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
|
Amount to be
Registered(1)
|
Proposed Maximum
Offering
Price
Per Share(2)
|
Proposed Maximum
Aggregate
Offering Price
|
Amount of
Registration Fee (3)
|
||||
|
|
|
|
|
|
|
|
|
Common Stock, $0.001 par value per share
|
5,793,700
|
$16.00
|
$92,699,200
|
$8,529
|
(1)
|
|
Includes shares that the underwriters have the option to purchase solely to cover over allotments, if any.
|
(2)
|
|
Estimated solely for the purpose of determining the registration fee pursuant to Rule 457 promulgated under the Securities Act of 1933, as amended.
|
(3)
|
|
$5,520 of this amount has been previously paid.
|
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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i
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1
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7
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16
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17
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18
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19
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20
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21
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23
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37
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50
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64
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68
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71
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73
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75
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79
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82
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82
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82
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F-1
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the underwriters will not exercise their over-allotment option to purchase up to 755,700 additional shares of our common stock from some of the selling
stockholders at the price set forth on the cover of this prospectus;
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an initial offering price of $15.00 per share, the midpoint of the range set forth on the cover of this prospectus;
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no exercise of options to purchase an aggregate of 504,466 shares of common stock which were outstanding as of May 19, 2002 under our stock option plans; and
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that we have completed a one-for-2.9 reverse stock split that we intend to complete prior to the consummation of this offering.
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Focus on our key guiding principals, or cornerstones, that drive our success
. Values, people, burgers and time.
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Offer high quality, imaginative menu items
. Our restaurants feature imaginative menu items that showcase recipes and capture
tastes and flavors that our guests do not typically associate with burgers, salads and sandwiches.
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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.
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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 we believe differentiates us from many of our competitors who have significantly higher average guest checks.
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Deliver strong unit economics
. 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 in 2001. The average cash investment cost for
|
|
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Pursue disciplined restaurant and franchise growth
. Our disciplined expansion strategy includes both company-owned and franchised
development. In 2002, we have opened four new company-owned restaurants, expect to open six additional new company-owned restaurants and relocate one restaurant. Our franchisees have opened four new restaurants and we expect them to open three
additional restaurants this year.
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Build awareness of the Red Robin® Americas Gourmet Burgers & Spirits® brand
. We believe we have become well
known within our markets for our signature menu items and 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 we have benefited from several key trends that
have helped drive our business. These trends include the expected increase in consumption of food away from home and the large and growing teen population.
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our ability to open new restaurants, secure sufficient new space and manage our planned expansion;
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the continued service of key management personnel;
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changes in consumer preferences or consumer discretionary spending;
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|
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health concerns regarding beef or other food products;
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|
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the effect of competition in the restaurant industry;
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the ability of our franchisees to take actions that could harm our business;
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adverse economic and other developments in the Western United States where 83.3% of our company-owned restaurants are located; and
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the concentration of ownership among Quad-C and our officers, directors and other principal stockholders.
|
Common stock offered by:
|
||
Red Robin Gourmet Burgers, Inc.
|
4,000,000 shares
|
|
Selling stockholders
|
1,038,000 shares
|
|
Common stock to be outstanding after this offering
|
15,025,654 shares
|
|
Use of proceeds
|
We intend to use the proceeds of this offering:
|
|
to repay approximately $47.9 million of indebtedness under our term loan,
including related fees;
|
||
to repay approximately $3.5 million of indebtedness under our revolving
credit facility; and
|
||
to repay approximately $2.1 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
|
|
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1,475,690 shares of common stock reserved for issuance under our stock option plans, of which 504,466 shares are subject to options outstanding at a weighted
average exercise price of $5.83 per share; and
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|
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300,000 shares of common stock reserved for issuance under our employee stock purchase plan.
|
Fiscal Year Ended
|
First Quarter Ended
|
|||||||||||||||||||
1999
|
2000(1)
|
2001
|
2001
|
2002
|
||||||||||||||||
(in thousands, except per share data, restaurant-related data and footnotes)
|
||||||||||||||||||||
Statement of Income Data:
|
(unaudited)
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Restaurant
|
$
|
121,430
|
|
$
|
180,413
|
|
$
|
214,963
|
|
$
|
64,572
|
|
$
|
76,317
|
|
|||||
Franchise royalties and fees
|
|
8,249
|
|
|
8,247
|
|
|
9,002
|
|
|
2,822
|
|
|
2,757
|
|
|||||
Rent revenue
|
|
333
|
|
|
510
|
|
|
520
|
|
|
120
|
|
|
127
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenues
|
|
130,012
|
|
|
189,170
|
|
|
224,485
|
|
|
67,514
|
|
|
79,201
|
|
|||||
Income from operations
|
|
7,145
|
|
|
8,805
|
|
|
18,740
|
|
|
5,127
|
|
|
5,993
|
|
|||||
Interest expense
|
|
4,156
|
|
|
6,482
|
|
|
7,850
|
|
|
2,500
|
|
|
2,217
|
|
|||||
Interest income
|
|
(186
|
)
|
|
(742
|
)
|
|
(746
|
)
|
|
(208
|
)
|
|
(100
|
)
|
|||||
Other expense
|
|
391
|
|
|
191
|
|
|
190
|
|
|
63
|
|
|
25
|
|
|||||
(Provision) benefit for income taxes(2)
|
|
1,596
|
|
|
12,557
|
|
|
(3,722
|
)
|
|
(901
|
)
|
|
(1,374
|
)
|
|||||
Net income(2)
|
|
4,380
|
|
|
15,431
|
|
|
7,724
|
|
|
1,871
|
|
|
2,476
|
|
|||||
Net income per common share(2)
|
||||||||||||||||||||
Basic
|
$
|
1.47
|
|
$
|
2.07
|
|
$
|
0.77
|
|
$
|
0.19
|
|
$
|
0.25
|
|
|||||
Diluted
|
$
|
1.47
|
|
$
|
2.07
|
|
$
|
0.75
|
|
$
|
0.18
|
|
$
|
0.23
|
|
|||||
Shares used in computing net income per common share
|
||||||||||||||||||||
Basic
|
|
2,971
|
|
|
7,444
|
|
|
10,085
|
|
|
10,076
|
|
|
10,090
|
|
|||||
Diluted
|
|
2,971
|
|
|
7,444
|
|
|
10,236
|
|
|
10,170
|
|
|
10,650
|
|
|||||
Selected Operating Data:
|
||||||||||||||||||||
System-wide restaurants open at end of period
|
|
144
|
|
|
164
|
|
|
182
|
|
|
165
|
|
|
186
|
|
|||||
Company-owned restaurants open at end of period
|
|
46
|
|
|
73
|
|
|
77
|
|
|
72
|
|
|
88
|
|
|||||
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
|
%
|
|
2.6
|
%
|
|
0.4
|
%
|
|||||
Restaurant-level operating profit(4)
|
$
|
20,340
|
|
$
|
32,423
|
|
$
|
41,215
|
|
$
|
11,497
|
|
$
|
14,298
|
|
|||||
EBITDA(5)
|
|
12,539
|
|
|
16,870
|
|
|
29,231
|
|
|
8,279
|
|
|
9,592
|
|
|||||
EBITDA margin(5)
|
|
9.6
|
%
|
|
8.9
|
%
|
|
13.0
|
%
|
|
12.3
|
%
|
|
12.1
|
%
|
April 21, 2002
|
||||||
Actual
|
As Adjusted(6)
|
|||||
(unaudited)
|
||||||
Balance Sheet Data:
|
||||||
Cash and cash equivalents
|
$
|
6,547
|
$
|
10,695
|
||
Total assets
|
|
154,188
|
|
156,168
|
||
Long-term debt, including current portion
|
|
78,743
|
|
30,122
|
||
Total stockholders equity
|
|
49,475
|
|
100,076
|
(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 4,310,344 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 are 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. It does
not include general and administrative costs, depreciation and amortization, franchise development costs and pre-opening costs. Although restaurant-level operating profit is a measure commonly used in the restaurant industry to evaluate operating
performance, it 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. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The following
table sets forth our calculation of restaurant-level operating profit:
|
(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:
|
(6)
|
|
As adjusted information gives effect to the application of the net proceeds from the sale of 4,000,000 shares of our common stock offered by us in this offering
at an initial offering price of $15.00 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 $47.9 million of indebtedness under our term loan,
including related fees, approximately $3.5 million of indebtedness under our revolving credit facility and approximately $2.1 million of indebtedness under one real estate and three equipment loans, including related fees. This information also
reflects the non-cash charge to earnings of approximately $2.2 million from the write-off of deferred loan fees and the cash charge of approximately $1.9 million from pre-payment penalty fees related to the indebtedness noted above.
|
|
|
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;
|
|
|
not provide for 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 $47.9 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 $3.5 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 $1.6 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 $0.5 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 give effect to the application of the net proceeds from the sale of 4,000,000 shares of our common stock offered by us in this
offering at an offering price of $15.00 per share, less the underwriting discount and estimated offering expenses payable by us, and the use of proceeds from this offering to repay approximately $47.9 million of indebtedness under our term loan,
including related fees, approximately $3.5 million of indebtedness under our revolving credit facility and approximately $2.1 million of indebtedness under one real estate and three equipment loans, including related fees. This information also
reflects the non-cash charge to earnings of approximately $2.2 million from the write-off of deferred loan fees and the cash charge of approximately $1.9 million from pre-payment penalty fees related to the indebtedness noted above.
|
(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 1,443,086 shares of common stock issuable on the exercise of stock options outstanding as of April 21, 2002.
|
Fiscal Year Ended
|
First Quarter Ended
|
|||||||||||||||||||||||||||
1997
|
1998
|
1999
|
2000(1)
|
2001
|
2001
|
2002
|
||||||||||||||||||||||
(in thousands, except per share data,
restaurant-related data and footnotes) |
(unaudited)
|
|||||||||||||||||||||||||||
Statement of Income Data:
|
||||||||||||||||||||||||||||
Revenue:
|
||||||||||||||||||||||||||||
Restaurant
|
$
|
108,604
|
|
$
|
110,953
|
|
$
|
121,430
|
|
$
|
180,413
|
|
$
|
214,963
|
|
$
|
64,572
|
|
$
|
76,317
|
|
|||||||
Franchise royalties and fees
|
|
7,078
|
|
|
7,193
|
|
|
8,249
|
|
|
8,247
|
|
|
9,002
|
|
|
2,822
|
|
|
2,757
|
|
|||||||
Rent revenue
|
|
36
|
|
|
69
|
|
|
333
|
|
|
510
|
|
|
520
|
|
|
120
|
|
|
127
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
|
115,718
|
|
|
118,215
|
|
|
130,012
|
|
|
189,170
|
|
|
224,485
|
|
|
67,514
|
|
|
79,201
|
|
|||||||
Costs and expenses:
|
||||||||||||||||||||||||||||
Restaurant operating costs:
|
||||||||||||||||||||||||||||
Cost of sales
|
|
28,471
|
|
|
27,679
|
|
|
30,159
|
|
|
43,945
|
|
|
50,914
|
|
|
15,952
|
|
|
17,897
|
|
|||||||
Labor
|
|
40,261
|
|
|
39,089
|
|
|
43,504
|
|
|
64,566
|
|
|
74,854
|
|
|
22,639
|
|
|
27,428
|
|
|||||||
Operating
|
|
16,550
|
|
|
17,382
|
|
|
19,429
|
|
|
27,960
|
|
|
33,195
|
|
|
10,317
|
|
|
11,412
|
|
|||||||
Occupancy
|
|
6,433
|
|
|
6,379
|
|
|
7,998
|
|
|
11,519
|
|
|
14,785
|
|
|
4,167
|
|
|
5,282
|
|
|||||||
Restaurant closures and impairment
|
|
6,342
|
|
|
140
|
|
|
(330
|
)
|
|
1,302
|
|
|
36
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
|
|
7,135
|
|
|
5,008
|
|
|
5,394
|
|
|
8,065
|
|
|
10,491
|
|
|
3,152
|
|
|
3,599
|
|
|||||||
General and administrative
|
|
10,974
|
|
|
13,578
|
|
|
13,434
|
|
|
17,116
|
|
|
16,845
|
|
|
4,545
|
|
|
5,712
|
|
|||||||
Franchise development
|
|
870
|
|
|
1,982
|
|
|
2,508
|
|
|
3,386
|
|
|
3,704
|
|
|
1,610
|
|
|
1,362
|
|
|||||||
Pre-opening costs
|
|
159
|
|
|
|
|
|
771
|
|
|
2,506
|
|
|
921
|
|
|
5
|
|
|
517
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total costs and expenses
|
|
117,195
|
|
|
111,237
|
|
|
122,867
|
|
|
180,365
|
|
|
205,745
|
|
|
62,387
|
|
|
73,208
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations
|
|
(1,477
|
)
|
|
6,978
|
|
|
7,145
|
|
|
8,805
|
|
|
18,740
|
|
|
5,127
|
|
|
5,993
|
|
|||||||
Other (income) expense:
|
||||||||||||||||||||||||||||
Interest expense
|
|
4,785
|
|
|
4,460
|
|
|
4,156
|
|
|
6,482
|
|
|
7,850
|
|
|
2,500
|
|
|
2,217
|
|
|||||||
Interest income
|
|
(127
|
)
|
|
(282
|
)
|
|
(186
|
)
|
|
(742
|
)
|
|
(746
|
)
|
|
(208
|
)
|
|
(100
|
)
|
|||||||
Other expense
|
|
559
|
|
|
595
|
|
|
391
|
|
|
191
|
|
|
190
|
|
|
63
|
|
|
25
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total other expense
|
|
5,217
|
|
|
4,773
|
|
|
4,361
|
|
|
5,931
|
|
|
7,294
|
|
|
2,355
|
|
|
2,143
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes
|
|
(6,694
|
)
|
|
2,205
|
|
|
2,784
|
|
|
2,874
|
|
|
11,446
|
|
|
2,772
|
|
|
3,850
|
|
|||||||
(Provision) benefit for income taxes(2)
|
|
(1,899
|
)
|
|
33
|
|
|
1,596
|
|
|
12,557
|
|
|
(3,722
|
)
|
|
(901
|
)
|
|
(1,374
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)(2)
|
$
|
(8,593
|
)
|
$
|
2,238
|
|
$
|
4,380
|
|
$
|
15,431
|
|
$
|
7,724
|
|
$
|
1,871
|
|
$
|
2,476
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share(2)
|
||||||||||||||||||||||||||||
Basic
|
$
|
(3.02
|
)
|
$
|
0.78
|
|
$
|
1.47
|
|
$
|
2.07
|
|
$
|
0.77
|
|
$
|
0.19
|
|
$
|
0.25
|
|
|||||||
Diluted
|
$
|
(3.02
|
)
|
$
|
0.78
|
|
$
|
1.47
|
|
$
|
2.07
|
|
$
|
0.75
|
|
$
|
0.18
|
|
$
|
0.23
|
|
|||||||
Shares used in computing net income per common share
|
||||||||||||||||||||||||||||
Basic
|
|
2,847
|
|
|
2,903
|
|
|
2,971
|
|
|
7,444
|
|
|
10,085
|
|
|
10,076
|
|
|
10,090
|
|
|||||||
Diluted
|
|
2,847
|
|
|
2,903
|
|
|
2,971
|
|
|
7,444
|
|
|
10,236
|
|
|
10,170
|
|
|
10,650
|
|
|||||||
Selected Operating Data:
|
||||||||||||||||||||||||||||
System-wide restaurants open at end of period
|
|
128
|
|
|
131
|
|
|
144
|
|
|
164
|
|
|
182
|
|
|
165
|
|
|
186
|
|
|||||||
Company-owned restaurants open at end of period
|
|
46
|
|
|
44
|
|
|
46
|
|
|
73
|
|
|
77
|
|
|
72
|
|
|
88
|
|
|||||||
Average annual comparable company-owned restaurant sales(3)
|
$
|
2,309
|
|
$
|
2,496
|
|
$
|
2,664
|
|
$
|
2,890
|
|
$
|
3,020
|
|
|||||||||||||
Comparable company-owned restaurant sales increase(3)
|
|
9.2
|
%
|
|
4.9
|
%
|
|
5.8
|
%
|
|
6.9
|
%
|
|
2.0
|
%
|
|
2.6
|
%
|
|
0.4
|
%
|
|||||||
Restaurant-level operating profit(4)
|
$
|
16,889
|
|
$
|
20,424
|
|
$
|
20,340
|
|
$
|
32,423
|
|
$
|
41,215
|
|
$
|
11,497
|
|
$
|
14,298
|
|
|||||||
EBITDA(5)
|
|
5,658
|
|
|
11,986
|
|
|
12,539
|
|
|
16,870
|
|
|
29,231
|
|
|
8,279
|
|
|
9,592
|
|
|||||||
EBITDA margin(5)
|
|
4.9
|
%
|
|
10.1
|
%
|
|
9.6
|
%
|
|
8.9
|
%
|
|
13.0
|
%
|
|
12.3
|
%
|
|
12.1
|
%
|
|||||||
Fiscal Year
|
First Quarter
|
|||||||||||||||||||||||||||
1997
|
1998
|
1999
|
2000
|
2001
|
2001
|
2002
|
||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
3,414
|
|
$
|
5,645
|
|
$
|
5,176
|
|
$
|
8,317
|
|
$
|
18,992
|
|
$
|
14,083
|
|
$
|
6,547
|
|
|||||||
Total assets(1)
|
|
52,555
|
|
|
55,338
|
|
|
70,706
|
|
|
141,184
|
|
|
154,441
|
|
|
148,759
|
|
|
154,188
|
|
|||||||
Long-term debt, including current portion
|
|
58,418
|
|
|
57,509
|
|
|
66,120
|
|
|
78,413
|
|
|
80,087
|
|
|
82,330
|
|
|
78,743
|
|
|||||||
Total stockholders equity (deficit)(1)
|
|
(22,248
|
)
|
|
(19,291
|
)
|
|
(14,861
|
)
|
|
39,773
|
|
|
46,978
|
|
|
41,401
|
|
|
49,475
|
|
(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 4,310,344 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 are 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. It does
not include general and administrative costs, depreciation and amortization, franchise development costs and pre-opening costs. Although restaurant-level operating profit is a measure commonly used in the restaurant industry to evaluate operating
performance, it 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. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The following
table sets forth our calculation of restaurant-level operating profit:
|
(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:
|
Fiscal Year Ended
|
First Quarter Ended
|
||||||||||||||
1999
|
2000
|
2001
|
2001
|
2002
|
|||||||||||
(unaudited)
|
|||||||||||||||
Revenue:
|
|||||||||||||||
Restaurant
|
93.4
|
%
|
95.4
|
%
|
95.8
|
%
|
95.6
|
%
|
96.3
|
%
|
|||||
Franchise royalties and fees
|
6.3
|
|
4.3
|
|
4.0
|
|
4.2
|
|
3.5
|
|
|||||
Rent revenue
|
0.3
|
|
0.3
|
|
0.2
|
|
0.2
|
|
0.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Total revenues
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
|||||
Costs and expenses:
|
|||||||||||||||
Restaurant operating costs:
|
|||||||||||||||
Cost of sales
|
24.8
|
|
24.4
|
|
23.7
|
|
24.7
|
|
23.5
|
|
|||||
Labor
|
35.8
|
|
35.8
|
|
34.8
|
|
35.0
|
|
35.9
|
|
|||||
Operating
|
16.0
|
|
15.5
|
|
15.4
|
|
16.0
|
|
15.0
|
|
|||||
Occupancy
|
6.6
|
|
6.4
|
|
6.9
|
|
6.5
|
|
6.9
|
|
|||||
Restaurant closures and impairment
|
(0.3
|
)
|
0.7
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Total restaurant operating costs
|
82.9
|
|
82.8
|
|
80.8
|
|
82.2
|
|
81.3
|
|
|||||
Depreciation and amortization
|
4.1
|
|
4.3
|
|
4.7
|
|
4.7
|
|
4.5
|
|
|||||
General and administrative
|
10.3
|
|
9.0
|
|
7.5
|
|
6.7
|
|
7.2
|
|
|||||
Franchise development
|
1.9
|
|
1.8
|
|
1.6
|
|
2.4
|
|
1.7
|
|
|||||
Pre-opening costs
|
0.6
|
|
1.3
|
|
0.4
|
|
|
|
0.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Income from operations
|
5.5
|
|
4.7
|
|
8.3
|
|
7.6
|
|
7.6
|
|
|||||
Other (income) expense:
|
|||||||||||||||
Interest expense
|
3.2
|
|
3.4
|
|
3.5
|
|
3.7
|
|
2.8
|
|
|||||
Interest income
|
(0.1
|
)
|
(0.4
|
)
|
(0.3
|
)
|
(0.3
|
)
|
(0.1
|
)
|
|||||
Other expense
|
0.3
|
|
0.1
|
|
0.1
|
|
0.1
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Total other expense
|
3.4
|
|
3.1
|
|
3.2
|
|
3.5
|
|
2.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Income before income taxes
|
2.1
|
|
1.5
|
|
5.1
|
|
4.1
|
|
4.9
|
|
|||||
(Provision) benefit for income taxes
|
1.2
|
|
6.6
|
|
(1.7
|
)
|
(1.3
|
)
|
(1.7
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
3.4
|
%
|
8.2
|
%
|
3.4
|
%
|
2.8
|
%
|
3.1
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
Payments Due As of December 30, 2001
|
|||||||||||||||
Contractual Obligations
|
Total
|
Less Than 1 year
|
1-3 years
|
3-5 years
|
After 5 years
|
||||||||||
(in thousands)
|
|||||||||||||||
Term loan and notes payable(1)
|
$
|
66,835
|
$
|
4,635
|
$
|
9,499
|
$
|
12,366
|
$
|
40,336
|
|||||
Capital lease obligations
|
|
13,252
|
|
443
|
|
795
|
|
1,098
|
|
10,917
|
|||||
Operating lease obligations
|
|
107,315
|
|
9,676
|
|
18,654
|
|
16,300
|
|
62,686
|
(1)
|
|
We intend to repay $48.1 million of this amount with the net proceeds of this offering.
|
|
|
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.
|
|
|
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.
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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, and land.
In 2000, our comparable company-owned restaurants generated average
sales of approximately $2.9 million and restaurant-level operating profit of approximately $533,000, or 18.4% of total comparable company-owned restaurant sales. The average cash investment cost for our free-standing restaurants opened in 2000 was
approximately $1.8 million, excluding pre-opening costs, which averaged approximately $144,000 per restaurant, and land.
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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 have opened four new company-owned restaurants and expect to open an additional six
new company-owned restaurants and relocate one restaurant, and our franchisees have opened four new restaurants and we expect our franchisees to open three additional 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.
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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
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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.
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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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employee discounts or other discounts;
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any federal, state, municipal or other sales, value added or retailers excise taxes; or
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adjustments for net returns on salable goods and discounts allowed to customers on sales.
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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.
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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.
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Class I directors, whose term will expire at the annual meeting of stockholders to be held in 2003;
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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.
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Long-Term Compensation
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|||||||||||||||
Annual Compensation(1)
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Securities Underlying Options/SARs (#)
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All Other Compensation ($)(2)
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|||||||||||||
Name and Principal Position
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Year
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Salary($)
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Bonus($)
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||||||||||||
Michael J. Snyder, Chief Executive Officer
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2001
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$
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340,609
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$
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347,288
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$
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4,620
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|||||
James P. McCloskey, Chief Financial Officer
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2001
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226,861
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162,068
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(3)
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2,793
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Michael E. Woods, Senior Vice President of Franchise Development
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2001
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196,568
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140,498
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(3)
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2,562
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Robert J. Merullo, Senior Vice President of Restaurant Operations
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2001
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207,563
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147,630
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(3)
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5,600
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Todd A. Brighton, Vice President of Development
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2001
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95,192
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(4)
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30,000
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150,000
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1,400
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Eric C. Houseman, Vice President of Restaurant Operations
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2001
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128,942
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48,300
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25,000
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1,391
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(1)
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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.
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(2)
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Represents premiums paid for supplemental life insurance.
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(3)
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Includes $20,000 of bonus compensation earned during 2001 that has been deferred at the election of the named executive officer.
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(4)
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Mr. Brighton joined Red Robin in April 2001. His annualized salary for 2001 was $150,000.
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(1)
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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.
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(2)
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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.
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(3)
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Based on an aggregate of 136,361 shares of our common stock that are subject to options granted to employees during 2001.
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(4)
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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.
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(5)
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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.
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Number of
Securities
Underlying
Unexercised Options at
December 30,
2001(1)
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Value of Unexercised
In-the-Money Options at
December 30, 2001
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|||||||
Name
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Exercisable
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Unexercisable
|
Exercisable($)
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Unexercisable($)
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||||
Michael J. Snyder
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517,241
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4,758,617
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James P. McCloskey(2)
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103,448
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34,483
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951,722
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317,244
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Michael E. Woods
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43,103
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103,448
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396,548
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951,722
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Robert J. Merullo
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86,207
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793,104
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Todd A. Brighton
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51,724
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438,102
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Eric C. Houseman
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3,448
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22,414
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31,722
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199,915
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(1)
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This table does not give effect to the exercise of stock options by certain of our executive officers in April 2002. See Related Party
TransactionsOption Exercises.
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(2)
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Excludes options to purchase 34,483 shares of our common stock that we granted to Mr. McCloskey in January 2002.
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designate recipients of awards;
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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;
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approve the form of award agreements;
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determine specific objectives and performance criteria with respect to performance awards;
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construe and interpret the 2002 stock incentive plan; and
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re-price, accelerate and extend the exercisability or term, and establish the events of termination or reversion of outstanding awards.
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stockholder approval of our dissolution or liquidation;
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certain changes in a majority of the membership of our board of directors over a period of two years or less;
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the acquisition of more than 30.0% 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;
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certain transfers of all or substantially all of our assets; and
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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.
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for any breach of the directors duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
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under Section 174 of the Delaware General Corporation Law; or
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for any transaction from which the director derives an improper personal benefit.
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Mike Snyder, our chief executive officer, received $4,100 in cash, $5.1 million in debentures repaid by us in August 2001, $18,870 in debentures repaid by us in
May 2001 and 793,647 shares of our common stock.
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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
69,340 shares of our common stock.
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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 69,340
shares of our common stock.
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Steve Snyder, Mike Snyders brother and one of our principal stockholders, and his wife each received $2,050 in cash, $2.1 million in debentures repaid by
us in August 2001, $9,435 in debentures repaid by us in May 2001 and 396,824 shares of our common stock.
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Mike Snyder elected to exercise options to purchase an aggregate of 517,241 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.
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Jim McCloskey elected to exercise options to purchase an aggregate of 172,415 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.
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Bob Merullo elected to exercise options to purchase 86,207 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.
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Mike Woods elected to exercise options to purchase an aggregate of 146,551 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.
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(1)
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This table reflects the early exercise of stock options by certain of our executive officers in April 2002. See Related Party TransactionsOption
Exercises.
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(2)
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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.
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(3)
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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.
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(4)
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Consists of 68,966 shares of common stock issuable pursuant to stock options, all of which are currently exercisable.
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(5)
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Robert J. Merullo controls the disposition of these shares held by his minor children and the exercise of the registration rights.
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(6)
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Michael E. Woods controls the disposition of these shares held by his minor children and the exercise of the registration rights.
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each person who beneficially owns more than 5.0% of our capital stock;
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each of our directors;
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each named executive officer;
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all directors and executive officers as a group; and
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each selling stockholder.
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*
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Represents beneficial ownership of less than one percent (1.0%) of the outstanding shares of our common stock.
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(1)
|
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This table gives effect to the exercise of stock options by certain of our executive officers. See Related Party TransactionsOption Exercises.
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(2)
|
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If a stockholder holds options or other securities that are exercisable or otherwise convertible into our common stock within 60 days of May 19, 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.
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(3)
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4,144,562 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. This amount excludes 165,782 shares of common stock held by RR Investors II, LLC. See footnotes 13 and 14, below, for more information
regarding RR Investors II. The address of this stockholder is c/o Quad-C Management, Inc., 230 East High Street, Charlottesville, Virginia 22902.
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(4)
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Includes 775,862 shares of common stock held by Hibari Guam Corporation, an indirect wholly owned subsidiary of Skylark Co., Ltd. In this offering, Hibari Guam
Corporation will sell 21,172 shares of common stock. 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.
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(5)
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If the over-allotment option is exercised in full, Mr. Snyder will own 672,638 shares of common stock after the offering. Mr. Snyders address is 2300
River Road, #17, Yakima, Washington 98902.
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(6)
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Gaishoku System Kenkyujos address is 1-25-8 Nishikubo, Musashino-shi, Tokyo, 180 Japan.
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(7)
|
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If the over-allotment option is exercised in full, Hibari Guam Corporation will not own any shares after the offering. Hibari Guam Corporations address is
9999 South Marine Drive, Temuning, Guam 96911.
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(8)
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Includes 3,034 shares held by the Claire C. McCloskey Trust, 3,034 shares held by the Megan L. McCloskey Trust and 3,034 shares held by the James P. McCloskey,
Jr. Trust, the sole beneficiaries of which are Mr. McCloskeys children. This amount also includes 11,586 shares held by the James P. McCloskey Retained Annuity Trust.
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(9)
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Includes an aggregate of 3,448 shares held by Mr. Woods minor children.
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(10)
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Includes an aggregate of 5,172 shares held by Mr. Merullos minor children.
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(11)
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Consists of 3,448 shares of common stock subject to options exercisable within 60 days of May 19, 2002 and 13,793 shares of common stock subject to
performance-vested options which we expect to become exercisable upon consummation of the offering.
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(12)
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Excludes 775,862 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.
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(13)
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Consists of 4,144,562 shares of common stock held by RR Investors, LLC and 165,782 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.
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(14)
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Consists of 4,144,562 shares of common stock held by RR Investors, LLC and 165,782 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.
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(15)
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Includes 2,759 shares of common stock subject to options exercisable within 60 days of May 19, 2002.
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(16)
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Includes 6,207 shares of common stock subject to options exercisable within 60 days of May 19, 2002 and 13,793 shares of common stock subject to
performance-vested options which we expect to become exercisable upon consummation of the offering.
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(17)
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Includes 14,655 shares held by Mr. Kingens minor child.
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(18)
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Consists of 68,966 shares of common stock subject to options exercisable within 60 days of May 19, 2002. Mr. Yokokawa has notified us that he intends to
exercise these options prior to the offering.
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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;
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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;
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do not provide for 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;
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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;
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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;
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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;
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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;
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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;
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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;
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allow our directors, not our stockholders, to fill vacancies on our board of directors; and
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provide that the authorized number of directors may be changed only by resolution of the board of directors.
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up to 504,466 shares of common stock reserved for issuance upon exercise of options outstanding as of May 19, 2002;
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up to 1,475,690 shares of common stock that may be issued with respect to awards that may be granted in the future under our stock option plans; and
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up to 300,000 shares of common stock that may be issued to our employees pursuant to our employee stock purchase plan.
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an individual who is a citizen or resident of the United States;
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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;
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an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
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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.
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U.S. state and local or non-U.S. tax consequences;
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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;
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the tax consequences for the shareholders, partners or beneficiaries of a non-U.S. holder;
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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
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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.
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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;
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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
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look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.
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1.
|
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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;
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2.
|
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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
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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
|
5,038,000
|
|
|
|
|
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, December 30, 2001 and April 21, 2002 (unaudited)
|
F-3
|
|
Consolidated Statements of IncomeYears Ended December 26, 1999, December 31, 2000 and December 30, 2001, and
Quarters Ended April 22, 2001 (unaudited) and April 21, 2002 (unaudited)
|
F-5
|
|
Consolidated Statements of Stockholders Equity (Deficit)Years Ended December 26, 1999, December 31, 2000 and
December 30, 2001, and Quarter Ended April 21, 2002 (unaudited)
|
F-6
|
|
Consolidated Statements of Cash FlowsYears Ended December 26, 1999, December 31, 2000 and December 30, 2001, and
Quarters Ended April 22, 2001 (unaudited) and April 21, 2002 (unaudited)
|
F-7
|
|
Notes to Consolidated Financial Statements
|
F-9
|
|
THE SNYDER GROUP COMPANY
|
||
Report of Independent Public Accountants
|
F-26
|
|
Statement of Operationsfor the Year Ended December 26, 1999
|
F-27
|
|
Statement of Stockholders Deficitfor the Year Ended December 26, 1999
|
F-28
|
|
Statement of Cash Flowsfor the Year Ended December 26, 1999
|
F-29
|
|
Notes to Financial Statements
|
F-30
|
|
Report of Independent Public Accountants
|
F-35
|
|
Balance SheetMay 10, 2000
|
F-36
|
|
Statement of Operationsfor the Period December 27, 1999 through May 10, 2000
|
F-37
|
|
Statement of Stockholders Deficitfor the Period December 27, 1999 through May 10, 2000
|
F-38
|
|
Statement of Cash Flowsfor the Period December 27, 1999 through May 10, 2000
|
F-39
|
|
Notes to Financial Statements
|
F-40
|
December 31, 2000
|
December 30, 2001
|
Apri 21,
2002
|
|||||||
(unaudited)
|
|||||||||
Assets
|
|||||||||
Current Assets:
|
|||||||||
Cash and cash equivalents
|
$
|
8,316,826
|
$
|
18,992,153
|
$
|
6,546,609
|
|||
Accounts receivable, net
|
|
3,398,531
|
|
2,697,197
|
|
1,759,508
|
|||
Inventories
|
|
2,607,272
|
|
2,745,898
|
|
3,070,691
|
|||
Prepaid expenses and other current assets
|
|
1,866,486
|
|
2,072,715
|
|
1,969,917
|
|||
Income tax refund receivable
|
|
1,045,494
|
|
25,379
|
|
|
|||
Deferred tax asset
|
|
3,371,444
|
|
1,667,165
|
|
1,666,888
|
|||
Restricted current assetsmarketing funds
|
|
834,121
|
|
680,607
|
|
149,509
|
|||
|
|
|
|
|
|
||||
Total current assets
|
|
21,440,174
|
|
28,881,114
|
|
15,163,122
|
|||
Real estate held for sale
|
|
3,696,574
|
|
842,496
|
|
1,892,496
|
|||
Property and equipment, net
|
|
72,159,703
|
|
82,451,120
|
|
91,426,758
|
|||
Deferred tax asset
|
|
8,172,572
|
|
8,652,382
|
|
8,188,128
|
|||
Goodwill, net
|
|
23,114,528
|
|
22,554,777
|
|
25,666,132
|
|||
Other assets, net
|
|
12,300,847
|
|
11,059,097
|
|
11,851,810
|
|||
|
|
|
|
|
|
||||
Total assets
|
$
|
140,884,398
|
$
|
154,440,986
|
$
|
154,188,446
|
|||
|
|
|
|
|
|
December 31, 2000
|
December 30, 2001
|
April 21,
2002
|
||||||||||
(unaudited)
|
||||||||||||
Liabilities and Stockholders Equity
|
||||||||||||
Current Liabilities:
|
||||||||||||
Trade accounts payable
|
$
|
5,004,767
|
|
$
|
5,669,512
|
|
$
|
6,400,657
|
|
|||
Accrued payroll and payroll-related liabilities
|
|
4,951,330
|
|
|
7,254,058
|
|
|
6,968,507
|
|
|||
Unredeemed gift certificates
|
|
2,237,199
|
|
|
2,341,504
|
|
|
1,940,474
|
|
|||
Accrued liabilities
|
|
6,209,630
|
|
|
7,200,640
|
|
|
6,091,692
|
|
|||
Accrued liabilitiesmarketing funds
|
|
834,121
|
|
|
680,607
|
|
|
149,509
|
|
|||
Current portion of long-term debt
|
|
4,387,221
|
|
|
5,077,515
|
|
|
4,659,936
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total current liabilities
|
|
23,624,268
|
|
|
28,223,836
|
|
|
26,210,775
|
|
|||
Deferred rent payable
|
|
3,761,506
|
|
|
4,229,199
|
|
|
4,419,729
|
|
|||
Long-term debt
|
|
74,025,280
|
|
|
75,009,577
|
|
|
74,083,144
|
|
|||
Commitments and contingencies (note 10)
|
|
|
|
|
|
|
|
|
|
|||
Stockholders Equity:
|
||||||||||||
Common stock, $.001 par value: 50,000,000 shares authorized; 10,076,343, 10,090,312 and 10,090,485 (unaudited) shares
issued and outstanding, respectively
|
|
10,076
|
|
|
10,090
|
|
|
10,090
|
|
|||
Preferred stock, $.001 par value: 1,000,000 shares authorized; no shares issued and outstanding
|
|
|
|
|
|
|
|
|
|
|||
Additional paid-in capital
|
|
53,373,858
|
|
|
53,454,868
|
|
|
53,744,568
|
|
|||
Deferred compensation
|
|
|
|
|
|
|
|
(268,808
|
)
|
|||
Note receivable from stockholder/officer
|
|
(300,000
|
)
|
|
(600,000
|
)
|
|
(600,000
|
)
|
|||
Accumulated deficit
|
|
(13,610,590
|
)
|
|
(5,886,584
|
)
|
|
(3,411,052
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Total stockholders equity
|
|
39,473,344
|
|
|
46,978,374
|
|
|
49,474,798
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total liabilities and stockholders equity
|
$
|
140,884,398
|
|
$
|
154,440,986
|
|
$
|
154,188,446
|
|
|||
|
|
|
|
|
|
|
|
|
Year Ended
|
Quarter Ended
|
|||||||||||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
April 22,
2001
|
April 21,
2002
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Restaurant
|
$
|
121,430,239
|
|
$
|
180,413,546
|
|
$
|
214,963,264
|
|
$
|
64,571,686
|
|
$
|
76,316,992
|
|
|||||
Franchise royalties and fees
|
|
8,248,810
|
|
|
8,247,439
|
|
|
9,002,090
|
|
|
2,821,838
|
|
|
2,757,151
|
|
|||||
Rent revenue
|
|
333,101
|
|
|
509,514
|
|
|
519,408
|
|
|
120,025
|
|
|
126,918
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenues
|
|
130,012,150
|
|
|
189,170,499
|
|
|
224,484,762
|
|
|
67,513,549
|
|
|
79,201,061
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Costs and Expenses:
|
||||||||||||||||||||
Restaurant operating costs:
|
||||||||||||||||||||
Cost of sales
|
|
30,158,666
|
|
|
43,945,312
|
|
|
50,913,947
|
|
|
15,952,422
|
|
|
17,896,612
|
|
|||||
Labor
|
|
43,503,825
|
|
|
64,565,631
|
|
|
74,853,721
|
|
|
22,638,733
|
|
|
27,427,930
|
|
|||||
Operating
|
|
19,429,491
|
|
|
27,959,620
|
|
|
33,194,842
|
|
|
10,316,432
|
|
|
11,412,408
|
|
|||||
Occupancy
|
|
7,997,915
|
|
|
11,519,135
|
|
|
14,785,060
|
|
|
4,166,616
|
|
|
5,282,328
|
|
|||||
Restaurant closures and impairment
|
|
(330,000
|
)
|
|
1,302,186
|
|
|
36,359
|
|
|
|
|
|
|
|
|||||
Depreciation and amortization
|
|
5,394,203
|
|
|
8,065,141
|
|
|
10,491,058
|
|
|
3,152,425
|
|
|
3,599,192
|
|
|||||
General and administrative
|
|
13,434,319
|
|
|
17,116,344
|
|
|
16,844,988
|
|
|
4,544,588
|
|
|
5,711,748
|
|
|||||
Franchise development
|
|
2,508,426
|
|
|
3,386,169
|
|
|
3,703,485
|
|
|
1,610,027
|
|
|
1,361,654
|
|
|||||
Pre-opening costs
|
|
770,597
|
|
|
2,506,387
|
|
|
920,845
|
|
|
5,354
|
|
|
516,540
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total costs and expenses
|
|
122,867,442
|
|
|
180,365,925
|
|
|
205,744,305
|
|
|
62,386,597
|
|
|
73,208,412
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income from operations
|
|
7,144,708
|
|
|
8,804,574
|
|
|
18,740,457
|
|
|
5,126,952
|
|
|
5,992,649
|
|
|||||
Other (Income) Expense:
|
||||||||||||||||||||
Interest expense
|
|
4,155,967
|
|
|
6,482,028
|
|
|
7,850,101
|
|
|
2,499,370
|
|
|
2,217,050
|
|
|||||
Interest income
|
|
(185,912
|
)
|
|
(741,521
|
)
|
|
(746,344
|
)
|
|
(208,015
|
)
|
|
(99,858
|
)
|
|||||
Other
|
|
390,971
|
|
|
190,715
|
|
|
190,437
|
|
|
63,227
|
|
|
25,461
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total other expense
|
|
4,361,026
|
|
|
5,931,222
|
|
|
7,294,194
|
|
|
2,354,582
|
|
|
2,142,653
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
2,783,682
|
|
|
2,873,352
|
|
|
11,446,263
|
|
|
2,772,370
|
|
|
3,849,996
|
|
|||||
(Provision) benefit for income taxes
|
|
1,595,989
|
|
|
12,557,195
|
|
|
(3,722,257
|
)
|
|
(901,020
|
)
|
|
(1,374,464
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
4,379,671
|
|
$
|
15,430,547
|
|
$
|
7,724,006
|
|
$
|
1,871,350
|
|
$
|
2,475,532
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Income Per Share:
|
||||||||||||||||||||
Basic
|
$
|
1.47
|
|
$
|
2.07
|
|
$
|
0.77
|
|
$
|
0.19
|
|
$
|
0.25
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted
|
$
|
1.47
|
|
$
|
2.07
|
|
$
|
0.75
|
|
$
|
0.18
|
|
$
|
0.23
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Weighted Average Shares Outstanding:
|
||||||||||||||||||||
Basic
|
|
2,971,407
|
|
|
7,443,893
|
|
|
10,085,468
|
|
|
10,076,416
|
|
|
10,090,419
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
2,971,407
|
|
|
7,443,893
|
|
|
10,235,917
|
|
|
10,169,596
|
|
|
10,649,738
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Deferred
Compensation
|
Note Receivable
from Stockholder/
Officer
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||
Balance, December 27,
1998
|
2,970,578
|
$
|
2,970
|
$
|
14,127,325
|
|
|
|
|
|
|
$
|
(33,420,808
|
)
|
$
|
(19,290,513
|
)
|
|||||||
Options exercised for common stock
|
8,620
|
|
9
|
|
49,991
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
4,379,671
|
|
|
4,379,671
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 26, 1999
|
2,979,198
|
|
2,979
|
|
14,177,316
|
|
|
|
|
|
|
|
(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
|
7,090,421
|
|
7,090
|
|
39,157,549
|
|
|
|
|
|
|
|
|
|
|
39,164,639
|
|
|||||||
Options exercised for common stock
|
6,724
|
|
7
|
|
38,993
|
|
|
|
|
|
|
|
|
|
|
39,000
|
|
|||||||
Issuance of note receivable-stockholder/officer
|
|
|
|
|
|
|
|
|
|
(300,000
|
)
|
|
|
|
|
(300,000
|
)
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
15,430,547
|
|
|
15,430,547
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2000
|
10,076,343
|
|
10,076
|
|
53,373,858
|
|
|
|
|
(300,000
|
)
|
|
(13,610,590
|
)
|
|
39,473,344
|
|
|||||||
Common stock issued
|
9,659
|
|
10
|
|
56,014
|
|
|
|
|
|
|
|
|
|
|
56,024
|
|
|||||||
Options exercised for common stock
|
4,310
|
|
4
|
|
24,996
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|||||||
Issuance of note receivable-stockholder/officer
|
|
|
|
|
|
|
|
|
|
(300,000
|
)
|
|
|
|
|
(300,000
|
)
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
7,724,006
|
|
|
7,724,006
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 30, 2001
|
10,090,312
|
|
10,090
|
|
53,454,868
|
|
|
|
|
(600,000
|
)
|
|
(5,886,584
|
)
|
|
46,978,374
|
|
|||||||
Deferred compensation (unaudited)
|
|
|
|
|
288,700
|
|
(288,700
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Amortization of deferred compensation
(unaudited) |
|
|
|
|
|
|
19,892
|
|
|
|
|
|
|
|
|
19,892
|
|
|||||||
Options exercised for common stock
(unaudited) |
173
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|||||||
Net income (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
2,475,532
|
|
|
2,475,532
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Balance, April 21, 2002 (unaudited)
|
10,090,485
|
$
|
10,090
|
$
|
53,744,568
|
$
|
(268,808
|
)
|
$
|
(600,000
|
)
|
$
|
(3,411,052
|
)
|
$
|
49,474,798
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
Quarter Ended
|
|||||||||||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
April 22,
2001
|
April 21,
2002
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
Cash Flows From Operating Activities:
|
||||||||||||||||||||
Net income
|
$
|
4,379,671
|
|
$
|
15,430,547
|
|
$
|
7,724,006
|
|
$
|
1,871,350
|
|
$
|
2,475,532
|
|
|||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
|
||||||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,892
|
|
|||||
Depreciation and amortization
|
|
5,394,203
|
|
|
8,065,141
|
|
|
10,491,058
|
|
|
3,152,425
|
|
|
3,599,192
|
|
|||||
Loss (gain) on sale of property and equipment
|
|
52,252
|
|
|
(61,832
|
)
|
|
191,552
|
|
|
45,982
|
|
|
1,949
|
|
|||||
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
|
|
|
333,152
|
|
|
16,193
|
|
|||||
Provision (benefit) for deferred income taxes
|
|
(2,186,121
|
)
|
|
(13,235,077
|
)
|
|
1,224,469
|
|
|
(298,394
|
)
|
|
937,795
|
|
|||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||
Accounts receivable
|
|
(1,405,280
|
)
|
|
(1,981,133
|
)
|
|
531,837
|
|
|
287,102
|
|
|
921,871
|
|
|||||
Inventories
|
|
(347,042
|
)
|
|
(1,051,706
|
)
|
|
(138,626
|
)
|
|
187,353
|
|
|
(206,003
|
)
|
|||||
Prepaid expenses and other current assets
|
|
(187,668
|
)
|
|
(906,078
|
)
|
|
(206,229
|
)
|
|
285,003
|
|
|
308,854
|
|
|||||
Income tax refund receivable
|
|
(133,879
|
)
|
|
(254,491
|
)
|
|
1,020,116
|
|
|
1,045,494
|
|
|
25,378
|
|
|||||
Other assets
|
|
(815,424
|
)
|
|
345,880
|
|
|
72,192
|
|
|
(321,828
|
)
|
|
(411,448
|
)
|
|||||
Trade accounts payable and accrued liabilities
|
|
2,509,359
|
|
|
(1,486,592
|
)
|
|
3,426,428
|
|
|
(1,714,004
|
)
|
|
(2,079,270
|
)
|
|||||
Deferred rent payable
|
|
272,365
|
|
|
660,741
|
|
|
467,693
|
|
|
126,428
|
|
|
190,530
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
|
7,307,168
|
|
|
8,099,842
|
|
|
25,539,171
|
|
|
5,000,063
|
|
|
5,800,465
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities:
|
||||||||||||||||||||
Proceeds from sales of real estate, property and equipment
|
|
44,144
|
|
|
1,209,449
|
|
|
2,648,232
|
|
|
513,853
|
|
|
50,603
|
|
|||||
Purchases of property and equipment
|
|
(16,301,773
|
)
|
|
(20,196,996
|
)
|
|
(18,675,387
|
)
|
|
(3,430,293
|
)
|
|
(10,708,626
|
)
|
|||||
Purchase of Western Franchise Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,320,265
|
)
|
|||||
Purchase of The Snyder Group Company
|
|
|
|
|
(1,572,900
|
)
|
|
(56,024
|
)
|
|
(56,024
|
)
|
|
|
|
|||||
Issuance of notes receivablestockholder/officer
|
|
|
|
|
(300,000
|
)
|
|
(300,000
|
)
|
|
(300,000
|
)
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net cash used in investing activities
|
|
(16,257,629
|
)
|
|
(20,860,447
|
)
|
|
(16,383,179
|
)
|
|
(3,272,464
|
)
|
|
(16,978,288
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities:
|
||||||||||||||||||||
Proceeds from issuance of long-term debt
|
|
9,500,000
|
|
|
53,133,034
|
|
|
6,376,775
|
|
|
5,356,752
|
|
|
329,988
|
|
|||||
Debt issuance costs
|
|
|
|
|
(2,052,642
|
)
|
|
(459,419
|
)
|
|
|
|
|
|
|
|||||
Amortization of debt issuance costs
|
|
32,084
|
|
|
83,882
|
|
|
223,139
|
|
|
64,671
|
|
|
75,291
|
|
|||||
Payments of long-term debt and capital leases
|
|
(1,100,697
|
)
|
|
(48,007,002
|
)
|
|
(4,702,184
|
)
|
|
(1,439,301
|
)
|
|
(1,674,000
|
)
|
Year Ended
|
Quarter Ended
|
|||||||||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
April 22,
2001
|
April 21,
2002
|
||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||
Repayment of debentures
|
|
|
|
|
(9,160,363
|
)
|
|
|
|
|
|
|
|
|||||
Repayment of promissory note
|
|
|
|
|
(1,799,938
|
)
|
|
|
|
|
|
|
|
|||||
Sale of common stock
|
|
50,000
|
|
|
23,704,333
|
|
|
81,024
|
|
56,124
|
|
1,000
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net cash provided by (used in) financing activities
|
|
8,481,387
|
|
|
15,901,304
|
|
|
1,519,335
|
|
4,038,246
|
|
(1,267,721
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
(469,074
|
)
|
$
|
3,140,699
|
|
$
|
10,675,327
|
$
|
5,765,845
|
$
|
(12,445,544
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
|
5,645,201
|
|
|
5,176,127
|
|
|
8,316,826
|
|
8,316,826
|
|
18,992,153
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
5,176,127
|
|
$
|
8,316,826
|
|
$
|
18,992,153
|
$
|
14,082,671
|
$
|
6,546,609
|
|
|||||
Supplemental Disclosures, Including Non-Cash Transactions:
|
||||||||||||||||||
Interest paid
|
$
|
4,320,276
|
|
$
|
6,536,349
|
|
$
|
7,805,576
|
$
|
2,561,472
|
$
|
2,434,007
|
|
|||||
Income taxes paid, net
|
$
|
590,132
|
|
$
|
817,102
|
|
$
|
1,600,000
|
$
|
|
|
359,000
|
|
|||||
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
|
Quarter Ended
|
||||||||||||||
December 26,
1999 |
December 31,
2000 |
December 30,
2001 |
April 22,
2001
|
April 21,
2002
|
|||||||||||
(unaudited)
|
(unaudited)
|
||||||||||||||
Net earnings
|
$
|
4,379,671
|
$
|
15,430,547
|
$
|
7,724,006
|
$
|
1,871,350
|
$
|
2,475,532
|
|||||
Basic
|
|
2,971,407
|
|
7,443,893
|
|
10,085,468
|
|
10,076,416
|
|
10,090,419
|
|||||
Dilutive effect of stock options
|
|
|
|
|
|
150,449
|
|
93,180
|
|
559,319
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Diluted weighted average shares outstanding
|
|
2,971,407
|
|
7,443,893
|
|
10,235,917
|
|
10,169,596
|
|
10,649,738
|
|||||
Earnings Per Share:
|
|||||||||||||||
Basic
|
$
|
1.47
|
$
|
2.07
|
$
|
0.77
|
$
|
0.19
|
$
|
0.25
|
|||||
Diluted
|
$
|
1.47
|
$
|
2.07
|
$
|
0.75
|
$
|
0.18
|
$
|
0.23
|
Year Ended December 31, 2000
|
|||
Total revenues
|
$
|
204,837,502
|
|
Net income
|
|
14,184,054
|
|
Earnings Per Share:
|
|||
Basic
|
$
|
1.91
|
|
Diluted
|
$
|
1.91
|
2000
|
2001
|
April 21,
2002
|
||||||||||
(unaudited)
|
||||||||||||
Trade receivable due from franchisees
|
$
|
1,794,023
|
|
$
|
2,498,572
|
|
$
|
950,065
|
|
|||
Receivable from landlords
|
|
3,024,675
|
|
|
1,530,817
|
|
|
662,597
|
|
|||
Other
|
|
187,416
|
|
|
232,856
|
|
|
410,357
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
5,006,114
|
|
|
4,262,245
|
|
|
2,023,019
|
|
||||
Allowance for doubtful accounts
|
|
(1,607,583
|
)
|
|
(1,565,048
|
)
|
|
(263,511
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Accounts receivable, net
|
$
|
3,398,531
|
|
$
|
2,697,197
|
|
$
|
1,759,508
|
|
|||
|
|
|
|
|
|
|
|
|
1999
|
2000
|
2001
|
||||||||||
Allowance for doubtful accounts, beginning of period
|
$
|
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 period
|
$
|
335,327
|
|
$
|
1,607,583
|
|
$
|
1,565,048
|
|
|||
|
|
|
|
|
|
|
|
|
2000
|
2001
|
April 21,
2002
|
|||||||
(unaudited)
|
|||||||||
Cash
|
$
|
300,935
|
$
|
161,516
|
$
|
2,891
|
|||
Prepaids
|
|
345,971
|
|
281,593
|
|
|
|||
Inventory
|
|
|
|
6,036
|
|
6,538
|
|||
Accounts receivable from franchisees
|
|
187,215
|
|
231,462
|
|
140,080
|
|||
|
|
|
|
|
|
||||
Restricted current assets-marketing funds
|
$
|
834,121
|
$
|
680,607
|
$
|
149,509
|
|||
|
|
|
|
|
|
Estimated Lives
|
2000
|
2001
|
April 21,
2002
|
|||||||||||
(unaudited)
|
||||||||||||||
Land
|
$
|
6,880,518
|
|
$
|
6,880,518
|
|
$
|
6,880,518
|
|
|||||
Buildings
|
15 to 30 years
|
|
6,280,339
|
|
|
6,373,239
|
|
|
6,378,396
|
|
||||
Furniture, fixtures and equipment
|
3 to 7 years
|
|
39,440,719
|
|
|
46,104,220
|
|
|
49,126,181
|
|
||||
Leasehold improvements
|
Shorter of lease term or life
|
|
52,961,926
|
|
|
64,844,180
|
|
|
70,239,591
|
|
||||
Restaurant property leased to others
|
3 to 30 years
|
|
8,784,584
|
|
|
8,784,584
|
|
|
8,792,552
|
|
||||
Construction in progress
|
|
4,938,974
|
|
|
4,450,897
|
|
|
7,847,367
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||
|
119,287,060
|
|
|
137,437,638
|
|
|
149,264,605
|
|
||||||
Accumulated depreciation and amortization
|
|
(47,127,357
|
)
|
|
(54,986,518
|
)
|
|
(57,837,847
|
)
|
|||||
|
|
|
|
|
|
|
|
|
||||||
Property and equipment, net
|
$
|
72,159,703
|
|
$
|
82,451,120
|
|
$
|
91,426,758
|
|
|||||
|
|
|
|
|
|
|
|
|
2000
|
2001
|
April 21,
2002
|
||||||||||
(unaudited)
|
||||||||||||
Franchise rights
|
$
|
5,800,000
|
|
$
|
5,800,000
|
|
$
|
8,600,000
|
|
|||
Workforce
|
|
2,530,000
|
|
|
2,530,000
|
|
|
|
|
|||
Loan fees
|
|
2,454,855
|
|
|
2,630,956
|
|
|
2,809,560
|
|
|||
Note receivable
|
|
1,195,121
|
|
|
1,050,000
|
|
|
152,387
|
|
|||
Deposits
|
|
322,129
|
|
|
252,009
|
|
|
289,493
|
|
|||
Liquor licenses
|
|
771,723
|
|
|
919,925
|
|
|
1,066,251
|
|
|||
Other
|
|
59,540
|
|
|
91,732
|
|
|
38,688
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
13,133,368
|
|
|
13,274,622
|
|
|
12,956,379
|
|
||||
Accumulated amortization
|
|
(832,521
|
)
|
|
(2,215,525
|
)
|
|
(1,104,569
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Other assets, net
|
$
|
12,300,847
|
|
$
|
11,059,097
|
|
$
|
11,851,810
|
|
|||
|
|
|
|
|
|
|
|
|
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
|
|||||||
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
|
533,828
|
|
$
|
5.80
|
539,689
|
|
$
|
5.80
|
1,413,138
|
|
$
|
5.80
|
||||||
Granted
|
118,448
|
|
|
5.80
|
959,914
|
|
|
5.80
|
136,361
|
|
|
6.53
|
||||||
Canceled
|
(103,966
|
)
|
|
5.80
|
(79,741
|
)
|
|
5.80
|
(132,223
|
)
|
|
5.80
|
||||||
Exercised
|
(8,621
|
)
|
|
5.80
|
(6,724
|
)
|
|
5.80
|
(4,310
|
)
|
|
5.80
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Outstanding at end of year
|
539,689
|
|
$
|
5.80
|
1,413,138
|
|
$
|
5.80
|
1,412,966
|
|
$
|
5.86
|
1999
|
2000
|
2001
|
|||||||||
Net Income:
|
As reported
|
$
|
4,379,671
|
$
|
15,430,547
|
$
|
7,724,006
|
||||
Proforma
|
|
4,192,923
|
|
12,963,474
|
|
7,379,407
|
|||||
Basic Earnings Per Share:
|
As reported
|
$
|
1.47
|
$
|
2.07
|
$
|
0.77
|
||||
Proforma
|
$
|
1.41
|
$
|
1.74
|
$
|
0.73
|
|||||
Diluted Earnings Per Share:
|
As reported
|
$
|
1.47
|
$
|
2.07
|
$
|
0.75
|
||||
Proforma
|
$
|
1.41
|
$
|
1.74
|
$
|
0.72
|
Aggregate Amortization Expense:
|
||
For the quarter ended 4/21/02 (unaudited)
|
176,066
|
|
Estimated Amortization Expense:
|
||
For year ended 12/29/02
|
$584,327
|
|
For year ended 12/28/03
|
576,053
|
|
For year ended 12/26/04
|
551,164
|
|
For year ended 12/25/05
|
532,490
|
|
For year ended 12/31/06
|
486,758
|
For the Year Ended
|
Quarter Ended
|
Quarter Ended
|
|||||||||||||
December 26, 1999
|
December 31, 2000
|
December 30, 2001
|
April 22,
2001
|
April 21,
2002
|
|||||||||||
(unaudited)
|
(unaudited)
|
||||||||||||||
Reported net income
|
$
|
4,379,671
|
$
|
15,430,547
|
$
|
7,724,006
|
$
|
1,871,350
|
$
|
2,475,532
|
|||||
Add back: goodwill amortization
|
|
0
|
|
485,479
|
|
535,745
|
|
165,699
|
|
0
|
|||||
Add back: workforce amortization
|
|
0
|
|
518,976
|
|
569,252
|
|
175,154
|
|
0
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
$
|
4,379,671
|
$
|
16,435,002
|
$
|
8,829,003
|
$
|
2,212,203
|
$
|
2,475,532
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings per share:
|
|||||||||||||||
Reported net income
|
$
|
1.47
|
$
|
2.07
|
$
|
0.77
|
$
|
0.19
|
$
|
0.25
|
|||||
Goodwill amortization
|
|
|
|
0.07
|
|
0.05
|
|
0.02
|
|
|
|||||
Workforce amortization
|
|
|
|
0.07
|
|
0.06
|
|
0.02
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
$
|
1.47
|
$
|
2.20
|
$
|
0.88
|
$
|
0.22
|
$
|
0.25
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share:
|
|||||||||||||||
Reported net income
|
$
|
1.47
|
$
|
2.07
|
$
|
0.75
|
$
|
0.18
|
$
|
0.23
|
|||||
Goodwill amortization
|
|
|
|
0.07
|
|
0.05
|
|
0.02
|
|
|
|||||
Workforce amortization
|
|
|
|
0.07
|
|
0.06
|
|
0.02
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income
|
$
|
1.47
|
$
|
2.20
|
$
|
0.86
|
$
|
0.21
|
$
|
0.23
|
|||||
|
|
|
|
|
|
|
|
|
|
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
|
)
|
|
|
|
Exhibit Number
|
Description of Document
|
|
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.
|
|
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.
|
|
10.30
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between Robert J. Merullo and Red Robin Gourmet Burgers, Inc.
|
|
10.31
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between James P. McCloskey and Red Robin Gourmet Burgers, Inc.
|
|
10.32
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between James P. McCloskey and Red Robin Gourmet Burgers, Inc.
|
|
10.33
|
Secured Promissory Note, dated April 25, 2002 executed by James P. McCloskey in favor of Red Robin Gourmet Burgers, Inc.
|
|
10.34
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between Michael J. Snyder and Red Robin Gourmet Burgers, Inc.
|
|
10.35
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between Michael E. Woods and Red Robin Gourmet Burgers, Inc.
|
|
10.36
|
Secured Promissory Note, dated April 25, 2002, executed by Michael E. Woods in favor of Red Robin Gourmet Burgers, Inc.
|
|
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.
|
|
|
Previously filed.
|
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) |
June 10, 2002
|
||
/s/ J
AMES
P.
M
C
C
LOSKEY
James P. McCloskey
|
Chief Financial Officer
(Principal Financial and Accounting Officer) |
June 10, 2002
|
||
*
Edward T. Harvey
|
Director
|
June 10, 2002
|
||
*
Terrence D. Daniels
|
Director
|
June 10, 2002
|
||
*
Gary J. Singer
|
Director
|
June 10, 2002
|
||
*
Tasuku Chino
|
Director
|
June 10, 2002
|
*By:
|
/s/ M
ICHAEL
J.
S
NYDER
|
|
Michael J. Snyder
Attorney-in-fact
|
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*
|
Amended and Restated Certificate of Incorporation.
|
|
3.2*
|
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.
|
|
10.30
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between Robert J. Merullo and Red Robin Gourmet Burgers, Inc.
|
|
10.31
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between James P. McCloskey and Red Robin Gourmet Burgers, Inc.
|
|
10.32
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between James P. McCloskey and Red Robin Gourmet Burgers, Inc.
|
|
10.33
|
Secured Promissory Note, dated April 25, 2002 executed by James P. McCloskey in favor of Red Robin Gourmet Burgers, Inc.
|
|
10.34
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between Michael J. Snyder and Red Robin Gourmet Burgers, Inc.
|
|
10.35
|
Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan Option Exercise AgreementEarly Exercise, dated April 25, 2002, by
and between Michael E. Woods and Red Robin Gourmet Burgers, Inc.
|
|
10.36
|
Secured Promissory Note, dated April 25, 2002, executed by Michael E. Woods in favor of Red Robin Gourmet Burgers, Inc.
|
|
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.
|
|
|
Previously filed.
|
EXHIBIT 2.2
CLOSING AGREEMENT
AND AMENDMENT TO MERGER AGREEMENT
THIS CLOSING AGREEMENT AND AMENDMENT TO MERGER 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 Nevada corporation ("Sub"), The Snyder Group Company, a Delaware corporation (the "Company") and the stockholders of the Company (the "Stockholders"). Terms used herein and not otherwise defined shall have the meaning assigned to them in that certain Agreement and Plan of Merger, dated February 18, 2000, by and among Buyer, Red Robin Holding Co., Inc., a Nevada corporation and a wholly-owned subsidiary of Buyer, the Company, the Stockholders, Stephen S. Snyder and Louise Snyder (the "Merger Agreement").
WHEREAS, Buyer, the Company and the Stockholders are parties to the Merger Agreement; and
WHEREAS, certain conditions to the Closing of the transactions contemplated by the Merger Agreement have not been satisfied; and
WHEREAS, the parties hereto desire to amend the Merger Agreement, waive certain conditions to the Closing, and consummate the Closing on the terms and conditions set forth in this Agreement.
In consideration of the mutual promises contained herein and intending to be legally bound, the parties hereto agree as follows:
(a) Section 2.8(a) of the Merger Agreement is hereby amended and restated to read in its entirety as follows:
"(a)(i) 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:
(A) Subject to Section 2.8(c), a number of shares of Buyer Common Stock (rounded to the nearest whole share) determined by dividing 5,000,000 shares of Buyer Common Stock, 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
(B) At the election of each Stockholder, (1) an amount
in cash determined by dividing $10,000,000, 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 (2) an amount in Debentures determined
by dividing $10,000,000, 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)(i)(B) at least three (3) business days prior to the
Closing Date.
(ii) 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 of the 34,528 shares of Company Common Stock issued and outstanding and registered in the name of Michael Snyder immediately prior to the Effective Time shall, in addition to the consideration specified in subparagraph (a)(i) above, be converted into and represent the right to receive the following additional consideration:
(A) 13.90616 shares of Buyer Common Stock (equal to an aggregate of 480,152 shares), subject to Section 2.8(c) and subject to adjustment as set forth in Section 2.9; and
(B) $27.81224 principal amount in Debentures (equal to an aggregate of $960,301 principal amount of Debentures), subject to adjustment as set forth in Section 2.9.
(iii) For purposes of this Agreement:
(A) the consideration referenced in subparagraphs
(a)(i)(A) and (a)(ii)(A) of this Section 2.8 is collectively referred to
as the "Stock Merger Consideration;"
(B) the cash consideration referenced in clause (1) of subparagraph (a)(i)(B) of this Section 2.8 is referred to as the "Cash Merger Consideration;" and
(C) the Debentures to be issued pursuant to clause (2) of subparagraph (a)(i)(B) and pursuant to subparagraph (a)(ii)(B) of this Section 2.8 are collectively referred to as the "Debenture Merger Consideration."
(b) In lieu of the Cash Merger Consideration to be paid to the Stockholders electing Cash Merger Consideration pursuant to Section 2.8 of the Merger Agreement, the parties hereby agree that each such Stockholder shall receive at the Closing a promissory note in the form attached hereto as Exhibit B in the principal amount of the Cash Merger Consideration to which such Stockholder would otherwise be entitled pursuant to Section 2.8 of the Merger Agreement."
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of 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 |
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
By: /s/ James P. McCloskey -------------------------------------- James P. McCloskey Chief Financial Officer |
THE SNYDER GROUP COMPANY,
a Delaware corporation
THE STOCKHOLDERS
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the day and year first above written.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
THE SNYDER GROUP COMPANY,
a Delaware corporation
By: /s/ Stephen S. Snyder -------------------------------------- Stephen S. Snyder Secretary |
THE STOCKHOLDERS
/s/ Stephen S. Snyder ------------------------------------------ Stephen S. Snyder, individually and as the Trustee of the Stephen S. Snyder Intervivos Trust /s/ Louise A. Snyder ------------------------------------------ Louise A. Snyder, individually and as the Trustee of the Louise A. Snyder Intervivos Trust |
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the day and year first above written.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
RED ROBIN HOLDING CO., INC.,
a Nevada corporation
THE SNYDER GROUP COMPANY,
a Delaware corporation
THE STOCKHOLDERS
/s/ Michael J. Snyder ------------------------------------------ Michael J. Snyder |
/s/ Michael E. Woods --------------------------- Michael E. Woods /s/ Robert Merullo --------------------------- Robert Merullo |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
By: /s/ George D. Hansen C.O.O. --------------------------- George D. Hansen Chief Operating Officer /s/ George D. Hansen --------------------------- George D. Hansen /s/ Deborah Hansen --------------------------- Deborah Hansen |
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
/s/ Beverly C. Brown --------------------------- Beverly C. Brown |
Closing Agmt
SHAMROCK INVESTMENT COMPANY,
a Washington general partnership
/s/ L.V. Brown, Jr. --------------------------- L.V. Brown, Jr. |
GUARANTIES
As of the Closing Date, a release of the following guaranties and assurances of indebtedness and lease obligations of the Company has not been obtained:
COMPANY NOTES:
1. Michael Snyder and Stephen Snyder guaranty the Company's obligations due ORIX USA Corporation, a Delaware corporation, under that certain Promissory Note dated March __, 1996 in the principal sum of $500,000.00, the Loan Agreement and Security Agreement executed in conjunction with the Promissory Note by the Company (Arvada Restaurant).
2. Michael J. Snyder and Stephen S. Snyder guaranty the obligations of the Company due Captec Financial Group Funding Corporation under that certain Promissory Note dated May 23, 1996 in the principal amount of $1,550,000.00 and the Company's performance under the Leasehold Deed of Trust and Security Agreement executed in conjunction with the Promissory Note (Bowles Restaurant).
3. Michael J. Snyder and Stephen S. Snyder's have agreed to guaranty the obligations of the Company to General Electric Capital Business Asset Funding Corporation in the original principal amount of $700,000.00 pursuant to a letter agreement dated August 3, 1999 (Broadmoor Restaurant).
4. Promissory Note dated March 1, 1994 in the amount of $200,000.00 payable to Rhea Woltman and executed by The Snyder Group Company and Michael J. Snyder, as Co-Borrowers and the Loan Agreement by and between Rhea Woltman as Lender and Michael J. Snyder and Stephen S. Snyder as Borrowers dated March 1, 1994. (Chapel Hills Restaurant).
5. Installment Note and Security Agreement dated May 1, 1994 between Columbia Credit Company as Lender and The Snyder Group Company d/b/a Red Robin Burger and Spirits Emporium and Michael J. Snyder and Stephen S. Snyder as Co-Borrowers in the principal amount of $700,000.00. (Kennewick Restaurant).
6. Michael J. Snyder guarantees the obligations of the Company to U.S. Bank National Association under that certain Promissory Note dated March 17, 1999 in the principal amount of $25,000.00 between The Snyder Group Company, as Borrower, and U.S. Bank National Association, as Lender, and the performance of the Company under the Commercial Security Agreement (Lakewood Restaurant).
7. Michael J. Snyder and Stephen S. Snyder guaranty the Company's payment and performance under the Term Note dated November 22, 1996 in the principal amount of $876,698.94 between the Company as Debtor and Metlife Capital Corporation as Holder and the
Exhibit A-1
Company's performance under the Security Agreement No. One, as amended. (Highlands Ranch Restaurant).
8. Installment Note and Security Agreement dated December 13, 1995 in the principal amount of $125,000.00 between Columbia Credit Corporation as Lender and The Snyder Group Company d/b/a Red Robin Burger and Spirits Emporium and Michael J. Snyder as Co-Borrower.
9. Michael J. Snyder guarantees the Company's payment and performance of the Company's Promissory Note dated October 16, 1998 in the principal amount of $800,000.00 between the Company as Borrower and U.S. Bank National Association as Lender, as amended or modified and the Company's performance under any agreement evidencing or securing the repayment of said indebtedness including, without limitation:
(a) Business Loan Agreement dated October 16, 1998 in the principal amount of $800,000.00 between The Snyder Group Company as Borrower and U.S. Bank National Association as Lender, the performance of which is guaranteed by Michael J. Snyder.
(b) Change in Terms Agreement dated February 22, 2000 between Borrower, The Snyder Group Company, and Lender, U.S. Bank National Association. (unsigned as of this date).
10. Commercial Guaranty of Michael J. Snyder (undated) to U.S. Bank National Association pursuant to which Michael J. Snyder individually guarantees all of the obligations of the Company, whether now existing or hereafter arising, to U.S. Bank National Association.
11. Michael J. Snyder and Stephen S. Snyder guaranty the Company's payment and performance under that certain Promissory Note dated January 24, 1996 in the principal amount of $500,000.00 between the Company as Maker, and J.S.C. Holding Company, Inc. Pension Trust, as Holder.
12. Michael J. Snyder guarantees the payment and performance of all obligations of the Company under that certain Promissory Note dated December 1, 1998 between the Company as Borrower and U.S. Bank National Association as Lender which secures payment of the principal amount of $100,000.00 due by the Company to U.S. Bank National Association, as amended and modified, and the Company's performance under any agreement evidencing or securing the repayment of said indebtedness.
13. Michael J. Snyder and Stephen S. Snyder guaranty the Company's payment and performance of the indebtedness evidenced by that certain Term Note dated May 5, 1999 in the amount of $733,672.67 between the Company, as Debtor, and GE Capital BAF Corporation ("GE") formerly Metlife Capital Corporation, as Holder, referencing Schedule No. 2226796-002, as amended or modified, and the Company's performance under any agreement evidencing or securing the repayment of said indebtedness.
Exhibit A-2
REAL PROPERTY LEASES:
a. Single User Building Lease (footer dated 10/15/91) between The Snyder Group Company, as Tenant and A&B Properties, Inc., as Landlord, as amended.
b. The performance of The Snyder Group Company under the Lease is personally guaranteed by Michael J. Snyder and Stephen S. Snyder.
a. Standard Commercial Shopping Center Lease dated July 7, 1988 by Arvada Marketplace Associates, Ltd., as Landlord and Michael J. Snyder and Steven S. Snyder, as Tenant, as amended and modified, the interest of Tenant is now held by The Snyder Group Company.
b. Michael Snyder, Stephen Snyder and Snyder Investments, Inc. guaranty the performance of the Tenant under the Lease.
a. Lease Agreement dated May 11, 1987 between John F. Olive, as Lessor and Michael J. Snyder and Steven S. Snyder, as Lessee, as amended. The interest of Lessor is now held by AEI Net Lease Income and Growth Fund XX Limited Partnership and the interest of Lessee is held by The Snyder Group Company.
b. Stephen Snyder and Michael Snyder guaranty the performance of the Lessee under the Lease and are original Lessees thereunder.
c. Consent to Assignment of Lease and Guaranty and Amendment of Guaranty dated February 24, 1994 between Michael J. Snyder and Steve S. Snyder to AEI Net Lease Income & Growth Fund XX Limited Partnership.
a. Lease-Option Agreement dated October 5, 1983 between John F. Olive, as Lessor and Denver Restaurant Investments Co., as Lessee, as amended. The interest of Lessee under the Lease is now held by The Snyder Group Company and the interest of Lessor is now held by AEI Net Lease Income and Growth Fund XX Limited Partnership.
b. The performance of the Lessee under the Lease is guaranteed by Michael J. Snyder, Stephen Snyder and Snyder Investments, Inc., Keith Helms, and Shamrock Investment Company.
Exhibit A-3
c. Consent to Assignment of Lease and Guaranty and Amendment of Guaranty dated February 24, 1994 by Michael J. Snyder and Steve S. Snyder, as Guarantors.
a. Lease dated April 28, 1995 between Captec Acceptance Leasing Corporation, as Landlord and The Snyder Group Company, as Tenant, as amended by First Amendment to Lease dated May 10, 1995.
b. Michael J. Snyder and Nadine C. Snyder, Stephen S. Snyder and Louise Snyder guaranty the payment and performance of Lessee's obligations under the Lease.
a. Lease (undated) between The Price Company, as Landlord and The Snyder Group Company, as Tenant, as amended.
b. Pursuant to a Guarantee of Lease, Stephen Snyder guarantees the payment and performance by The Snyder Group Company of its obligations under the Lease.
c. Pursuant to a Guarantee of Lease, Michael J. Snyder guarantees the payment and performance by The Snyder Group Company of its obligations under the Lease.
a. Lease between Captec Net Lease Realty, Inc. and The Snyder Group Company dated December 13, 1995, as amended.
b. The Lease Agreement is guaranteed by Michael J. Snyder, Nadine C. Snyder, Stephen S. Snyder and Louise Snyder, jointly and severally.
a. Lease between Bonnyville Construction Company as Landlord and The Snyder Group Company as Tenant, dated November __, 1995 (footer dated 11/21/95), as amended.
b. The obligations of the Tenant under the Lease are guaranteed by Michael Snyder and Stephen Snyder pursuant to a Guaranty of Lease in favor of Bonnyville Construction Company.
Exhibit A-4
a. Ground Lease dated the 14th day of February 1997, between Park Meadows Malls, Ltd., a Colorado limited partnership, as Landlord, and The Snyder Group Company, a Delaware corporation, as Tenant, as amended.
a. Office Building Lease, The Terrace Building at DTC Bay, 511 Corporation, as Landlord, and The Snyder Group Company, a Delaware corporation, d/b/a Red Robin Restaurants, as Tenants, as amended.
EQUIPMENT LEASES:
a. Stephen S. Snyder personally guarantees the payment and performance of the Company under the Lease Agreement No. 06092 between the Company as Lessee and Captec Financial Group, Inc., as Lessor, which Guaranty is dated May 17, 1996.
b. Michael J. Snyder personally guarantees the payment and performance of the Company under the Lease Agreement No. 06092 between the Company as Lessee and Captec Financial Group, Inc., as Lessor, which Guaranty is dated May 17, 1996.
a. Stephen S. Snyder personally guarantees the payment and performance of the Company under the Lease Agreement No. 05827 between the Company as Lessee and Captec Financial Group, Inc., as Lessor, which Guaranty is dated April 27, 1995.
b. Michael J. Snyder personally guarantees the payment and performance of the Company under the Lease Agreement No. 05827 between the Company as Lessee and Captec Financial Group, Inc., as Lessor, which Guaranty is dated April 27, 1995.
3. Guarantee dated November 28, 1995 pursuant to which Michael J. Snyder guarantees the payment of all obligations of the Company due Northwest Equipment Finance, Inc., as now existing or arising in the future.
4. Guarantee dated November 28, 1995 pursuant to which Stephen S. Snyder guarantees the payment of all obligations of the Company due Northwest Equipment Finance, Inc., as now existing or arising in the future.
5. Steve Snyder personally guarantees a motor vehicle lease dated February 12, 1999 between The Company, as Lessee, and Ralph Schomp, BMV, Lessor.
Exhibit A-5
FORM OF PROMISSORY NOTE
Exhibit B-1
PROMISSORY NOTE
$_______________ Englewood Colorado May __, 2000
FOR VALUE RECEIVED, Red Robin International, Inc., a Nevada corporation ("Borrower"), promises to pay to _______________________ ("Holder"), at such place as may be designated in writing by Holder, the principal amount of ______________________ ($_____________), in lawful monies of the United States, with interest on the unpaid principal amount at the rate of 10% per annum (the "Note").
The unpaid principal balance of this Note, together with all unpaid accrued interest thereon and any other sums payable by Borrower hereunder, shall be due and payable upon the earlier of (i) November __, 2001; or (ii) such date as Borrower shall have closed and received the proceeds from a bank or other credit facility in an amount not less than $50 million.
Interest on the unpaid principal balance under this Note shall be paid
in arrears on the first business day of each month beginning on June 1, 2000 and
continuing monthly thereafter, until maturity, on which date the principal, and
unpaid interest and all other sums due under this Note shall be paid in full.
Interest on this Note shall be computed on this basis of a three hundred sixty
(360) day year and the actual number of days elapsed in the period for which
interest is payable.
Borrower represents and warrants that this Note issued for commercial, investment and business purposes, and not for personal, family or household purposes. Notwithstanding any other provision of this Note, interest and charges payable by reason of the indebtedness evidenced by this Note, shall not exceed the maximum would otherwise be payable, then such excess sums shall be construed as having been immediately applied by Holder to the principal balance of this Note when received. If at the time any such sum is received by Holder, the principal balance of this Note has been paid in full, such sum shall be promptly refunded by Holder to Borrower, less any sums due to Holder.
Borrower may prepay this Note in whole or in part without penalty at any time together with interest due up to date of payment.
Borrower shall be in default of this Note if any payment of principal or interest is not made within 10 days of the date when due hereunder. After maturity, or after default, interest shall accrue on any unpaid installment of principal or interest, as the case may be, at an annual rate equal to five percentage points (5%) above the interest rate stated on this Note, until paid in full.
This Note shall be binding on Borrower, its representatives and successors and shall inure to the benefit of and shall be enforceable by Holder, its successors and assigns. This Note may not be changed, modified, amended, or terminated orally, but the foregoing may be
done in writing by authorized representatives of the parties. If Holder shall institute legal action to enforce payment hereof, Borrower agrees, in addition to any other payments required hereunder, to pay all reasonable expenses of collection, including attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of the State of Colorado.
IN WITNESS THEREOF, Borrower has caused this Note to be executed and delivered as of the date first above written.
RED ROBIN INTERNATIONAL, INC.,
a Nevada corporation
EXHIBIT 4.1
SPECIMEN OF COMMON STOCK CERTIFICATE
[LOGO OF RED ROBIN]
RED ROBIN GOURMET BURGERS, INC.
COMMON STOCK COMMON STOCK NUMBER SHARES RR INCORPORATED UNDER THE LAWS SEE REVERSE FOR CERTAIN OF THE STATE OF DELAWARE DEFINITIONS CUSIP 75689M 10 1 |
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
PAR VALUE $0.001 PER SHARE, OF
RED ROBIN GOURMET BURGERS, INC.
(hereinafter called the "Company") transferable on the books of the Company by said owner hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Certificate of Incorporation and all amendments thereto, copies of which are on file at the office of the Transfer Agent, all of which the holder of this certificate by acceptance hereof assents. This certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated: /s/ JAMES P. MCCLOSKEY [CORPORATE SEAL] /s/ MICHAEL J. SNYDER ----------------------- --------------------------- Chief Financial Officer Chairman, CEO and President & Secretary |
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
Transfer Agent and Registrar
By_____________________________________
Authorized Officer
RED ROBIN GOURMET BURGERS, INC.
A statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights as established, from time to time, by the Certificate of Incorporation of the Corporation and by any certificate of determination, the number of shares constituting each class and series, and the designations thereof, may be obtained by the holder hereof upon request and without charge at the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM ---as tenants in common UNIF GIFT MIN ACT --................Custodian................... (Cust) (Minor) TEN ENT ---as tenants by the entireties under Uniform Gifts to Minors JT TEN ---as joint tenants with right Act...................................... of survivorship and not as (State) tenants in common UNIF TRF MIN ACT --................Custodian (until age.......) (Cust) ....................under Uniform Transfers (Minor) to Minors Act............................... (State) |
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED_________________________hereby sell, assign and transfer unto
__________________________________________________________________________Shares of the common stock represented by the within Certificate and do hereby irrevocably constitute and appoint
________________________________________________________________________Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.
Dated_______________________________________
X___________________________________________________________
X___________________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE GUARANTEED:___________________________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
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 |
FORM OF STOCK OPTION AGREEMENT - TIME VESTED
2000 Management Performance Common Stock Option Plan
[Insert Date]
[Insert Name]
[Insert Address]
Dear ______________________:
Red Robin Gourmet Burgers, Inc. (the "Company") has designated you to be a recipient of an option (the "Option") to purchase shares of Common Stock, $.001 par value, of the Company on the terms set forth in this letter and in the Company's 2000 Management Performance Common Stock Option Plan (the "Plan").
The Option is awarded pursuant to the Plan, which was effective on May 11, 2000. The Plan is administered by the Committee.
Please refer to the Plan for certain conditions not set forth in this letter. All provisions of this Option are subject to the terms of the Plan, and the terms of the Plan are hereby incorporated into this letter by this reference. Capitalized terms which are not defined herein shall have the meanings given those terms in the Plan.
(1) The Option will become exercisable when the vesting provisions described below are met.
(2) The Option will become vested, without duplication, as to [insert 50% of the total number granted] Common Shares on [insert date], and will become vested as to the remaining [insert 50% of the total number granted] Common Shares on [insert date]; provided, that you must continue to be an employee of the Company at all times through the appropriate vesting date in order for the Option to become vested.
[insert name]
[insert date]
(3) Subject to the limitations set forth in this letter and in the Plan,
after the Option becomes vested, you may exercise the vested portion of the
Option, in whole or in part, at any time until: the earlier of (i) the effective
time of termination of your employment with the Company for "Cause" (as defined
below) or by you for any reason; (ii) the later of (x) ninety (90) days after
termination of your employment with the Company by the Company other than for
Cause (and other than by reason of death, Disability or retirement at, or after,
age 65) and (y) thirty (30) days following the occurrence of a Liquidity Event
(provided, that if you are subject to a "lock-up agreement" pursuant to such
Liquidity Event, thirty (30) days following the expiration of such agreement);
(iii) a Company Transfer; or (iv) [ten (10) years from grant].
(4) You may exercise all or any portion of the Option by giving written notice of the exercise to the Company, stating the number of Common Shares that you are purchasing and transmitting cash or check (subject to collection) in the amount of the full purchase price. Attached is a Notice of Exercise form to be used to give the Company written notice of the exercise of your Option.
(5) This Option is not transferable by you except by will or by the laws of descent and distribution or to a Related Transferee, and the Option may be exercised during your lifetime only by you or your Related Transferees to whom the Option has been transferred. All agreements made by you in this letter shall be binding on your heirs and descendants.
(6) For purposes of this letter and the Plan, "Cause" shall mean with
respect to the termination by the Company of an employee of the Company or a
Subsidiary of the Company: (i) continual deliberate neglect by the employee in
the performance of his material duties; (ii) failure by the employee to devote
substantially all of his working time to the business of the Company and its
Subsidiaries; (iii) the employee'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 employee's willful failure to
follow the lawful directives of the Board or Chief Executive Officer 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 employee's breach of the provisions of any
non-competition, non-interference, non-disclosure, confidentiality or other
similar agreement executed by the employee 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 employee'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 employee 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.
[insert name]
[insert date]
(1) As provided in the Plan, appropriate adjustments shall be made in the number and kind of Common Shares for which the Option may be exercised and the Option price should there be a change in the capital structure of the Company, and the Board shall take appropriate actions in good faith with respect to the Option in the event of a significant corporate transaction.
(2) By signing this letter, you agree to make arrangements satisfactory to the Company to comply with any income and payroll tax withholding requirements that may apply upon the exercise of the Option.
(3) By signing this letter, you agree to hold all of the Common Shares acquired pursuant to the exercise of the Option for investment purposes and not with a view to resale or distribution to the public, unless and until such time as the Common Shares so acquired shall have been registered under applicable state and federal securities laws or an exemption from such registration is available. By signing this letter, you hereby agree to execute such documents as the Company may require with respect to applicable state and federal securities laws, and you agree to any restrictions on the resale of the Common Shares that may pertain.
(4) By signing this letter, neither you nor any other person shall become the beneficial owner of the Common Shares subject to the Option, nor have any rights to distributions or other rights as a shareholder with respect to any such Common Shares, until you have exercised the Option in accordance with the provisions hereof and of the Plan.
[insert name]
[insert date]
and will perform such duties as may be assigned to you from time to time by the Board or by the executive officers of the Company; provided that the provisions of this sentence shall not be interpreted as affecting any right that the Company may have to terminate your employment at any time.
This Agreement shall be governed by the laws of the State of Colorado.
[Remainder of page intentionally left blank]
If you agree to the foregoing terms and conditions, please execute the attached copy of this letter and return it to the President of the Company.
Sincerely,
RED ROBIN GOURMET BURGERS, INC.
I hereby accept the foregoing Option according to the terms set forth in this letter and in the Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan.
Stock Option Grant S-1
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
Pursuant to the terms of the stock option agreement, dated ____ __, 2000, between Red Robin Gourmet Burgers, Inc. and the undersigned optionee, the optionee hereby exercises the option to purchase ______________ Common Shares. The optionee hereby delivers the full option price with respect to the exercised option, which is comprised of cash in the amount of $__________.
Executed this ____day of _________, 200_.
OPTIONEE
Red Robin Gourmet Burgers, Inc. hereby acknowledges receipt of the foregoing notice of exercise and payment of the option price this ___ day of________________, 200__.
Red Robin Gourmet Burgers, Inc.
FORM OF STOCK OPTION AGREEMENT - PERFORMANCE VESTED
2000 Management Performance Common Stock Option Plan
[Insert Date]
[Insert Name]
[Insert Address]
Dear ___________________:
Red Robin International, Inc. (the "Company") has designated you to be a recipient of an option (the "Option") to purchase shares of Common Stock, $.001 par value, of the Company on the terms set forth in this letter and in the Company's 2000 Management Performance Common Stock Option Plan (the "Plan").
The Option is awarded pursuant to the Plan, which was effective on May 11, 2000. The Plan is administered by the Committee.
Please refer to the Plan for certain conditions not set forth in this letter. All provisions of this Option are subject to the terms of the Plan, and the terms of the Plan are hereby incorporated into this letter by this reference. Capitalized terms which are not defined herein shall have the meanings given those terms in the Plan.
(1) The Option will become exercisable when the vesting provisions
described below are met; provided, that except as provided in subparagraph
(2)(e) below, you must continue to be an employee of the Company at all times
through the appropriate vesting date in order for the Option to become vested.
(2) The Option will become vested, without duplication, as to the number of Common Shares indicated below, if and when the following conditions are satisfied:
[Insert Name]
[Insert Date]
vested or expired, will, as of the last day of the fiscal year of the Company in which such event occurs or such earlier date within such fiscal year as the Board shall determine, become vested as to such number of Common Shares determined by multiplying [insert 20% of options granted] Common Shares by a fraction, the numerator of which is the lesser of (A) the amount by which EBITDA for such period exceeds $114,994,000 and (B) $9,999,000, and the denominator of which is $9,999,000.
(ii) In the event cumulative EBITDA from January 1, 2000 through the end of any fiscal year ending on or before December 31, 2003 equals at least $124,993,000 but is less than $132,493,000, the Option, to the extent not theretofore vested or expired, will, as of the last day of the fiscal year of Holdings in which such event occurs or such earlier date within such fiscal year as the Board shall determine, become vested as to [insert 20% of options granted] Common Shares plus such additional number of Common Shares, if any, determined by multiplying [insert 30% of options granted] Common Shares by the fraction, the numerator of which is the lesser of (A) the amount by which EBITDA for such period exceeds $124,993,000 and (B) $7,500,000, and the denominator of which is $7,500,000.
(iii) In the event cumulative EBITDA from January 1, 2000 through the end of any fiscal year ending on or before December 31, 2003 equals at least $132,493,000 but is less than $139,993,000, the Option, to the extent not theretofore vested or expired, will, as of the last day of the fiscal year of Holdings in which such event occurs or such earlier date within such fiscal year as the Board shall determine, become vested as to [insert 50% of options granted] Common Shares plus such additional number of Common Shares, if any, determined by multiplying [insert 50% of options granted] Common Shares by the fraction, the numerator of which is the lesser of (A) the amount by which EBITDA for such period exceeds $132,493,000 and (B) $7,500,000, and the denominator of which is $7,500,000.
(iv) In the event cumulative EBITDA from January 1, 2000 through the end of any fiscal year ending on or before December 31, 2003 equals at least $139,993,000, the Option, to the extent not theretofore vested or expired, will, as of the last day of the fiscal year of Holdings in which such event occurs or such earlier date within such fiscal year as the Board shall determine, become vested as to [insert number of options granted] Common Shares.
(v) The determination of EBITDA shall be made in accordance with generally accepted accounting principles in effect in the United States ("GAAP") and shall exclude net gains on the disposal of assets and other non-operating income items, but shall include net losses on the disposal of assets (other than with respect to the restaurants identified in Schedule I hereto) and other non-operating expense items; provided that reported EBITDA shall be adjusted by excluding therefrom (x) the amount of the non-cash charges to earnings required under GAAP, if any, for the accretion of the value of the options issued pursuant to the Plan that were deducted in calculating EBITDA for such period and (y) management fees paid to Quad-C Management, Inc. that were deducted in calculating EBITDA for each period, and subtracting therefrom an annual
[Insert Name]
[Insert Date]
(ii) In the event that on or after December 31, 2001, and on or before December 31, 2006, as a result of a Liquidity Event, the IRR realized by Investors over
[Insert Name]
[Insert Date]
the term of the investment through the date of closing of such Liquidity
Event, and after giving effect to the dilution that would be caused by the
exercise of all Options vested (either theretofore or by operation of the
provisions of this paragraph (b)) under the Plan and, in the event of an
Initial Public Offering, valuing the Common Shares held by Investors
immediately before the Initial Public Offering at the Initial Public
Offering price, is at least: (A) if the applicable Liquidity Event occurs
prior to December 31, 2002, 45%, but is less than 55%; (B) if the
applicable Liquidity Event occurs on or after December 31, 2002, but prior
to December 31, 2003, 45% but is less than 50%; (C) if the applicable
Liquidity Event occurs on or after December 31, 2003, but prior to December
31, 2004, 37% but is less than 40%; or (D) if the applicable Liquidity
Event occurs on or after December 31, 2004, 32% but is less than 35%; then
the Option, to the extent not theretofore vested or expired, will, as of
the date of closing of such Liquidity Event, become vested as to [insert
20% of options granted] Common Shares plus such additional number of Common
Shares, if any, determined by multiplying [insert 30% of options granted]
by a fraction, the numerator of which is the amount by which the IRR for
such periods exceeds 45%, 45%, 37% or 32%, as applicable (depending upon,
as set forth in clauses (A), (B), (C) or (D) of this subparagraph (b)(ii),
in which year the Liquidity Event occurs), and the denominator of which is:
(w) 10%, if the Liquidity Event occurred prior to December 31, 2002; (x) 5,
if the Liquidity Event occurred on or after December 31, 2002 but prior to
December 31, 2003; (y) 3%, if the Liquidity Event occurred on or after
December 31, 2003, but prior to December 31, 2004; or (z) 3%, if the
Liquidity Event occurred on or after December 31, 2004.
(iii) In the event that on or after December 31, 2001, and on or
before December 31, 2006, as a result of a Liquidity Event, the IRR
realized by Investors over the term of the investment through the date of
closing of such Liquidity Event, and after giving effect to the dilution
that would be caused by the exercise of all Options vested (either
theretofore or by operation of the provisions of this paragraph (b)) under
the Plan and, in the event of an Initial Public Offering, valuing the
Common Shares held by Investors immediately before the Initial Public
Offering at the Initial Public Offering price, is at least: (A) if the
applicable Liquidity Event occurs prior to December 31, 2002, 55%, but is
less than 65%; (B) if the applicable Liquidity Event occurs on or after
December 31, 2002, but prior to December 31, 2003, 50% but is less than
55%; (C) if the applicable Liquidity Event occurs on or after December 31,
2003, but prior to December 31, 2004, 40% but is less than 45%; or (D) if
the applicable Liquidity Event occurs on or after December 31, 2004, 35%
but is less than 40%; then the Option, to the extent not theretofore vested
or expired, will, as of the date of closing of such Liquidity Event, become
vested as to [insert 50% of options granted] Common Shares plus such
additional number of Common Shares, if any, determined by multiplying
[insert 50% of options granted] by a fraction, the numerator of which is
the amount by which the IRR for such periods exceeds 55%, 50%, 40% or 35%,
as applicable (depending upon, as set forth in clauses (A), (B), (C) or (D)
of this subparagraph (b)(ii), in which year the Liquidity Event occurs),
and the denominator of which is: (w) 10%, if the Liquidity Event occurred
prior to December 31, 2002; (x) 5, if the Liquidity Event occurred on or
after December 31, 2002 but prior to December 31, 2003; (y) 5%, if the
Liquidity Event
[Insert Name]
[Insert Date]
occurred on or after December 31, 2003, but prior to December 31, 2004; or
(z) 5%, if the Liquidity Event occurred on or after December 31, 2004.
(iv) In the event that on or after December 31, 2001, and on or before December 31, 2006, as a result of a Liquidity Event, the IRR realized by Investors over the term of the investment through the date of closing of such Liquidity Event, and after giving effect to the dilution that would be caused by the exercise of all Options vested (either theretofore or by operation of the provisions of this paragraph (b)) under the Plan and, in the event of an Initial Public Offering, valuing the Common Shares held by Investors immediately before the Initial Public Offering at the Initial Public Offering price, is at least: (A) if the applicable Liquidity Event occurs prior to December 31, 2002, 65%; (B) if the applicable Liquidity Event occurs on or after December 31, 2002, but prior to December 31, 2003, 55%; (C) if the applicable Liquidity Event occurs on or after December 31, 2003, but prior to December 31, 2004, 45%; or (D) if the applicable Liquidity Event occurs on or after December 31, 2004, 40%; then the Option, to the extent not theretofore vested or expired, will, as of the date of closing of such Liquidity Event, become vested as to [insert number of options granted] Common Shares.
(v) In the event that Options become vested under paragraph (b) of this Section B(2) as the result of an Initial Public Offering, such vesting will be deemed conditional pending the continuation of your employment with the Company until the earlier of (A) two years after the date of such Initial Public Offering and (B) December 31, 2004.
(c) The Board shall have complete discretion to determine whether the provisions of paragraphs (a), (b) or (c) of this Section B(2) have been satisfied.
(d) If your employment with the Company is terminated for any reason other than death or Disability, including by reason of retirement, voluntary termination or involuntary termination by the Company with or without "Cause" (as defined below), prior to December 31, 2008, the unvested portion of the Option will expire as of the date of such termination of employment. If your employment with the Company and its subsidiaries is terminated by reason of your death or Disability after December 31, 2006
[Insert Name]
[Insert Date]
and prior to December 31, 2008, the unvested portion of the Option will expire. If your employment with the Company and its subsidiaries is terminated by reason of your death or Disability on or prior to December 31, 2006, a percentage of the Option will be deemed to have "conditionally
vested" depending on the date of termination of your employment as follows:
Percentage of Option Termination of Employment Conditionally Vested ------------------------- -------------------- Prior to December 31, 2001 0% On or after December 31, 2001 and before December 31, 2002 25% On or after December 31, 2002 and before December 31, 2003 50% On or after December 31, 2003 and before December 31, 2004 75% On or after December 31, 2004 100% |
The remaining portion of the Option will expire as of the date of termination of employment. Final vesting of the "conditionally vested" Option will be dependent upon satisfaction of the applicable provisions of paragraph (a), (b) or (c) of this Section B(2), so that the applicable portion of the "conditionally vested" Option may not be exercised unless the provisions of paragraph (a), (b) or (c), as the case may be, of this Section B(2) are satisfied, and if such conditions are not satisfied the "conditionally vested" Option will expire on December 31, 2006. Such "conditionally vested" Option will not be subject to the first proviso in the first sentence of Section B(1).
(e) On April 15, 2007, provided that you are an employee of the Company or its subsidiaries on such date, to the extent not theretofore vested or expired, the Option will vest.
(3) Subject to the limitations set forth in this letter and in the Plan, after the Option becomes vested, you may exercise the vested portion of the Option, in whole or in part, at any time until: the earlier of (i) the effective time of termination of your employment with the Company for "Cause" (as defined below) or by you for any reason; (ii) the later of (x) one year after termination of your employment with the Company by the Company other than for Cause (and other than by reason of death, Disability or retirement at, or after, age 65) and (y) 30 days following the occurrence of a Liquidity Event (provided, that if you are subject to a "lock-up agreement" pursuant to such Liquidity Event, 30 days following the expiration of such agreement); (iii) a Company Transfer; or (iv) December 31, 2009.
(4) You may exercise all or any portion of the Option by giving written notice of the exercise to the Company, stating the number of Common Shares that you are purchasing and transmitting cash or check (subject to collection) in the amount of the full purchase price. Attached is a Notice of Exercise form to be used to give the Company written notice of the exercise of your Option.
(5) This Option is not transferable by you except by will or by the laws of descent and distribution or to a Related Transferee, and the Option may be exercised during your
[Insert Name]
[Insert Date]
lifetime only by you or your Related Transferees to whom the Option has been transferred. All agreements made by you in this letter shall be binding on your heirs and descendants.
(6) For purposes of this letter and the Plan, "Cause" shall mean with
respect to the termination by the Company of an employee of the Company or a
Subsidiary of the Company: (i) continual deliberate neglect by the employee in
the performance of his material duties; (ii) failure by the employee to devote
substantially all of his working time to the business of the Company and its
Subsidiaries; (iii) the employee'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 employee's willful failure to
follow the lawful directives of the Board or Chief Executive Officer 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 employee's breach of the provisions of any
non-competition, non-interference, non-disclosure, confidentiality or other
similar agreement executed by the employee 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 employee'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 employee 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.
(1) As provided in the Plan, appropriate adjustments shall be made in the number and kind of Common Shares for which the Option may be exercised and the Option price should there be a change in the capital structure of the Company, and the Board shall take appropriate actions in good faith with respect to the Option in the event of a significant corporate transaction.
(2) By signing this letter, you agree to make arrangements satisfactory to the Company to comply with any income and payroll tax withholding requirements that may apply upon the exercise of the Option.
(3) By signing this letter, you agree to hold all of the Common Shares acquired pursuant to the exercise of the Option for investment purposes and not with a view to resale or distribution to the public, unless and until such time as the Common Shares so acquired shall have been registered under applicable state and federal securities laws or an exemption from such registration is available. By signing this letter, you hereby agree to execute such documents as the Company may require with respect to applicable state and federal securities laws, and you agree to any restrictions on the resale of the Common Shares that may pertain.
[Insert Name]
[Insert Date]
(4) By signing this letter, neither you nor any other person shall become the beneficial owner of the Common Shares subject to the Option, nor have any rights to distributions or other rights as a shareholder with respect to any such Common Shares, until you have exercised the Option in accordance with the provisions hereof and of the Plan.
This Agreement shall be governed by the laws of the State of Colorado.
[Remainder of page intentionally left blank]
FORM OF STOCK OPTION AGREEMENT - PERFORMANCE VESTED
2000 Management Performance Common Stock Option Plan
If you agree to the foregoing terms and conditions, please execute the attached copy of this letter and return it to the President of the Company.
Sincerely,
RED ROBIN INTERNATIONAL, INC.
I hereby accept the foregoing Option according to the terms set forth in this letter and in the Red Robin International, Inc. 2000 Management Performance Common Stock Option Plan.
Stock Option Grant S-1
RED ROBIN INTERNATIONAL, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
Pursuant to the terms of the stock option agreement, dated ____ __, 2000, between Red Robin International, Inc. and the undersigned optionee, the optionee hereby exercises the option to purchase ______________ Common Shares. The optionee hereby delivers the full option price with respect to the exercised option, which is comprised of cash in the amount of $__________.
Executed this ____day of _________, 200_.
OPTIONEE
Red Robin International, Inc. hereby acknowledges receipt of the foregoing notice of exercise and payment of the option price this ___ day of 200__.
Red Robin International, Inc.
Schedule I
115 N. Nellis Boulevard
Las Vegas, Nevada
294 N. El Camino Real
Encinitas, California
12697 Beach Boulevard
Stanton, Virginia
12865 El Camino Real
San Diego, California
EXHIBIT 10.6
STOCK SUBSCRIPTION AGREEMENT
AMONG
RED ROBIN INTERNATIONAL, INC.,
RR INVESTORS, LLC
AND
RR INVESTORS II, LLC
Dated as of February 18, 2000
TABLE OF CONTENTS
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Organization; Qualification................................................................. 36 4.2 Authority Relative to this Agreement........................................................ 36 4.3 Consents and Approvals...................................................................... 36 4.4 Non-Contravention........................................................................... 37 4.5 Litigation.................................................................................. 37 4.6 Investment Representations.................................................................. 37 4.7 Brokers..................................................................................... 38 ARTICLE V ADDITIONAL AGREEMENTS 5.1 Conduct of Business......................................................................... 38 5.2 Forbearances................................................................................ 39 5.3 Negotiations with Others.................................................................... 39 5.4 Investigation of Business and Properties.................................................... 39 5.5 Confidentiality............................................................................. 40 5.6 No Disclosure; Public Announcements......................................................... 40 5.7 Expenses.................................................................................... 40 5.8 Interim Financial Statements................................................................ 41 5.9 Efforts to Consummate....................................................................... 41 5.10 Environmental Investigation................................................................. 42 5.11 Further Assurances.......................................................................... 42 5.12 HSR Act..................................................................................... 42 ARTICLE VI CONDITIONS TO OBLIGATIONS OF BUYER 6.1 Representations and Warranties.............................................................. 42 6.2 Performance of this Agreement............................................................... 42 6.3 Consents and Approvals...................................................................... 43 6.4 Injunction, Litigation, etc................................................................. 43 6.5 Legislation................................................................................. 43 6.6 Proceedings................................................................................. 43 6.7 Opinion of Counsel.......................................................................... 43 6.8 Closing Deliveries.......................................................................... 43 6.9 Material Change............................................................................. 44 6.10 Capitalization.............................................................................. 44 6.11 SGC Acquisition............................................................................. 44 6.12 Financing................................................................................... 45 6.13 Shareholders Agreement; Registration Rights Agreement....................................... 45 6.14 Board of Directors.......................................................................... 45 6.15 Consulting Services Agreement............................................................... 45 6.16 Lender Releases............................................................................. 45 6.17 Employment and Non-competition Agreements................................................... 45 6.18 Payment or Reimbursement of Expenses........................................................ 45 6.19 Conversion of Hibari Debt................................................................... 45 |
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE COMPANY 7.1 Representations and Warranties.............................................................. 46 7.2 Performance of this Agreement............................................................... 46 7.3 Consents and Approvals...................................................................... 46 7.4 Injunction, Litigation, etc................................................................. 46 7.5 Legislation................................................................................. 46 7.6 Proceedings; Certificates................................................................... 46 7.7 Opinion of Counsel.......................................................................... 46 7.8 Closing Deliveries.......................................................................... 47 7.9 Partial Repayment of Company Debt........................................................... 47 7.10 Conversion of Hibari Debt................................................................... 47 7.11 Purchase Price.............................................................................. 47 ARTICLE VIII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 8.1 Survival of Representations................................................................. 47 8.2 Indemnification by the Company.............................................................. 48 8.3 Indemnification by Buyer.................................................................... 49 8.4 Notice and Defense of Claims................................................................ 49 8.5 Limitations on Indemnification.............................................................. 51 8.6 Calculation of Covered Liabilities ......................................................... 52 8.7 Exclusive Remedy............................................................................ 52 ARTICLE IX TERMINATION 9.1 Termination................................................................................. 53 9.2 Procedure: Effect of Termination............................................................ 53 ARTICLE X GENERAL PROVISIONS 10.1 Notices..................................................................................... 53 10.2 Interpretation.............................................................................. 55 10.3 Entire Agreement............................................................................ 55 10.4 No Third Party Beneficiaries................................................................ 55 10.5 Successors and Assigns...................................................................... 55 10.6 Severability................................................................................ 55 10.7 Amendment................................................................................... 56 10.8 Extension; Waiver........................................................................... 56 10.9 Disclosure Schedules........................................................................ 56 10.10 Counterparts................................................................................ 56 10.11 Jurisdiction; Waiver of Jury Trial.......................................................... 56 10.12 Governing Law............................................................................... 57 |
EXHIBITS A Forecast B Form of Opinion of Counsel for the Company C Form of Shareholders Agreement D Form of Registration Rights Agreement E Form of Consulting Services Agreement F 2000 Management Performance Common Stock Option Plan (Term Sheet) G Form of Employment Agreement H Form of Non-Interference, Non-Disclosure and Non-Competition Agreement I Form of Opinion of Counsel for Buyer SCHEDULES 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 Compliance with Laws 3.10 Absence of Changes 3.11 Undisclosed Liabilities 3.12 Litigation 3.13 Real Property 3.14 Personal Property 3.15 Franchise Operations 3.18 Intellectual Property 3.19 Contracts 3.20 Insurance 3.21 Labor Matters 3.22 Employee Plans 3.23 Tax Matters 3.24 Transactions with Certain Persons 3.25 Suppliers 3.26 Banking Relationships 4.3 Consents and Approvals 5.2 Forbearances 6.10 Options 7.9 Company Debt to be Retired 10.2(a) The Company's' Executive Officers 10.2(b) Buyer's Executive Officers |
STOCK SUBSCRIPTION AGREEMENT
THIS STOCK SUBSCRIPTION AGREEMENT (the "Agreement") dated as of February 18, 2000, is made among RED ROBIN INTERNATIONAL, INC., a Nevada corporation (the "Company") and RR INVESTORS, LLC, a Virginia limited liability company ("Investors"), and RR INVESTORS II, LLC, a Virginia limited liability company ("Investors II", and individually, or collectively with Investors, as the context indicates, "Buyer").
RECITALS
The Company desires to issue and sell to Buyer and Buyer desires to subscribe for and purchase, 12,500,000 newly issued shares (the "Shares") of common stock, $0.001 par value (the "Company Common Stock"), on and subject to the terms and conditions set forth herein.
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.
"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 or its Subsidiary's 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 its Subsidiaries or in which the Company or its Subsidiaries have any interest whatsoever.
"Audited Financial Statements" has 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, 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) 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, leased employee, 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's 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.
"Business" means the operation and franchising of the "Red Robin" casual restaurant dining business conducted by the Company and its Subsidiaries.
"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.
"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.
"Claim Notice" has the meaning set forth in Section 8.4(a).
"Closing" has the meaning set forth in Section 2.3.
"Closing Date" has the meaning set forth in Section 2.3.
"Company" means Red Robin International, Inc., a Nevada corporation.
"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.
"Controlled Group Liability" means any and all liabilities under (i)
at the date of the Claim Notice with respect to an indemnity claim other than
facts and circumstances arising out of or relating to the subject matter of such
Claim Notice and (ii) subtracting from the value determined pursuant to clause
(i) the diminution in value resulting from the subject matter of such Claim
Notice as of the date of Final Determination thereof.
"Decrees" has the meaning set forth in Section 3.8.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
"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.
"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 8.4(e).
"Financial Statements" means the Audited Financial Statements and/or the Interim Financial Statements as the context requires.
"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.
"Forecast" means the financial forecast delivered by the Company to Buyer a copy of which is attached hereto as Exhibit A.
"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.
"Hazardous Emissions" has the meaning set forth in Section 3.6.
"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 8.4.
"indemnifying party" has the meaning set forth in Section 8.4.
"Intellectual Property" means all trade names (including the trade name "Red Robin International, Inc."), trademarks and service marks (including the service mark "America's Gourmet Burgers & Spirits"), 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).
"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 (i) 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 or
(ii) 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
Effect" or "Material Adverse Change" with respect to such Person.
"Material Contracts" has the meaning set forth in Section 3.19.
"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.
"PBGC" means the Pension Benefit Guaranty Corporation.
"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 material liability (including, without limitation, any contingent liability) and (ii) covers any employee or former employee, leased employee, 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 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(c)(i).
"Personnel" of a corporation means all directors, officers and employees of such corporation and its Subsidiaries.
"Purchase Price" has the meaning set forth in Section 2.2.
"Real Property" means real property, together with the structures, fixtures and other improvements thereon and the appurtenances, rights and easements thereto.
"SGC" means The Snyder Group Company, a Delaware corporation.
"SGC Acquisition" means the acquisition of the assets or capital stock of SGC.
"Shares" has the meaning set forth in the Recitals.
"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 8.1.
"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 Law" means the Internal Revenue Code, federal, state or local laws relating to Taxes and any regulations or official administrative pronouncements released thereunder.
"Tax Loss" means the tax effect of any item (including any decrease in tax basis of Assets of the Company or 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, 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 Tax.
"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, leased employee, consultant or independent contractor of the Company, any Subsidiary or any ERISA Affiliate (with respect to their relationship with any such entity).
ARTICLE II
ISSUANCE AND SALE OF SHARES
2.1 Issuance and Sale of Shares Upon the terms and subject to the satisfaction or waiver, if permissible, of the conditions hereof, at the Closing the Company shall issue and sell to Investors and Investors II, as the case may be, and Investors and Investors, II shall purchase from the Company, 12,019,231 Shares and 480,769 Shares, respectively, free and clear of all Encumbrances, except for any such Encumbrances which may be created by Buyer. The Company agrees that it will authorize the issuance and sale of the Shares and that upon consummation of the transactions contemplated hereby, the Shares will be validly issued, fully paid and non-assessable.
2.2 Purchase Price The consideration to be paid for the Shares shall be $25,000,000.00 (the "Purchase Price").
2.3 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 March 31, 2000, or such other date as may be agreed upon by
the parties (the "Closing Date"). If the Closing takes place, the Closing and
all of the transactions contemplated by this Agreement shall be deemed to have
occurred as of the close of business on the day preceding the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Buyer to enter into this Agreement, the Company hereby makes the following representations and warranties to Buyer, except as otherwise set forth in written disclosure schedules (the "Schedules") delivered to Buyer prior to the
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 Nevada, 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. 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 has never had any Subsidiary.
(c) Each Subsidiary of the Company 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. 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 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 and (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.
(c) Except as set forth in Schedule 3.2, 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, except as set forth in Schedule 3.2, 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 shareholders 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 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.
(e) At the Closing pursuant to this Agreement and upon payment of the Purchase Price, the Shares will be validly issued, fully paid and non-assessable.
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 the board of directors of the Company, which authorization constitutes all necessary corporate action on the part of the Company. 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 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 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 terminationm 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 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, to the knowledge of the Company, 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, 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, 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, to the knowledge of the Company, no owners or operators of real property adjacent to the Facilities spilled, released or discharged any Hazardous Substances onto such adjacent properties. To the knowledge of the Company, 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) is 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) To the knowledge of 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, to the knowledge of the Company, 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, 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 To the knowledge of 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 Company, all of which are in full force and effect and, to the knowledge of the Company, except as set forth in Schedule 3.7, all of which will remain in full force and effect following consummation of the transactions contemplated hereby. Except for matters relating to Buyer and its Affiliates, the Company has no 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 Company nor any of its 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 To the knowledge of 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 $25,000 singly or $125,000
in the aggregate. Except as set forth in Schedule 3.8, neither the Company nor
any of its Subsidiaries has received any written notice to the effect that, nor
does 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 $25,000 singly or $125,000 in the aggregate.
3.9 Financial Statements(a) 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 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 period ended July 11, 1999 (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 have been prepared in accordance with GAAP. 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 have been prepared in accordance with GAAP applied on a consistent basis, subject to changes resulting from normal year-end audit adjustments and the absence of footnotes required by GAAP.
3.10 Absence of Changes Except as set forth in Schedule 3.10, since June 11, 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, (c) there has not been any material deterioration of relations between the Company or its Subsidiaries and their suppliers, franchisees or Personnel and (d) to the knowledge of the Company there has been no 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, contingently or otherwise, to or for the benefit of any of its Personnel, except pursuant to the Employee Plans set forth in Schedule 3.22, (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 commitment to make any capital expenditure in excess of the amounts set forth in the Forecast plus $500,000;
(v) except as set forth in the Forecast or otherwise 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 $50,000, 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 $50,000 in any one instance or $250,000 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) except for drawings under the revolving line of credit in effect on December 27, 1998 in the ordinary course of business, 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 $50,000 individually or $250,000 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 except pursuant to franchise agreements in the ordinary course of business;
(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 shareholder 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 $50,000 individually or $250,000 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 To the knowledge of the Company, 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 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 Company, threatened (i) against (A) the Company or any of its Subsidiaries or their Assets involving amounts not covered by insurance in excess of $50,000 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 the Company does not have 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 judgements or awards against the Company or any of its Subsidiaries or their respective business or Assets. To the knowledge of 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.
3.13 Real Property
(i) there are no outstanding options or rights of first refusal or first offer to purchase any Owned Real Property, or any portion thereof or interest therein;
(ii) there are no pending, or to the knowledge of the Company threatened, condemnation proceedings relating to any of the Owned Real Property or other matters materially and adversely affecting the current use, occupancy or value thereof;
(iii) except as set forth in Schedule 3.13, other than Permitted Encumbrances, there are no leases, subleases, licenses, concessions or other agreements, written or oral, granting any Person the right of use or occupancy of any portion of the Owned Real Property; and
(iv) no Person, other than the Company and its Subsidiaries and tenants under leases set forth in Schedule 3.13, is in possession of the Owned Real Property.
(i) Schedule 3.13 sets forth all leases ("Real Property Leases") pursuant to which Facilities are leased by the Company and 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. 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 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 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) the Company has not received written notice of any pending or, to the knowledge of 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 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 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 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 Company, no Facility thereon is in material violation of applicable zoning Laws;
(ii) to the knowledge of 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 $50,000, 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 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 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 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) except as set forth in Schedule 3.14, 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 Franchise Operations Set forth in Schedule 3.15 is an accurate and complete list (by franchise number, name of franchisee of record and location) of all of the franchisees of the Company and its Subsidiaries. To the knowledge of the Company, each area development agreement, franchise agreement and other agreement providing substantial rights or obligations of the Company or any of its Subsidiaries to franchisees or of franchisees to the Company or any of its Subsidiaries (collectively, the "Franchise Agreements") and any disclosure document previously used or currently in use in connection with any of the Franchise Agreements complies in all material respects with all Laws applicable thereto in effect at the time that such agreements were executed or used. Except as set forth in Schedule 3.15, since January 1, 1996, there has not occurred or, to the knowledge of the Company, been threatened any dispute with respect to, or termination or non-renewal by a franchisee of, any of the Franchise Agreements. Except as set forth in Schedule 3.15, the Company does not have knowledge that any franchisee intends to terminate or not to renew its Franchise Agreement or otherwise change its existing relationship with the Company. Except as set forth in Schedule 3.15, neither the Company nor any of its Subsidiaries is required to be registered under state franchise registration or comparable laws. The Company's franchise offering circular has been filed where required, in accordance with all applicable Laws, except where the failure to file would not have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole. Except as set forth in Schedule 3.15, no stop orders, suspensions, injunction or other adverse determination has been issued by any Governmental Authority with respect to any such franchise registration, nor is any such stop order, suspension, injunction or determination contemplated.
3.16 Sufficiency of Assets The Assets constitute all of the properties and assets used or held for use in connection with, necessary for, or material or otherwise relating to the Business. 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.
3.17 Books and Records The Company and its Subsidiaries have made and kept Books and Records and accounts which, 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, correct and complete and contain copies of the minutes and records of, and accurately and adequately reflect, all 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, correct and complete and accurately and adequately reflect all transactions in connection with the Company's and its Subsidiaries' capital stock through and including the date hereof.
3.18 Intellectual Property; Computer Software..
(a) Schedule 3.18 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 3.18. 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 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 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 Company or any of its Subsidiaries that such third party is claiming ownership of or right to use any Intellectual Property, and, to the knowledge of 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.
(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 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.
3.19 Material Contracts.
(a) Schedule 3.19 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), including all Contracts related to the SGC Acquisition, 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 $50,000 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 Company, any member of any such person's immediate family, involving annual compensation in excess of $50,000, 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 $250,000 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 $250,000 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 $50,000, 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 3.19, the consequences of a default or termination
under which would have a Material Adverse Effect on the
Company 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 3.19 and has included as part of Schedule 3.19 a brief summary of the material terms of each oral Material Contract.
(b) With respect to each Contract set forth or described in Schedule 3.19 except as set forth in Schedule 3.19, (i) there is no material default under any such Contract by the Company or any of its Subsidiaries or, to the knowledge
of 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 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 Company, no party has repudiated any term thereof or threatened to terminate, cancel or not renew any such Contract.
3.20 Insurance Schedule 3.20 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 3.20 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. Except as set forth in Schedule 3.20, since January 1, 1994, 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 3.20 describes any self-insurance arrangements affecting the Company or any of its Subsidiaries.
3.21 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 3.22(a) as an Employee Benefit Plan. For purposes of this Section 3.21, the terms "employee" or "employees" shall be considered to include individuals rendering personal services to the Company or any of its Subsidiaries as independent contractors.
(b) Schedule 3.21 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 3.21 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 3.21 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 3.21 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 3.21 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 3.21, 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.
3.22 Employee Plans.
(a) Schedule 3.22 contains a complete list of Employee Plans. True
and complete copies of each of the following documents have been delivered to
Buyer: (i) the current version of each Employee Plan (and, if applicable,
related trust agreements and all amendments thereto), 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) the most recent
determination letter, if any, 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 Plan (to
the extent required) which covers or has covered employees, consultants or
independent contractors of the Company or any of its Subsidiaries, (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 thirty (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.
(b)
(A) 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 in Schedule 3.22, 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 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) 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. 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.
Multiemployer Plan or a Multiple Employer Plan, and no liability will arise or be imposed on the Company or any of its Subsidiaries or any ERISA Affiliate under, or with respect to, any Multiemployer Plan or a Multiple Employer Plan.
(A) 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 3.22, 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 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) 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) 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.
Code or (ii) that is, or which as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby could be, an "excess parachute payment" pursuant to Section 280G of the Internal Revenue Code.
or modify any existing Employee Plan which covers or has covered employees or former employees of the Company or any of its Subsidiaries. Except for terminations for which the Company has no material liability, no Employee Plan has been terminated since January 1, 1996.
(c) There does not now exist, nor, to the knowledge of 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.
3.23 Tax Matters.
material respects. Except as set forth in Schedule 3.23, neither the Company nor any of its Subsidiaries currently has outstanding any request for, or is the beneficiary of, any extension of time within which to file Tax Returns in respect of any Taxes. The Company has delivered to Buyer complete and accurate copies of all material federal, state and local income Tax Returns (and written examination reports and statements of deficiency) for the years 1996, 1997 and 1998. No written claim has ever been made by a Taxing Authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the nonfiling entity is or may be subject to taxation by that jurisdiction. To the knowledge of the Company, each of the Company and its Subsidiaries has disclosed on its federal income Tax Returns all material positions taken that could give rise to a substantial understatement penalty under Section 6662 of the Internal Revenue Code.
directly or indirectly secures any debt the interest on which is tax-exempt under Section 103(a) of the Internal Revenue Code or (iii) is leased to a "tax-exempt" entity.
3.24 Transactions with Certain Persons Except as disclosed in Schedule 3.24, (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 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 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 3.24 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 3.24 as remaining in place or having ongoing obligations or duties.
3.25 Suppliers Schedule 3.25 sets forth for each of the fiscal years 1998 and 1999, 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 3.25, none of the Company or any of its 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.
3.26 Banking Relationships Schedule 3.26 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.
3.27 Prohibited Payments To the knowledge of 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.
3.28 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"). To the knowledge of 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.
3.29 Brokers Except for Banc of America Securities LLC, 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. A true and complete copy of the agreements between the Company and Banc of America Securities LLC has been delivered to Buyer.
3.30 Full Disclosure 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 BUYER
As an inducement to the Company to enter into this Agreement, Buyer hereby makes the following representations and warranties to the Company, except as otherwise set forth in written disclosure schedules (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 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 warranty to which such other Schedule relates.
4.1 Organization; Qualification Each Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia and has legal power and authority to own all of its properties and assets and to carry on its business as it is presently being conducted.
4.2 Authority Relative to this Agreement Each Buyer has all necessary legal 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 Buyer of this Agreement and the consummation by each Buyer of the transactions contemplated hereby have been duly authorized by the manager of such Buyer and no other company proceedings on the part of either Buyer are necessary with respect thereto. This Agreement has been duly executed and delivered by each Buyer and, assuming that the Company has duly authorized, executed and delivered this Agreement, this Agreement constitutes a valid and binding obligation of each Buyer, enforceable against each Buyer in accordance with its terms.
4.3 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 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 4.3. 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 is a party or by which it is bound, consent to the execution and delivery of this Agreement by either Buyer or the consummation of the transactions contemplated hereby.
4.4 Non-Contravention The execution, delivery and performance by each Buyer of this Agreement do not, and the consummation by each Buyer of the transactions contemplated hereby will not (i) violate or result in a breach of any provision of the articles of organization or operating agreement of either Buyer, (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 is a party or by which either Buyer is bound, or (iii) violate any order, writ, injunction, decree or Law applicable to either Buyer.
4.5 Litigation There is no Decree or Action pending or, to the knowledge of Buyer, threatened (a) against either Buyer 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 on the ability of either Buyer 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.
4.6 Investment Representations Each Buyer acknowledges that the
Shares are not being registered under the Securities Act, based, in part, on
reliance that the issuance of the Shares is exempt from registration under
Section 4(2) of the Securities Act as not involving any public offering. Each
Buyer further acknowledges that the Company's reliance on such exemption is
predicated, in part, on the representations set forth below made by such Buyer
to the Company:
(a) Each Buyer is acquiring the Shares solely for such Buyer's 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 the Shares within the meaning of the Securities Act;
(b) Each Buyer 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 the Shares;
(c) Each Buyer is experienced in evaluating and investing in companies such as the Company. Each Buyer has been given access to all books, records and other information of the Company which such Buyer has desired to review and analyze in connection with Buyer's purchase of the Shares hereunder;
(d) Each Buyer is aware that an investment in Shares of a closely held corporation such as the Company is not liquid and will require such Buyer's capital to be invested for an indefinite period of time, possibly without return. Each Buyer has the ability to bear the economic risk of this investment, and can afford a complete loss of the Purchase Price;
(e) Each Buyer understands that (i) the offering and sale of the Shares hereunder has not been registered under the Securities Act, and that the Shares may not be re-offered or re-sold unless the Shares are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available, (ii) if any transfer of the Shares is to be made in reliance on an exemption under the Securities Act, the Company 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 the Company, the Shares may bear a legend to the effect of clauses (i) and (ii) of this paragraph. Each Buyer 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 either Buyer 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 Brokers 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.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 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 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, franchisees, 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,
(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.
5.2 Forbearances Except as contemplated by this Agreement or as set forth on Schedule 5.2, 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 IX, 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 June 11, 1999, would have been in violation of Section 3.10 or (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.
5.4 Investigation of Business and Properties From the date hereof until the earlier of (i) the Closing Date and (ii) termination under Article IX, the Company will, and will cause its Subsidiaries to, afford Buyer, any financial institution providing financing to the Company in connection with the transactions contemplated hereby (subject to the execution of an appropriate confidentiality agreement), and their respective attorneys, accountants, financial advisors and other representatives, reasonable access during regular business hours upon reasonable notice, to make such reasonable inspection of the Assets, business and operations of the Company and its Subsidiaries and to inspect and make copies of Contracts, Books and Records and all other documents and
5.5 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 agreement dated May 17, 1999 between Quad-C, Inc and the Company (the "Buyer Confidentiality Letter") 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 Buyer Confidentiality Letter. 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, subject to the provisions of the Buyer Confidentiality Letter, to the extent such disclosure is required by law.
5.6 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.
5.7 Expenses Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated
5.8 Interim Financial Statements From the date hereof through the Closing date, the Company shall provide to Buyer 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.
5.9 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 5.9. Without limiting the generality of the foregoing, (i) the Company agrees to cause its Personnel to provide all necessary cooperation in connection with the arrangement of any financing to be consummated as contemplated by Section 6.12 hereof, including participating in meetings, due diligence sessions and road shows, the preparation of offering memoranda and similar documents and the execution of definitive financing documents 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. No consideration, whether such consideration shall consist of the payment of money or shall take any other form, for any such 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, (ii) Buyer to guarantee the financing to be provided to the Company as contemplated hereby or (iii) 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.
5.11 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.
5.12 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.
ARTICLE VI
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 10.8:
6.2 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.
6.3 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.
6.4 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 or impair Buyer's ability to own the Shares if the transactions contemplated hereby are consummated.
6.5 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.
6.6 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.
6.7 Opinion of Counsel The Company shall have delivered to Buyer an opinion of O'Melveny & Myers LLP, counsel for the Company, dated as of the Closing Date, substantially with respect to the matters set forth in Exhibit B attached hereto and stating that such opinion is made for the benefit of Buyer and the Company's institutional lenders, and the Company's institutional lenders shall be entitled to rely thereon as if such opinion were addressed to them.
6.8 Closing Deliveries Buyer shall have received, at or prior to the Closing, the following:
(i) Certificates evidencing the Shares in form and substance reasonably satisfactory to Buyer;
(ii) a certificate of the Company executed by the Secretary
of the Company 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 authorizing the execution, delivery and
performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby and (D) incumbency matters;
(iii) 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 6.1, 6.2, 6.3 and 6.9 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 Nevada 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 Nevada and all other states where it is qualified to do business; and
(vi) all other documents and certificates required to be delivered by the Company pursuant to the terms of this Agreement.
6.9 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 occurrence or circumstance that with the passage of time might reasonably be expected to result in such Material Adverse Change.
6.10 Capitalization At the Closing and without giving effect to the issuance of the Shares to Buyer, but taking into account the issuance of shares of Company Common Stock in connection with the consummation of the SGC Acquisition, there shall be issued and outstanding 16,369,827 shares of Company Common Stock, which shares shall constitute all of the issued and outstanding capital stock of the Company. In addition, (i) there shall be outstanding under each of the Company's Employee Stock Option Plan, 1990 and Employee Stock Option Plan, 1996 only the options to purchase Company Common Stock granted to the persons in the amounts set forth in Schedule 6.10 under the caption "Existing Options," and (ii) the Company's 2000 Management Performance Common Stock Option Plan having substantially the terms set forth in Exhibit F hereto shall have been adopted by the Board of Directors of the Company providing for the grant of Options to purchase up to 2,836,500 additional shares of Company Common Stock (of which 2,800,000 shall have been granted as of the Closing Date to the persons, in the amounts and on the terms set forth on Schedule 6.10 under the caption "New Options)." Except for the Existing Options and the New Options there shall not be any securities or obligations convertible into or exchangeable for, or giving any Person any right to acquire any shares of capital stock of the Company.
6.11 SGC Acquisition The SGC Acquisition shall have been consummated pursuant to the Agreement and Plan of Merger dated the date hereof and executed contemporaneously with the execution of this Agreement. Buyer shall have been accorded access to the Assets, business, operations and Personnel of SGC to the same extent Buyer is to be accorded access to the Assets, operations, business and Personnel of the Company and its Subsidiaries pursuant to Section 5.4 hereof.
6.12 Financing The Company shall have obtained and consummated financing and received proceeds thereof on terms and conditions reasonably satisfactory to Buyer, sufficient to retire outstanding Company Debt as set forth in the Forecast, to provide capital required for the opening of additional owned restaurants as set forth in the Forecast and to provide working capital for its operations after the Closing.
6.13 Shareholders Agreement; Registration Rights Agreement The Master Agreement among the Company, Skylark Company, Ltd. and certain other shareholders of the Company dated as of March 10, 1996 and the Stock Purchase Agreement between Skylark, Gerald I. Kingen and others dated December 29, 1996 shall each have been terminated by the parties thereto. The Company and shareholders holding in excess of 90% of Company Common Shares on a Fully-Diluted Basis shall have entered into the Shareholders Agreement and a Registration Rights Agreement substantially in the forms of Exhibits C and D hereto.
6.14 Board of Directors The boards of directors of the Company and
each of its Subsidiaries shall have been reconstituted as contemplated by
Section 2(a) of the Shareholders Agreement, and any resignations of directors
necessary to accomplish the foregoing shall have submitted to the Company and
each of its Subsidiaries, as the case may be, effective as of the Closing Date.
6.15 Consulting Services Agreement The Company shall have entered into the Consulting Services Agreement with Quad-C Management, Inc. substantially in the form of Exhibit E hereto.
6.16 Lender Releases Upon receipt of the funds to retire the Company Debt, the lenders with respect to the Company Debt shall (i) cancel, terminate, extinguish and deliver to Buyer all instruments with respect to such Company Debt (collectively, "Debt Instruments") and shall release all Encumbrances in connection therewith (and shall, if necessary or advisable, reconvey all Assets or property that are the subject of such Encumbrances) and (ii) deliver to the Company an acknowledgment of payment and release and other evidence reasonably satisfactory to Buyer of such termination, cancellation and extinguishment of all Debt Instruments and related Encumbrances.
6.17 Employment and Non-competition Agreements Michael J. Snyder shall have executed and delivered to the Company employment and confidentiality, non-competition and non-disturbance agreements substantially in form of Exhibits G and H hereto.
6.18 Payment or Reimbursement of Expenses To the extent that invoices have been provided to the Company, all expenses of Buyer required by Section 5.7 to be paid by the Company at the Closing shall have been paid.
6.19 Conversion of Hibari Debt All obligations under the promissory notes issued by the Company payable to the order of Hibari Guam Corporation (the "Hibari Debt") shall have been canceled in exchange for the issuance to the holder of the Hibari Debt of 2.25 million shares of Company Common Stock.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company 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 10.8.
7.2 Performance of this Agreement Buyer 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 or waivers listed in Schedule 4.3 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.
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 the Company 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 this Agreement.
7.6 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.
7.7 Opinion of Counsel Buyer shall have delivered to the Company an opinion of McGuire, Woods, Battle & Boothe LLP, counsel for Buyer, dated as of the
Closing Date, substantially with respect to the matters set forth in Exhibit I attached hereto.
7.8 Closing Deliveries The Company shall have received, at or prior to the Closing, the following:
(i) a certificate of Buyer executed by the Secretary of Buyer certifying as of the Closing Date (A) a true and correct copy of the articles of organization of Buyer, (B) a true and correct copy of the operating agreement of Buyer, (C) a true and correct copy of the resolutions of the manager of Buyer authorizing the execution, delivery and performance of this Agreement by the Buyer and the consummation of the transactions contemplated hereby and (D) incumbency matters;
(ii) a certificate of Buyer executed by a Vice President of Buyer certifying that, as of the Closing Date, the conditions set forth in Sections 7.1, 7.2, and 7.3 with respect to Buyer have been satisfied;
(iii) a copy of the articles of organization of Buyer and all amendments thereto, each certified as of a recent date by the Clerk of the State Corporation Commission of the Commonwealth of Virginia;
(iv) a certificate of the Clerk of the State Corporation Commission of the Commonwealth of Virginia certifying the good standing of Buyer in Virginia; and
(v) all other documents and certificates required to be delivered by Buyer pursuant to the terms of this Agreement.
7.9 Partial Repayment of Company Debt The Company Debt set forth in Schedule 7.9 shall have been reduced to a principal balance not to exceed $20 million.
7.10 Conversion of Hibari Debt All obligations under the Hibari Debt shall have been canceled in exchange for the issuance to the holder of the Hibari Debt of 2.25 million shares of Company Common Stock.
7.11 Purchase Price The Purchase Price, in immediately available funds, shall have been delivered to the Company.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival of Representations The representations and warranties of the Company contained in this Agreement (including the Schedules hereto) or any certificate
8.2 Indemnification by the Company.
(a) Subject to the limitations contained in this Article VIII, the Company will indemnify and hold harmless Buyer, its subsidiaries, Affiliates, each of their respective 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; and
(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.
(b) The claims for indemnity by Buyer Indemnified Parties pursuant to this Section 8.2 are referred to as "Buyer Claims." The indemnity provided for in this
Section 8.2 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.
8.3 Indemnification by Buyer.
(a) Subject to the limitations contained in this Article VIII, Buyer will indemnify and hold harmless the Company, its Affiliates, each of their respective partners, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the "Company Indemnified Parties") from and against, and pay or reimburse the Company Indemnified Parties for, any and all Covered Liabilities actually incurred or paid by the Company Indemnified Parties as a result of:
(ii) the nonfulfillment, nonperformance or other breach of any covenant or agreement of Buyer contained in this Agreement.
(b) The claims for indemnity by Company Indemnified Parties pursuant to this Section 8.3 are referred to as "Company Claims." The indemnity provided for in this Section 8.3 is not limited to matters asserted by third parties against any Company Indemnified Party, but includes Covered Liabilities actually incurred or sustained by any Company Indemnified Party in the absence of third-party claims.
8.4 Notice and Defense of Claims.
(b) In the case of a claim involving the assertion of a claim by a third party (whether pursuant to an Action or otherwise, a "Third-Party Claim"), if the indemnifying party shall acknowledge in writing to the indemnified party that the
(c) If the claim for indemnification involves a matter other than a Third Party Claim, the indemnifying party shall have thirty (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. 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 thirty (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.
(d) Any Covered Liabilities for which an indemnifying party is responsible shall, subject to the provisions of Section 8.5 hereof, be paid directly by the indemnifying party. Upon Final Determination (as defined below) of the amount of a claim for indemnification, the indemnified party shall pay the amount of such claim within twenty (20) days after the date of such Final Determination together with interest at the prime rate of Morgan Guaranty Trust Company of New York from time to time, from (and including) the later of (i) the date of delivery of the Claim Notice or (ii) the date such Covered Liability was paid or incurred, to (and including) the date immediately preceding the date of payment.
(e) 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.
8.5 Limitations on Indemnification.
8.6 Calculation of Covered Liabilities.
8.7 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 VIII shall be the exclusive remedy of Buyer and the Company 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 VIII, 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 IX
TERMINATION
9.1 Termination This Agreement may be terminated at any time prior to the Closing:
(i) by the mutual written consent of the Company and Buyer;
(iv) by the Company or Buyer if the Closing has not occurred by 11:59 p.m. April 30, 2000.
ARTICLE X
GENERAL PROVISIONS
10.1 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:
Red Robin International, Inc. 5575 DTC Parkway, Suite 110 Englewood, Colorado 80111 Attention: Michael J. Snyder and John W. Grant Facsimile No.: 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 No.: 949-823-6994
(b) If to 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.
Facsimile No.: 804-979-1145
with a copy to:
McGuire, Woods, Battle & Boothe LLP
One James Center
Richmond, Virginia 23219
Attention: Leslie A. Grandis
Facsimile No.: 804-775-1061
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.
10.2 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 10.2(a) hereto after reasonable inquiry of other Personnel of the Company and its Subsidiaries, and "knowledge of Buyer" shall mean the actual knowledge of the executive officers of Buyer identified in Schedule 10.2(b) hereto after reasonable inquiry of other Personnel of Buyer. 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.
10.4 No Third Party Beneficiaries Except as set forth in Article VIII, nothing in this Agreement (whether expressed or implied) is intended to confer upon any person other than the parties hereto and their respective permitted successors and assigns, 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.
10.5 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.
10.6 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.
10.7 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.
10.8 Extension; Waiver At any time prior to the Closing either party to this Agreement 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.
10.9 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
10.10 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.
10.11 Jurisdiction; Waiver of Jury Trial The parties hereto irrevocably submit to the exclusive jurisdiction of the United States District Court for the District of Colorado (or, if subject matter jurisdiction in that court is not available, in the District Court for the City and County of Denver) 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 which 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.
10.12 Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York without regard to any laws or regulations relating to choice of laws (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers.
RED ROBIN INTERNATIONAL, INC.
By: /s/ James P. McCloskey --------------------------------- James P. McCloskey Chief Financial Officer |
RR INVESTORS, LLC
President
RR INVESTORS II, LLC
President
the fullest extent permitted by applicable Law, any objection which 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.
10.12 Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York without regard to any laws or regulations relating to choice of laws (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers.
RED ROBIN INTERNATIONAL, INC.
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 |
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 therefor 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 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 actions 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 attorneys 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 Greenwood Village, 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 therefor. 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 27/th/ day of February, 2001.
/s/ Michael J. Snyder --------------------- Michael J. Snyder |
EXHIBIT 10.30
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
OPTION EXERCISE AGREEMENT - EARLY EXERCISE
Name of Optionee: Robert J. Merullo -------------------------- Date of Grant of Option: May 11, 2000 -------------------------- Exercise Price per Share: $2.00 -------------------------- Number of Shares Being Exercised: 250,000 -------------------------- |
The undersigned (the "Purchaser") hereby irrevocably elects to exercise his/her right, evidenced by that certain stock option agreement dated as of the Date of Grant of Option identified above (the "Option Agreement") under the Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan (the "Plan"), as follows:
. the Purchaser hereby irrevocably elects to purchase a number of shares of Common Stock, par value $0.001 per share (the "Shares"), of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), equal to the Number of Shares Being Exercised set forth above, and
. such purchase shall be at a price per share equal to the Exercise Price per Share set forth above (subject to applicable withholding taxes).
1. Investment Representations. The Purchaser acknowledges that the sale of the Shares by the Purchaser is restricted by SEC Rule 701. The Purchaser hereby affirms as made as of the date hereof the representations in his or her Option Agreement and such representations are incorporated herein by this reference. The Purchaser represents that he/she has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and can afford a complete loss of the purchase price for the Shares. The Purchaser acknowledges receipt of the Corporation's condensed consolidated financial information.
The Purchaser also understands and acknowledges (a) that the certificates representing the Shares will be legended as provided for below, and (b) that the Corporation has no obligation to register the Shares or file any registration statement under federal or state securities laws.
The certificates representing the Shares will bear the following legends or substantially similar legends:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
"THE SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT TO REPURCHASE THEM UNDER AN AGREEMENT WITH THE CORPORATION, A COPY OF WHICH IS AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION."
2. Vesting. The Shares are being acquired prior to the time that they have
become vested in accordance with the terms of the Option Agreement. Accordingly,
the Shares are subject to the Corporation's repurchase right set forth in
Section 5 below and other restrictions set forth herein. The Shares shall vest,
and the Corporation's repurchase right under Section 5 shall lapse, as of the
date(s) that the Option would have otherwise become vested as to such Shares.
The maximum number of Shares that may vest on any occasion or event shall not
exceed the number of shares that would have otherwise vested on such date under
the Option Agreement had the underlying stock option not been exercised prior to
full vesting to acquire the Shares. No additional Shares shall vest after the
date that the Purchaser's employment by the Corporation terminates.
3. Delivery of Share Certificate. The Corporation shall issue a certificate or certificates for the Shares, registered in the name of the Purchaser, which certificate(s) shall upon redelivery thereof to the Corporation pursuant to the following provisions of this Section 3 be held by the Corporation until the restrictions on such Shares shall have lapsed and the Shares shall thereby have become vested or the Shares represented thereby are repurchased by the Corporation in accordance with Section 5.
Upon delivery to the Purchaser of the certificate(s) representing the Shares, the Purchaser shall redeliver such certificate(s) to the Corporation, together with a stock power or stock powers, in blank and in substantially the form attached hereto, with respect to such certificate(s), to be held by the Corporation pursuant to the terms hereof. The Purchaser hereby appoints the Corporation and each of its authorized representatives as the Purchaser's attorney(s)-in-fact to effect any transfer of the Shares that are repurchased by the Corporation in accordance with the terms hereof or related cash, property or rights (including Restricted Property, as such term is defined below) to the Corporation as may be required pursuant to this Exercise Agreement and to execute such documents as the Corporation or such representatives deem necessary or advisable in connection with any such transfer.
Promptly after the vesting of the Shares in accordance with Section 2 above, a certificate or certificates evidencing the number of shares of Common Stock as to which the restrictions
have lapsed or been released shall be delivered to the Purchaser or other person entitled under the terms hereof and of the Plan to receive the shares. The Shares so delivered shall no longer be subject to the Corporation's repurchase right under Section 5, but such shares shall continue to be subject to the other restrictions set forth herein, in the Option Agreement, and in the Plan. Vested Shares and any other amounts deliverable pursuant to the Shares shall be delivered and paid only to the Purchaser or the Purchaser's beneficiary or personal representative, as the case may be.
4. Dividend; Voting Rights. After the date of issuance of the Shares, the Purchaser shall be entitled to cash dividends and voting rights with respect to the Shares, but such rights shall terminate as to any Shares that are repurchased by the Corporation in accordance with Section 5. Any securities or other property receivable in respect of the Shares by the Purchaser as a result of any dividend or other distribution, conversion or exchange of or with respect to the Shares are, together, referred to as "Restricted Property." Upon a repurchase of any Shares by the Corporation in accordance with Section 5, the Restricted Property related to such repurchased Shares shall be automatically transferred to the Corporation, without any further action by the Purchaser (or the Purchaser's beneficiary or personal representative, as the case may be) or additional consideration from the Corporation. The Corporation may take any other action necessary or advisable to evidence such transfer. The Purchaser, or the Purchaser's beneficiary or personal representative, as the case may be, shall deliver any additional documents of transfer that the Corporation may request to confirm the transfer of such Restricted Property to the Corporation.
5. Corporation's Repurchase Right. Subject to the terms and conditions of this Section 5, the Corporation shall have the right (the "Repurchase Right") (but not the obligation) to repurchase in one or more transactions in connection with the termination of the Purchaser's employment with the Corporation, and the Purchaser (or any permitted transferee) shall be obligated to sell any of the Shares that have not, as of the date of such termination of employment, become vested.
To exercise the Repurchase Right, the Corporation must give written notice thereof to the Purchaser (the "Repurchase Notice"). The Repurchase Notice is irrevocable by the Corporation and must (a) be in writing and signed by an authorized officer of the Corporation, (b) set forth the Corporation's intent to exercise the Repurchase Right and contain the total number of Shares to be sold to the Corporation pursuant to the exercise of the Repurchase Right, (c) be mailed or delivered to the Purchaser at the Purchaser's address reflected or last reflected on the Corporation's payroll records or delivered to the Purchaser in person, and (d) be so mailed or delivered no later than the ninetieth (90th) day following the date that the Purchaser's employment by the Corporation terminates. If mailed, the Repurchase Notice shall be enclosed in a properly sealed envelope, addressed as aforesaid, and deposited (postage prepaid) in a post office or branch post office regularly maintained by the United States Government. The Repurchase Notice shall be deemed to have been duly given as of the date mailed or delivered in accordance with the foregoing provisions.
Share as reasonably determined by the Corporation's Board of Directors as of the date of the Repurchase Notice. No interest shall be paid with respect to and no other adjustments (other than adjustments to reflect stock splits and similar changes in capitalization) shall be made to the Repurchase Price. The closing of any repurchase under this Section 5 shall be at a date to be specified by the Corporation, such date to be no later than 90 days after the date that the Purchaser's employment by the Corporation terminates. The Repurchase Price shall be paid at the closing in the form of a check in the amount of the Repurchase Price, by cancellation of money purchase indebtedness in like amount or by a combination of check and debt cancellation, as the Corporation may determine in its discretion.
Upon a repurchase of any Shares by the Corporation, such repurchased Shares
shall be automatically transferred to the Corporation, without any further
action by the Purchaser (or the Purchaser's beneficiary or personal
representative, as the case may be). The Corporation may exercise its powers
under this Exercise Agreement (including, without limitation, its powers under
Section 3) and take any other action necessary or advisable to evidence such
transfer. The Purchaser, or the Purchaser's beneficiary or personal
representative, as the case may be, shall deliver any additional documents of
transfer that the Corporation may request to confirm the transfer of such
repurchased Shares to the Corporation.
If the Purchaser (or any permitted transferee who is an employee of the Company) ceases to be an employee of the Company and holds Shares as to which the Corporation's Repurchase Right has been exercised, the Purchaser shall be entitled to the value of such Shares in accordance with the foregoing provisions of this Section 5, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a shareholder with respect to the Shares subject to the repurchase. To the maximum extent permitted by law, the Purchaser's rights following the exercise of the Repurchase Right shall, with respect to the repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified above in this Section 5.
The Repurchase Right is in addition to, and not in lieu of, any right that the Corporation may have under the Option Agreement or the Plan. Notwithstanding anything to the contrary, the Corporation may assign any or all of its rights under this Section 5 to one or more stockholders of the Corporation.
6. Limitation on Disposition and Other Restrictions. The Shares and any
Restricted Property in respect of the Shares may not be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily, other than to the Corporation, until the time that
the Shares (and related Restricted Property) become vested in accordance with
Section 2.
7. Plan and Option Agreement. The Purchaser acknowledges receipt of a copy of all documents referenced herein and acknowledges reading and understanding these documents and having an opportunity to ask any questions that he/she may have had about them.
The Company has made and makes no representation regarding the advisability of, or regarding the tax, financial and other consequences of, an election to purchase the Shares prior to the time(s) that they have become vested under the Option Agreement. The Purchaser has
and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors with respect to (1) this purchase and (2) the advisability of and procedures for making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to this purchase and the risks, potential benefits, and consequences of such an election. The Purchaser is not relying on any representations or statements made by the Company or any of its agents. The Purchaser acknowledges that, under applicable law, if he or she decides to make an election under Section 83(b) of the Code with respect to this purchase, such election must be made within 30 days of the date of this purchase.
"PURCHASER" ACCEPTED BY: RED ROBIN GOURMET BURGERS, Inc. /s/ Robert J. Merullo --------------------------------- Signature By: /s/ Michael J. Snyder ------------------------------------ Michael J. Snyder Robert J. Merullo Its: Chief Executive Officer & President --------------------------------- ------------------------------------ Print Name April 25, 2002 --------------------------------- Date |
$500,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned Robert J. Merullo ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Five Hundred Thousand Dollars ($500,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long- term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Five Hundred Thousand Dollars ($500,000.00), less any principal repaid.
3. Payments. The principal balance of Five Hundred Thousand Dollars ($500,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) December 31, 2009 or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note; or
(c) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker
and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ Robert J. Merullo --------------------------- Signature |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25 day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and Robert J. Merullo ("Debtor").
RECITALS
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Five Hundred Thousand Dollars ($500,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 250,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. [213] ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral, for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from Collateral during the term of this Agreement which (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor, and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchaser who will represent and agree that such purchaser or purchasers are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado, or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in Denver County, State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ Robert J. Merullo ----------------------------- Signature Robert J. Merullo By: /s/ Michael J. Snyder ------------------------------ --------------------------------------- Print Name Michael J. Snyder 9828 Good Hope Drive Its: Chief Executive Officer & President ------------------------------ ------------------------------------- Address Castle Rock, CO 80104 ------------------------------ City, State, Zip Code |
STOCK POWER*
For value received, Robert J. Merullo (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ Robert J. Merullo --------------------------------- Signature |
* Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Corporation to exercise its repurchase right set forth in the related Option Exercise Agreement and/or its rights under the Pledge Agreement without requiring additional signatures from the Debtor.
SECTION 1 - PROXY
The undersigned, the owner of 250,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Five Hundred Thousand Dollars ($500,000 ) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature: /s/ Robert J. Merullo ---------------------------------- |
Print Name: Robert J. Merullo
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared Robert J. Merullo , personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson -------------------------------------------- NOTARY PUBLIC |
[SEAL]
EXHIBIT 10.31
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
OPTION EXERCISE AGREEMENT - EARLY EXERCISE
Name of Optionee: James P. McCloskey ----------------------------- Date of Grant of Option: June 20, 2000 ----------------------------- Exercise Price per Share: $2.00 ----------------------------- Number of Shares Being Exercised: 100,000 ----------------------------- |
The undersigned (the "Purchaser") hereby irrevocably elects to exercise his/her right, evidenced by that certain stock option agreement dated as of the Date of Grant of Option identified above (the "Option Agreement") under the Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan (the "Plan"), as follows:
. the Purchaser hereby irrevocably elects to purchase a number of shares of Common Stock, par value $0.001 per share (the "Shares"), of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), equal to the Number of Shares Being Exercised set forth above, and
. such purchase shall be at a price per share equal to the Exercise Price per Share set forth above (subject to applicable withholding taxes).
1. Investment Representations. The Purchaser acknowledges that the sale of the Shares by the Purchaser is restricted by SEC Rule 701. The Purchaser hereby affirms as made as of the date hereof the representations in his or her Option Agreement and such representations are incorporated herein by this reference. The Purchaser represents that he/she has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and can afford a complete loss of the purchase price for the Shares. The Purchaser acknowledges receipt of the Corporation's condensed consolidated financial information.
The Purchaser also understands and acknowledges (a) that the
certificates representing the Shares will be legended as provided for below, and
(b) that the Corporation has no obligation to register the Shares or file any
registration statement under federal or state securities laws.
The certificates representing the Shares will bear the following legends or substantially similar legends:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
"THE SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT TO REPURCHASE THEM UNDER AN AGREEMENT WITH THE CORPORATION, A COPY OF WHICH IS AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION."
2. Vesting. The Shares are being acquired prior to the time that they have become vested in accordance with the terms of the Option Agreement. Accordingly, the Shares are subject to the Corporation's repurchase right set forth in Section 5 below and other restrictions set forth herein. The Shares shall vest, and the Corporation's repurchase right under Section 5 shall lapse, as of the date(s) that the Option would have otherwise become vested as to such Shares. The maximum number of Shares that may vest on any occasion or event shall not exceed the number of shares that would have otherwise vested on such date under the Option Agreement had the underlying stock option not been exercised prior to full vesting to acquire the Shares. No additional Shares shall vest after the date that the Purchaser's employment by the Corporation terminates.
3. Delivery of Share Certificate. The Corporation shall issue a certificate or certificates for the Shares, registered in the name of the Purchaser, which certificate(s) shall upon redelivery thereof to the Corporation pursuant to the following provisions of this Section 3 be held by the Corporation until the restrictions on such Shares shall have lapsed and the Shares shall thereby have become vested or the Shares represented thereby are repurchased by the Corporation in accordance with Section 5.
Upon delivery to the Purchaser of the certificate(s) representing the Shares, the Purchaser shall redeliver such certificate(s) to the Corporation, together with a stock power or stock powers, in blank and in substantially the form attached hereto, with respect to such certificate(s), to be held by the Corporation pursuant to the terms hereof. The Purchaser hereby appoints the Corporation and each of its authorized representatives as the Purchaser's attorney(s)-in-fact to effect any transfer of the Shares that are repurchased by the Corporation in accordance with the terms hereof or related cash, property or rights (including Restricted Property, as such term is defined below) to the Corporation as may be required pursuant to this Exercise Agreement and to execute such documents as the Corporation or such representatives deem necessary or advisable in connection with any such transfer.
Promptly after the vesting of the Shares in accordance with Section 2 above, a certificate or certificates evidencing the number of shares of Common Stock as to which the restrictions
have lapsed or been released shall be delivered to the Purchaser or other person entitled under the terms hereof and of the Plan to receive the shares. The Shares so delivered shall no longer be subject to the Corporation's repurchase right under Section 5, but such shares shall continue to be subject to the other restrictions set forth herein, in the Option Agreement, and in the Plan. Vested Shares and any other amounts deliverable pursuant to the Shares shall be delivered and paid only to the Purchaser or the Purchaser's beneficiary or personal representative, as the case may be.
4. Dividend; Voting Rights. After the date of issuance of the Shares, the Purchaser shall be entitled to cash dividends and voting rights with respect to the Shares, but such rights shall terminate as to any Shares that are repurchased by the Corporation in accordance with Section 5. Any securities or other property receivable in respect of the Shares by the Purchaser as a result of any dividend or other distribution, conversion or exchange of or with respect to the Shares are, together, referred to as "Restricted Property." Upon a repurchase of any Shares by the Corporation in accordance with Section 5, the Restricted Property related to such repurchased Shares shall be automatically transferred to the Corporation, without any further action by the Purchaser (or the Purchaser's beneficiary or personal representative, as the case may be) or additional consideration from the Corporation. The Corporation may take any other action necessary or advisable to evidence such transfer. The Purchaser, or the Purchaser's beneficiary or personal representative, as the case may be, shall deliver any additional documents of transfer that the Corporation may request to confirm the transfer of such Restricted Property to the Corporation.
5. Corporation's Repurchase Right. Subject to the terms and conditions of this Section 5, the Corporation shall have the right (the "Repurchase Right") (but not the obligation) to repurchase in one or more transactions in connection with the termination of the Purchaser's employment with the Corporation, and the Purchaser (or any permitted transferee) shall be obligated to sell any of the Shares that have not, as of the date of such termination of employment, become vested.
To exercise the Repurchase Right, the Corporation must give written notice thereof to the Purchaser (the "Repurchase Notice"). The Repurchase Notice is irrevocable by the Corporation and must (a) be in writing and signed by an authorized officer of the Corporation, (b) set forth the Corporation's intent to exercise the Repurchase Right and contain the total number of Shares to be sold to the Corporation pursuant to the exercise of the Repurchase Right, (c) be mailed or delivered to the Purchaser at the Purchaser's address reflected or last reflected on the Corporation's payroll records or delivered to the Purchaser in person, and (d) be so mailed or delivered no later than the ninetieth (90th) day following the date that the Purchaser's employment by the Corporation terminates. If mailed, the Repurchase Notice shall be enclosed in a properly sealed envelope, addressed as aforesaid, and deposited (postage prepaid) in a post office or branch post office regularly maintained by the United States Government. The Repurchase Notice shall be deemed to have been duly given as of the date mailed or delivered in accordance with the foregoing provisions.
Share as reasonably determined by the Corporation's Board of Directors as of the date of the Repurchase Notice. No interest shall be paid with respect to and no other adjustments (other than adjustments to reflect stock splits and similar changes in capitalization) shall be made to the Repurchase Price. The closing of any repurchase under this Section 5 shall be at a date to be specified by the Corporation, such date to be no later than 90 days after the date that the Purchaser's employment by the Corporation terminates. The Repurchase Price shall be paid at the closing in the form of a check in the amount of the Repurchase Price, by cancellation of money purchase indebtedness in like amount or by a combination of check and debt cancellation, as the Corporation may determine in its discretion.
Upon a repurchase of any Shares by the Corporation, such repurchased Shares
shall be automatically transferred to the Corporation, without any further
action by the Purchaser (or the Purchaser's beneficiary or personal
representative, as the case may be). The Corporation may exercise its powers
under this Exercise Agreement (including, without limitation, its powers under
Section 3) and take any other action necessary or advisable to evidence such
transfer. The Purchaser, or the Purchaser's beneficiary or personal
representative, as the case may be, shall deliver any additional documents of
transfer that the Corporation may request to confirm the transfer of such
repurchased Shares to the Corporation.
If the Purchaser (or any permitted transferee who is an employee of the Company) ceases to be an employee of the Company and holds Shares as to which the Corporation's Repurchase Right has been exercised, the Purchaser shall be entitled to the value of such Shares in accordance with the foregoing provisions of this Section 5, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a shareholder with respect to the Shares subject to the repurchase. To the maximum extent permitted by law, the Purchaser's rights following the exercise of the Repurchase Right shall, with respect to the repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified above in this Section 5.
The Repurchase Right is in addition to, and not in lieu of, any right that the Corporation may have under the Option Agreement or the Plan. Notwithstanding anything to the contrary, the Corporation may assign any or all of its rights under this Section 5 to one or more stockholders of the Corporation.
6. Limitation on Disposition and Other Restrictions. The Shares and any
Restricted Property in respect of the Shares may not be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily, other than to the Corporation, until the time that
the Shares (and related Restricted Property) become vested in accordance with
Section 2.
7. Plan and Option Agreement. The Purchaser acknowledges receipt of a copy of all documents referenced herein and acknowledges reading and understanding these documents and having an opportunity to ask any questions that he/she may have had about them.
The Company has made and makes no representation regarding the advisability of, or regarding the tax, financial and other consequences of, an election to purchase the Shares prior to the time(s) that they have become vested under the Option Agreement. The Purchaser has
and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors with respect to (1) this purchase and (2) the advisability of and procedures for making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to this purchase and the risks, potential benefits, and consequences of such an election. The Purchaser is not relying on any representations or statements made by the Company or any of its agents. The Purchaser acknowledges that, under applicable law, if he or she decides to make an election under Section 83(b) of the Code with respect to this purchase, such election must be made within 30 days of the date of this purchase.
"PURCHASER" ACCEPTED BY: RED ROBIN GOURMET BURGERS, Inc. /s/ James P. McCloskey --------------------------------- Signature By: /s/ Michael J. Snyder ------------------------------------ Michael J. Snyder James P. McCloskey Its: Chief Executive Officer & President --------------------------------- ----------------------------------- Print Name April 25, 2002 --------------------------------- Date |
$200,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned James P. McCloskey ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Two Hundred Thousand Dollars ($200,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long-term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Two Hundred Thousand Dollars ($200,000.00), less any principal repaid.
3. Payments. The principal balance of Two Hundred Thousand Dollars ($200,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) December 31, 2009 or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note; or
(c) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker
and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ James P. McCloskey ---------------------------- Signature |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25th day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and James P. McCloskey ("Debtor").
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Two Hundred Thousand Dollars ($200,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 100,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. [204] ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral, for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from Collateral during the term of this Agreement which (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor, and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchaser who will represent and agree that such purchaser or purchasers are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado, or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in Denver County, State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ James P. McCloskey ------------------------------------ Signature James P. McCloskey By: /s/ Michael J. Snyder ------------------------------------ ------------------------------------ Print Name Michael J. Snyder 5235 South Logan Circle Its: Chief Executive Officer & President ------------------------------------ ----------------------------------- Address Greenwood Village, CO 80104 ------------------------------------ City, State, Zip Code |
STOCK POWER*
For value received, James P. McCloskey (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ James P. McCloskey -------------------------------- Signature |
SECTION 1 - PROXY
The undersigned, the owner of 100,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Two Hundred Thousand Dollars ($200,000) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature: /s/ James P. McCloskey ----------------------------- |
Print Name: James P. McCloskey
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared James P. McCloskey, personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson ---------------------------------------- NOTARY PUBLIC |
[SEAL]
EXHIBIT 10.32
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
OPTION EXERCISE AGREEMENT - EARLY EXERCISE
Name of Optionee: James P. McCloskey ----------------------------------- Date of Grant of Option: January 29, 2002 ----------------------------------- Exercise Price per Share: $2.50 ----------------------------------- Number of Shares Being Exercised: 100,000 ----------------------------------- |
The undersigned (the "Purchaser") hereby irrevocably elects to exercise his/her right, evidenced by that certain stock option agreement dated as of the Date of Grant of Option identified above (the "Option Agreement") under the Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan (the "Plan"), as follows:
. the Purchaser hereby irrevocably elects to purchase a number of shares of Common Stock, par value $0.001 per share (the "Shares"), of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), equal to the Number of Shares Being Exercised set forth above, and
. such purchase shall be at a price per share equal to the Exercise Price per Share set forth above (subject to applicable withholding taxes).
1. Investment Representations. The Purchaser acknowledges that the sale of the Shares by the Purchaser is restricted by SEC Rule 701. The Purchaser hereby affirms as made as of the date hereof the representations in his or her Option Agreement and such representations are incorporated herein by this reference. The Purchaser represents that he/she has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and can afford a complete loss of the purchase price for the Shares. The Purchaser acknowledges receipt of the Corporation's condensed consolidated financial information.
The Purchaser also understands and acknowledges (a) that the
certificates representing the Shares will be legended as provided for below, and
(b) that the Corporation has no obligation to register the Shares or file any
registration statement under federal or state securities laws.
The certificates representing the Shares will bear the following legends or substantially similar legends:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
"THE SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT TO REPURCHASE THEM UNDER AN AGREEMENT WITH THE CORPORATION, A COPY OF WHICH IS AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION."
2. Vesting. The Shares are being acquired prior to the time that they have become vested in accordance with the terms of the Option Agreement. Accordingly, the Shares are subject to the Corporation's repurchase right set forth in Section 5 below and other restrictions set forth herein. The Shares shall vest, and the Corporation's repurchase right under Section 5 shall lapse, as of the date(s) that the Option would have otherwise become vested as to such Shares. The maximum number of Shares that may vest on any occasion or event shall not exceed the number of shares that would have otherwise vested on such date under the Option Agreement had the underlying stock option not been exercised prior to full vesting to acquire the Shares. No additional Shares shall vest after the date that the Purchaser's employment by the Corporation terminates.
3. Delivery of Share Certificate. The Corporation shall issue a certificate or certificates for the Shares, registered in the name of the Purchaser, which certificate(s) shall upon redelivery thereof to the Corporation pursuant to the following provisions of this Section 3 be held by the Corporation until the restrictions on such Shares shall have lapsed and the Shares shall thereby have become vested or the Shares represented thereby are repurchased by the Corporation in accordance with Section 5.
Upon delivery to the Purchaser of the certificate(s) representing the Shares, the Purchaser shall redeliver such certificate(s) to the Corporation, together with a stock power or stock powers, in blank and in substantially the form attached hereto, with respect to such certificate(s), to be held by the Corporation pursuant to the terms hereof. The Purchaser hereby appoints the Corporation and each of its authorized representatives as the Purchaser's attorney(s)-in-fact to effect any transfer of the Shares that are repurchased by the Corporation in accordance with the terms hereof or related cash, property or rights (including Restricted Property, as such term is defined below) to the Corporation as may be required pursuant to this Exercise Agreement and to execute such documents as the Corporation or such representatives deem necessary or advisable in connection with any such transfer.
Promptly after the vesting of the Shares in accordance with Section 2 above, a certificate or certificates evidencing the number of shares of Common Stock as to which the restrictions
have lapsed or been released shall be delivered to the Purchaser or other person entitled under the terms hereof and of the Plan to receive the shares. The Shares so delivered shall no longer be subject to the Corporation's repurchase right under Section 5, but such shares shall continue to be subject to the other restrictions set forth herein, in the Option Agreement, and in the Plan. Vested Shares and any other amounts deliverable pursuant to the Shares shall be delivered and paid only to the Purchaser or the Purchaser's beneficiary or personal representative, as the case may be.
4. Dividend; Voting Rights. After the date of issuance of the Shares, the Purchaser shall be entitled to cash dividends and voting rights with respect to the Shares, but such rights shall terminate as to any Shares that are repurchased by the Corporation in accordance with Section 5. Any securities or other property receivable in respect of the Shares by the Purchaser as a result of any dividend or other distribution, conversion or exchange of or with respect to the Shares are, together, referred to as "Restricted Property." Upon a repurchase of any Shares by the Corporation in accordance with Section 5, the Restricted Property related to such repurchased Shares shall be automatically transferred to the Corporation, without any further action by the Purchaser (or the Purchaser's beneficiary or personal representative, as the case may be) or additional consideration from the Corporation. The Corporation may take any other action necessary or advisable to evidence such transfer. The Purchaser, or the Purchaser's beneficiary or personal representative, as the case may be, shall deliver any additional documents of transfer that the Corporation may request to confirm the transfer of such Restricted Property to the Corporation.
5. Corporation's Repurchase Right. Subject to the terms and conditions of this Section 5, the Corporation shall have the right (the "Repurchase Right") (but not the obligation) to repurchase in one or more transactions in connection with the termination of the Purchaser's employment with the Corporation, and the Purchaser (or any permitted transferee) shall be obligated to sell any of the Shares that have not, as of the date of such termination of employment, become vested.
To exercise the Repurchase Right, the Corporation must give written notice thereof to the Purchaser (the "Repurchase Notice"). The Repurchase Notice is irrevocable by the Corporation and must (a) be in writing and signed by an authorized officer of the Corporation, (b) set forth the Corporation's intent to exercise the Repurchase Right and contain the total number of Shares to be sold to the Corporation pursuant to the exercise of the Repurchase Right, (c) be mailed or delivered to the Purchaser at the Purchaser's address reflected or last reflected on the Corporation's payroll records or delivered to the Purchaser in person, and (d) be so mailed or delivered no later than the ninetieth (90/th/) day following the date that the Purchaser's employment by the Corporation terminates. If mailed, the Repurchase Notice shall be enclosed in a properly sealed envelope, addressed as aforesaid, and deposited (postage prepaid) in a post office or branch post office regularly maintained by the United States Government. The Repurchase Notice shall be deemed to have been duly given as of the date mailed or delivered in accordance with the foregoing provisions.
Share as reasonably determined by the Corporation's Board of Directors as of the date of the Repurchase Notice. No interest shall be paid with respect to and no other adjustments (other than adjustments to reflect stock splits and similar changes in capitalization) shall be made to the Repurchase Price. The closing of any repurchase under this Section 5 shall be at a date to be specified by the Corporation, such date to be no later than 90 days after the date that the Purchaser's employment by the Corporation terminates. The Repurchase Price shall be paid at the closing in the form of a check in the amount of the Repurchase Price, by cancellation of money purchase indebtedness in like amount or by a combination of check and debt cancellation, as the Corporation may determine in its discretion.
Upon a repurchase of any Shares by the Corporation, such repurchased
Shares shall be automatically transferred to the Corporation, without any
further action by the Purchaser (or the Purchaser's beneficiary or personal
representative, as the case may be). The Corporation may exercise its powers
under this Exercise Agreement (including, without limitation, its powers under
Section 3) and take any other action necessary or advisable to evidence such
transfer. The Purchaser, or the Purchaser's beneficiary or personal
representative, as the case may be, shall deliver any additional documents of
transfer that the Corporation may request to confirm the transfer of such
repurchased Shares to the Corporation.
If the Purchaser (or any permitted transferee who is an employee of the Company) ceases to be an employee of the Company and holds Shares as to which the Corporation's Repurchase Right has been exercised, the Purchaser shall be entitled to the value of such Shares in accordance with the foregoing provisions of this Section 5, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a shareholder with respect to the Shares subject to the repurchase. To the maximum extent permitted by law, the Purchaser's rights following the exercise of the Repurchase Right shall, with respect to the repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified above in this Section 5.
The Repurchase Right is in addition to, and not in lieu of, any right that the Corporation may have under the Option Agreement or the Plan. Notwithstanding anything to the contrary, the Corporation may assign any or all of its rights under this Section 5 to one or more stockholders of the Corporation.
6. Limitation on Disposition and Other Restrictions. The Shares and any
Restricted Property in respect of the Shares may not be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily, other than to the Corporation, until the time that
the Shares (and related Restricted Property) become vested in accordance with
Section 2.
7. Plan and Option Agreement. The Purchaser acknowledges receipt of a copy of all documents referenced herein and acknowledges reading and understanding these documents and having an opportunity to ask any questions that he/she may have had about them.
The Company has made and makes no representation regarding the advisability of, or regarding the tax, financial and other consequences of, an election to purchase the Shares prior to the time(s) that they have become vested under the Option Agreement. The Purchaser has
and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors with respect to (1) this purchase and (2) the advisability of and procedures for making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to this purchase and the risks, potential benefits, and consequences of such an election. The Purchaser is not relying on any representations or statements made by the Company or any of its agents. The Purchaser acknowledges that, under applicable law, if he or she decides to make an election under Section 83(b) of the Code with respect to this purchase, such election must be made within 30 days of the date of this purchase.
"PURCHASER" ACCEPTED BY: RED ROBIN GOURMET BURGERS, Inc. /s/ James P. McCloskey --------------------------------- Signature By: /s/ Michael J. Snyder ------------------------------------ Michael J. Snyder James P. McCloskey Its: Chief Executive Officer & President ---------------------------------- ------------------------------------ Print Name April 25, 2002 --------------------------------- Date |
$250,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned James P. McCloskey ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long-term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Two Hundred Fifty Thousand Dollars ($250,000.00), less any principal repaid.
3. Payments. The principal balance of Two Hundred Fifty Thousand Dollars ($250,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) January 29, 2012 or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note; or
(c) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker
and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ James P. McCloskey ------------------------------------- Signature |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25th day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and James P. McCloskey ("Debtor").
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 100,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. 205 ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral, for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from Collateral during the term of this Agreement which (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor, and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchaser who will represent and agree that such purchaser or purchasers are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado, or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in Denver County, State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ James P. McCloskey ------------------------------------ Signature James P. McCloskey By: /s/ Michael J. Snyder ------------------------------------ ------------------------------------- Print Name Michael J. Snyder 5235 South Logan Circle Its: Chief Executive Officer & President ------------------------------------ ----------------------------------- Address Greenwood Village, CO 80104 ------------------------------------ City, State, Zip Code |
STOCK POWER*
For value received, James P. McCloskey (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ James P. McCloskey --------------------------------------- Signature |
* Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Corporation to exercise its repurchase right set forth in the related Option Exercise Agreement and/or its rights under the Pledge Agreement without requiring additional signatures from the Debtor.
SECTION 1 - PROXY
The undersigned, the owner of 100,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Two Hundred Fifty Thousand Dollars ($250,000) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature: /s/ James P. McCloskey -------------------------- |
Print Name: James P. McCloskey
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared James P. McCloskey, personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson ------------------------------------ NOTARY PUBLIC |
[SEAL]
EXHIBIT 10.33
$600,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned James P. McCloskey ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Six Hundred Thousand Dollars ($600,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long-term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Six Hundred Thousand Dollars ($600,000.00), less any principal repaid.
3. Payments. The principal balance of Six Hundred Thousand Dollars ($600,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) June 26, 2006, or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note;
(c) Debtor ceases to be employed by Holder or one of its subsidiaries; or
(d) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ James P. McCloskey ---------------------------------------- Signature |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25th day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and James P. McCloskey ("Debtor").
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Six Hundred Thousand Dollars ($600,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 300,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. [199, 200, 201, 202, 203] ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from the Collateral during the term of this Agreement (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchaser who will represent and agree that such purchaser or purchasers are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel, at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in the State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ James P. McCloskey --------------------------------- Signature James P. McCloskey By: /s/ Michael J. Snyder --------------------------------- --------------------------------------- Michael J. Snyder Print Name 5235 South Logan Circle Its: Chief Executive Officer & President --------------------------------- ------------------------------------ Address Greenwood Village, CO 80121 --------------------------------- City, State, Zip Code |
STOCK POWER*
For value received, James P. McCloskey (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ James P. McCloskey -------------------------------- Signature |
* Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Corporation to exercise its repurchase right set forth in the related Option Exercise Agreement and/or its rights under the Pledge Agreement without requiring additional signatures from the Debtor.
SECTION 1 - PROXY
The undersigned, the owner of 300,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Six Hundred Thousand Dollars ($600,000.00) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature: /s/ James P. McCloskey ----------------------------- Print Name: James P. McCloskey |
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared James P. McCloskey, personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson ---------------------------------------- NOTARY PUBLIC |
[SEAL]
EXHIBIT 10.34
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
OPTION EXERCISE AGREEMENT - EARLY EXERCISE
Name of Optionee: Michael J. Snyder -------------------------- Date of Grant of Option: May 11, 2000 -------------------------- Exercise Price per Share: $2.00 -------------------------- Number of Shares Being Exercised: 1,500,000 -------------------------- |
The undersigned (the "Purchaser") hereby irrevocably elects to exercise his/her right, evidenced by that certain stock option agreement dated as of the Date of Grant of Option identified above (the "Option Agreement") under the Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan (the "Plan"), as follows:
. the Purchaser hereby irrevocably elects to purchase a number of shares of Common Stock, par value $0.001 per share (the "Shares"), of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), equal to the Number of Shares Being Exercised set forth above, and
. such purchase shall be at a price per share equal to the Exercise Price per Share set forth above (subject to applicable withholding taxes).
1. Investment Representations. The Purchaser acknowledges that the sale of the Shares by the Purchaser is restricted by SEC Rule 701. The Purchaser hereby affirms as made as of the date hereof the representations in his or her Option Agreement and such representations are incorporated herein by this reference. The Purchaser represents that he/she has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and can afford a complete loss of the purchase price for the Shares. The Purchaser acknowledges receipt of the Corporation's condensed consolidated financial information.
The Purchaser also understands and acknowledges (a) that the certificates representing the Shares will be legended as provided for below, and (b) that the Corporation has no obligation to register the Shares or file any registration statement under federal or state securities laws.
The certificates representing the Shares will bear the following legends or substantially similar legends:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
"THE SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT TO REPURCHASE THEM UNDER AN AGREEMENT WITH THE CORPORATION, A COPY OF WHICH IS AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION."
2. Vesting. The Shares are being acquired prior to the time that they have become vested in accordance with the terms of the Option Agreement. Accordingly, the Shares are subject to the Corporation's repurchase right set forth in Section 5 below and other restrictions set forth herein. The Shares shall vest, and the Corporation's repurchase right under Section 5 shall lapse, as of the date(s) that the Option would have otherwise become vested as to such Shares. The maximum number of Shares that may vest on any occasion or event shall not exceed the number of shares that would have otherwise vested on such date under the Option Agreement had the underlying stock option not been exercised prior to full vesting to acquire the Shares. No additional Shares shall vest after the date that the Purchaser's employment by the Corporation terminates.
3. Delivery of Share Certificate. The Corporation shall issue a certificate or certificates for the Shares, registered in the name of the Purchaser, which certificate(s) shall upon redelivery thereof to the Corporation pursuant to the following provisions of this Section 3 be held by the Corporation until the restrictions on such Shares shall have lapsed and the Shares shall thereby have become vested or the Shares represented thereby are repurchased by the Corporation in accordance with Section 5.
Upon delivery to the Purchaser of the certificate(s) representing the Shares, the Purchaser shall redeliver such certificate(s) to the Corporation, together with a stock power or stock powers, in blank and in substantially the form attached hereto, with respect to such certificate(s), to be held by the Corporation pursuant to the terms hereof. The Purchaser hereby appoints the Corporation and each of its authorized representatives as the Purchaser's attorney(s)-in-fact to effect any transfer of the Shares that are repurchased by the Corporation in accordance with the terms hereof or related cash, property or rights (including Restricted Property, as such term is defined below) to the Corporation as may be required pursuant to this Exercise Agreement and to execute such documents as the Corporation or such representatives deem necessary or advisable in connection with any such transfer.
Promptly after the vesting of the Shares in accordance with Section 2 above, a certificate or certificates evidencing the number of shares of Common Stock as to which the restrictions
have lapsed or been released shall be delivered to the Purchaser or other person entitled under the terms hereof and of the Plan to receive the shares. The Shares so delivered shall no longer be subject to the Corporation's repurchase right under Section 5, but such shares shall continue to be subject to the other restrictions set forth herein, in the Option Agreement, and in the Plan. Vested Shares and any other amounts deliverable pursuant to the Shares shall be delivered and paid only to the Purchaser or the Purchaser's beneficiary or personal representative, as the case may be.
4. Dividend; Voting Rights. After the date of issuance of the Shares, the Purchaser shall be entitled to cash dividends and voting rights with respect to the Shares, but such rights shall terminate as to any Shares that are repurchased by the Corporation in accordance with Section 5. Any securities or other property receivable in respect of the Shares by the Purchaser as a result of any dividend or other distribution, conversion or exchange of or with respect to the Shares are, together, referred to as "Restricted Property." Upon a repurchase of any Shares by the Corporation in accordance with Section 5, the Restricted Property related to such repurchased Shares shall be automatically transferred to the Corporation, without any further action by the Purchaser (or the Purchaser's beneficiary or personal representative, as the case may be) or additional consideration from the Corporation. The Corporation may take any other action necessary or advisable to evidence such transfer. The Purchaser, or the Purchaser's beneficiary or personal representative, as the case may be, shall deliver any additional documents of transfer that the Corporation may request to confirm the transfer of such Restricted Property to the Corporation.
5. Corporation's Repurchase Right. Subject to the terms and conditions of this Section 5, the Corporation shall have the right (the "Repurchase Right") (but not the obligation) to repurchase in one or more transactions in connection with the termination of the Purchaser's employment with the Corporation, and the Purchaser (or any permitted transferee) shall be obligated to sell any of the Shares that have not, as of the date of such termination of employment, become vested.
To exercise the Repurchase Right, the Corporation must give written notice thereof to the Purchaser (the "Repurchase Notice"). The Repurchase Notice is irrevocable by the Corporation and must (a) be in writing and signed by an authorized officer of the Corporation, (b) set forth the Corporation's intent to exercise the Repurchase Right and contain the total number of Shares to be sold to the Corporation pursuant to the exercise of the Repurchase Right, (c) be mailed or delivered to the Purchaser at the Purchaser's address reflected or last reflected on the Corporation's payroll records or delivered to the Purchaser in person, and (d) be so mailed or delivered no later than the ninetieth (90/th/) day following the date that the Purchaser's employment by the Corporation terminates. If mailed, the Repurchase Notice shall be enclosed in a properly sealed envelope, addressed as aforesaid, and deposited (postage prepaid) in a post office or branch post office regularly maintained by the United States Government. The Repurchase Notice shall be deemed to have been duly given as of the date mailed or delivered in accordance with the foregoing provisions.
The price per Share to be paid by the Corporation upon settlement of the Corporation's Repurchase Right (the "Repurchase Price") shall equal the lesser of (a) the price paid by the Purchaser to exercise the stock option and acquire such Share, or (b) the fair market value of a
Share as reasonably determined by the Corporation's Board of Directors as of the date of the Repurchase Notice. No interest shall be paid with respect to and no other adjustments (other than adjustments to reflect stock splits and similar changes in capitalization) shall be made to the Repurchase Price. The closing of any repurchase under this Section 5 shall be at a date to be specified by the Corporation, such date to be no later than 90 days after the date that the Purchaser's employment by the Corporation terminates. The Repurchase Price shall be paid at the closing in the form of a check in the amount of the Repurchase Price, by cancellation of money purchase indebtedness in like amount or by a combination of check and debt cancellation, as the Corporation may determine in its discretion.
Upon a repurchase of any Shares by the Corporation, such repurchased Shares
shall be automatically transferred to the Corporation, without any further
action by the Purchaser (or the Purchaser's beneficiary or personal
representative, as the case may be). The Corporation may exercise its powers
under this Exercise Agreement (including, without limitation, its powers under
Section 3) and take any other action necessary or advisable to evidence such
transfer. The Purchaser, or the Purchaser's beneficiary or personal
representative, as the case may be, shall deliver any additional documents of
transfer that the Corporation may request to confirm the transfer of such
repurchased Shares to the Corporation.
If the Purchaser (or any permitted transferee who is an employee of the Company) ceases to be an employee of the Company and holds Shares as to which the Corporation's Repurchase Right has been exercised, the Purchaser shall be entitled to the value of such Shares in accordance with the foregoing provisions of this Section 5, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a shareholder with respect to the Shares subject to the repurchase. To the maximum extent permitted by law, the Purchaser's rights following the exercise of the Repurchase Right shall, with respect to the repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified above in this Section 5.
The Repurchase Right is in addition to, and not in lieu of, any right that the Corporation may have under the Option Agreement or the Plan. Notwithstanding anything to the contrary, the Corporation may assign any or all of its rights under this Section 5 to one or more stockholders of the Corporation.
6. Limitation on Disposition and Other Restrictions. The Shares and any
Restricted Property in respect of the Shares may not be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily, other than to the Corporation, until the time that
the Shares (and related Restricted Property) become vested in accordance with
Section 2.
7. Plan and Option Agreement. The Purchaser acknowledges receipt of a copy of all documents referenced herein and acknowledges reading and understanding these documents and having an opportunity to ask any questions that he/she may have had about them.
The Company has made and makes no representation regarding the advisability of, or regarding the tax, financial and other consequences of, an election to purchase the Shares prior to the time(s) that they have become vested under the Option Agreement. The Purchaser has
and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors with respect to (1) this purchase and (2) the advisability of and procedures for making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to this purchase and the risks, potential benefits, and consequences of such an election. The Purchaser is not relying on any representations or statements made by the Company or any of its agents. The Purchaser acknowledges that, under applicable law, if he or she decides to make an election under Section 83(b) of the Code with respect to this purchase, such election must be made within 30 days of the date of this purchase.
"PURCHASER" ACCEPTED BY: RED ROBIN GOURMET BURGERS, Inc. /s/ Michael J. Snyder --------------------------------- Signature By: /s/ James P. McCloskey --------------------------------- James P. McCloskey Michael J. Snyder Its: Chief Financial Officer & Secretary ---------------------------------- ----------------------------------- Print Name April 25, 2002 -------------------------------- Date |
$3,000,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned Michael J. Snyder ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Three Million Dollars ($3,000,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long-term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Three Million Dollars ($3,000,000.00), less any principal repaid.
3. Payments. The principal balance of Three Million Dollars ($3,000,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) December 31, 2009 or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note; or
(c) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker
and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ Michael J. Snyder ----------------------------------- Signature |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25 day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and Michael J. Snyder ("Debtor").
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Three Million Dollars ($3,000,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 1,500,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. [216 and 217] ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral, for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from Collateral during the term of this Agreement which (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor, and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchaser who will represent and agree that such purchaser or purchasers are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado, or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in Denver County, State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ Michael J. Snyder ----------------------------------- Signature Michael J. Snyder By: /s/ James P. McCloskey ----------------------------------- -------------------------------- Print Name James P. McCloskey 142 Capulin Place Its: Chief Financial Officer & Secretary ----------------------------------- ----------------------------------- Address Castle Rock, CO 80104 ----------------------------------- City, State, Zip Code |
STOCK POWER*
For value received, Michael J. Snyder (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ Michael J. Snyder ---------------------------------- Signature |
* Instructions: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Corporation to exercise its repurchase right set forth in the related Option Exercise Agreement and/or its rights under the Pledge Agreement without requiring additional signatures from the Debtor.
SECTION 1 - PROXY
The undersigned, the owner of 1,500,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Three Million Dollars ($3,000,000) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature: /s/ Michael J. Snyder ---------------------- |
Print Name: Michael J. Snyder
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared Michael J. Snyder, personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson ------------------------------------- NOTARY PUBLIC |
[SEAL]
EXHIBIT 10.35
RED ROBIN GOURMET BURGERS, INC.
2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN
OPTION EXERCISE AGREEMENT - EARLY EXERCISE
Name of Optionee: Michael E. Woods -------------------------- Date of Grant of Option: May 11, 2000 -------------------------- Exercise Price per Share: $2.00 -------------------------- Number of Shares Being Exercised: 300,000 -------------------------- |
The undersigned (the "Purchaser") hereby irrevocably elects to exercise his/her right, evidenced by that certain stock option agreement dated as of the Date of Grant of Option identified above (the "Option Agreement") under the Red Robin Gourmet Burgers, Inc. 2000 Management Performance Common Stock Option Plan (the "Plan"), as follows:
. the Purchaser hereby irrevocably elects to purchase a number of shares of Common Stock, par value $0.001 per share (the "Shares"), of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), equal to the Number of Shares Being Exercised set forth above, and
. such purchase shall be at a price per share equal to the Exercise Price per Share set forth above (subject to applicable withholding taxes).
1. Investment Representations. The Purchaser acknowledges that the sale of the Shares by the Purchaser is restricted by SEC Rule 701. The Purchaser hereby affirms as made as of the date hereof the representations in his or her Option Agreement and such representations are incorporated herein by this reference. The Purchaser represents that he/she has no need for liquidity in this investment, has the ability to bear the economic risk of this investment, and can afford a complete loss of the purchase price for the Shares. The Purchaser acknowledges receipt of the Corporation's condensed consolidated financial information.
The Purchaser also understands and acknowledges (a) that the
certificates representing the Shares will be legended as provided for below, and
(b) that the Corporation has no obligation to register the Shares or file any
registration statement under federal or state securities laws.
The certificates representing the Shares will bear the following legends or substantially similar legends:
"OWNERSHIP OF THIS CERTIFICATE, THE SHARES EVIDENCED BY THIS CERTIFICATE AND ANY INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER APPLICABLE LAW AND UNDER AGREEMENTS WITH THE CORPORATION, INCLUDING RESTRICTIONS ON SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION."
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), NOR HAVE THEY BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR IN THE OPINION OF COUNSEL TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND WITH APPLICABLE STATE SECURITIES LAWS."
"THE SHARES ARE SUBJECT TO THE CORPORATION'S RIGHT TO REPURCHASE THEM UNDER AN AGREEMENT WITH THE CORPORATION, A COPY OF WHICH IS AVAILABLE FOR REVIEW AT THE OFFICE OF THE SECRETARY OF THE CORPORATION."
2. Vesting. The Shares are being acquired prior to the time that they have become vested in accordance with the terms of the Option Agreement. Accordingly, the Shares are subject to the Corporation's repurchase right set forth in Section 5 below and other restrictions set forth herein. The Shares shall vest, and the Corporation's repurchase right under Section 5 shall lapse, as of the date(s) that the Option would have otherwise become vested as to such Shares. The maximum number of Shares that may vest on any occasion or event shall not exceed the number of shares that would have otherwise vested on such date under the Option Agreement had the underlying stock option not been exercised prior to full vesting to acquire the Shares. No additional Shares shall vest after the date that the Purchaser's employment by the Corporation terminates.
3. Delivery of Share Certificate. The Corporation shall issue a certificate or certificates for the Shares, registered in the name of the Purchaser, which certificate(s) shall upon redelivery thereof to the Corporation pursuant to the following provisions of this Section 3 be held by the Corporation until the restrictions on such Shares shall have lapsed and the Shares shall thereby have become vested or the Shares represented thereby are repurchased by the Corporation in accordance with Section 5.
Upon delivery to the Purchaser of the certificate(s) representing the Shares, the Purchaser shall redeliver such certificate(s) to the Corporation, together with a stock power or stock powers, in blank and in substantially the form attached hereto, with respect to such certificate(s), to be held by the Corporation pursuant to the terms hereof. The Purchaser hereby appoints the Corporation and each of its authorized representatives as the Purchaser's attorney(s)-in-fact to effect any transfer of the Shares that are repurchased by the Corporation in accordance with the terms hereof or related cash, property or rights (including Restricted Property, as such term is defined below) to the Corporation as may be required pursuant to this Exercise Agreement and to execute such documents as the Corporation or such representatives deem necessary or advisable in connection with any such transfer.
Promptly after the vesting of the Shares in accordance with Section 2 above, a certificate or certificates evidencing the number of shares of Common Stock as to which the restrictions
have lapsed or been released shall be delivered to the Purchaser or other person entitled under the terms hereof and of the Plan to receive the shares. The Shares so delivered shall no longer be subject to the Corporation's repurchase right under Section 5, but such shares shall continue to be subject to the other restrictions set forth herein, in the Option Agreement, and in the Plan. Vested Shares and any other amounts deliverable pursuant to the Shares shall be delivered and paid only to the Purchaser or the Purchaser's beneficiary or personal representative, as the case may be.
4. Dividend; Voting Rights. After the date of issuance of the Shares, the Purchaser shall be entitled to cash dividends and voting rights with respect to the Shares, but such rights shall terminate as to any Shares that are repurchased by the Corporation in accordance with Section 5. Any securities or other property receivable in respect of the Shares by the Purchaser as a result of any dividend or other distribution, conversion or exchange of or with respect to the Shares are, together, referred to as "Restricted Property." Upon a repurchase of any Shares by the Corporation in accordance with Section 5, the Restricted Property related to such repurchased Shares shall be automatically transferred to the Corporation, without any further action by the Purchaser (or the Purchaser's beneficiary or personal representative, as the case may be) or additional consideration from the Corporation. The Corporation may take any other action necessary or advisable to evidence such transfer. The Purchaser, or the Purchaser's beneficiary or personal representative, as the case may be, shall deliver any additional documents of transfer that the Corporation may request to confirm the transfer of such Restricted Property to the Corporation.
5. Corporation's Repurchase Right. Subject to the terms and conditions of this Section 5, the Corporation shall have the right (the "Repurchase Right") (but not the obligation) to repurchase in one or more transactions in connection with the termination of the Purchaser's employment with the Corporation, and the Purchaser (or any permitted transferee) shall be obligated to sell any of the Shares that have not, as of the date of such termination of employment, become vested.
To exercise the Repurchase Right, the Corporation must give written notice thereof to the Purchaser (the "Repurchase Notice"). The Repurchase Notice is irrevocable by the Corporation and must (a) be in writing and signed by an authorized officer of the Corporation, (b) set forth the Corporation's intent to exercise the Repurchase Right and contain the total number of Shares to be sold to the Corporation pursuant to the exercise of the Repurchase Right, (c) be mailed or delivered to the Purchaser at the Purchaser's address reflected or last reflected on the Corporation's payroll records or delivered to the Purchaser in person, and (d) be so mailed or delivered no later than the ninetieth (90/th/) day following the date that the Purchaser's employment by the Corporation terminates. If mailed, the Repurchase Notice shall be enclosed in a properly sealed envelope, addressed as aforesaid, and deposited (postage prepaid) in a post office or branch post office regularly maintained by the United States Government. The Repurchase Notice shall be deemed to have been duly given as of the date mailed or delivered in accordance with the foregoing provisions.
Share as reasonably determined by the Corporation's Board of Directors as of the date of the Repurchase Notice. No interest shall be paid with respect to and no other adjustments (other than adjustments to reflect stock splits and similar changes in capitalization) shall be made to the Repurchase Price. The closing of any repurchase under this Section 5 shall be at a date to be specified by the Corporation, such date to be no later than 90 days after the date that the Purchaser's employment by the Corporation terminates. The Repurchase Price shall be paid at the closing in the form of a check in the amount of the Repurchase Price, by cancellation of money purchase indebtedness in like amount or by a combination of check and debt cancellation, as the Corporation may determine in its discretion.
Upon a repurchase of any Shares by the Corporation, such repurchased
Shares shall be automatically transferred to the Corporation, without any
further action by the Purchaser (or the Purchaser's beneficiary or personal
representative, as the case may be). The Corporation may exercise its powers
under this Exercise Agreement (including, without limitation, its powers under
Section 3) and take any other action necessary or advisable to evidence such
transfer. The Purchaser, or the Purchaser's beneficiary or personal
representative, as the case may be, shall deliver any additional documents of
transfer that the Corporation may request to confirm the transfer of such
repurchased Shares to the Corporation.
If the Purchaser (or any permitted transferee who is an employee of the Company) ceases to be an employee of the Company and holds Shares as to which the Corporation's Repurchase Right has been exercised, the Purchaser shall be entitled to the value of such Shares in accordance with the foregoing provisions of this Section 5, but (unless otherwise required by law) shall no longer be entitled to participation in the Corporation or other rights as a shareholder with respect to the Shares subject to the repurchase. To the maximum extent permitted by law, the Purchaser's rights following the exercise of the Repurchase Right shall, with respect to the repurchase and the Shares covered thereby, be solely the rights that he or she has as a general creditor of the Corporation to receive payment of the amount specified above in this Section 5.
The Repurchase Right is in addition to, and not in lieu of, any right that the Corporation may have under the Option Agreement or the Plan. Notwithstanding anything to the contrary, the Corporation may assign any or all of its rights under this Section 5 to one or more stockholders of the Corporation.
6. Limitation on Disposition and Other Restrictions. The Shares and any
Restricted Property in respect of the Shares may not be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily, other than to the Corporation, until the time that
the Shares (and related Restricted Property) become vested in accordance with
Section 2.
7. Plan and Option Agreement. The Purchaser acknowledges receipt of a copy of all documents referenced herein and acknowledges reading and understanding these documents and having an opportunity to ask any questions that he/she may have had about them.
The Company has made and makes no representation regarding the advisability of, or regarding the tax, financial and other consequences of, an election to purchase the Shares prior to the time(s) that they have become vested under the Option Agreement. The Purchaser has
and will rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors with respect to (1) this purchase and (2) the advisability of and procedures for making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to this purchase and the risks, potential benefits, and consequences of such an election. The Purchaser is not relying on any representations or statements made by the Company or any of its agents. The Purchaser acknowledges that, under applicable law, if he or she decides to make an election under Section 83(b) of the Code with respect to this purchase, such election must be made within 30 days of the date of this purchase.
"PURCHASER" ACCEPTED BY: /s/ Michael E. Woods RED ROBIN GOURMET BURGERS, Inc. ---------------------------- Signature By: /s/ Michael J. Snyder ------------------------------------- Michael J. Snyder Michael E. Woods Its: Chief Executive Officer & President ---------------------------- ------------------------------------- Print Name April 25, 2002 ---------------------------- Date |
$600,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned Michael E. Woods ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Six Hundred Thousand Dollars ($600,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long-term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Six Hundred Thousand Dollars ($600,000.00), less any principal repaid.
3. Payments. The principal balance of Six Hundred Thousand Dollars ($600,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) December 31, 2009 or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note; or
(c) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker
and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ Michael E. Woods ----------------------------------- Signature |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25 day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and Michael E. Woods ("Debtor").
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Six Hundred Thousand Dollars ($600,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 300,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. [215] ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral, for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from Collateral during the term of this Agreement which (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor, and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchaser who will represent and agree that such purchaser or purchasers are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado, or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in Denver County, State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ Michael E. Woods ------------------------------------ Signature Michael E. Woods By: /s/ Michael J. Snyder ------------------------------------ --------------------------------- Print Name Michael J. Snyder 9999 S. Euclid Way Its: Chief Executive Officer & President ------------------------------------ ----------------------------------- Address Denver, CO 80209 ------------------------------------ City, State, Zip Code |
STOCK POWER*
For value received, Michael E. Woods (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ Michael E. Woods ------------------------------------------ Signature |
SECTION 1 - PROXY
The undersigned, the owner of 300,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Six Hundred Thousand Dollars ($600,000) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature: /s/ Michael E. Woods ----------------------------- |
Print Name: Michael E. Woods
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared Michael E. Woods, personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson ---------------------------------------- NOTARY PUBLIC |
[SEAL]
EXHIBIT 10.36
$250,000.00 April 25, 2002 Greenwood Village, CO
FOR VALUE RECEIVED, the undersigned Michael E. Woods ("Maker"), promises to pay to the order of RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Holder"), which term shall include any subsequent holder of this Note, at 5575 DTC Parkway, Suite 110, Greenwood Village, Colorado 80111 (or at such other place as Holder shall designate in writing) in lawful money of the United States of America, the principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00), with interest thereon commencing as of the date first written above at the rate (the "Interest Rate") described below.
1. Interest Rate. The Interest Rate shall be equal to 100% of the long-term Applicable Federal Rate, for annual compounding, announced by the Internal Revenue Service and in effect on the date first set forth above. The parties agree that such rate is 4.65% for purposes of this Note. Interest shall be compounded annually.
2. Outstanding Principal Balance. All references to the "Outstanding Principal Balance" shall mean the sum of Two Hundred Fifty Thousand Dollars ($250,000.00), less any principal repaid.
3. Payments. The principal balance of Two Hundred Fifty Thousand Dollars ($250,000.00) shall be due and payable in full on the "Due Date." The Due Date shall be the first to occur of (1) January 6, 2007, or (2) the first date that the Maker is no longer employed by the Holder (or a subsidiary of the Holder). On the Due Date, the accrued interest on this Note shall also be due and payable.
4. Application of Payments. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and then to the reduction of the Outstanding Principal Balance.
5. Prepayment Right. Maker shall have the right to prepay at any time, in whole or in part, the Outstanding Principal Balance of this Note, without premium or penalty.
6. Events of Default. Time is of the essence hereof. Upon the occurrence of any of the following events (the "Events of Default"):
(a) Failure of Maker to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due;
(b) Default by Maker in the performance of any other obligation of Maker under this Note;
(c) Debtor ceases to be employed by Holder or one of its subsidiaries; or
(d) Default by Maker in the performance of any obligation under that certain Option Exercise Agreement (the "Option Exercise Agreement") of even date herewith between Maker and Holder, under that certain Pledge Agreement of even date herewith between Maker and Holder, or under any other document delivered by Maker in connection with the Option Exercise Agreement;
then if Maker does not fully cure any Event of Default within five (5) days of the date written notice is given by Holder to Maker (at Maker's address set forth below his signature), payment of the entire Outstanding Principal Balance and accrued interest on this Note shall, at the option of Holder, be accelerated and shall be immediately due and payable without notice or demand. In such event, Holder shall have the right, in addition to all other rights and remedies hereunder or under any other document, to foreclose or to require foreclosure of any or all liens securing the payment hereof.
7. Default Rate. In the event that Maker fails to pay any portion of the Outstanding Principal Balance or any portion of the accrued interest thereon when due, the amount past due and unpaid shall bear interest at an annual rate (the "Default Rate") equal to the greater of: (i) the Interest Rate; or (ii) the lesser of (a) twelve percent (12%) per annum or (b) the rate established by the Federal Reserve Bank of San Francisco on advances to member banks under Sections 13 and 13(a) of the Federal Reserve Act in effect on the twenty-fifth (25th) day of the month immediately preceding the date of this Note plus five percent (5%) per annum or (c) the maximum rate that may be charged under applicable law; computed from the Due Date on which said amount was due and payable until paid. The charging or collecting of interest at the Default Rate shall not limit any of Holder's other rights or remedies under this Note.
8. Governing Law. Maker, and each endorser and cosigner of this Note, acknowledges and agrees that this Note is made and is intended to be paid and performed in the State of Colorado and the provisions hereof will be construed in accordance with the laws of the State of Colorado and, to the extent that federal law may preempt the applicability of state laws, federal law. Maker, and each endorser and cosigner of this Note further agree that upon the occurrence of a default, this Note may be enforced in any court of competent jurisdiction in the State of Colorado, and they do hereby submit to the jurisdiction of such courts regardless of their residence.
9. Remedies Cumulative; Waiver. The remedies of Holder as provided herein shall be cumulative and concurrent, and may be pursued singularly, successively or together, in the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Holder, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same; such waiver or release to be affected only through a written document executed by Holder and then only to the extent specifically recited therein. Without limiting the generality of the preceding sentence, acceptance by Holder of any payment with knowledge of the occurrence of a default by Maker shall not be deemed a waiver of such default, and acceptance by Holder of any payment in an amount less than the amount then due hereunder shall be an acceptance on account only and shall not in any way affect the existence of a default hereunder. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.
10. Purpose of Loan. Maker certifies that the loan evidenced by this Note is obtained for business or commercial purposes and that the proceeds thereof shall not be used for personal, family, household or agricultural purposes.
11. Miscellaneous Provisions.
(a) Maker, and each endorser and cosigner of this Note expressly grants to Holder the right to release or to agree not to sue any other person, or to suspend the right to enforce this Note against such other person or to otherwise discharge such person; and Maker, and each endorser and cosigner agrees that the exercise of such rights by Holder will have no effect on the liability of any other person, primarily or secondarily liable hereunder. Maker, and each endorser and cosigner of this Note waives, to the fullest extent permitted by law, demand for payment, presentment for payment, protest, notice of protest, notice of dishonor, notice of nonpayment, notice of acceleration of maturity, diligence in taking any action to collect sums owing hereunder, any duty or obligation of Holder to effect, protect, perfect, retain or enforce any security for the payment of this Note or to proceed against any collateral before otherwise enforcing this Note, and the right to plead as a defense to the payment hereof any statute of limitations.
(b) This Note shall be paid when due without deduction or setoff of any kind or nature whatsoever.
(c) Maker agrees to reimburse Holder for all costs, including, without limitation, reasonable attorneys' fees, incurred to collect this Note if this Note is not paid when due, including, but not limited to, attorneys' fees incurred in connection with any bankruptcy proceedings instituted by or against Maker (including relief from stay litigation).
(d) If any provision hereof is for any reason and to any extent, invalid or unenforceable, then neither the remainder of the document in which such provision is contained, nor the application of the provision to other persons, entities or circumstances shall be affected thereby, but instead shall be enforceable to the maximum extent permitted by law.
(e) This Note shall be a joint and several obligation of Maker, and of all endorsers and cosigners hereof and shall be binding upon them and their respective heirs, personal representatives, successors and assigns.
(f) Maker may modify this Note in any manner that does not materially and adversely affect Holder. Except as provided in the preceding sentence, this Note may not be modified or amended orally, but only by a modification or amendment in writing signed by Holder and Maker.
(g) Notwithstanding anything in the Option Exercise Agreement to the contrary, if any amount becomes due or payable from the Holder to the Maker under the Option Exercise Agreement (in connection with the Holder's repurchase of shares or otherwise), the Holder may, in its sole discretion and in lieu of making such payment to the Maker, treat such amount as a payment of the Maker against the interest and/or principal on this Note.
(h) When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever.
(i) The headings of the paragraphs and sections of this Note are for convenience of reference only, are not to be considered a part hereof and shall not limit to otherwise affect any of the terms hereof.
(j) In the event that at any time any payment received by Holder hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall otherwise be deemed to be due to any party other than Holder, then, in any such event, the obligation to make such payment shall survive any cancellation of this Note and/or return thereof to Maker and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and the amount of such payment shall bear interest at the Default Rate from the date of such final order until repaid hereunder.
12. Security. This Note is secured by a pledge of certain personal property of Maker as described more fully in that certain Pledge Agreement executed by Maker and Holder concurrently herewith.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day and year first above written.
"MAKER"
/s/ Michael E. Woods Signature Michael E. Woods ----------------------------------- Print Name |
THIS PLEDGE AGREEMENT ("Agreement") is made and entered into this 25 day of April, 2002, between RED ROBIN GOURMET BURGERS, INC., a Delaware corporation ("Secured Party"), and Michael E. Woods ("Debtor").
A. Concurrently herewith, Debtor has executed a certain Secured Promissory Note (the "Purchase Note") in the stated principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00) in favor of Secured Party.
B. The indebtedness of Debtor to Secured Party under the Purchase Note is hereinafter referred to as the "Indebtedness."
C. It is the purpose and intent of the parties hereto to secure the payment by Debtor to Secured Party of the Indebtedness by a pledge of certain collateral, according to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions set forth herein, the parties agree as follows:
1. Debtor hereby grants to Secured Party a security interest in and to 125,000 shares of the Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc. which are evidenced by Share Certificate No. [ 214 ] ("Collateral") and does hereby deliver to and deposit the Collateral with the Board of Directors of Secured Party, together with a stock power duly executed in blank.
During the term hereof, and subject to the provisions of this Agreement, Secured Party shall hold and retain the Collateral for the purpose of perfecting the security interest herein granted to Secured Party, and for the purpose of carrying out the provisions of this Agreement.
2. The Collateral shall secure the payment of the Indebtedness.
3. Debtor warrants that Debtor is the sole lawful owner of the Collateral and that there is no lien or charge against, or encumbrance or security interest in, or adverse claim to, the Collateral, or any portion thereof, other than the security interest created pursuant to this Agreement and the Secured Party's rights pursuant to an Option Exercise Agreement of even date herewith between the Secured Party and Debtor. So long as there is any Indebtedness whatsoever owing to Secured Party, Debtor agrees to keep the Collateral free and dear of any and all liens, encumbrances, security interests (other than the security interest of Secured Party), adverse claims or interests.
4. Any and all cash dividends and cash distributions during the term of this Agreement which derive from the Collateral shall be retained by Secured Party and treated as a prepayment by Debtor against the Indebtedness. In the event that Secured Party cannot or does not (for any reason) retain such cash dividends or cash distributions, Debtor shall promptly remit
the amount of such dividends and distributions in cash to Secured Party to be treated as a prepayment by Debtor against the Indebtedness. As long as Debtor is not in default hereunder, Debtor shall retain all voting rights associated with the Collateral. After the occurrence of a default hereunder, Secured Party shall have all voting rights associated with the Collateral. Any securities or other property which are derived from the Collateral during the term of this Agreement (as a result of any non-cash dividend or other distribution of such securities or other property, conversion or exchange of or with respect to the Collateral) shall, regardless of whether Debtor is in default hereunder, be held by Secured Party as additional Collateral.
5. Debtor shall be in default under this Agreement upon the happening of any of the following events:
(a) Debtor fails to pay any portion of the Indebtedness when due, or commits a default under the Purchase Note, subject to any applicable grace or cure periods set forth therein.
(b) Debtor fails to perform any other agreement or covenant under this Agreement within any applicable notice and/or "grace" periods specified herein, provided that if no notice or grace period is herein specified, Debtor shall have ten (10) days after notice thereof has been given within which to cure any such default;
(c) All or any portion of the Collateral is seized or levied upon by writ of attachment, garnishment, execution or otherwise, and such seizure or levy is not released within thirty (30) days thereafter;
(d) Debtor executes a general assignment for the benefit of his creditors, convenes any meeting of his creditors, becomes insolvent, admits in writing his insolvency or inability to pay his debts, or is unable to pay or is generally not paying his debts as they become due;
(e) A receiver, trustee, custodian or agent is appointed to take possession of all or any portion of the Collateral or all or any substantial portion of Debtor's assets;
(f) Any case or proceeding is voluntarily commenced by Debtor under any provision of the federal Bankruptcy Code or any other federal or state law relating to debtor rehabilitation, insolvency, bankruptcy, liquidation or reorganization, or any such case or proceeding is involuntarily commenced against Debtor and not dismissed within thirty (30) days thereafter;
(g) Any representation made by Debtor in this Agreement shall have been untrue or incorrect in any material respect when made.
Upon such default, Secured Party may, at its option, declare all Indebtedness to be immediately due and payable. Additionally, Secured Party shall have the rights and remedies set forth in Paragraph 6 below.
6. Should Debtor default under this Agreement, Secured Party shall have all the rights and remedies afforded a secured party under Article 9 of the Uniform Commercial Code of Colorado and may, in connection therewith, also:
(a) Require Debtor to assemble the Collateral and make its possession available to Secured Party at a place designated by Secured Party that is reasonably convenient to both Debtor and Secured Party; or
(b) Sell, lease or otherwise dispose of the Collateral at public or private sale, in one or more sales, as a unit or in parcels, and at such time and place and on such terms as Secured Party may determine. Secured Party may be the purchaser of any or all of the Collateral at any public or private sale. If, at any time when Secured Party shall determine to exercise its right to sell all or any part of the Collateral and such Collateral, or the part thereof to be sold, it has been advised by legal counsel that the Collateral is subject to the Securities Act of 1933 as amended or any state securities laws, Secured Party in its sole and absolute discretion, is hereby expressly authorized to sell such Collateral, or any part thereof, subject to obtaining all required regulatory approvals, by private sale in such manner and under such circumstances as Secured Party may deem necessary or advisable in order that such sale may be effected legally without registration or qualification under applicable securities laws. Without limiting the generality of the foregoing, Secured Party, in its sole and absolute discretion, may approach and negotiate with a restricted number of potential purchasers to effect such sale or restrict such sale to a purchaser or purchasers who will represent and agree that such purchaser or purchaser are purchasing for his or their own account, for investment only, and not with a view to the distribution or sale of such Collateral or any part thereof. Any such sale shall be deemed to be a sale made in a commercially reasonable manner within the meaning of the Uniform Commercial Code of the State of Colorado and Debtor hereby consents and agrees that Secured Party shall incur no responsibility or liability for selling all or any part of the Collateral at a price which is not unreasonably low, notwithstanding the possibility that a higher price might be realized if the sale were public. Any public sale of any or all of the Collateral may be postponed from time to time by public announcement at the time and place last scheduled for the sale. Without limiting the generality of this Section 6, it shall conclusively be deemed to be commercially reasonable for Secured Party to direct any prospective purchaser of any or all of the Collateral to Debtor to ascertain all information concerning the status of Red Robin Gourmet Burgers, Inc. Secured Party's disposition of any or all of the Collateral in any manner which differs from the procedures specified in this Section 6 shall not be deemed to be commercially unreasonable; or
(c) Propose to accept the Collateral after giving notice of such proposal to Debtor and to any other person with a security interest in the Collateral as required by and in accordance with Sections 4-9-620 and 4-9-621 of the Uniform Commercial Code of Colorado, or any applicable successor statute. Such acceptance shall discharge the obligation of Debtor with respect to the Indebtedness in accordance with Section 4-9-622 of the Uniform Commercial Code of Colorado or any applicable successor statute, provided that neither Debtor nor any other person with a security interest in the Collateral objects in writing to such proposal within twenty (20) days after receipt of such notice.
The proceeds of any sale, lease or other disposition of the Collateral shall be applied in the manner and priority set forth in Section 4-9-615 of the Uniform Commercial Code of Colorado, or any applicable successor statute.
7. In the event that legal action is instituted by either party to enforce his or its rights under this Agreement or any obligation secured hereby, the prevailing party in such action shall be entitled to recover from the losing party his or its reasonable attorneys' fees as determined by the Court.
8. Debtor waives any right to require the Secured Party to:
(a) Proceed against any person;
(b) Proceed against or exhaust any Collateral; or
(c) Pursue any other remedy in Secured Party's power.
Debtor further authorizes the Secured Party, without notice or demand and without affecting its liability hereunder or on the Indebtedness, from time to time to:
(d) Amend or modify the terms of the Purchase Note (with Debtor's consent to the extent required by the Purchase Note), including, but not limited to, any such amendment or modification which affects the Indebtedness.
(e) Take and hold security, other than the Collateral herein described, for the payment of the Indebtedness or any part thereof, and exchange, enforce, waive, and release the Collateral herein described or any part thereof or any such other security.
(f) Apply such Collateral or other security and direct the order or manner of sale thereof as Secured Party in its discretion may determine.
9. (a) On the last business day of each fiscal quarter of Secured Party, Secured Party shall determine the value of the Collateral. The value of a share of any security means the daily closing price of such security on the NASDAQ National Market System (or other principal exchange on which shares of such security is listed or approved for trading) on such day or the most recent day on which such security traded if it did not trade on such last business day of the fiscal quarter. The daily closing price shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing "bid" and "asked" prices as reported by NASDAQ (or other principal exchange). If the daily closing price per share of such security is determined during a period following the declaration of a dividend, distribution, recapitalization, reclassification or similar transaction, then the value shall be properly adjusted to take into account ex-dividend trading. In the event that a security is not traded on a national securities exchange, the Board of Directors of Secured Party shall determine the value of the security in good faith and such determination shall be final and conclusive on all parties.
(b) If the value of the Collateral shall be less than the outstanding principal and accrued interest under the Purchase Note, then Secured Party may require Debtor to repay so much of the accrued interest as may be required to cause the value of the Collateral to equal the
balance of the principal and accrued interest under the Purchase Note. If repaying some or all of the accrued interest does not reduce the amount remaining under the Purchase Note to the value of the Collateral, then Debtor shall also repay so much of the principal as may be necessary to cause the balance remaining under the Purchase Note to equal the value of the Collateral. Any amounts demanded by Secured Party pursuant to this Section 9 shall be due within 30 days following Debtor's receipt of Secured Party's written demand therefor.
10. Neither the acceptance of any partial or delinquent payment by Secured Party nor Secured Party's failure to exercise any of its rights or remedies on default by Debtor shall be a waiver of the default, a modification of this Agreement or Debtor's obligations under this Agreement, or a waiver of any subsequent default by Debtor.
11. All notices required or permitted to be given pursuant to this Agreement shall be in writing, and shall be delivered either personally, by overnight delivery service or by U.S. certified or registered mail, postage prepaid, return-receipt requested and addressed, if to the Secured Party to the attention of the Chairman of the Board of Directors of Secured Party, with a copy to the attention of the General Counsel, at its principal executive offices, or if to the Debtor to the Debtor's address as it appears below his signature hereto. The parties may change their addresses by giving notice of such change in accordance with this section. Notices sent by overnight delivery service shall be deemed received on the business day following the date of deposit with the delivery service. Mailed notices shall be deemed received upon the earlier of the date of delivery shown on the return-receipt, or the second business day after the date of mailing.
12. Time is hereby expressly declared to be of the essence of this Agreement.
13. This Agreement and each of its provisions shall be binding on the heirs, executors, administrators, successors, and assigns of each of the parties hereto. Nothing contained in this paragraph, however, shall be deemed a consent to the sale, assignment, or transfer of the Collateral by Debtor.
14. This Agreement is made and entered into and shall be interpreted in accordance with the laws of the State of Colorado. Any action concerning this Agreement shall be commenced in a court of competent jurisdiction in the State of Colorado.
15. Upon payment in full of the portion of the Indebtedness evidenced by the Purchase Note, this Agreement shall terminate and be of no further force or effect and Secured Party shall immediately deliver to Debtor the Collateral and the stock powers.
16. Secured Party shall not be responsible for any damage or loss to the Collateral, or any part thereof, arising from act of God, flood, fire, or any other cause beyond the reasonable control of Secured Party.
17. Secured Party shall not be liable to either party or to anyone else for actions taken (or omissions to act) which are within the scope of the authority of Secured Party under this Agreement, provided that such actions (or omissions to act) do not constitute bad faith, gross negligence or willful misconduct.
18. Secured Party shall not be responsible in any manner whatsoever for any failure or inability of any of the parties hereto, or of anyone else, to perform or comply with the provisions of this Agreement, nor for the genuineness or accuracy of any notice received by Secured Party from any of the parties hereto.
19. Upon the request of Secured Party, from time to time, Debtor agrees to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such additional instruments, and agrees to perform any and all acts reasonably required to carry into effect the provisions and intent of this Agreement.
20. In the event that the Collateral consists of securities traded on the NASDAQ National Market System or other national securities exchange and Debtor would (but for the restrictions on the Collateral imposed by this Agreement) be able to sell all or a portion of such Collateral on such system or exchange in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound, then Debtor may petition Secured Party to release, and Secured Party shall release, such portion of the Collateral consisting of such publicly-traded shares as Debtor may request in writing; provided (1) that the released portion of the Collateral shall be delivered only to a nationally-recognized broker identified by and for the account of Debtor, (2) that Debtor shall have previously given irrevocable written instructions to such broker (with a copy to Secured Party) to promptly sell such portion of the Collateral upon receipt by broker and promptly deliver to Secured Party (to be treated by Secured Party as a partial prepayment of the Indebtedness) a portion of the gross proceeds from such sale (such portion not to be less than the amount of the then-outstanding Indebtedness multiplied by a fraction, the numerator of which is the number of shares to be sold and the denominator of which is the total number of shares of that class composing the Collateral before the release of such shares from the Collateral). Secured Party's obligation under the preceding sentence is subject to the further conditions precedent that (1) Debtor shall provide such written assurances and representations to Secured Party as Secured Party may reasonably request to ensure compliance with the conditions of the preceding sentence, and (2) Debtor furnishes to Secured Party an opinion of counsel reasonably acceptable to Secured Party that the contemplated sale of all or a specified portion of the Collateral (at the time and on the terms specified and otherwise consistent with this Section 20) will be in compliance with all applicable law and in compliance with all other agreements to which Debtor is a party or otherwise bound.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.
"DEBTOR" "SECURED PARTY" RED ROBIN GOURMET BURGERS, INC. a Delaware corporation /s/ Michael E. Woods ----------------------------------- Signature Michael E. Woods By: /s/ Michael J. Snyder ----------------------------------- ------------------------------------ Print Name Michael J. Snyder 999 S. Euclid Way Its: Chief Executive Officer & President ----------------------------------- ------------------------------------- Address Denver, CO 80209 ----------------------------------- City, State, Zip Code |
STOCK POWER*
For value received, Michael E. Woods (the Debtor identified in the related Pledge Agreement), hereby sells, assigns and transfers to ___________________________, an aggregate _______ shares of Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), represented by stock certificate number(s) ________________ to which this instrument is attached, and hereby irrevocably constitutes and appoints the Secretary of the Corporation as his/her attorney in fact and agent to transfer such shares on the books of the Corporation with full power of substitution in the premises.
Dated: _______________ /s/ Michael E. Woods ---------------------------------------- Signature |
SECTION 1 - PROXY
The undersigned, the owner of 125,000 shares of restricted Common Stock, par value $0.001 per share, of Red Robin Gourmet Burgers, Inc., a Delaware corporation (the "Corporation"), hereby appoints the Board of Directors of the Corporation to be proxy agent ("Proxy Agent") for the undersigned, with full power of substitution, with respect to all of such shares of Common Stock of the Corporation ("Proxy Shares").
The Proxy Agent is authorized to vote all of the Proxy Shares on any matter submitted to a vote of stockholders of the Corporation at any stockholders meeting held on or after the date of this Proxy and prior to the termination of this Proxy.
The Proxy Agent is further authorized to execute documents on behalf of the undersigned with respect to the Proxy Shares consenting to the taking of any action to be taken by the stockholders of the Corporation without a meeting and to exercise any and all other rights of a stockholder of the Corporation on or after the date of this Proxy and prior to the termination of this Proxy.
Notwithstanding anything herein to the contrary, this Proxy may only be exercised by Proxy Agent if the undersigned defaults (beyond any applicable notice and/or grace or cure period) under that certain Secured Promissory Note of even date herewith in the stated principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Purchase Note") executed by the undersigned in favor of the Corporation, under that certain Pledge Agreement of even date herewith executed by the Corporation and the undersigned, or under that certain Option Exercise Agreement of even date herewith executed by the Corporation and the undersigned.
SECTION 2 - OUTSTANDING PROXIES
This Proxy revokes all proxies previously given by the undersigned to vote any of the Proxy Shares to any other person or entity.
SECTION 3 - IRREVOCABILITY
This Proxy is coupled with an interest and is irrevocable.
SECTION 4 - TERMINATION
This Proxy shall terminate upon the payment in full of the Purchase Note.
SECTION 5 - LEGEND
The undersigned agrees to immediately place a legend on the share certificates evidencing the Proxy Shares which reflects the existence of this Proxy.
Dated: April 25, 2002 Signature:/s/ Michael E. Woods -------------------- |
Print Name: Michael E. Woods
STATE OF COLORADO ) ) ss. COUNTY OF ARAPAHOE ) |
On April 25, 2002, before me, Kyle L. WhiteJohnson, Notary Public, personally appeared Michael E. Woods, personally known to me/proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person executed the instrument.
WITNESS my hand and official seal.
/s/ Kyle L. WhiteJohnson ------------------------- NOTARY PUBLIC |
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