officer, chief financial officer, and treasurer, and any of them.
"Facilities" means any and all real property (including, without limitation, all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Borrower or any of its Subsidiaries (but only as to portions of buildings actually leased or used).
"Fee Property" has the meaning set forth in subsection 4.13(a)(ii) herein.
"Finova Debt" means that certain Indebtedness of Borrower under the loan agreement among Borrower, Finova Capital Corporation ("Finova"), and certain Subsidiaries of Borrower dated as of September 6, 2000, as amended ("Finova Loan Agreement").
"Fiscal Period" means each four-week fiscal accounting period of Borrower identified on the calendar delivered to Lender pursuant to subsection 6.1(j) herein.
"Fiscal Quarter" means with respect to the Fiscal Period ending on (i) the
last Sunday of the 16th week in each year, the four Fiscal Periods then ending,
(ii) the last Sunday of the 28th week in each year, the three Fiscal Periods
then ending, (iii) the last Sunday of the 40th week in each year, the three
Fiscal Periods then ending, and (iv) closest to the last Sunday of each year,
the three Fiscal Periods then ending.
"Fiscal Year" means each fiscal accounting year of Borrower consisting of 13 Fiscal Periods and ending closest to the last Sunday of each year.
"Fixed Charge Coverage" means (a) EBITDAR minus cash taxes, cash dividends and Unfunded Capital Expenditures for the previous four rolling Fiscal Quarters divided by (b) the sum of all required principal payments (on short and long term Indebtedness and Capital Leases), Interest Expense and rental or lease expense over the last four rolling Fiscal Quarters all of the foregoing as determined on a Consolidated basis for Parent.
"Funded Debt" means, at the time of calculation thereof on a Consolidated
Basis: (a) all obligations of Parent and its Subsidiaries for borrowed money or
for the deferred CREDIT AGREEMENT PAGE 5 [EXECUTION COPY] |
purchase price of property or services and all obligations of Parent and/or any of its Subsidiaries evidenced by bonds, debentures, notes or other similar instruments, including, without limitation, (i) all Indebtedness under this Agreement and (ii) all Subordinated Debt; (b) the face amount of all letters of credit, whether or not drawn, issued for the account of Parent and its Subsidiaries; (c) the capitalized amount of all Capital Leases of Parent and its Subsidiaries; and (d) all Contingent Obligations of Borrower and its Subsidiaries in respect of any of the foregoing.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means generally accepted accounting principles set forth in opinions and pronouncements of the accounting principles board of the American Institute of Certified Public Accountants in statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the date of determination.
"Governmental Approval" means any authorization, consent, approval, certificate of compliance, license, permit, or exemption from, contract with, registration or filing with, or report or notice to, any Governmental Body required or permitted by Applicable Law.
"Governmental Body" means the government of the United States, any state, or any governmental or regulatory official, body, department, bureau, subdivision, agency, commission, court, arbitrator, or authority, or any instrumentality thereof, whether federal, state, or local.
"Guarantors" means Parent, all of Borrower's Subsidiaries (other than Inactive Subsidiaries and Liquor License Subsidiaries), and any Person who now or hereafter executes and delivers to Lender a Guaranty.
"Guaranties" means those certain guaranties made by Parent and each Subsidiary of Borrower (other than Inactive Subsidiaries and Liquor License Subsidiaries) dated as of the date hereof and delivered to Lender pursuant to subsection 5.1(d) hereof and all guaranties now or hereafter delivered by any Person to Lender to guaranty all or any portion of the Obligations, as each such guaranty may be amended, restated, supplemented or otherwise modified from time to time.
"Hazardous Materials" means (a) any chemical, material or substance at any time defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," "infectious waste," "toxic substances," or any other formulations intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity," or words of similar import under any applicable Environmental Laws or regulations promulgated pursuant thereto; (b) any oil, petroleum, petroleum
fraction or petroleum derived substance; (c) any drilling fluids, produced
waters and other wastes associated with CREDIT AGREEMENT PAGE 6 [EXECUTION COPY] |
the exploration, development or production of crude oil, natural gas or geothermal resources; (d) any flammable substances or explosives; (e) any radioactive materials; (f) asbestos in any regulated quantity; (g) urea formaldehyde foam insulation; (h) electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million; (i) pesticides; and (j) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Body.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of Borrower or any of its Subsidiaries, any qualification or exception to such
opinion or certification (a) which is of a "going concern" or similar nature,
(b) which relates to the limited scope of examination of matters relevant to
such financial statement or (c) which relates to the treatment or classification
of any item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which would be
to cause Borrower or any of its Subsidiaries to be in default of any of its
obligations under any of Sections 7.3, 7.15, 7.16 or 7.17.
"Inactive Subsidiaries" means Borrower's Subsidiaries listed as "inactive" on Schedule 8.20.
"Indebtedness" means, as applied to any Person, (a) all indebtedness for
borrowed money, (b) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (c) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money (other than accounts
payable incurred in the ordinary course of business and accrued expenses
incurred in the ordinary course of business), (d) any obligation owed for all or
any part of the deferred purchase price of property or services (excluding any
such obligations incurred under ERISA), which purchase price is (i) due more
than six months from the date of incurrence of the obligation in respect thereof
or (ii) evidenced by a note or similar written instrument, (e) all indebtedness
for borrowed money secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person and
(f) all Contingent Obligations; except in any of the foregoing cases for any
indebtedness or obligations between a Subsidiary and Borrower or another
Subsidiary.
"Indemnified Liabilities" has the meaning set forth in Section 10.2 herein.
"Indemnified Persons" has the meaning set forth in Section 10.2 herein.
"Interest Expense" means, for any period, total consolidated interest expense (both cash and noncash and determined without regard to original issue discount) of Borrower and its Subsidiaries for such period, as determined in accordance with GAAP.
"Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement designed to protect Borrower or any of its Subsidiaries against fluctuations in interest rates.
CREDIT AGREEMENT PAGE 7
[EXECUTION COPY]
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter.
"Investment" means (a) any direct or indirect purchase or other acquisition by Borrower or any of its Subsidiaries of, or of a beneficial interest in, stock or other Securities of any other Person, or (b) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Borrower or any of its Subsidiaries to any other Person other than a wholly owned Subsidiary of Borrower including all indebtedness and accounts receivable acquired from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business; provided, however, that the term "Investment" shall not include, without limitation (i) trade and customer accounts receivable for goods furnished or services rendered in the ordinary course of business and payable in accordance with customary trade terms, (ii) advances and prepayments to suppliers for goods and services in the ordinary course of business, (iii) stock or other securities acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to Borrower or any of its Subsidiaries or as security for any such Indebtedness or claims, (iv) cash held in any deposit account with Lender and (v) shares in a mutual fund that invests solely in the investments permitted in the exceptions set forth in Section 7.6.
"Investor Group" means the Management Group and the Sponsor Group.
"Lender" means U.S. Bank National Association, together with its successors and assigns.
"Lien" means any lien, mortgage, pledge, assignment, security interest, charge, or any encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option, trust, or other preferential arrangement having the practical effect of any of the foregoing.
"Liquor License Subsidiaries" means Subsidiaries of Borrower that were formed to hold a liquor license and whose sole asset is a liquor license and include the following: Red Robin of Baltimore County, Inc., a Maryland corporation, Red Robin of Anne Arundel County, Inc., a Maryland corporation, and Red Robin of Montgomery County, Inc. a Maryland corporation.
"Loan" or "Loans" means one or more of the Revolving Credit Loans and any other loan made by Lender to Borrower under or pursuant to this Agreement or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Security Agreement, the Subsidiary Security Agreement, the Deeds of Trust, the Guaranties, any
Interest Rate Agreements entered into between Borrower or any Loan Party and
Lender and all other CREDIT AGREEMENT PAGE 8 [EXECUTION COPY] |
agreements, instruments, and documents arising out of this Agreement, or the Loans, as the same may be amended, restated, supplemented or otherwise modified from time to time.
"Loan Parties" means Parent, Borrower, and each Subsidiary of Borrower (other than Inactive Subsidiaries and Liquor License Subsidiaries).
"Management Group" means the Management Holder and their Related Parties.
"Management Holder" means Snyder or any Person over which Snyder, directly or indirectly, exercises voting control, including, without limitation, the right to direct the management and policies of such Person and the right to elect a majority of the Board of Directors or similar governing authority for such Person.
"Material Adverse Effect" means (i) a material adverse effect upon the business operations, properties, assets, or condition (financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, (ii) the material impairment of the ability of the Borrower to perform the Obligations, or (iii) the material impairment of the material rights or remedies of, or benefits to Lender under any Loan Document.
"Notes" means one or more of the Revolving Credit Note or any other promissory note evidencing a Loan or any combination thereof.
"Notice of Borrowing" means a notice delivered by Borrower to Lender pursuant to Section 4.1 with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of Borrower from time to time owed to Lender under this Agreement, the Notes, and the other Loan Documents, whether for principal, interest, reimbursement of fees, expenses, indemnification or otherwise.
"Operating Lease" means, as applied to any Person, any lease (including, without limitation, leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) that is not a Capital Lease other than any such lease under which that Person is the lessor.
"Parent" means Red Robin Gourmet Burgers, Inc., a Delaware corporation.
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor thereto).
"Permitted Encumbrances" means the following types of Liens:
(a) liens for taxes, assessments or governmental charges or claims payment of which is not, at the time, required by Section 6.4;
(b) statutory liens of carriers, warehousemen mechanics and materialmen and other liens imposed by law (other than any Lien imposed pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA) incurred in the
ordinary course of CREDIT AGREEMENT PAGE 9 [EXECUTION COPY] |
business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor;
(c) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);
(d) any attachment or judgment Lien not constituting an Event of Default under subsection 9.1(i);
(e) leases or subleases granted to others not interfering in any material respect with the ordinary conduct of the business of Borrower or any of its Subsidiaries;
(f) easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of Borrower or any of its Subsidiaries;
(g) any (i) interest or title of a lessor or sublessor under any Capital Lease or any Operating Lease not prohibited by this Agreement, (ii) restriction or encumbrance that the interest or title of such lessor or sublessor may be subject to, or (iii) subordination of the interest of the lessee or sublessee under such lease to any restriction or encumbrance referred to in the preceding clause (ii);
(h) Liens arising from Capital Leases and purchase money security interests permitted by this Agreement; provided such liens attach only to the property purchased or leased in connection with such purchase money financing or Capital Lease transaction;
(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(j) deposits in the ordinary course of business to secure liabilities to insurance carriers, lessors, utilities and other service providers;
(k) Liens granted pursuant to this Agreement or the other Loan Documents;
(l) Statutory liens of landlords incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor;
(m) Liens listed on Schedule 7.4 attached hereto; and
(n) Liens required to be granted under the Finova Loan Agreement; provided that such Liens do not encumber any of the Collateral.
CREDIT AGREEMENT PAGE 10
[EXECUTION COPY]
"Permitted Prior Liens" means the Liens described in clauses (a), (b), (c),
(f), (g), (h), (i), and (j) of the definition of Permitted Encumbrances subject
to the limitations or requirements set forth therein.
"Person" means any individual, partnership, joint venture, firm, corporation, association, trust, or other enterprise or any Governmental Body.
"Plan" means an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 302 of ERISA or Section 412 of the Internal Revenue Code and is either (a) maintained by Borrower or any ERISA Affiliate for employees of Borrower or any ERISA Affiliate or (b) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which Borrower or any ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.
"Qualifying IPO" means an underwritten primary public offering (other than a public offering pursuant to the registration statement on Form S-8 (or any successor form)) of the common capital stock of Parent pursuant to an effective registration statement filed with the United States Securities & Exchange Commission in accordance with the Securities Act of 1933, as amended from time to time, and any successor statute (whether alone or in conjunction with a secondary public offering).
"RR Investors" means RR Investors, LLC, a Virginia limited liability company.
"RR Investors II" means RR Investors II, LLC, a Virginia limited liability company.
"Related Parties means (i) any spouse or immediate family member of Snyder,
(ii) any trust set up for the benefit of Snyder or any of the Persons specified
in clause (i), or (iii) any corporation or limited liability company wholly
owned by a Management Holder and/or the Persons specified in clause (i) and
(ii).
"Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or into or out of any Facility, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property.
"Restaurants" means the restaurants and properties listed on Schedule 1.1.
"Revolving Credit Commitment" means the commitment of the Lender to make
Revolving Credit Loans to Borrower in the aggregate amount of up to $10,000,000
pursuant to Section 2.1. CREDIT AGREEMENT PAGE 11 [EXECUTION COPY] |
"Revolving Credit Commitment Period" means the period from and including the Closing Date to, but not including, the Revolving Credit Commitment Termination Date.
"Revolving Credit Commitment Termination Date" means March 31, 2003, or such earlier date as the Revolving Credit Commitment terminates.
"Revolving Credit Loans" means the Loans made by Lender pursuant to Section 2.1.
"Revolving Credit Note" means the promissory note of Borrower issued pursuant to Section 2.3 on the Closing Date, in substantially in the form described in Section 2.3, as it may be amended, supplemented, or otherwise modified from time to time.
"Securities" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
"Security Agreement" means that certain security agreement by and between Borrower and Lender dated as of the date hereof and delivered to Lender pursuant to subsection 5.1(c) hereof, as such security agreement may be amended, restated, supplemented or otherwise modified from time to time.
"Shareholders Agreement" means that certain amended and restated shareholders agreement dated as of August 9, 2001 by and among Parent, Borrower, Skylark Company, Ltd., a Japan corporation, RR Investors, RR Investors II, Snyder and certain other shareholders.
"Snyder" means Michael J. Snyder, an individual.
"Solvent" means, with respect to any Person, that as of the date of
determination both (a)(i) the then fair value of the property of such Person is
(y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (b) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
CREDIT AGREEMENT PAGE 12
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"Sponsor Group" means RR Investors, RR Investors II and any of their respective Affiliates.
"Subordinated Debt" means all Indebtedness of the Borrower that is subordinate and junior in right of payment to all of the Obligations pursuant to a subordination agreement in form and substance acceptable to Lender.
"Subsidiary" means, with respect to any Person, any corporation, partnership, association, joint venture or other business entity of which more than fifty percent (50%) of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.
"Subsidiary Security Agreement" means all security agreements now or hereafter executed by a Subsidiary of Borrower in accordance with the terms hereof, as each such security agreement may be amended, restate or otherwise supplemented from time to time.
"Tangible Net Worth" means Parent's Consolidated net worth determined in accordance with GAAP, plus, to the extent deducted from total assets in determining Consolidated net worth, deferred rent liability, less the sum of (a) the amount of all deferred charges, deferred loan fees, and net deferred tax assets; (b) all intangible assets, including, but not limited to, goodwill, licenses, franchises, work force intangibles, trademarks, trade names, service marks, patents and copyrights; (c) unamortized debt discount and expense; (d) the cost of capital stock of an Affiliate; (e) any Indebtedness owing to Parent or any Subsidiary by an Affiliate thereof, unless such Indebtedness arose in connection with the sale or lease of goods or property in the ordinary course of business or the performance of services in the ordinary course of business and would otherwise constitute current assets in accordance with generally accepted accounting principles; and (f) the amount of any write-up in book value of the assets of Parent and/or its Subsidiaries resulting from any revaluation of assets.
"Tax" means for any Person, any tax, assessment, duty, levy, or other charge imposed by any Governmental Body on such Person or on any property, revenue, income, or franchise of such Person and any interest or penalty with respect to any of the foregoing.
"UCC" means the Uniform Commercial Code as in effect from time to time in the state of Washington.
"Unfunded Capital Expenditures" means the sum of all purchases of capital assets or acquisitions of other companies, including goodwill, less (a) the sum of all new financing amounts received or assumed to acquire capital assets or acquisitions of other companies for the period specified, including Revolving Credit Loans, (b) for purposes of measuring the Fixed Charge Coverage for the Fiscal Quarters ending in calendar year 2002, the sum of
CREDIT AGREEMENT PAGE 13
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$18,500,000, which represents Borrower's cash balances at its Fiscal Year ending December 30, 2001, and (c) net cash proceeds received by Borrower from the sale of assets permitted under Section 7.7 herein.
1.2 Accounting Terms
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Borrower to Lender pursuant to subsections (a), (b) and (c) of
Section 6.1 shall be prepared in accordance with GAAP (except, with respect to
interim financial statements, normal year-end audit adjustments and the absence
of explanatory footnotes) as in effect at the time of such preparation.
Calculations in connection with the definitions, covenants, and other provisions
of this Agreement shall utilize accounting principles and policies in
conformance with those used to prepare the financial statements referred to in
Section 8.10.
1.3 Rules of Construction
Unless the context otherwise requires, the following rules of construction apply to the Loan Documents:
(a) Words in the singular include the plural and in the plural include the singular.
(b) Provisions of the Loan Documents apply to successive events and transactions.
(c) In the event of any inconsistency between the provisions of this Agreement and the provisions of any of the other Loan Documents, the provisions of this Agreement govern.
(d) References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided.
1.4 Incorporation of Recitals and Exhibits
The foregoing recitals are incorporated into this Agreement by reference. All references to "Exhibits" contained herein are references to exhibits attached hereto, the terms and conditions of which are made a part hereof for all purposes.
ARTICLE 2. REVOLVING CREDIT FACILITY
2.1 Revolving Credit Commitment
(a) Subject to and upon the terms and conditions set forth herein, and in reliance upon the representations, warranties and covenants of Borrower contained herein or made pursuant hereto, Lender agrees to make loans (individually, a "Revolving Credit Loan"; collectively, the "Revolving Credit Loans") to Borrower from time to time during the
CREDIT AGREEMENT PAGE 14
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Revolving Credit Commitment Period, in an aggregate amount not exceeding its
Revolving Credit Commitment to be used for the purposes identified in Section
2.2. Lender's Revolving Credit Commitment shall expire on the Revolving Credit
Commitment Termination Date and all Revolving Credit Loans and all other amounts
owed hereunder with respect to the Revolving Credit Loans and the Revolving
Credit Commitment shall be paid in full no later than that date. Amounts
borrowed under Section 2.1 may be repaid and reborrowed until but excluding the
Revolving Credit Commitment Termination Date.
(b) During the Revolving Credit Commitment Period Borrower may use the Revolving Credit Commitment by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing all in accordance to the terms and conditions hereof.
(c) Notwithstanding the foregoing, unless and until the conditions set forth in Section 5.3 herein are satisfied in Lender's discretion, no more than $7,800,000 in Revolving Credit Loans shall be outstanding at any time.
2.2 Use of Proceeds
Borrower may use the proceeds of the Revolving Credit Loans for construction and or acquisition of new restaurants and for its general corporate purposes, including working capital.
2.3 Revolving Credit Note
The Revolving Credit Loans to be made by Lender pursuant to its Revolving Loan Commitment shall be evidenced by and repayable with interest in accordance with a promissory note in the form of Exhibit A hereto, payable to the order of Lender dated as of the date hereof and in the principal amount of Lender's Revolving Credit Commitment (the "Revolving Credit Note").
2.4 Rate of Interest
Interest on each Revolving Credit Loan shall accrue at an annual rate equal to 3.0% plus the one-month LIBOR rate quoted by Lender from Telerate Page 3750 or any successor thereto, which shall be that one-month LIBOR rate in effect and reset each New York banking day. Lender's internal records of applicable interest rates shall be determinative in the absence of manifest error. For determining payment dates for LIBOR rate loans, the New York banking day shall be the standard convention. In the event after the date of initial funding any governmental authority subjects Lender to any new or additional charge, fee, withholding or tax of any kind with respect to any Revolving Credit Loans hereunder or changes the method of taxation of such Revolving Credit Loans or changes the reserve or deposit requirements applicable to such Revolving Credit Loans, Borrower shall pay to Lender such additional amounts as will compensate the Lender for such costs or lost income resulting therefrom as reasonably determined by Lender.
CREDIT AGREEMENT PAGE 15
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2.5 Payment of Interest
Until the Revolving Credit Loans shall have been paid in full, Borrower shall pay monthly in arrears to Lender an amount equal to all accrued interest on the Revolving Credit Loans (a) on the 15th day of each calendar month, commencing on the 15th day of the first month following the making of the Revolving Credit Loan, and on the 15th day of each month thereafter, and (b) on the Revolving Credit Commitment Termination Date.
2.6 Repayment of Principal and Termination of Revolving Credit Commitment
(a) Borrower shall pay Lender all outstanding principal, accrued interest, and other charges with respect to the Revolving Credit Loans on the Revolving Credit Commitment Termination Date. The Revolving Credit Commitment of Lender shall automatically and permanently terminate on the Revolving Credit Commitment Termination Date.
(b) Borrower shall, on each date when any reduction in the Revolving Credit Commitment (as reduced from time to time) shall become effective, including pursuant to Section 9.2, make a mandatory prepayment of all Revolving Credit Loans equal to the excess, if any, of the aggregate outstanding principal amount of all Revolving Credit Loans over the Revolving Credit Commitment as so reduced.
(c) If, at any time, the aggregate outstanding principal amount of all Revolving Credit Loans exceeds the aggregate amount of the Revolving Credit Commitment then in effect, the Borrower shall immediately make a mandatory prepayment of all Revolving Credit Loans equal to the amount of such excess.
(d) Borrower may from time to time on any Business Day voluntarily reduce the amount of the Revolving Credit Commitment; provided, however, that (i) all such reductions shall require at least five Business Days' notice to Lender and be permanent and irrevocable (ii) there may not be more than one reduction in any calendar quarter, and (iii) any partial reduction of the Revolving Credit Commitment shall be in the minimum amount of $1,000,000 and in an integral multiple of $1,000,000 thereafter.
2.7 Revolving Credit Commitment Fee
Borrower shall pay Lender a nonrefundable fee for the Revolving Credit Commitment in the amount of $150,000, concurrently with the execution of this Agreement.
2.8 Cleanup Period
In the event a Qualifying IPO occurs, Borrower shall reduce the outstanding principal balance of the Revolving Credit Loans to $0 for a period of 60 consecutive days, such 60-day period to commence no later than 30 days after the date the Qualifying IPO occurs.
CREDIT AGREEMENT PAGE 16
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ARTICLE 3. [RESERVED]
ARTICLE 4. GENERAL PROVISIONS APPLICABLE TO THE LOANS
4.1 Borrowing Mechanics
(a) Whenever Borrower desires that Lender make a Loan it shall deliver to Lender a Notice of Borrowing in the form of Exhibit B annexed hereto no later than 2:00 p.m. (Seattle time) on the proposed Funding Date. The Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be a Business Day), and (ii) the amount of Loans requested. In lieu of delivering the above-described Notice of Borrowing, Borrower may give Lender telephonic notice by the required time of any proposed borrowing under this Section 4.1; provided, that such notice shall be promptly confirmed in writing by delivery of a Notice of Borrowing to Lender on or before the applicable Funding Date; provided further, that if Borrower maintains a loan sweep service connected to an account of Lender that provides for advances under the Revolving Credit Commitment, then a Notice of Borrowing is not required for Revolving Credit Loans.
(b) Lender shall not incur any liability to Borrower in acting upon any telephonic notice referred to above that Lender believes in good faith to have been given by a duly authorized officer or other person authorized to borrow on behalf of Borrower or for otherwise acting in good faith under this Section 4.1, and upon funding of Loans by Lender in accordance with this Agreement pursuant to any such telephonic notice, Borrower shall have effected Loans hereunder.
(c) Borrower shall notify Lender prior to the funding of any Loans in the event that any of the matters to which Borrower is required to certify in the applicable Notice of Borrowing is no longer true and correct as of the applicable Funding Date, and the acceptance by Borrower of the proceeds of any Loans shall constitute a re-certification by Borrower, as of the applicable Funding Date, as to the matters to which Borrower is required to certify in the applicable Notice of Borrowing.
4.2 Disbursement of Funds
Upon satisfaction or waiver of the conditions precedent specified in Sections 5.1 (in the case of Loans made on the Closing Date) and 5.2 (in the case of all Loans), Lender shall make the proceeds of such Loans available to Borrower on the applicable Funding Date by causing an amount of same day funds equal to the proceeds of all such Loans to be credited to the account of Borrower at the office of Lender located at 1420 Fifth Avenue, 11th Floor, Seattle, Washington 98101; provided that Borrower hereby authorizes Lender to disburse Loan proceeds directly to Lawyers Title of Arizona, Inc. in Phoenix,
Arizona in escrow for acquisition of two of the Fee Properties.
CREDIT AGREEMENT PAGE 17 [EXECUTION COPY] |
4.3 [Reserved] |
4.4 Manner of Payment
All sums payable to Lender pursuant to this Agreement shall be paid directly to Lender in immediately available United States funds. Borrower authorizes Lender to debit any of Borrower's accounts maintained at Lender to make all payments due under this Agreement, the Notes, and the other Loan Documents. Whenever any payment to be made hereunder or on any of the Notes becomes due and payable on a day other than a Business Day, such payment may be made on the next succeeding Business Day and such extension of time shall in such case be included in computing interest on such payment. For determining payment dates for LIBOR rate loans, the New York banking day shall be the standard convention.
4.5 Statements
Lender shall send Borrower statements of all amounts due hereunder; the statements shall be considered presumptively correct, absent manifest error, unless Borrower notifies Lender to the contrary within thirty (30) days of receipt of any statement that Borrower claims to be incorrect. Borrower agrees that accounting entries made by Lender with respect to Borrower's loan accounts shall constitute evidence of all disbursements of Loan proceeds and payments made on the Loans. Without limiting the methods by which Lender may otherwise be entitled by Applicable Law to make demand for payment of the Loans upon Borrower, Borrower agrees that any statement, invoice, or payment notice from Lender to Borrower with respect to any Obligation shall be deemed to be a demand for payment in accordance with the terms of such statement, invoice, or payment notice. Under no circumstances shall a demand by Lender for partial payment of principal or interest or both be construed as a waiver by Lender of its right thereafter to demand and receive payment (in part or in full) of any remaining principal or interest obligation.
4.6 Computations of Interest and Fees
Except as otherwise expressly provided herein, all computations of interest and fees shall be based on a 360-day year for the actual number of days elapsed.
4.7 Default Interest
Upon the occurrence and during the continuance of any Event of Default, Lender may, in its sole discretion, increase the interest rate charged on all Loans to a rate of interest equal to four percent (4%) per annum in excess of the interest rate then applicable to such Loan from the date of such Event of Default until such Event of Default is cured, if curable, or waived by Lender or until the Loans are paid in full and the Commitments have terminated.
CREDIT AGREEMENT PAGE 18
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4.8 Late Charge
If any payment of principal or interest required under any Loan is fifteen
(15) days or more past due, Borrower will be charged a late charge of five
percent (5%) of the delinquent payment for each such late payment. The 15-day
period provided for herein shall not be construed as a waiver of any Default or
Event of Default resulting from any late payment under any Loan.
4.9 Maximum Interest Rate
Notwithstanding any provision contained herein or in the Notes, the total liability of Borrower for payment of interest pursuant hereto, including late charges, shall not exceed the maximum amount of interest permitted by Applicable Law to be charged, collected, or received from Borrower; and if any payments by Borrower include interest in excess of that maximum amount, Lender shall apply the excess first to reduce the unpaid balance of the Loans, then the excess, if any, shall be returned to Borrower.
4.10 Prepayments
Borrower may prepay all or any portion of the Revolving Credit Loans without penalty or premium.
4.11 Increased Costs, Etc.
In the event after the date of initial funding of any Loan any Governmental Body subjects Bank to any new or additional charge, fee, withholding or tax of any kind with respect to any Loans hereunder or changes the method of taxation of such Loans or changes the reserve or deposit requirements applicable to such loans, Borrower shall pay to Lender such additional amounts as will compensate Lender for such cost or lost income resulting therefrom as reasonably determined by Lender.
4.12 Taxes
(a) All payments by Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, stamp or other taxes, fees, duties, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by Lender's net income or receipts, such as the business and occupation tax, if any, imposed by the State of Washington (such nonexcluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will
(i) pay directly to the relevant authority the full amount required to
be so withheld or deducted, CREDIT AGREEMENT PAGE 19 [EXECUTION COPY] |
(ii) promptly forward to the Lender an official receipt, a true and complete copy thereof or other documentation satisfactory to the Lender evidencing such payment to such authority, and
(iii) pay to the Lender or the holders of the Notes such additional amount or amounts as is necessary to ensure that the net amount actually received by Lender or holder of each Note will equal the full amount Lender or such holder would have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Lender with respect to any payment received by the Lender hereunder, the Lender may pay such Taxes and Borrower will promptly pay such additional amounts (including any penalties, interest or expenses (collectively, "Penalties"); provided, however, that Borrower shall not be responsible for the payment or reimbursement of any such item to the extent such item is due to the action or inaction of the Lender) as is necessary in order that the net amount received by such Person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Person would have received had not such Taxes been asserted. Lender agrees that in the event any refunds or rebates of any Taxes paid by Borrower for the account of such Lender are received by such Lender (collectively "Refunds") or Borrower shall pay any amount as Taxes for the account of Lender which is later determined not to constitute Taxes (collectively "Overpayments"), the Lender shall promptly pay all Refunds and Overpayments to Borrower. Further, Lender agrees to notify Borrower promptly of any Refunds or Overpayments of which it becomes aware. Lender shall cooperate reasonably with Borrower's inquiries regarding possible Refunds and Overpayments (but in no event shall Lender be required to take any action which is inconsistent with its internal policies or which would otherwise be adverse to Lender).
(b) If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Lender the required receipts or other required documentary evidence, the Borrower shall indemnify the Lender for any incremental Taxes or Penalties that may become payable by Lender as a result of any such failure.
4.13 Collateral
(a) As security for repayment of all of the Loans and all other Obligations, Borrower shall grant to Lender a first and exclusive Lien, subject only to the Permitted Prior Liens (i) in all of its equipment, fixtures, furnishings and wares now owned or hereafter located at the Restaurants, and proceeds thereof; and (ii) on its fee interest in the real property legally described on Schedule 4.13 ("Fee Property"), together with all improvements and fixtures now owned or hereafter used or acquired by Borrower in the ownership, operation or maintenance of the Fee Property and the restaurant located or to be located thereon.
(b) In the event a Qualifying IPO does not occur by June 30, 2002, Borrower
shall grant to Lender a first and exclusive lien on its fee or leasehold
interest, as the case may CREDIT AGREEMENT PAGE 20 [EXECUTION COPY] |
be, subject only to the Permitted Prior Liens in the various parcels of real property on which the Restaurants are located and, in connection therewith:
(i) Lender shall review and approve title to the Restaurant's premises and approve any lease of said premises. As to each lease of the Restaurant's premises, Lender may require in its discretion, without limitation, that:
(1) Borrower shall be the owner and holder of the lessee's interest, free and clear of any Liens, except for the Permitted Prior Liens.
(2) The landlord shall own the fee interest in the leased premises free and clear of any Liens, provided, that if any Liens exist the holder or holders thereof shall execute and deliver to Lender such consent and estoppel instruments as Lender may reasonably require; and further provided, that any underlying leases be approved by Lender in its reasonable discretion and the holder or holders of the lessor's interest in any such lease shall execute and deliver to Lender such consent and estoppel instruments as Lender may require in its discretion;
(ii) Lender shall receive a Deed of Trust encumbering Borrower's interest in the Restaurant's premises and such Deed of Trust, shall be recorded or perfected in the manner required by state and local law to establish a valid first priority Lien, superior to the rights of any third party or any subsequent lienholder, except for the Permitted Prior Liens;
(iii) Each such Deed of Trust against a Restaurant shall be insured by a title insurance policy acceptable in form and substance to Lender issued by a title insurance company of Lender's choice in an amount and with such endorsements as Lender deems appropriate in its sole discretion;
(iv) Lender shall be granted, by instruments satisfactory to Lender, a perfected first priority security interest (except for the Permitted Prior Liens) in all furniture, furnishings, equipment, and leasehold improvements located at the Restaurant;
(v) Borrower shall execute such other documents as Lender may reasonably require, such as an agreement supplementing this Agreement with terms and conditions with specific application to the Restaurant.
(vi) Lender may require in its discretion that it receive a legal opinion of Borrower's counsel with respect to each Deed of Trust covering a Restaurant addressing such matters as Lender may require;
(vii) Lender shall have received insurance certificates and lender loss payable endorsements in forms satisfactory to Lender to the effect set forth in Section 6.5 with respect to the Restaurant;
CREDIT AGREEMENT PAGE 21
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(viii) Lender shall have received an environmental questionnaire satisfactory to Lender, together with the results of any additional environmental testing required by Lender satisfactory to Lender with respect to such Restaurant, and a certificate and indemnity regarding hazardous substances in form and substance satisfactory to Lender with respect to each such Restaurant; and
(ix) Lender shall have received a questionnaire and disclosure statement regarding compliance by such Restaurant with the Americans with Disabilities Act of 1990, all state and local laws or ordinances relating to handicapped access or any statute, law, regulation, ordinances, or order of Governmental Bodies or order of decree of any court adopted or enacted with respect thereto in a form satisfactory to Lender, together with a certificate of compliance and indemnity regarding access laws in form and substance satisfactory to Lender with respect to each such Restaurant.
(c) Lender acknowledges that, with respect to taking leasehold mortgages against Borrower's leasehold interests in certain of the real property on which Restaurants are located ("Leased Sites"), the lease with respect to such a Leased Site may require the consent of the landlord to a leasehold mortgage and that the landlord may not be obligated to give such consent under the terms of the lease. In such a case, Borrower shall exercise its reasonable best efforts to obtain the requisite landlord consent and shall inform Lender in writing of its efforts to obtain such consent and the landlord's responses. If, after consultation with Borrower, Lender determines, in its sole discretion, that Borrower has exercised its best efforts to obtain such consent and that such consent is not obtainable from such landlord, then a leasehold mortgage on such Leased Site shall not be required. In the event seven or more leasehold mortgages on Leased Sites are not obtained by October 31, 2002 and a Qualifying IPO has not occurred, then Lender may declare an Event of Default hereunder.
4.14 Application of Payments
All payments (other than voluntary prepayments) made by Borrower hereunder
shall be credited, to the extent of the amount thereof, in the following manner:
(i) first, against fees, expenses, and indemnities due hereunder; (ii) second,
against accrued interest on all amounts in default; (iii) third, against accrued
interest on the Loans not in default; and (iv) fourth, against principal of
Loans; provided, however, that if an Event of Default has occurred and is
continuing at the time of such payment, then Lender shall be entitled to apply
the payment in the manner it shall deem appropriate.
ARTICLE 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent for Initial Loans
The obligation of Lender to make a Loan hereunder on the Closing Date is subject to the satisfaction, or waiver by Lender, immediately prior to or concurrently with the making of such Loan, of the following conditions precedent:
CREDIT AGREEMENT PAGE 22
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(a) The Lender shall have received counterparts of this Agreement, duly executed by the respective parties hereto.
(b) Lender shall have received the Revolving Credit Note, duly executed and delivered by Borrower.
(c) Lender shall have received, duly executed and delivered by Borrower, a security agreement ("Security Agreement") in the form attached hereto as Exhibit C, granting to Lender a first priority security interest in all of Borrower's equipment, fixtures, furnishings, wares, and fixtures, located at, the Restaurants, now owned or hereafter acquired, together with the proceeds thereof.
(d) Lender shall have received, duly executed and delivered by Parent and each Subsidiary (other than Inactive Subsidiaries and the Liquor License Subsidiaries), an unconditional guaranty in the form attached hereto as Exhibit D (for Parent) and in the form attached hereto as Exhibit D-1 (for each such Subsidiary), whereby Parent and each such Subsidiary jointly, severally, and unconditionally guarantees payment of the Obligations.
(e) Lender shall have received, duly executed and delivered by Western Franchise Development, Inc., a subsidiary security agreement in the form attached hereto as Exhibit E, granting to Lender a first priority security interest in all of such Loan Party's equipment, fixtures, furnishings, wares, fixtures, located at the Restaurants, now owned or hereafter acquired, together with the proceeds thereof.
(f) Lender shall have received a landlord waiver from each landlord of each leased Restaurant in form and substance reasonably acceptable to Lender.
(g) Lender shall have received, duly executed and delivered by Borrower, such financing statements and other documents reasonably deemed necessary by Lender to perfect the security interests granted to Lender.
(h) Lender shall have received from counsel for Borrower, opinions addressed to Lender and each dated as of the Closing Date, substantially in the form attached hereto as Exhibit F.
(i) No Default or Event of Default hereunder shall exist, and after having given effect to the requested Loan, no Default or Event of Default shall exist.
(j) All representations and warranties of any of the Loan Parties contained in any of the Loan Documents or otherwise made in writing to Lender in connection herewith shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of the initial Loan.
(k) All corporate proceedings of each Loan Party shall be satisfactory in form and substance to Lender, and Lender shall have received all information and
copies of all documents, including records of all corporate proceedings, that
Lender has requested in CREDIT AGREEMENT PAGE 23 [EXECUTION COPY] |
connection therewith, such documents where appropriate to be certified by proper corporate authorities or Governmental Bodies. Borrower shall provide Lender with the following documents prior to or upon the execution of this Agreement:
(i) Copies of the articles of incorporation and bylaws of each Loan Party, together with all amendments thereto, certified by an officer of such Loan Party to be true and complete;
(ii) Certificates of authority for each Loan Party in the state of its formation and in each state where any of the Collateral owned by such Loan Party is located dated within thirty (30) days of the date of the execution of this Agreement; and
(iii) Certified resolutions of the directors of each Loan Party and incumbency certificates in the form and substance acceptable to Lender.
(l) Lender shall have received such evidence reasonably deemed necessary by Lender that Lender's security interests in the Collateral constitute first priority and exclusive security interests, except for the Permitted Prior Liens.
(m) All Indebtedness of Borrower (other than the existing Indebtedness identified in Schedule 5.1(m) annexed hereto) shall have been paid in full, redeemed or defeased, or purchased by Lender, any commitments to lend thereunder shall have been terminated, all security interests created to secure the obligations arising in connection therewith shall have been terminated or effectively assigned to Lender, and Borrower shall have delivered to Lender UCC-3 termination statements or assignments (or comparable forms) and any and all other instruments of release, satisfaction, assignment and/or reconveyance (or evidence of the filing thereof) as reasonably may be necessary or advisable to terminate or assign to Lender all of such security interests and all other security interests in the Collateral.
(n) Borrower shall obtain all consents deemed by Lender to be necessary or advisable in connection with the transactions contemplated by the Loan Documents and in the continued operation of the business conducted by Borrower, including without limitation consent from the lenders with respect to the Finova Debt, and each consent shall be in full force and effect and in form and substance reasonably satisfactory to Lender.
(o) Lender shall have received a Notice of Borrowing from Borrower for the initial Loan.
(p) Lender shall have received insurance certificates and lender loss payable endorsements on casualty/property loss insurance in forms reasonably satisfactory to Lender to the effect set forth in Section 6.5 hereof.
(q) There shall have been no material adverse change in the financial condition of Borrower subsequent to December 30, 2001.
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(r) Lender shall have received the loan fees as provided in Section 2.7.
(s) Lender shall have received payment of all fees and expenses in accordance with Section 10.2
(t) Lender shall have received a Deed of Trust encumbering Borrower's interest in the Fee Property located in Prescott, Arizona and such Deed of Trust shall have been recorded or perfected in the manner required by state and local law to establish a valid first priority Lien, superior to the rights of any third party or any subsequent lienholder except for the Liens described in clauses (a) and (f) of the definition of Permitted Encumbrances and except as otherwise approved by Lender in writing.
(u) The Deed of Trust against the Fee Property located in Prescott, Arizona shall be insured by a title insurance policy acceptable in form and substance to Lender issued by a title insurance company of Lender's choice in an amount and with such endorsements as Lender deems appropriate in its sole discretion.
(v) Lender shall have received a certificate and indemnity regarding hazardous substances in form and substance satisfactory to Lender with respect to the Fee Property located in Prescott, Arizona.
(w) Lender shall have received copies of all permits required for construction of the Restaurant on the Fee Property located in Prescott, Arizona.
5.2 Conditions Precedent to All Loans, Etc.
The obligation of Lender to make any Loan, is subject to the fulfillment, to the satisfaction of Lender, of the following conditions precedent on the date such Loan is made:
(a) The conditions set forth in Section 5.1 shall have been previously satisfied or waived in writing by Lender, and Lender shall have received evidence reasonably satisfactory to Lender of satisfaction thereof.
(b) Lender shall have received for each requested Loan, a Notice of Borrowing in form and substance reasonably satisfactory to Lender.
(c) There shall be executed and delivered to Lender such further instruments, agreements, opinions, and documents, as may be reasonably necessary or proper in the reasonable opinion of Lender to confirm the obligations of Borrower to Lender hereunder, the grant of security therefor, and the proper use of the proceeds of all Loans.
(d) The representations and warranties contained herein and in the other Loan Documents shall be true, correct and complete in all material respects on and as of the Funding Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all material respects on and as of such earlier date.
CREDIT AGREEMENT PAGE 25
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(e) No Default or Event of Default shall have occurred and be continuing and after having given effect to the requested Loan, no Default or Event of Default shall exist.
(f) To the extent not previously delivered, all other documents, agreements, and instruments from or with respect to Borrower or any other Person that may be called for hereunder shall be duly executed and delivered to Lender, including but not limited to all documents, agreements, and instruments reasonably deemed necessary by Lender to perfect its security interest in Collateral acquired after the date of this Agreement. For the purposes of this Agreement, the waiver of delivery of any document, agreement, or instrument from or with respect to Borrower or any other Person does not constitute a continuing waiver with respect to the obligation to fulfill the conditions precedent to the making or renewal of each Loan hereunder.
(g) There shall have been no material adverse change in the financial condition of Borrower and its Subsidiaries subsequent to December 30, 2001.
(h) Borrower and each Loan Party is Solvent.
5.3 Conditions for Removal of Limitation on Revolving Credit Loans.
The limitation on Revolving Credit Loans set forth in subsection 2.1(c) herein shall be of no further force or effect upon written notice from Lender to Borrower that the following conditions precedent have been satisfied in Lender's sole discretion:
(a) The conditions set forth in Sections 5.1 and 5.2 shall have been previously satisfied or waived in writing by Lender, and Lender shall have received evidence reasonably satisfactory to Lender of satisfaction thereof.
(b) Lender shall have received a Deed of Trust encumbering Borrower's interest in the Fee Property located in Peoria, Arizona and such Deed of Trust shall have been recorded or perfected in the manner required by state and local law to establish a valid first priority Lien, superior to the rights of any third party or any subsequent lienholder except for the Liens described in clauses (a) and (f) of the definition of Permitted Encumbrances and except as otherwise approved by Lender in writing.
(c) The Deed of Trust against the Fee Property located in Peoria, Arizona shall be insured by a title insurance policy acceptable in form and substance to Lender issued by a title insurance company of Lender's choice in an amount and with such endorsements as Lender deems appropriate in its sole discretion.
(d) Lender shall have received a certificate and indemnity regarding hazardous substances in form and substance satisfactory to Lender with respect to the Fee Property located in Peoria, Arizona.
(e) Lender shall have received copies of all permits required for construction of the Restaurant on the Fee Property located in Peoria, Arizona.
CREDIT AGREEMENT PAGE 26
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ARTICLE 6. AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that so long as this Agreement is in effect, any Note remains outstanding and unpaid, or any Obligation remains outstanding, unless Lender shall otherwise give prior written consent, Borrower shall perform and shall cause each of its Subsidiaries to perform all covenants in this Article 6.
6.1 Financial Information, etc.
Borrower will furnish, or cause to be furnished, to the Lender, copies of the following financial statements, reports, notices and other information:
(a) as soon as available and in any event within thirty (30) days after the end of each Fiscal Period, Consolidated balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal Period and Consolidated statements of income and cash flow of the Parent and its Subsidiaries for such Fiscal Period and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Period, in each case certified by the chief financial officer or treasurer of the Parent;
(b) as soon as available and in any event within one hundred twenty (120) days after the end of each Fiscal Year of the Parent, a copy of the annual audit report for such Fiscal Year for the Parent and its Subsidiaries, including therein consolidated balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of income and cash flow of the Parent and its Subsidiaries for such Fiscal Year certified, in the case of each consolidated balance sheet and consolidated statement of income and cash flow, without any Impermissible Qualification, in a manner reasonably acceptable to the Lender by independent public accountants of nationally recognized standing, together with a certificate from such accountants containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in Sections 7.3, 7.15, 7.16, 7.17 and 7.18, and to the effect that, in making the examination necessary for the signing of such annual report by such accountants, they have not become aware of any Default or Event of Default that has occurred and is continuing, or, if they have become aware of such Default or Event of Default, describing such Default or Event of Default and the steps, if any, being taken to cure it;
(c) as soon as available and in any event within forty-five (45) days after the end of each Fiscal Quarter, Consolidated balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal Quarter and Consolidated statements of income and cash flow of the Parent and its Subsidiaries for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, in each case certified by the chief financial officer or treasurer of the Parent;
(d) as soon as available and in any event within forty-five (45) days after the end of each Fiscal Quarter (including the last Fiscal Quarter of each Fiscal Year), a certificate in form and substance acceptable to Lender ("Compliance Certificate"), executed by the chief financial officer or treasurer of the Borrower, showing (in reasonable detail and with
CREDIT AGREEMENT PAGE 27
[EXECUTION COPY]
appropriate calculations and computations in all respects reasonably satisfactory to the Lender) compliance (or noncompliance) with the covenants set forth in Sections 7.3, 7.15, 7.16, 7.17 and 7.18;
(e) as soon as available and in any event within forty-five (45) days after the end of each Fiscal Quarter, a statement of income and cash flow for each Restaurant for such Fiscal Quarter, in each case certified by the chief financial officer or treasurer of the Borrower;
(f) as soon as possible and in any event within three (3) Business Days after the occurrence of each Default, a statement of the chief financial officer or treasurer of the Borrower setting forth details of such Default and the action which the Borrower has taken and proposes to take with respect thereto;
(g) as soon as possible and in any event within three (3) Business Days
after (x) the occurrence of any material adverse development with respect to any
litigation, action, proceeding, or labor controversy described in Section 8.5 or
(y) the commencement of any labor controversy, litigation, action or proceeding
of the type described in Section 8.5, notice thereof and copies of all
documentation relating thereto;
(h) promptly after the sending or filing thereof, copies of all reports which the Parent, Borrower or any of its Subsidiaries sends to its security holders generally and (i) all reports and registration statements which the Parent, Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any national securities exchange and (ii) copies of all notices and documents sent to any holder of Indebtedness for borrowed money owing by the Parent, Borrower or any of its Subsidiaries (other than routine notices sent in the ordinary course of business such as borrowing requests, conversion notices and the like);
(i) immediately upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a required contribution to any Plan if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA, or the taking of any action with respect to a Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the occurrence of any event with respect to any Plan which could result in the incurrence by the Borrower of any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower with respect to any post-retirement welfare plan benefit, notice thereof and copies of all documentation relating thereto;
(j) as soon as reasonably practicable after the Borrower obtains knowledge of any treatment, storage, processing, discharge, spill or other disposition by the Borrower or any Subsidiary of the Borrower of any substance defined as Hazardous Materials, at any Facility in violation of any applicable Environmental Law; the making of a claim or demand against the Borrower or any Subsidiary of the Borrower based on alleged damage to health caused by any Hazardous Materials; or any charge brought by any Governmental Body accusing the Borrower or any Subsidiary of the Borrower with improperly using, handling,
CREDIT AGREEMENT PAGE 28
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storing discharging or disposing of any such Hazardous Materials or with causing or permitting any pollution of any body of water; in any such case which has a reasonable possibility of giving rise to a Material Adverse Effect, the Borrower will inform the Lender, of the nature of such violation, claim, demand or charge and will provide such additional information as may be reasonably requested by the Lender;
(k) as soon as available, a calendar identifying each Fiscal Period of each Fiscal Year;
(l) as soon as possible and in any event within three (3) Business Days after Borrower distributes funds to Parent to cover expenses incurred in connection with a Qualified IPO, a written summary of the nature and amount of such expenses;
(m) such other information respecting the condition or operations, financial or otherwise, including, without limitation, consolidating financial information, of the Parent, Borrower or any of the Borrower's Subsidiaries, as the Lender may from time to time reasonably request.
6.2 Licenses and Permits
Borrower will, and will cause each of its Subsidiaries to, maintain all Governmental Approvals and all related or other material agreements necessary for it to operate its business, and at all times comply with all Applicable Laws relating to the operations, facilities, or activities of Borrower or its Subsidiaries, except where the failure to do any of the foregoing could not reasonably be expected to result in a Material Adverse Effect.
6.3 Maintenance of Properties
Borrower will, and will cause each of its Subsidiaries to, keep its properties in good repair and in good working order and condition, in a manner consistent with past practices and comparable to industry standards, ordinary wear and tear excepted; from time to time make all appropriate and proper repairs, renewals, replacements, additions, and improvements thereto; and keep all equipment that may now or in the future be subject to compliance with any Applicable Laws in material compliance with such Applicable Laws.
6.4 Payment of Charges
Borrower will, and will cause each of its Subsidiaries to, duly pay and discharge all material (a) Taxes imposed on or against it or its property or assets, or upon any property leased by it, prior to the date on which penalties attached thereto, unless and to the extent only that such Taxes, after written notice having been given to Lender, are being contested in good faith and by appropriate proceedings; (b) claims allowed by Applicable Laws, whether for labor, materials, rentals, or anything else, which could, if unpaid, become a Lien upon its property or assets or its outstanding capital stock or adversely affect its facilities or operations, (unless and to the extent only that the validity thereof is being contested in good faith and by appropriate proceedings, after written notice having been given to Lender);
CREDIT AGREEMENT PAGE 29
[EXECUTION COPY]
(c) trade bills in accordance with the terms thereof or generally prevailing industry standards; and (d) other Indebtedness heretofore or hereafter incurred or assumed by it, unless such Indebtedness be renewed or extended. In the event any charge is being contested by Borrower or its Subsidiaries as allowed above, Borrower shall establish adequate reserves against possible liability therefor.
6.5 Insurance
(a) Borrower will, and will cause each of its Subsidiaries to, maintain insurance upon its properties and business insuring against such risks as Lender shall reasonably determine from time to time. Borrower and its Subsidiaries shall cause each insurance policy issued in connection with the Restaurants to provide and shall cause the insurer issuing such policy to certify to Lender that (i) if such insurance is proposed to be canceled or materially changed for any reason whatsoever, such insurer will promptly notify Lender, and such cancellation or change shall not be effective as to Lender for thirty (30) days after receipt by Lender of such notice, unless the effect of the change is to extend or increase coverage under the policy; and (ii) Lender will have the right at its election to remedy any default in the payment of premiums within thirty (30) days of notice from the insurer of the default. Each such policy of casualty insurance covering damage to or loss of property with respect to the Restaurants shall name Lender as the loss payee thereunder for all losses.
(b) From time to time upon request by Lender, Borrower will promptly furnish or cause to be furnished to Lender evidence, in form and substance reasonably satisfactory to Lender, of the maintenance of all insurance, indemnities, or bonds required by this Section 6.5 or by any license, lease, or other agreement to be maintained, including but not limited to such originals or copies as Lender may request of policies, certificates of insurance, riders, assignments, and endorsements relating to the insurance and proof of premium payments.
6.6 Maintenance of Records
Borrower will, and will cause each of its Subsidiaries to, keep at all times books of account and other records in which full, true, and correct entries will be made of all dealings or transactions in relation to its business and affairs to the extent required on a consolidated basis by GAAP.
6.7 Inspection
Upon reasonable advance notice by Lender, Borrower will, and will cause each of its Subsidiaries to, allow any representative of Lender to visit and inspect any of its properties, to examine its books of account and other records and files, to make copies thereof and to discuss the affairs, business, finances, and accounts of Borrower and its Subsidiaries with their officers, employees, and accountants, all at such reasonable times and as often as Lender may reasonably desire; provided that no advance notice is required if a Default
or Event of Default has occurred and is continuing.
CREDIT AGREEMENT PAGE 30 [EXECUTION COPY] |
6.8 Environmental Disclosure and Inspection |
(a) Borrower shall, and shall cause each of its Subsidiaries to, (i) exercise reasonable due diligence in order to comply with all material Environmental Laws applicable to them and (ii) use all reasonable efforts to cause all tenants under any leases or occupancy agreements affecting any portion of the Facilities.
(b) Borrower shall promptly advise Lender in writing and in reasonable detail of (i) any Release of any Hazardous Materials required to be reported to any Governmental Body under any applicable Environmental Laws, (ii) any and all written communications with respect to any Environmental Claims that have a reasonable possibility of giving rise to a Material Adverse Effect or with respect to any Release of Hazardous Materials required to be reported to any Governmental Body, and (iii) any remedial action taken by Borrower or any other Person in response to (x) any Hazardous Materials on, under or about any Facility, the existence of which has a reasonable possibility of resulting in an Environmental Claim having a Material Adverse Effect, or (y) any Environmental Claim that could have a Material Adverse Effect.
(c) Borrower shall promptly notify Lender of (i) any proposed acquisition of stock, assets, or property by Borrower or any of its Subsidiaries and (ii) any proposed action to be taken by Borrower or any of its Subsidiaries to commence manufacturing, industrial or other similar operations other than those operations in which Borrower and its Subsidiaries currently engage that could in either such case reasonably be expected to expose Borrower or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have a Material Adverse Effect.
(d) Borrower shall, at its own expense, provide copies of such documents or information as Lender may reasonably request in relation to any matters disclosed pursuant to this Section 6.8.
6.9 Borrower's Remedial Action Regarding Hazardous Materials
Borrower shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all necessary remedial action in connection with the presence, storage, use, disposal, transportation or Release of any Hazardous Materials on or under any Facility required by any applicable Environmental Laws and Governmental Approvals unless the failure to so comply could not reasonably be expected to have a Material Adverse Effect. In the event Borrower or any of its Subsidiaries undertakes any remedial action with respect to any Hazardous Materials on or under any Facility, Borrower or such Subsidiary, shall conduct and complete such remedial action in material compliance with all applicable Environmental Laws, and in accordance with the policies, orders and directives of all federal, state and local Governmental Bodies except when, and only to the extent that, Borrower's or such Subsidiary's liability for such presence, storage, use, disposal, transportation or discharge of any Hazardous Materials, or the legal authority for any such policies, orders, and directives, is being contested in good faith by Borrower or such Subsidiary.
CREDIT AGREEMENT PAGE 31
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6.10 Further Assurances; Financing Statements; Appraisals
(a) At any time or from time to time upon the request of Lender, Borrower will, and will cause each of its Subsidiaries to, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Lender may reasonably request in order to effect fully the purposes of the Loan Documents and to provide for payment of the Obligations in accordance with the terms of this Agreement, the Notes and the other Loan Documents. In furtherance and not in limitation of the foregoing, Borrower shall take, and cause each of its Subsidiaries to take, such actions as Lender may reasonably request from time to time (including, without limitation, the execution and delivery of guaranties by Parent and Subsidiaries of Parent, security agreements, pledge agreements, mortgages, deeds of trust, stock powers, financing statements and other documents, the filing or recording of any of the foregoing, the obtaining of title insurance (in the event a Qualifying IPO does not occur by June 30, 2002 and leasehold deeds of trust are required pursuant to subsection 4.13(b)) with respect to any of the foregoing that relates to an interest in real property, and the delivery of stock certificates and other collateral with respect to which perfection is obtained by possession) to ensure that the Obligations are secured by substantially all of the assets of Borrower and its Subsidiaries consisting of equipment, fixtures, furnishings, wares and leasehold improvements located at or arising from the operation of the Restaurants and the Fee Property and guarantied by Parent and each Subsidiary of Borrower (other than Inactive Subsidiaries and the Liquor License Subsidiaries).
(b) Borrower hereby authorizes Lender to file one or more financing statements or continuation statements thereto covering all Collateral.
(c) In the event a Qualifying IPO does not occur by June 30, 2002, Lender, at Borrower's sole cost and expense, may order and obtain appraisals of the Fee Property by an appraiser acceptable to Lender.
6.11 Corporate Existence
Borrower will, and will cause each of its Subsidiaries to, maintain and preserve its corporate existence, except that (a) any Subsidiary of Borrower may merge or consolidate with any other Subsidiary of Borrower or may merge into Borrower and (b) the Inactive Subsidiaries may be liquidated and dissolved in accordance with the terms of Section 6.18 herein.
6.12 Notice of Disputes and Other Matters
Borrower will, and will cause each of its Subsidiaries to, promptly give written notice to Lender of:
(a) Any citation, order to show cause or other legal process or order that could reasonably be expected to have a Material Adverse Effect, directing it to
become a party to or to appear at any proceeding or hearing by or before any
Governmental Body that has CREDIT AGREEMENT PAGE 32 [EXECUTION COPY] |
granted to it any Governmental Approval, and include with such notice a copy of any such citation, order to show cause, or other legal process or order;
(b) Any (i) refusal, denial, threatened denial, or failure by any Governmental Body to grant, issue, renew, or extend any material Governmental Approval; (ii) proposed or actual revocation, termination, or modification (whether favorable or adverse) of any material Governmental Approval by any Governmental Body; (iii) dispute or other action which could reasonably be expected to have a Material Adverse Effect with regard to any Governmental Approval by any Governmental Body; (iv) notice from any Governmental Body of the imposition of any material fines or penalties or forfeitures; or (v) threats or notice with respect to any of the foregoing or with respect to any proceeding or hearing that might result in any of the foregoing;
(c) Any dispute involving more than $100,000 concerning, or any threatened nonrenewal or termination of, any lease for any Restaurant;
(d) Any actions, proceedings, or unasserted possible claims of which it may have notice that are probable of assertion in which (i) the amount involved is $100,000 or more, or (ii) the claim is not solely a claim for monetary damages, and could, if adversely determined, reasonably be expected to have a Material Adverse Effect;
(e) Any notices of default or demands for payment or like notices served or sent by any holder of any Indebtedness or Subordinated Debt to or upon Borrower;
(f) Any change in the positions of any Executive Officer of Borrower;
(g) All matters materially and adversely affecting the value, enforceability or collectability of any material portion of its property subject to any Lien granted to Lender, or any of its other assets, if such matters could reasonably be expected to have a Material Adverse Effect; or
(h) Any material adverse change in the relationship between any of Borrower and its Subsidiaries and any of its suppliers or customers which could reasonably be expected to have a Material Adverse Effect.
6.13 Exchange of Notes
Subject to receiving appropriate indemnity from Lender, Borrower will upon receipt of a written notice of loss, theft, destruction, or mutilation of any of the Notes, and upon surrendering such Notes for cancellation if mutilated, execute and deliver a new Note or a Note of like tenor in lieu of such lost, stolen, destroyed, or mutilated Note. Any Notes issued pursuant to this Section
6.13 shall be dated so that neither gain nor loss of interest shall result therefrom.
CREDIT AGREEMENT PAGE 33 [EXECUTION COPY] |
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6.14 Maintenance of Liens
Except for Permitted Encumbrances, Borrower will, and will cause each of its Subsidiaries to, at all times maintain the liens and security interests provided under or pursuant to this Agreement and the other Loan Documents as valid and perfected first Liens on the property and assets intended to be covered thereby. Except as contemplated under Section 7.4, Borrower shall take all action reasonably requested by Lender necessary to assure that Lender has valid and exclusive Liens on all Collateral.
6.15 Other Agreements
Borrower will, and will cause each of its Subsidiaries to, comply with all covenants and agreements set forth in or required pursuant to any of the other Loan Documents to which it is a party.
6.16 Access Law Disclosure and Inspection
(a) Borrower shall, and shall cause each of its Subsidiaries to, exercise all due diligence in order to comply and use reasonable efforts to cause all tenants under any leases or occupancy agreements affecting any portion of the Facilities.
(b) Borrower shall promptly advise Lender in writing and in reasonable detail of (i) any claim by any Person required to be reported to any federal, state or local governmental or regulatory agency under any applicable Access Laws known to any Executive Officer, (ii) any and all written communications with respect to any such claims that could reasonably be expected to have Material Adverse Effect, (iii) any remedial action taken by Borrower or any other Person in response to claim that could reasonably be expected to have a Material Adverse Effect, and (iv) any request for information from any Governmental Body that states that such Governmental Body is investigating whether Borrower or any of its Subsidiaries may not be in compliance with Access Laws known to any Executive Officer.
(c) Borrower shall, at its own expense, provide copies of such documents or information as Lender may reasonably request in relation to any matters disclosed pursuant to this Section 6.16.
6.17 Borrower's Remedial Action Regarding Access Law Compliance
Borrower shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all necessary remedial action in order to comply with all applicable Access Laws and Governmental Approvals unless the failure to so comply could not reasonably be expected to have a Material Adverse Effect. In the event Borrower or any of its Subsidiaries undertakes any remedial action with respect to any Facility, Borrower, or such Subsidiary, shall conduct and complete such remedial action in material compliance with all applicable Access
Laws, and in accordance with the policies, orders and directives of all
Governmental CREDIT AGREEMENT PAGE 34 [EXECUTION COPY] |
Bodies except when, and only to the extent that, Borrower's or such Subsidiary's liability for such noncompliance is being contested in good faith by Borrower or such Subsidiary.
6.18 Inactive Subsidiaries
On or prior to December 31, 2002, Borrower shall (i) cause each Inactive
Subsidiary to be liquidated and dissolved in accordance with Applicable Laws and
(ii) deliver to Lender evidence reasonably satisfactory to Lender of each such
liquidation and dissolution, including without limitation, copies, certified by
the applicable Governmental Body, of all documents filed with such Governmental
Body, to effect each such liquidation and dissolution.
ARTICLE 7. NEGATIVE COVENANTS
Borrower hereby covenants and agrees that so long as this Agreement is in effect, any Note remain outstanding or unpaid, or any Obligation remains outstanding, unless Lender shall otherwise give prior written consent, Borrower shall perform and shall cause each of its Subsidiaries to perform, all covenants in this Article 7.
7.1 Restricted Payments Etc.
On and at all times after the Closing Date:
(a) Borrower will not declare, pay or make any dividend or distribution (in cash, property or obligations) on any Securities (now or hereafter outstanding) of the Borrower (other than dividends or distributions payable in its common stock or warrants to purchase its common stock or split-ups or reclassifications of its stock into additional or other shares of its common stock) or apply, or permit any of its Subsidiaries to apply, any of its funds, property or assets to the purchase, redemption, sinking fund or other retirement of, or agree or permit any of its Subsidiaries to purchase or redeem, any shares of any Securities (now or hereafter outstanding) of Borrower; except (i) as necessary to fund the operating expenses of Parent in an aggregate amount not to exceed $100,000 in any Fiscal Year; (ii) prior to December 31, 2002, expenses incurred in connection with the consummation of a Qualified IPO; and (iii) up to $325,000 in the aggregate to fund the cash requirements associated with the Parent's loans to management in conjunction with the exercise stock options in Parent prior to a Qualified IPO.
(b) Borrower will not, and will not permit any of its Subsidiaries to, (i) make any payment of interest on any Subordinated Debt which would violate the subordination provisions of the Subordination Agreement entered into with Lender with respect to such Subordinated Debt or (ii) make any payment or voluntary or mandatory prepayment of principal of, or redeem, purchase or defease, any Subordinated Debt;
(c) Borrower will not, and will not permit any Subsidiary to, make any deposit for any of the foregoing purposes set forth in clauses (a) and (b); and
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(d) If any payment of principal, interest or any other amount is required to be paid or is paid on the same day with respect to any Subordinated Debt, on the one hand, and with respect to this Agreement or any other Loan Document, on the other hand, then all such amounts paid or required to be paid with respect to this Agreement or such other Loan Documents shall be paid in full in cash before any payments are made with respect to the Subordinated Debt.
7.2 Transactions With Affiliates
Except for the transactions listed on Schedule 7.2, Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, except on arm's length terms: (a) enter into any transaction in which an Affiliate shall have any interest; (b) make any payment or agree to make any payment to any such Affiliate; or (c) transfer or agree to transfer ownership or possession of any of its business or assets, tangible or intangible, real, personal, or mixed, to any Affiliate.
7.3 Other Indebtedness
Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume, or suffer to exist, contingently or otherwise, any Indebtedness except (a) Indebtedness represented by the Loan Documents; (b) Subordinated Debt; (c) Indebtedness and Capital Leases disclosed on Schedule 5.1(m); (d) Indebtedness secured by purchase money security interests incurred in connection with the purchase of capital assets and capitalized leases in each case subject to compliance with Section 7.16; (e) trade accounts and other current payables arising from the ordinary course of business, deferred income taxes and judgments or orders for the payment of money to the extent such judgments or orders do not result in an Event of Default pursuant to Section 9.1 or result in any Liens prohibited by Section 7.4; (f) Contingent Obligations permitted by Section 7.18; and (g) other Indebtedness not to exceed $100,000 in the aggregate outstanding at any time. Except as allowed in Section 7.4 herein, none of the Indebtedness described in this Section 7.3 shall be secured by any of the assets or rights of Borrower or its Subsidiaries.
7.4 Liens
Borrower shall not, and shall not permit any of its Subsidiaries to, contract, create, incur, assume, or suffer to exist any Lien upon or grant any interest in any of its property or assets whether now owned or hereafter acquired, except for the Permitted Encumbrances.
7.5 Advances and Loans
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, except by Borrower or its Subsidiaries (other than Inactive Subsidiaries and the Liquor License Subsidiaries) to or for the benefit of Borrower or its Subsidiaries (other than Inactive Subsidiaries and the Liquor License Subsidiaries): (a) lend money, make credit available (other than in the ordinary course of business for such matters as advances to employees for moving, travel and entertainment expenses, drawing accounts, and similar
CREDIT AGREEMENT PAGE 36
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expenditures), or lend property or the use thereof to any Person; (b) purchase or repurchase the stock or Indebtedness or all or a substantial part of the assets or properties of any Person; (c) except as to Indebtedness permitted by Sections 7.3 or 7.18, guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly or by any instrument having the effect of assuring any Person's payment, performance, or capability) the Indebtedness, performance, obligations, stock, or dividends of any Person; or (d) agree to do any of the foregoing. Notwithstanding the foregoing, Borrower and its Subsidiaries may endorse negotiable instruments for deposit or collection in the ordinary course of business.
7.6 Investments
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, except (a) marketable securities issued or directly and unconditionally guaranteed by the United States federal government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; and (d) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's, issued by Lender or any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having unimpaired capital and surplus of not less than $100,000,000.
7.7 Liquidation and Sale of Assets
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, wind up, liquidate, or dissolve Borrower's or any of its Subsidiaries' affairs; convey, sell, lease, or otherwise dispose of (or agree to do any of the foregoing at any time) any of its material licenses, contracts, or permits; sell all or a substantial part of its property or assets or sell any part of its property or assets necessary for the conduct of its business as now generally conducted or as proposed to be conducted, except (a) sales of inventory in the ordinary course of business, (b) planned asset sales set forth in Schedule 7.7, and (c) liquidation and dissolution of Inactive Subsidiaries in accordance with Section 6.18 herein.
7.8 Consolidation and Merger
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into any transaction of merger or consolidation with any Person or purchase, lease, or otherwise acquire all or a substantial part of the property or assets of any other
CREDIT AGREEMENT PAGE 37
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Person, except that any Subsidiary of Borrower may merge or consolidate with any other Subsidiary of Borrower or may merge into Borrower
7.9 Subsidiaries
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, form or acquire any Person or any portion thereof; provided, however, Borrower may form or acquire any Person as a new wholly owned Subsidiary provided that such new Subsidiary and deliver to Lender a Guaranty in the form attached hereto as Exhibit D-1.
7.10 Type of Business
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, engage in any material line of business which is substantially different from and not incidental or reasonably related to the business in which Borrower and its Subsidiaries are presently engaged.
7.11 Change of Chief Executive Office or Name
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, change (a) its state of incorporation, (b) the location of its chief executive office, (c) its name, or (d) the location of any of the Collateral; without, in each case, (x) prior written notice to Lender and (y) the execution, delivery, and filing (and payment of filing fees and taxes) of all such documents as may reasonably be necessary or advisable in the opinion of Lender to continue to perfect and protect the liens and security interests in the Collateral.
7.12 Change in Documents
Borrower shall not, and shall not permit any of its Subsidiaries (other than Inactive Subsidiaries) to, directly or indirectly, materially amend, supplement, terminate or otherwise modify in any material way its articles of incorporation delivered to Lender or executed in connection herewith.
7.13 Control
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into any agreement (other than management agreements with existing Affiliates set forth on Schedule 7.2, employment contracts, or the Shareholders Agreement) with any Person that confers upon such Person the right or authority to control or direct a portion of the business or assets of Borrower or any of its Subsidiaries.
7.14 Pension Plan
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, terminate or partially terminate any Plan now existing
or hereafter established for Borrower or any of its ERISA Affiliates or withdraw
from participation therein under CREDIT AGREEMENT PAGE 38 [EXECUTION COPY] |
circumstances that result or could reasonably be expected to result in liability
in excess of $100,000 to the PBGC, to the fund by which the Plan is funded, or
to the employees (or their beneficiaries) for whom the Plan is or shall be
maintained; or permit any other event or circumstance to occur that results or
could result in liability to the PBGC in excess of $100,000 or a violation of
Section 302 of ERISA with respect to a Plan.
7.15 Maximum Cash Flow Leverage Ratio
Borrower shall not permit its Cash Flow Leverage Ratio for any Fiscal Quarter ending on or after the Closing Date to exceed 4.0:1.0; provided, however, that if a Qualifying IPO occurs, then the maximum Cash Flow Leverage Ratio shall be 3.0:1.0 for each Fiscal Quarter ending after the Qualifying IPO.
7.16 Minimum Fixed Charge Coverage Ratio
Borrower shall not permit the Fixed Charge Coverage (a) for any Fiscal Quarter ending on or after the Closing Date to be less than 1.15:1.00; provided that in the event a Qualified IPO occurs, then for the Fiscal Quarter ending December 29, 2002 and for each Fiscal Quarter thereafter, the Fixed Charge Coverage shall not be less than 1.25:1.00.
7.17 Minimum Tangible Net Worth
Borrower shall not permits its Tangible Net Worth to be less than (a) $5,000,000 at its Fiscal Quarter ending April 21, 2002, (b) $7,000,000 at its Fiscal Quarter ending July 14, 2002, (c) $8,000,000 at its Fiscal Quarter ending October 6, 2002 and (d) $9,000,000 at its Fiscal Quarter ending December 29, 2002 and at the end of each Fiscal Quarter thereafter; provided that each of the foregoing amounts shall be increased by an amount equal to 90 percent of the net proceeds of the Qualifying IPO and any follow-on offering or secondary offering.
7.18 Contingent Obligations
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or remain liable with respect to any Contingent Obligation, except:
(i) Borrower and its Subsidiaries, as applicable, may remain liable with respect to Contingent Obligations described in Schedule 7.18 annexed hereto; and
(ii) Borrower may become and remain liable with respect to Contingent Obligations under guaranties in the ordinary course of business of the obligations to landlords of Borrower's Subsidiaries (other than Inactive Subsidiaries) and bonding requirements in connection with the development and operation of restaurants; and
(iii) Interest Rate Agreements required to be maintained by Borrower
under the Finova Loan Agreement; CREDIT AGREEMENT PAGE 39 [EXECUTION COPY] |
(iv) In addition to clauses (i), (ii) and (iii) above, Borrower and its Subsidiaries may become and remain liable with respect to Contingent Obligations under guaranties in the ordinary course of business of the obligations to suppliers, , customers and licensees of Borrower and its Subsidiaries in an aggregate amount not to exceed at any time $100,000.
7.19 Sale or Discount of Receivables
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable, except neither Borrower nor any of its Subsidiaries shall be precluded from compromising disputed or potentially uncollectible notes or accounts receivable.
7.20 Amendments of Documents Relating to Subordinated Debt
Borrower will not consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to, any document or instrument evidencing or applicable to any Subordinated Debt.
7.21 Disposal of Subsidiary Stock
Neither Borrower nor Parent shall:
(i) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity securities of any of its Subsidiaries, except to qualify directors if required by Applicable Law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity securities of any of its Subsidiaries (including such Subsidiary), except to Borrower, another wholly owned Subsidiary of Borrower, or to qualify directors if required by Applicable Law.
7.22 Fiscal Year
Borrower shall not change its Fiscal Year end from the last Sunday of December of each calendar year.
7.23 Negative Pledges, Restrictive Agreements, etc.
Borrower will not, and will not permit any of its Subsidiaries to, enter into any agreement (excluding this Agreement, any other Loan Document and the Finova Loan Agreement as presently in effect) prohibiting (a) the creation or assumption of any Lien for the benefit of the Lender upon its properties, revenues or assets, whether now owned or hereafter acquired, or the ability of Borrower or any Subsidiary to amend or otherwise modify this Agreement or any other Loan Document or (b) the ability of any Subsidiary to
CREDIT AGREEMENT PAGE 40
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make any payments, directly or indirectly, to Borrower by way of dividends, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement which restricts the ability of any such Subsidiary to make any payment, directly or indirectly, to Borrower.
7.24 Liquidity
Borrower shall not permit the sum of its cash and cash equivalents plus the amount available to borrow under the Revolving Credit Commitment to be less than $5,000,000 at the end of each Fiscal Quarter ending on or after the Closing Date.
ARTICLE 8. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the Loans as herein provided, Borrower hereby makes the following representations, covenants, and warranties to Lender, all of which shall survive the execution and delivery of this Agreement and shall not be affected or waived by any inspection or examination made by or on behalf of Lender:
8.1 Corporate Status
Borrower is a corporation organized and validly existing under the laws of the state of Nevada. Each Loan Party is a corporation organized and validly existing under the laws of the state of its incorporation. Borrower and each of the Loan Parties has the corporate power and authority to own its property and assets and to transact the business in which it is engaged or presently proposes to engage. Borrower and each of the Loan Parties is qualified to do business in all states in which it is doing business, except where the failure to so qualify could not reasonably be expected to result in a Material Adverse Effect. Borrower and each of the Loan Parties is not a "holding company" or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" as such terms are defined in the Public Utility Holding Company Act of 1935; nor is it an "investment company," or an "affiliated company," or a "principal underwriter" of an "investment company," as such terms are defined in the Investment Company Act of 1940.
8.2 Power and Authority
Borrower and each of the Loan Parties has the corporate power to execute, deliver, and carry out the terms and provisions of this Agreement and each of the Loan Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery, and performance of this Agreement and the other Loan Documents, the borrowings hereunder, and the making and delivery of the Notes and all Loan Documents delivered hereunder, in each case as applicable to such Loan Party. This Agreement constitutes and the Notes and other Loan Documents and instruments issued or to be issued hereunder, when
executed and delivered pursuant hereto, constitute or will constitute the
authorized, valid, CREDIT AGREEMENT PAGE 41 [EXECUTION COPY] |
and legally binding obligations of the Loan Parties enforceable in accordance with their respective terms.
8.3 No Violation of Agreements
Except as set forth in Schedule 8.3, Borrower and each of its Subsidiaries is not in default under any material provision of any agreement to which it is a party or in violation of any material provision of any Applicable Laws except, in each case, where no Material Adverse Effect could reasonably be expected to result therefrom. The execution and delivery of this Agreement, the Notes, the other Loan Documents, and the instruments incidental hereto; the consummation of the transactions herein or therein contemplated; and compliance with the terms and provisions hereof or thereof (a) to Borrower's knowledge, will not violate any material provision of any Applicable Law; (b) will not conflict with or violate; result in any breach of any of the terms, covenants, conditions, or provisions of; constitute a default under; or result in the creation or imposition of (or the obligation to impose) any lien, charge, or encumbrance upon any of the property or assets of Borrower or any of its Subsidiaries pursuant to the terms of any material Governmental Approval, mortgage, deed of trust, lease, agreement, or other instrument to which Borrower or any of its Subsidiaries is a party, by which Borrower or any of its Subsidiaries may be bound, or to which Borrower or any of its Subsidiaries may be subject where such conflict, violation, default or lien could reasonably be expected to have a Material Adverse Effect; and (c) will not violate any of the provisions of the articles of incorporation of Borrower or any of its Subsidiaries. Except as referenced in Section 8.4, no Governmental Approval is necessary (x) for the execution of this Agreement, the making of the Notes, or the assumption and performance of this Agreement or the Notes by Borrower or (y) for the consummation by Borrower and its Subsidiaries of the transactions contemplated by this Agreement including but not limited to the grant of the security interests to Lender.
8.4 Recording and Enforceability
Neither the articles of incorporation, bylaws, nor other applicable corporate documents of Borrower or any of its Subsidiaries require recording, filing, registration, notice, or other similar action in order to insure the legality, validity, binding effect, or enforceability against all Persons of this Agreement, the Notes, or other Loan Documents executed or to be executed hereunder, other than filings or recordings that may be required under the Uniform Commercial Code, the applicable real property recording statutes with respect to the Deeds of Trust.
8.5 Litigation
Except as set forth on Schedule 8.5 hereto, there are no actions, suits, or proceedings pending or, to Borrower's knowledge, threatened against or affecting Borrower or any of its Subsidiaries before any Governmental Body, which could reasonably be expected to have a Material Adverse Effect. To Borrower's knowledge, Borrower and its Subsidiaries, or any of them, are not in default under any material provision of any Applicable Law or
CREDIT AGREEMENT PAGE 42
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Governmental Approval of any Governmental Body, which could reasonably be expected to have a Material Adverse Effect.
8.6 Good Title to Properties
Borrower and its Subsidiaries each has good and marketable title to, or a valid leasehold interest in, its property and assets, subject to no Liens, except those permitted under the provisions of Section 7.4 of this Agreement.
8.7 Licenses and Permits
All material Governmental Approvals with respect to the business of
Borrower and its Subsidiaries are, to Borrower's knowledge (a) duly and validly
issued by the respective Governmental Bodies, (b) in full force and effect, and
(c) valid. With regard to such Governmental Approvals, to Borrower's knowledge
no fact or circumstance exists that constitutes or, with the passage of time or
the giving of notice or both, would constitute a material default under any
thereof, or permit the grantor thereof to cancel or terminate the rights
thereunder, except upon the expiration of the full term thereof. Borrower and
its Subsidiaries presently hold all material Governmental Approvals as are
necessary or advisable in connection with the conduct of its business.
8.8 [Reserved]
8.9 Properties in Good Condition
All the material properties of Borrower and its Subsidiaries are in good repair and good working order and condition ordinary wear and tear excepted in a manner consistent with past practices of Borrower and its Subsidiaries and comparable to industry standards and to Borrower's knowledge, are in substantial compliance with all Applicable Laws.
8.10 Financial Statements
The audited and unaudited financial statements of Borrower that have heretofore been delivered to Lender are true and correct in all material respects and present fairly (i) the financial position of Borrower and its Subsidiaries as of the date of said statements and (ii) the results of operations of Borrower and its Subsidiaries for the periods covered thereby; and there are not any material liabilities that should have been reflected in the financial statements or the notes thereto under GAAP, contingent or otherwise, including liabilities for Taxes or any unusual forward or long-term commitments, that are not disclosed or reserved against in the statements referred to above or in the notes thereto or that are not disclosed herein. All such financial statements have been prepared in accordance with GAAP subject, in the case of unaudited statements, to changes resulting in audit and normal year-end adjustments, and the absence of footnotes. There has been no material adverse change (including but not limited to any such change occasioned by accident, act
of God, war, fire, flood, explosion, strike or other labor dispute, or orders or
action by any Governmental Body CREDIT AGREEMENT PAGE 43 [EXECUTION COPY] |
or public utility) in the operations, business, property, assets, or condition (financial or otherwise) of Borrower and its Subsidiaries taken as a whole since December 30, 2001.
8.11 Outstanding Indebtedness
Other than current trade payables, other operating liabilities incurred in the ordinary course of business, Indebtedness permitted under Section 7.3, as of the date hereof Borrower and its Subsidiaries have no Indebtedness, including but not limited to Indebtedness to its Affiliates, that is not listed on Borrower's unaudited financial statements dated December 30, 2001.
8.12 Taxes
Except to the extent permitted in Section 6.4, Borrower and its Subsidiaries have duly filed all tax returns and reports required by Applicable Law to be filed, and all Taxes upon Borrower and its Subsidiaries or upon its assets that are due and payable have been paid, except to the extent any such Taxes are being contested in good faith and by appropriate proceedings and could not reasonably be expected to have a Material Adverse Effect.
8.13 License Fees
Except to the extent permitted in Section 6.4, Borrower and its Subsidiaries have paid all fees and charges that have become due for any Governmental Approval or have made adequate provisions for any such fees and charges that have accrued, except where the failure to do any of the foregoing could not reasonably be expected to result in a Material Adverse Effect.
8.14 Trademarks, Patents, Etc.
Borrower and each of its Subsidiaries possesses all necessary material trademarks, trade names, service marks, copyrights, patents, patent rights, and licenses to conduct its businesses as now and as proposed to be conducted, and to Borrower's knowledge, without conflict with the rights or claimed rights of others.
8.15 Disclosure
To the best of Borrower's knowledge, the exhibits hereto, the financial information and statements referred to in Section 8.10 herein, any certificate, statement, report or other document furnished to Lender by Borrower or any other Person in connection herewith or in connection with any transaction contemplated hereby, and this Agreement taken as a whole, do not, on the date hereof, contain any untrue statements of material fact or omit to state any material fact necessary in order to make the statements contained therein or herein not misleading.
CREDIT AGREEMENT PAGE 44
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8.16 Regulations T, U and X
Borrower and its Subsidiaries do not own and no part of the proceeds hereof will be used to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any margin stock. Borrower and its Subsidiaries are not engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying any margin stock. If requested by Lender, Borrower will, and will cause its Subsidiaries to, furnish to Lender a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in said Regulation. No part of the proceeds of the Loans will be used for any purpose that violates or is inconsistent with the provisions of Regulations T, U and X of said Board of Governors.
8.17 Names
Borrower, its Subsidiaries and any of their respective predecessors do not operate or do business or to Borrower's knowledge during the past five (5) years have not operated or done business under a fictitious, trade, or assumed name, except as set forth on Schedule 8.17 or as hereafter disclosed to Lender pursuant to Section 7.1.
8.18 Condition of Property
Except as otherwise disclosed to Lender, Borrower hereby represents and warrants to Lender that, to its knowledge, as of the date hereof and continuing hereafter, the property of Borrower and its Subsidiaries (both owned and leased) and each portion thereof (a) are not and have not been a site for the use, generation, manufacture, storage, disposal, or transportation of any Hazardous Material other than in the ordinary course of its business in compliance with Applicable Laws; (b) are presently in compliance with or are being and promptly shall be brought into compliance with all Environmental Laws; and (c) are not being used and have not been used in any manner that has resulted in or will result in Hazardous Materials being spilled or disposed of on any adjacent or other property.
8.19 Pension Plans
To Borrower's knowledge, no "reportable event" as defined in Section 4043(b) of Title IV of ERISA has occurred and is continuing with respect to any Plan. In addition, each of the Plans is in compliance with the requirements of ERISA, including the minimum funding requirements.
8.20 Borrower and Subsidiaries
(a) Except as disclosed on Schedule 8.20, Borrower and its Subsidiaries are engaged only in the business of operating restaurants and franchising others to operate restaurants.
CREDIT AGREEMENT PAGE 45
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(b) All of the Subsidiaries of Borrower as of the Closing Date are identified in Schedule 8.20 annexed hereto. The capital stock of each of the Subsidiaries of Borrower identified in Schedule 8.20 annexed hereto is duly authorized, validly issued, fully paid, and nonassessable and none of such capital stock constitutes margin stock. Schedule 8.20 annexed hereto correctly sets forth the ownership interest of Borrower in each of its Subsidiaries identified therein.
(c) The Inactive Subsidiaries do not have any ongoing operations and are not operating any business. The assets of each Inactive Subsidiary have a liquidation value of less than $50,000.
ARTICLE 9. EVENTS OF DEFAULT; REMEDIES
9.1 Events of Default
"Event of Default," wherever used herein, means any one of the following events (whatever the reason for the Event of Default, whether it shall relate to one or more of the parties hereto, and whether it shall be voluntary or involuntary or be pursuant to or effected by operation of Applicable Law):
(a) If Borrower shall fail to (i) pay any principal of the Notes when due in accordance with the terms hereof or thereof, (ii) pay any interest on the Notes when due in accordance with the terms thereof or hereof, or (iii) pay any other amount payable hereunder within ten (10) days after Lender makes a demand for such other amount; or
(b) If Borrower or any of its Subsidiaries shall (i) default in payment of principal of or interest on any Indebtedness for money borrowed or Capital Lease obligations (other than as set forth in subsection 9.1(a) above), if the outstanding principal (or capitalized) amount of such Indebtedness or Capital Lease obligation is $100,000 or more, after any applicable grace period provided in the instrument or agreement under which such Indebtedness or Capital Lease obligation was created; or (ii) default in the observance or performance of any other material provisions of any agreement or condition relating to any such Indebtedness or Capital Lease obligation or contained in any instrument or agreement evidencing, securing, or relating thereto beyond any applicable grace period, or any other event shall occur or condition exist, the effect of which default, event or condition is to cause or to permit the holder or holders of such Indebtedness or Capital Lease obligation to cause, with the giving of notice if required, such Indebtedness to become due prior to the date of maturity, any applicable grace period having expired; or
(c) If any representation or warranty (i) made by Borrower in this Agreement or (ii) made by Borrower in any document, certificate, or statement furnished pursuant to this Agreement or in any Loan Document, is false or misleading in any material respect as of the date when made; or
(d) If Borrower fails to observe or perform, or to cause any Subsidiary to
observe or perform, any term, covenant, or agreement to be performed or observed
pursuant to CREDIT AGREEMENT PAGE 46 [EXECUTION COPY] |
Sections 6.1, 6.5, 6.7, 6.10, 6.12, 6.14, 6.15 (subject to any cure or grace periods set forth in the applicable Loan Document), and Article 7 herein; or
(e) If Borrower fails to observe or perform, or to cause any Subsidiary to observe or perform, any term, covenant, or agreement to be performed or observed pursuant to the provisions of this Agreement, the other Loan Documents, or any other agreement incidental hereto not otherwise specified in this Section 9.1 and such default is not cured within thirty (30) days after notice of default is given; or
(f) If Borrower or any Loan Party fails to perform any of its obligations under any of the Loan Documents not otherwise specified in this Section 9.1, or if the validity of any of such documents has been disaffirmed by or on behalf of any of the parties thereto other than Lender and such default is not cured within thirty (30) days after notice of such default is given; or
(g) If (i) Borrower or any Loan Party shall commence any case, proceeding,
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition, or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, or other similar official for it or for all or any
substantial part of its assets, or Borrower or any Loan Party shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against Borrower or any Loan Party any case, proceeding, or other
action of a nature referred to in clause (i) above which (X) results in the
entry of an order for relief or any such adjudication or appointment or (Y)
remains undismissed, undischarged, unstayed, or unbonded for a period of sixty
(60) days; or (iii) there shall be commenced against Borrower or any Loan Party
any case, proceeding, or other action seeking issuance of a warrant of
attachment, execution, distraint, or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief which shall not have been vacated, discharged, stayed, or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower
or any Loan Party shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in any of the acts set forth in clauses
(i), (ii), or (iii) above; or (v) Borrower or any Loan Party shall admit in
writing its inability to pay its debts as they become due or shall, within the
meaning of the Bankruptcy Code, generally not pay its debts (other than debts
that are the subject of a bona fide dispute) as they become due; or (vi)
Borrower or any Loan Party suspends or discontinues its business; or
(h) If (i) any Plan shall be terminated pursuant to Subtitle C of Title IV ERISA, (ii) a trustee shall be appointed by the appropriate U.S. District Court to administer such Plan, (iii) the PBGC shall institute proceedings to terminate any such Plan, or (iv) any such Plan fails to satisfy the minimum funding
standards for such Plan for a Plan year as established in Section 412 of the
Internal Revenue Code; or CREDIT AGREEMENT PAGE 47 [EXECUTION COPY] |
(i) One or more judgments or decrees shall be entered against any Loan Party involving in the aggregate liability of $100,000 or more not covered by insurance, which judgment or decree shall not have been vacated, discharged, stayed, or bonded pending appeal within thirty (30) days from entry thereof; or
(j) If Parent shall cease to directly own and control 100 percent of the issued and outstanding capital stock of Borrower or if any Change in Control shall occur; or
(k) If there shall occur or exist any event of default under the Subordinated Notes, and such event of default is not cured or waived in writing by the holders of the Subordinated Notes; or
(l) If there shall occur any event that has a Material Adverse Effect.
9.2 Acceleration; Remedies
(a) If any Event of Default described in subsections 9.1(g)(i) or (ii) shall occur then immediately and automatically the Commitments shall immediately terminate and the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes shall immediately become due and payable and Lender's obligations to make any Loan shall immediately terminate.
(b) If any other Event of Default other than described in subsections 9.1(g)(i) or 9.1(g)(ii) shall occur and be continuing, Lender may (i) by notice to Borrower, declare the Commitments to be terminated forthwith, whereupon such obligations shall immediately terminate; and (ii) by notice of default to Borrower, declare all or a portion of the Loans hereunder, with accrued interest thereon, and all other amounts owing under this Agreement and the Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable.
(c) Except as expressly provided above in this Section 9.2, presentment, demand, purchase, and all other notices of any kind are hereby expressly waived. Lender may proceed to protect and enforce their rights hereunder or realize on any or all security granted pursuant hereto in any manner or order Lender deems expedient without regard to any equitable principles of marshaling or otherwise. No failure or delay on the part of Lender, or the holder of any of the Notes in exercising any right, power, or privilege hereunder and no course of dealing between Borrower and Lender, or the holder of any of the Notes shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any right, power, or privilege. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies that Lender or any subsequent holder of any of the Notes would otherwise have. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances or shall constitute a waiver of the right of Lender to any other or further action in any circumstances without notice or demand.
CREDIT AGREEMENT PAGE 48
[EXECUTION COPY]
ARTICLE 10. MISCELLANEOUS
10.1 Notices
All notices, requests, consents, demands, approvals, and other communications hereunder shall be deemed to have been duly given, made, or served if made in writing and delivered personally, sent via facsimile, or mailed by first class mail, postage prepaid, to the respective parties to this Agreement. For purposes of this Agreement, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof. The designation of the persons to be so notified or the address of such persons for the purposes of such notice may be changed from time to time by similar notice in writing, except that any communication with respect to a change of address shall be deemed to be given or made when received by the party to whom such communication was sent.
10.2 Payment of Expenses and Taxes
Borrower agrees (a) to pay or reimburse Lender for all of its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, the Loan Documents and any other documents prepared in connection therewith, and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the fees and disbursements of counsel to Lender, (b) to pay or reimburse Lender for all their respective reasonable costs and expenses incurred in connection with, and to pay, indemnify, and hold Lender, and its officers, directors, employees, and agents and attorneys (the "Indemnified Persons") harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever arising out of or in connection with, the enforcement or preservation of any rights under the Loan Documents and any such other documents prepared in connection therewith, including without limitation, the reasonable fees and disbursements of counsel to Lender, (c) to pay, indemnify, and to hold Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other Taxes (other than income and gross revenue taxes), if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan Document and any such other documents including, without limitation, the reasonable fees and disbursements of counsel to Lender in connection with the foregoing and in connection with advising Lender with respect to its rights and responsibility under any Loan Document and (d) to pay, indemnify, and hold the Indemnified Persons harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel) which may be incurred by or asserted against any Indemnified Person arising out of or in connection with any investigation, litigation or proceeding related to the Loan Documents or the use of the proceeds of the Loans, whether or not any of the Indemnified Persons is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities"),
provided, that Borrower shall have CREDIT AGREEMENT PAGE 49 [EXECUTION COPY] |
no obligation hereunder with respect to Indemnified Liabilities of any Indemnified Person arising from (i) the gross negligence or willful misconduct of such Indemnified Person, (ii) legal proceedings commenced against Lender by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such, and (iii) legal proceedings which are resolved in favor of Borrower. The agreements in this Section 10.2 shall survive repayment of the Notes and all other amounts payable hereunder.
10.3 Assignments and Participations in Loans
This Agreement is binding upon and inures to the benefit of Borrower and Lender and their successors and assigns and all subsequent holders of the Notes or any portion thereof. Borrower expressly acknowledges that Lender is not prohibited or restricted from assigning rights or participation hereunder or any portion thereof to another Person. Borrower, however, is precluded from assigning any of its respective rights or delegating any of its obligations hereunder or under any of the Loan Documents without the prior written consent of Lender. Lender may furnish any information concerning Borrower and its Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants).
10.4 Setoff
As additional security for the payment of the Obligations, Borrower hereby grants to Lender a security interest in, a lien on and an express contractual right to set off against all depository account balances, cash and any other property of Borrower now or hereafter in the possession of Lender and the right to refuse to allow withdrawals from any account (collectively "Setoff"). Lender may, at any time upon the occurrence and continuance of a Default or an Event of Default (notwithstanding any notice requirements or grace/cure periods under this Agreement or any of the other Loan Documents) Setoff against the Obligations whether or not the Obligations (including future installments) are then due or have been accelerated, all without any advance or contemporaneous notice or demand of any kind to Borrower, such notice and demand being expressly waived.
10.5 Waiver of Setoff
In the event that Lender sells all or any portion of the Loans to any participant, Borrower hereby waives the right to interpose any setoff, counterclaim, or cross-claim against such participant (other than compulsory counterclaims or cross-claims) in connection with any litigation or dispute under this Agreement, regardless of the nature of such setoff, counterclaim, or cross-claim.
10.6 Fees and Commissions
Borrower agrees to indemnify Lender and hold it harmless with regard to any commissions, fees, judgments, or expenses of any nature and kind that Lender may
become liable to pay by reason of any claims by or on behalf of brokers,
finders, or agents in CREDIT AGREEMENT PAGE 50 [EXECUTION COPY] |
connection with any act or failure to act by Borrower or any litigation or similar proceeding arising from such claims. Borrower states that it is aware of no valid basis for any such claims.
10.7 Entire Agreement; Amendments and Waivers
This Agreement represents the entire agreement between the parties hereto with respect to the Loans and transactions contemplated hereunder and, except as expressly provided herein, shall not be affected by reference to any other documents. This Agreement, or any provision hereof, cannot be changed, waived, discharged or terminated orally, but only by an instrument in writing, signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. Any extensions, renewals and modifications of the Loan shall be governed by the terms and conditions of this Agreement and the other Loan Documents.
10.8 Severability
If any provision of this Agreement or any of the Loan Documents is held invalid under any Applicable Laws, such invalidity shall not affect any other provision of this Agreement that can be given an effect without the invalid provision, and, to this end, the provisions hereof are severable.
10.9 Descriptive Headings
The descriptive headings of the several sections of this Agreement are inserted for convenience only and do not affect the meaning or construction of any of the provisions hereof.
10.10 Governing Law
This Agreement and the rights and obligations of the parties hereunder and under the other Loan Documents shall be construed in accordance with and shall be governed by the laws of the state of Washington.
10.11 Consent to Jurisdiction, Service, and Venue
For the purpose of enforcing payment of any of the Notes, performance of the obligations under any of the Notes, any arbitration award under the other Loan Documents, or otherwise in connection herewith, Borrower hereby consents to the jurisdiction and venue of the courts of the state of Washington or of any federal court located in such state including but not limited to the Superior Court of Washington for King County and the United States District Court for the Western District of Washington. Borrower hereby waives the right to contest the jurisdiction and venue of courts located in King County, Washington, on the ground of inconvenience or otherwise and waives any right to bring any action or proceeding against Lender in any court outside King County, Washington. The
provisions of this Section do not limit or otherwise affect the right of Lender
to institute and conduct action in CREDIT AGREEMENT PAGE 51 [EXECUTION COPY] |
any other appropriate manner, jurisdiction, or court and do not otherwise limit Borrower's right to contest such manner, jurisdiction, or court as may be sought by Lender in any such action or its right to raise substantive claims therein.
10.12 Successors and Assigns
This Agreement and the other Loan Documents shall be binding upon and inure to the benefit of Borrower, Lender, all future holders of the Notes and their respective successors and assigns, except that Borrower may not assign or transfer any of its rights or obligations under any Loan Document without the prior written consent of Lender.
10.13 Waiver of Jury Trial
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE LOAN TRANSACTION CONTEMPLATED BY THE LOAN DOCUMENTS OR THE LENDING RELATIONSHIPS THAT ARE BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on this waiver in entering into this Agreement, and that each will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
10.14 Counterparts
This Agreement and each of the Loan Documents may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to constitute an original agreement, but all of such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.
CREDIT AGREEMENT PAGE 52
[EXECUTION COPY]
10.15 Statutory Notice
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
[The remainder of this page intentionally left blank.]
CREDIT AGREEMENT PAGE 53
[EXECUTION COPY]
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be duly executed by their respective duly authorized signatories as of the date first above written.
RED ROBIN INTERNATIONAL, INC., a
Nevada corporation
By /s/ James P. McCloskey --------------------------------------------- Name: James P. McCloskey Title: Chief Financial Officer & Secretary |
Notice Address: Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Greenwood Village, Colorado 80111 Facsimile: (303) 846-6073 Attention: Chief Financial Officer
LENDER:
U.S. BANK NATIONAL ASSOCIATION
By /s/ Cathryn S. Schalkle --------------------------------------------- Name: Cathryn S. Schalkle --------------------------------------- Title: Vice President -------------------------------------- |
Notice Address: U.S. Bank National Association
1420 Fifth Avenue, 11th Floor Seattle, Washington 98101 Facsimile: (206) 344-2887 Attention: Cathy Schalkle CREDIT AGREEMENT PAGE 54 [EXECUTION COPY] |
The following exhibits and schedules to the Credit Agreement have been omitted
and shall be furnished supplementally to the Commission upon request:
SCHEDULES
EXHIBITS
Exhibit A - Form of Revolving Credit Note; Section 2.3 Exhibit B - Form of Notice of Borrowing; Section 4.1(a) Exhibit C - Security Agreement; Section 5.1(c) Exhibit D - Guaranty of Parent; Section 5.1(d) Exhibit D-1 - Form of Subsidiary Guaranty; Section 5.1(e) Exhibit E - Form of Subsidiary Security Agreement Exhibit F - Opinion of Counsel for Borrower; Section 5.1(h) |
EXHIBIT 21.1
Red Robin Gourmet Burgers, Inc. (Parent Company)