Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is made as of this 7th day of
September, 2005, by and between RED ROBIN GOURMET BURGERS, INC., a Delaware
corporation (the “Company”), and DENNIS B. MULLEN (the “Executive”).

 

RECITAL

 

WHEREAS, the Company, for itself and its wholly owned subsidiary, Red Robin
International, Inc., a Nevada corporation (“RRI”), desires to establish the
right to the services of the Executive in the capacities described below, on the
terms and conditions hereinafter set forth, and the Executive is willing to
accept such employment on such terms and conditions.

 

AGREEMENT

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1. Employment Period. The Company, through RRI, hereby employs the Executive,
and the Executive hereby accepts such employment, upon the terms and conditions
hereinafter set forth. The term of the Executive’s employment hereunder shall be
deemed to have commenced on August 11, 2005 (the “Effective Date”), and shall
continue through and including December 31, 2008, subject to earlier termination
or renewal as provided herein (such term being referred to herein as the
“Employment Period”). RRI shall be the “employer” for tax, legal reporting,
payroll processing and similar purposes.

 

2. Position and Duties.

 

(a) During the Employment Period, the Executive shall be the Chairman and Chief
Executive Officer of the Company, with such duties and responsibilities as are
assigned to him by the Board of Directors of the Company (the “Board”)
consistent with his position as Chairman and Chief Executive Officer of the
Company.

 

(b) During the Employment Period, the Executive shall devote substantially all
of his skill, knowledge and working time to the business and affairs of the
Company and its subsidiaries; provided, however, that the Executive may continue
to serve in his current position as Chairman of the Janus Funds. The Executive
shall perform his services primarily at the Company’s headquarters in Denver,
Colorado. The Executive shall use his best efforts to carry out his
responsibilities under this Agreement faithfully and efficiently.

 

(c) In his position as Chairman and Chief Executive Officer, the Executive
shall, subject to the oversight of the Board and the “Authorization Limits”
established from time to time by the Board, have full authority and
responsibility to manage the operation of the Company’s restaurants and
franchise system, including the hiring and discharge of employees of the Company
and its subsidiaries, closing, selling, developing and opening restaurants as
contemplated by the annual budget approved by the Board (the “Annual Plan”),
establishing and administering the Company’s marketing plan,

 

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making improvements in and refurbishing the Company’s restaurants consistent
with the capital expenditure budget in the Annual Plan, administering and
managing the day-to-day operation of the restaurants, granting new franchises
and administering and managing the franchise operations consistent with the
Annual Plan; provided that without the approval of the Board, the Executive
shall not take any major action not contemplated by or consistent with the
Annual Plan and the Authority Limits.

 

3. Compensation.

 

(a) Base Salary. During the Employment Period, the Executive shall receive from
the Company an annual base salary (“Annual Base Salary”) at the rate of
$625,000, payable in accordance with the Company’s and RRI’s normal payroll
policy. The Executive’s Annual Base Salary shall be subject to review by the
Board of Directors in January 2006 and annually thereafter during the remainder
of the Employment Term; provided, however, that the Executive’s Annual Base
Salary may not be reduced below $625,000.

 

(b) Signing Bonus. The Executive shall be entitled to a one time signing bonus
in the amount of $120,000, which the Company or RRI shall pay to the Executive
within five (5) business days after the execution of the Agreement.

 

(c) Annual Incentive Compensation. In addition to the Annual Base Salary, the
Executive shall be eligible to receive a cash bonus each fiscal year during the
Employment Period as determined in accordance with the Company’s annual
incentive plan and as approved by the compensation committee of the Board. For
fiscal 2005, the Executive shall be eligible to receive a cash bonus in
accordance with the terms set forth on Exhibit A attached hereto

 

(d) Other Benefits. During the Employment Period: (i) the Executive shall be
entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company and RRI to the same extent as
other senior executive employees, and (ii) the Executive and/or the Executive’s
family, as the case may be, shall be eligible to participate in, and shall
receive all benefits under, all welfare benefit plans, practices, policies and
programs provided by the Company and RRI (including, to the extent provided,
without limitation, medical, prescription, dental, disability, salary
continuance, employee life insurance, group life insurance, accidental death and
travel accident insurance plans and programs) to the same extent as other senior
executive employees.

 

(e) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable travel and other expenses
incurred by the Executive in carrying out the Executive’s duties under this
Agreement, provided that the Executive complies with the policies, practices and
procedures of the Company and RRI for submission of expense reports, receipts or
similar documentation of the incurrence and purpose of such expenses
(collectively referred to herein as “Expense Policies”).

 

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(f) Commuting Expenses. During the Employment Period, the Company and RRI shall
pay or reimburse the Executive for travel expenses actually incurred by the
Executive in commuting between Arizona and Denver, Colorado; provided that the
Executive complies with the Expense Policies, and provided further that such
expenses shall be subject to review for reasonableness at least quarterly by the
chairman of the compensation committee of the Board.

 

(g) Air Travel. The Executive may fly on charter or private aircraft to commute
from Arizona to Denver, Colorado and otherwise for appropriate business use,
subject in each case to the Executive’s compliance with the Expense Policies and
the Company’s policy for non-commercial air travel as established by the Board.

 

(h) Automobile Allowance. During the Employment Period, the Executive shall be
paid a car allowance in the gross amount of $1,000 per month.

 

(i) Housing. During the Employment Period, the Company or RRI shall provide the
Executive with the use of a furnished apartment or other comparable housing in
Denver, Colorado.

 

(j) Options. Effective as of August 25, 2005, the Company granted to the
Executive a nonqualified stock option (the “Option”) to purchase One Hundred
Thousand (100,000) shares of Common Stock of the Company at $45.79 per share,
representing the last price furnished by the National Association of Securities
Dealers, Inc. (the “NASD”) through the NASDAQ National Market Reporting System
on such date. The Option was granted under the Company’s 2004 Performance
Incentive Plan, and otherwise on the terms and conditions set forth in the award
agreement between the Company and the Executive.

 

(k) The Company reserves the right to modify, suspend or discontinue any and all
of the above-referenced employee benefit plans, practices, policies and programs
at any time without recourse by the Executive so long as such action is taken
with respect to senior executives generally and does not single out the
Executive.

 

4. Termination.

 

(a) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death. If the Company determines in good
faith that the Disability of the Executive has occurred, it may give to the
Executive written notice of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive, provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of his duties.

 

(b) Cause. The Company may terminate the Executive’s employment at any time for
Cause.

 

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(c) Other than Cause or Death or Disability. The Company may terminate the
Executive’s employment at any time without Cause by delivery of not less than
thirty (30) days’ advance written notice to the Executive of the effective date
of termination.

 

(d) Expiration of Stated Term. Unless earlier terminated pursuant to the
preceding subparagraphs of this Section 4, the Executive’s employment shall
otherwise terminate automatically upon the expiration of the stated term of this
Agreement (as such term may be extended or reduced pursuant to Section 5 below).

 

(e) Obligations of the Company Upon Termination.

 

(i) Death or Disability. If the Executive’s employment is terminated by reason
of the Executive’s Death or Disability, this Agreement shall terminate without
further obligations to the Executive or his legal representatives under this
Agreement, other than for (A) payment of the sum of (1) the Executive’s Annual
Base Salary through the date of termination to the extent not theretofore paid,
and (2) any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(1) and (2) shall be hereinafter referred to as the “Accrued Obligations”),
which Accrued Obligations shall be paid to the Executive or his estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the date of
termination; (B) payment on the next bonus payment date immediately following
the effective date of termination of a pro rata share (determined on the basis
of the number of days during which the Executive was employed by the Company
during the applicable fiscal year prior to the effective date of termination) of
the bonus that would otherwise be payable pursuant to Section 3(c) hereof had
the Executive continued to be employed by the Company on such bonus payment
date; and (C) payment to the Executive or his estate or beneficiary, as
applicable, of any amounts due pursuant to the terms of any applicable welfare
benefit plans.

 

(ii) Cause. If the Executive’s employment is terminated by the Company for
Cause, this Agreement shall terminate without further obligations to the
Executive other than for the timely payment of Accrued Obligations through the
date of termination. If it is subsequently determined that the Company did not
have Cause for termination pursuant to Section 4(b) hereof, then the Company’s
decision to terminate shall be deemed to have been made under Section 4 (c)
hereof, and the amounts payable under Section 4(e)(iii) hereof shall be the only
amounts the Executive may receive on account of his termination.

 

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(iii) Other than Cause or Death or Disability. If, prior to the expiration of
the stated term of this Agreement (as such term may be extended or reduced
pursuant to Section 5 below), the Company terminates the Executive’s employment
for any reason other than for Cause or other than by reason of the Executive’s
Death or Disability, this Agreement shall terminate without further obligations
to the Executive other than:

 

(A) if such termination is effective before August 31, 2007: (1) the timely
payment of Accrued Obligations through the effective date of termination; (2)
continued payment for a period of six months following the effective date of
termination of the Executive’s Annual Base Salary as in effect immediately prior
to the date of termination (such payments to be made in accordance with the
Company’s normal payroll practices); (3) on the next bonus payment date
immediately following the effective date of termination, payment of the greater
of 50% or a pro rata share (determined on the basis of the number of days during
which the Executive was employed by the Company during the applicable fiscal
year prior to the effective date of termination) of the bonus that would
otherwise be payable pursuant to Section 3(c) hereof had the Executive continued
to be employed by the Company on such bonus payment date, subject in each case
of the benefits in clauses (1), (2) and (3) to standard withholdings and other
authorized deductions; and (4) payment (or reimbursement to the Executive) of
the cost of continuing coverage for the Executive and his spouse under the
Company’s and RRI’s then existing medical, dental and prescription insurance
plans for a period of six (6) months following the effective date of termination
(provided that during any period when the Executive is eligible to receive such
benefits under another employer-provided plan, the benefits provided under this
clause (4) may be made secondary to those provided under such other plan);

 

(B) if such termination becomes effective on or after August 31, 2007: (1) the
timely payment of Accrued Obligations through the effective date of termination;
(2) continued payment for what would have otherwise been the remainder of the
then-existing employment term and any then-effective renewal term (as determined
pursuant to Section 5 hereof) of the Executive’s Annual Base Salary as in effect
immediately prior to the date of termination (such payments to be made in
accordance with the Company’s normal payroll practices); (3) on the next bonus
payment date immediately following the effective date of termination, payment of
a pro rata share (determined on the basis of the number of days during which the
Executive was employed by the Company during the applicable fiscal year prior to
the effective date of termination) of the bonus that would otherwise be payable
pursuant to Section 3(c) hereof had the Executive continued to be employed by
the Company on such bonus payment date, subject in each case of the benefits in
clauses (1), (2) and (3) to standard withholdings and other authorized
deductions; and (4) payment (or reimbursement to the Executive) of the cost of
continuing coverage for the Executive and his spouse under the Company’s and
RRI’s then existing medical, dental and prescription insurance plans for what
would have otherwise been the remainder of the then-existing employment term and
any then-effective renewal term as determined pursuant to Section 5 hereof
(provided that during any period when the Executive is eligible to receive such
benefits under another employer-

 

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provided plan, the benefits provided under this clause (4) may be made secondary
to those provided under such other plan);

 

provided, however, that as conditions precedent to receiving the payments and
benefits provided for in this Section 4(e)(iii) (other than payment of the
Accrued Obligations, the Executive shall first execute and deliver to the
Company and RRI a general release agreement substantially in the form attached
hereto as Exhibit B, and all rights of the Executive thereunder or under
applicable law to rescind or revoke the release shall have expired.

 

(iv) Expiration of Stated Term. In the event that the Executive’s employment is
otherwise terminated by reason of the expiration of the term of this Agreement
(as such term may be extended or reduced pursuant to Section 5 below), the
Company shall have no further obligations to the Executive other than for (A)
the timely payment of Accrued Obligations through the date of termination; (B)
payment on the next bonus payment date immediately following the effective date
of termination of a pro rata share (determined on the basis of the number of
days during which the Executive was employed by the Company during the
applicable fiscal year prior to the effective date of termination) of the bonus
that would otherwise be payable pursuant to Section 3(c) hereof had the
Executive continued to be employed by the Company on such bonus payment date;
and (C) payment to the Executive of any amounts due pursuant to the terms of any
applicable welfare benefit plans.

 

(v) Exclusive Remedy. The Executive agrees that the payments contemplated by
this Section 4(e) shall constitute the exclusive and sole remedy for any
termination of his employment, and the Executive covenants not to assert or
pursue any other remedies, at law or in equity, with respect to any termination
of employment; provided, however, that nothing contained in this Section 4(e)(v)
shall prevent the Executive from otherwise challenging in a subsequent
arbitration proceeding a determination by the Company that it was entitled to
terminate the Executive’s employment hereunder for Cause.

 

(f) Survival of Certain Obligations Following Termination. Notwithstanding any
other provision contained in this Agreement, the provisions in Sections 6
through 19 of this Agreement shall survive any termination of the Executive’s
employment hereunder (but shall be subject to the Executive’s right to receive
the payments and benefits provided under this Section 4).

 

5. Stated Term; Renewal.

 

(a) Subject to earlier termination pursuant to Section 4 above or modification
pursuant to this Section 5, the term of this Agreement shall be deemed to have
commenced as of the Effective Date and shall continue through December 31, 2008.
Notwithstanding the foregoing sentence, at anytime on or after February 28,
2007, either the Company or the Executive may, by delivery of written notice to
the other party, elect to have the term of this

 

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Agreement expire as of any date which is not less than six months from the date
such notice is delivered to the other party.

 

(b) Subject to earlier termination pursuant to Section 4 above or the preceding
subparagraph (a) of this Section 5, effective upon December 31, 2008 and each
six-month anniversary date thereafter, the term of this Agreement shall be
automatically renewed for an additional six (6) month period unless one party or
the other gives notice, in writing, at least sixty (60) days prior to such date
(or anniversary date, as the case may be) of their desire to terminate the
Agreement or modify its terms.

 

6. Confidential Information. The Executive shall not disclose to any person or
entity or use, any information not in the public domain, in any form, acquired
by the Executive while he was employed or associated with the Company or RRI or,
if acquired following the termination of such association, such information
which, to the Executive’s knowledge, has been acquired, directly or indirectly,
from any person or entity owing a duty of confidentiality to the Company or RRI,
relating to the Company or its business. The Executive agrees and acknowledges
that all of such information, in any form, and copies and extracts thereof are
and shall remain the sole and exclusive property of the Company, and the
Executive shall on request return to the Company the originals and all copies of
any such information provided to or acquired by the Executive in connection with
his association with the Company or RRI, and shall return to the Company all
files, correspondence and/or other communications received, maintained and/or
originated by the Executive during the course of such association.

 

7. Covenant Not to Compete. The Executive agrees that, for the period commencing
on the Effective Date and ending on the second anniversary of the date of
termination of employment, including due to expiration of the Employment Period
(the “Restrictive Period”), the Executive shall not, in the Territory
(hereinafter defined), directly or indirectly, either for himself or for, with
or through any other Person, own, manage, operate, control, be employed by,
participate in, loan money to or be connected in any manner with, or permit his
name to be used by, any business that, in the reasonable judgment of the Board,
competes with the Company and its subsidiaries in the casual dining restaurant
business (a “Competitive Activity”). In making its judgment as to whether any
business is engaged in a Competitive Activity, the Board shall act in good
faith, and shall first provide the Executive with a reasonable opportunity to
present such information as the Executive may desire for the Board’s
consideration. For purposes of this Agreement, the term “participate” includes
any direct or indirect interest, whether as an officer, director, employee,
partner, sole proprietor, trustee, beneficiary, agent, representative,
independent contractor, consultant, advisor, provider of personal services,
creditor, owner (other than by ownership of less than five percent of the stock
of a publicly-held corporation whose stock is traded on a national securities
exchange or in the NASD National Market (a “Public Company”). “Territory” means
North America and the territories of the United States in the Caribbean,
including Puerto Rico.

 

8. No Interference. During the Restrictive Period, the Executive shall not,
without the prior written approval of the Company, directly or indirectly
through any other Person (i) induce or attempt to induce any employee of the
Company or RRI at the level of assistant store manager or higher to leave the
employ of the Company or RRI, or in any way interfere with the relationship
between the Company or RRI and any employee thereof, (ii) hire any Person

 

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who was an employee of the Company or RRI at the level of assistant store
manager or higher within twelve months after such Person’s employment with the
Company or RRI was terminated for any reason or (iii) induce or attempt to
induce any supplier or other business relation of the Company or RRI to cease
doing business with the Company or RRI, or in any way interfere with the
relationship between any such supplier or business relation and the Company or
RRI.

 

9. Return of Documents. In the event of the termination of the Executive’s
employment for any reason, the Executive shall deliver to the Company all of (i)
the property of the Company or any of its subsidiaries, and (ii) non-personal
documents and data of any nature and in whatever medium of the Company or any of
its subsidiaries, and he shall not take with him any such property, documents or
data or any reproduction thereof, or any documents containing or pertaining to
any Confidential Information.

 

10. Reasonableness of Restrictions. The Executive agrees that the covenants set
forth in Sections 6, 7, 8 and 9 are reasonable with respect to their duration,
geographical area and scope. In the event that any of the provisions of Sections
6, 7, 8, and 9 relating to the geographic or temporal scope of the covenants
contained therein or the nature of the business or activities restricted thereby
shall be declared by a court of competent jurisdiction to exceed the maximum
restrictiveness such court deems enforceable, such provision shall be deemed to
be replaced herein by the maximum restriction deemed enforceable by such court.

 

11. Injunctive Relief. The parties hereto agree that the Company would suffer
irreparable harm from a breach by the Executive of any of the covenants or
agreements contained herein, for which there is no adequate remedy at law.
Therefore, in the event of the actual or threatened breach by the Executive of
any of the provisions of this Agreement, the Company, or its respective
successors or assigns, may, in addition and supplementary to other rights and
remedies existing in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance, injunctive or other relief in
order to enforce compliance with, or prevent any violation of, the provisions
hereof; and that, in the event of such a breach or threat thereof, the Company
shall be entitled to obtain a temporary restraining order and/or a preliminary
or permanent injunction restraining the Executive from engaging in activities
prohibited hereby or such other relief as may be required to specifically
enforce any of the covenants contained herein.

 

12. Extension of Restricted Periods. In addition to the remedies the Company may
seek and obtain pursuant to this Agreement, the restricted periods set forth
herein shall be extended by any and all periods during which the Executive shall
be found by a court to have been in violation of the covenants contained herein.

 

13. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:

 

“Cause” means with respect to the termination by the Company of the Executive as
an employee of the Company:

 

(i) the Executive’s continual or deliberate neglect in the performance of his
material duties;

 

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(ii) the Executive’s failure to devote substantially all of his working time to
the business of the Company and its subsidiaries (other than as expressly
permitted in this Agreement);

 

(iii) the Executive’s willful failure to follow the lawful directives of the
Board in any material respect;

 

(iv) the Executive’s engaging willfully in misconduct in connection with the
performance of any of his duties, including, without limitation, falsifying or
attempting to falsify documents, books or records of the Company or its
subsidiaries, misappropriating or attempting to misappropriate funds or other
property, or securing or attempting to secure any personal profit in connection
with any transaction entered into on behalf of the Company or its subsidiaries;

 

(v) the violation by the Executive, in any material respect, of any policy or of
any code or standard of behavior or conduct generally applicable to employees of
the Company or its subsidiaries;

 

(vi) the Executive’s breach of the material provisions of this Agreement or any
other non-competition, non-interference, non-disclosure, confidentiality or
other similar agreement executed by the Executive with the Company or any of its
subsidiaries or other active disloyalty to the Company or any of its
subsidiaries (including, without limitation, aiding a competitor or unauthorized
disclosure of confidential information); or

 

(vii) the Executive’s engaging in conduct which is reasonably likely to result
in material injury to the reputation of the Company or any of its subsidiaries,
including, without limitation, commission of a felony, fraud, embezzlement or
other crime involving moral turpitude, or sexual harassment.

 

“Disability” shall mean a physical or mental impairment which substantially
limits a major life activity of the Executive and which renders the Executive
unable to perform the essential functions of his position, even with reasonable
accommodation which does not impose an undue hardship on the Company. The
Company reserves the right, in good faith, to make the determination of
disability under this Agreement based upon information supplied by the Executive
and/or his medical personnel, as well as information from medical personnel (or
others) selected by the Company or its insurers.

 

“Incapacity” as used herein shall be limited only to such Disability which
substantially prevents the Company from availing itself of the services of the
Executive.

 

14. Arbitration. Any controversy arising out of or relating to this Agreement,
its enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, or any other
controversy arising out of the Executive’s employment, including, but not
limited to, any state or federal statutory claims, shall be submitted to
arbitration in Denver, Colorado, before a sole arbitrator selected from Judicial
Arbiter Group, Inc., Denver, Colorado, or its successor (“JAG”), or if JAG is no
longer able to supply the arbitrator, such arbitrator shall be selected from the
Judicial Arbitration and Mediation

 

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Services, Inc., (“JAMS”) or other mutually agreed upon arbitration provider, as
the exclusive forum for the resolution of such dispute. Provisional injunctive
relief may, but need not, be sought by either party to this Agreement in a court
of law while arbitration proceedings are pending, and any provisional injunctive
relief granted by such court shall remain effective until the matter is finally
determined by the Arbitrator. Final resolution of any dispute through
arbitration may include any remedy or relief which the Arbitrator deems just and
equitable, including any and all remedies provided by applicable state or
federal statutes. At the conclusion of the arbitration, the Arbitrator shall
issue a written decision that sets forth the essential findings and conclusions
upon which the Arbitrator’s award or decision is based. Any award or relief
granted by the Arbitrator hereunder shall be final and binding on the parties
hereto and may be enforced by any court of competent jurisdiction. The parties
acknowledge and agree that they are hereby waiving any rights to trial by jury
in any action, proceeding or counterclaim brought by either of the parties
against the other in connection with any matter whatsoever arising out of or in
any way connected with this Agreement or the Executive’s employment. The parties
agree that Company shall be responsible for payment of the forum costs of any
arbitration hereunder, including the Arbitrator’s fee. The Executive and the
Company further agree that in any proceeding to enforce the terms of this
Agreement, the prevailing party shall be entitled to its or his reasonable
attorneys’ fees and costs incurred by it or him in connection with resolution of
the dispute in addition to any other relief granted.

 

15. Governing Law. This Agreement and the legal relations hereby created between
the parties hereto shall be governed by and construed under and in accordance
with the internal laws of the State of Colorado, without regard to conflicts of
laws principles thereof.

 

16. Taxes. The Company and RRI may withhold from any payments made under this
Agreement all federal, state, city or other applicable taxes as shall be
required pursuant to any law, governmental regulation or ruling.

 

17. Entire Agreement. This Agreement (including Exhibits) constitutes and
contains the entire agreement and final understanding concerning the Executive’s
employment with the Company and the other subject matters addressed herein
between the parties. It is intended by the parties as a complete and exclusive
statement of the terms of their agreement. It supersedes and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matter hereof. Any representation, promise or agreement
not specifically included in this Agreement shall not be binding upon or
enforceable against either party. This is a fully integrated agreement.

 

18. Amendment and Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Board of Directors of the
Company (or a person expressly authorized thereby) and the Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.

 

19. Miscellaneous.

 

(a) Binding Effect. This Agreement is intended to bind and inure to the benefit
of and be enforceable by the Executive, the Company and their respective heirs,

 

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successors and assigns, except that the Executive may not assign his rights or
delegate his obligations hereunder without the prior written consent of the
Company.

 

(b) 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:

 

  (i) If to the Company, to:

 

Red Robin Gourmet Burgers, Inc.

6312 South Fiddler’s Green Circle, Suite 200N

Greenwood Village, CO 80111

Attention: Board of Directors, Lead Director and General Counsel

Facsimile No.: 303-846-6048

 

with a copy to:

 

O’Melveny & Myers LLP

610 Newport Center Drive, 17th Floor

Newport Beach, California 92660

Attention: Thomas J. Leary

Facsimile No.: 949-823-6994

 

  (ii) If to the Executive, to:

 

Dennis B. Mullen

c/o Red Robin Gourmet Burgers, Inc.

6312 South Fiddler’s Green Circle, Suite 200N

Greenwood Village, CO 80111

E-mail: dmullen@redrobin.com

 

with a copy to:

 

Roger C. Cohen, Esq.

Ballard Spahr Andrews & Ingersoll, LLP

Seventeenth Street Plaza Building, 1225 17th Street

Suite 2300

Denver, Colorado 80202-5596

Facisimile No.: 303-296-3956

 

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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.

 

(c) Headings. The section and other headings contained in this Agreement are for
the convenience of the parties only and are not intended to be a part hereof or
to affect the meaning or interpretation hereof.

 

(d) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.

 

(e) Construction. Each party has cooperated in the drafting and preparation of
this Agreement. Hence, in any construction to be made of this Agreement, the
same shall not be construed against any party on the basis that the party was
the drafter.

 

(f) Savings Clause. If any provision of this Agreement or the application
thereof is held invalid, the invalidity shall not affect other provisions or
applications of the Agreement which can be given effect without the invalid
provisions or applications and to this end the provisions of this Agreement are
declared to be severable.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

12

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

RED ROBIN GOURMET BURGERS, INC. By:  

/s/ Edward T. Harvey

   

Edward T. Harvey

   

Lead Director

EXECUTIVE    

/s/ Dennis B. Mullen

   

Dennis B. Mullen

 

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EXHIBIT A

 

Incentive Bonus for Fiscal 2005

 

The Executive’s bonus opportunity for fiscal 2005 shall be a percentage of the
base salary actually paid to the Executive in fiscal 2005 as follows:

 

Minimum

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Target

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Maximum

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45%   90%   135%

 

For fiscal 2005, the Executive’s bonus opportunity shall be determined based on
the Company’s EBITDA (earnings before interest, taxes, depreciation and
amortization) for such fiscal year before pre-opening expenses and before any
accounting charges for stock options, but after accrual of all bonuses to be
earned and paid to the Company’s executives and employees (“Adjusted EBITDA”).
For this purpose, Adjusted EBITDA shall be calculated in accordance with
generally accepted accounting principles, consistent with their application in
the Company’s 2005 annual budget (as previously approved by the Board), but
subject to such further adjustments as the compensation committee of the Board
may reasonably determine and apply to determine annual bonuses for the Company’s
senior executives generally. Subject to any such further adjustment, the
Adjusted EBITDA levels required to achieve the “minimum,” “target” and “maximum”
bonus opportunities shall be as previously established by the compensation
committee of the Board for purposes of the 2005 bonus plan for senior executives
of the Company.

 

For fiscal 2005, the Executive shall be entitled to receive 75% of the total
bonus opportunity based solely on the Company’s achievement of the Adjusted
EBITDA levels as established by the compensation committee of the Board for
purposes of the 2005 bonus plan for senior executives of the Company. All or any
portion of the remaining 25% of the total bonus opportunity for fiscal 2005
shall be payable to the Executive in the sole discretion of the compensation
committee of the Board based on such committee’s assessment of the Executive’s
achievement of certain personal goals established by the committee.

 

The total bonus payable to the Executive with respect to fiscal 2005, as
determined pursuant to the foregoing provisions, shall be determined on the
basis of the amount of base salary actually paid to the Executive during fiscal
2005, exclusive of his signing bonus and any other benefits.

 

A-1

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EXHIBIT B

 

STRICTLY CONFIDENTIAL

 

GENERAL RELEASE

 

1. Definitions.

 

I intend all words used by this Release to have their plain meanings in ordinary
English. These terms shall have the following meanings:

 

A. I, me, my and Releasor mean me and anyone who has or obtains any legal rights
or claims through me.

 

B. Employer means: (i) Red Robin Gourmet Burgers, Inc. and Red Robin
International, Inc. (collectively, the “Company”), (ii) any company related to
the Company in the past or present, (iii) the past and present officers,
directors, employees, shareholders, attorneys, agents and representatives of the
Company, (iv) any present or past employee benefit plan sponsored by the Company
and/or officers, directors, trustees, administrators, employees, attorneys,
agents and representatives of such plan, (v) and any person who acted on behalf
of the Company on instruction from the Company.

 

C. Employment Agreement means that certain Employment Agreement dated as of
September 7, 2005, between me and the Company.

 

D. My claims means all of my rights to any relief of any kind from the Employer,
including but not limited to:

 

  1. All claims I now have, whether or not I now know about such claims,
including all claims arising out of or relating to my past employment with
Employer, the termination of that employment or statements or actions of the
Employer including, but not limited to: breach of contract; defamation;
infliction of emotional distress; wrongful discharge; workers’ compensation
retaliation; violation of the Age Discrimination in Employment Act of 1967; Fair
Labor Standards Act; Title VII of the Civil Rights Act of 1964; the Civil Rights
Acts of 1866 and 1871; the Civil Rights Act of 1991; the Family and Medical
Leave Act; the National Labor Relations Act; The Americans with Disabilities
Act; COBRA; ERISA; the anti-discrimination laws of the state in which I reside
and of any other state; the Wage Claim Act or corresponding statute of the state
in which I reside; and/or any other federal, state or local statute, law,
ordinance, regulation, order or principle of common law;

 

  2.

All claims I have now, whether or not I know about the claims, for any type of
relief from the Employer, including, but not limited to, all claims for back
pay, front pay, lost benefits, reinstatement, liquidated damages, punitive
damages, and

 

B-1

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damages for any alleged breach of contract, any tort claim and any alleged
personal injury or emotional injury or damage; and

 

  3. All claims for attorneys’ fees;

 

but excluding my rights to receive payments and benefits pursuant to Section
4(e)(iii) of my Employment Agreement.

 

2. Agreement to Release My Claims.

 

In exchange for my right to receive payments and other benefits under Section
4(e)(iii) of my Employment Agreement, I agree to give up all My Claims against
the Employer and give up all other actions, causes of action, claims or
administrative complaints that I have against the Employer. I will not bring any
lawsuits or administrative claims against the Employer relating to the claims
that I have released nor will I allow any lawsuits or claims to be brought or
continued on my behalf or in my name. The money and other consideration I
receive pursuant to Section 4(e)(iii) of my Employment Agreement is a full and
fair payment for the release of My Claims and the Employer does not owe me
anything further for My Claims. Separate from this agreement, I will also
receive any compensation due me for the last pay period during which I was an
employee of Employer and compensation for earned vacation pay. My rights to
receive the other payments and benefits due under Section 4(e)(iii) of my
Employment Agreement shall be effective only after receipt by the Employer of
this Release, signed by me and properly notarized, and after the expiration of
the seven (7) day revocation period mentioned in Section 5, below. I understand
that I will not receive any payments due me under Section 4(e)(iii) of my
Employment Agreement (other than payment of the Accrued Obligations under clause
(a)(i) thereof) if I revoke or rescind this Release, and in any event, until
after the seven (7) day revocation period has expired.

 

I further agree to:

 

  A. Reimburse the Employer for any cost; loss; expense, including reasonable
attorneys’ fees; awards or judgments resulting from my failure to perform my
obligations under this Release or under my Employment Agreement or from any
misstatement or omission I have made in this Release; and

 

  B. Indemnify, defend and save harmless the Employer from any costs, liability
or expense, including reasonable attorneys’ fees, arising from the taxation, if
any, of any amounts received by me pursuant to this Release, including but not
limited to any penalties or administrative expenses.

 

3. Additional Agreement and Understandings.

 

Even though the Employer will pay me to settle and release My Claims, the
Employer does not admit that it is legally obligated to me, and the Employer
denies that it is responsible or legally obligated for My Claims or that it has
engaged in any improper conduct or wrongdoing against me.

 

B-2

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I have read this Release carefully and understand its terms. I am hereby being
advised by the Employer to consult with an attorney prior to signing this
Release. My decision to sign or not to sign this Release is my own voluntary
decision made with full knowledge that the Employer has advised me to consult
with an attorney. In agreeing to sign this Release, I have not relied on any
statement or explanation of my rights or obligations made by the Employer or its
attorneys.

 

I am old enough to sign this Release and to be legally bound by the agreements
that I am making. I represent that I have not filed for personal bankruptcy or
been involved in any personal bankruptcy proceeding between the time any of My
Claims accrued and date of my signature below. I am legally able and entitled to
receive the entire sum of money being paid to me by the Employer in settlement
of My Claims. I have not assigned or pledged any of My Claims or any portion of
them to any third person. I am a resident of the State of                     
and have executed this Release within the State of                     . I
understand and agree that this Release contains all the agreements between the
Employer and me relating to this settlement, and that it supersedes all prior
negotiations and agreements relating to the subject matter hereof.

 

4. Twenty-One Day Period to Consider the Release.

 

I understand that I have twenty-one (21) days from the day that I receive this
Release, not counting the day upon which I receive it, to consider whether I
wish to sign this Release. If I cannot make up my mind in that time, the
Employer may or may not allow more time. I acknowledge that if I sign this
Release before the end of the twenty-one (21) day period, it will be my
personal, voluntary decision to do so.

 

5. Seven Day Period to Rescind the Release.

 

I understand that I may rescind (that is, cancel) this Release for any reason
within seven (7) calendar days after I sign and deliver it to the Employer. I
understand that my notice rescinding this agreement must be in writing and
hand-delivered or mailed to the Employer. If mailed, my notice rescinding this
agreement must be:

 

A.   Postmarked within seven (7) days after I sign and deliver this agreement to
the Employer; B.   Properly addressed to:   

Red Robin Gourmet Burgers, Inc.

Red Robin International, Inc.

6312 South Fiddler’s Green Circle, Suite 200 North

Greenwood Village, CO 80111

Attention: Vice President Human Resources

    and      C.   Sent by certified mail, return receipt requested, postage
pre-paid.

 

B-3

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6. Confidentiality.

 

I understand that part of the consideration paid to me by the Employer is in
consideration for my agreement to keep the fact of this Release and its terms
strictly confidential, except as required by law. I may not discuss, disclose or
reveal, directly or indirectly, the fact of this Release or its terms or
conditions to any person, corporation, or other entity, other than to my
accountant, legal advisor and members of my immediate family who (prior to
disclosure to them) shall likewise agree in writing to maintain the
confidentiality of this Release. Neither may I provide any information,
assistance or encouragement of any kind to any person firm or corporation
concerning the investigation or prosecution of any claim against the Employer,
except pursuant to EEOC requirements or court order. If I violate the terms of
this Section 6, I shall be liable to the Employer for the return of all payments
made pursuant to Section 4(e)(iii) of my Employment Agreement (other than
payment of the Accrued Obligations thereunder and for the Employer’s costs and
attorneys’ fees in any action brought to enforce the provisions of this Section
6. The parties agree that fixing the amount of damages caused by my breach of
this Section 6 would be difficult or impossible to ascertain, that the amount
for which I would become liable to Employer upon my breach of my obligations
under this Section 6 is a fair and reasonable estimate of the damages that
Employer may sustain as a result of my breach. On that basis, the amount I have
agreed to pay to Employer upon my breach of my obligations under this Section 6
shall be payable as liquidated damages for my breach and not as a penalty.

 

7. Non-Disparagement.

 

I agree that I will not, directly or indirectly, make or ratify any statement,
public or private, oral or written, to any person that disparages, either
professionally or personally, the Company or its parents, subsidiaries and
affiliates, past and present, and each of them, as well as its and their
trustees, directors, officers, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and
each of them.

 

8. Survival of Certain Provisions of Employment Agreement.

 

Section 6 through Section 19 of the Employment Agreement shall survive the
termination of my employment are incorporated herein by reference as if fully
set forth.

 

9. Choice of Law.

 

This Release shall be deemed to have been executed and delivered within the
State of Colorado, and my rights and obligations and the rights and obligations
of the Employer hereunder shall be construed and enforced in accordance with,
and governed by, the laws of the State of Colorado without regard to principles
of conflict of laws.

 

10. Arbitration.

 

Any dispute or controversy arising out of interpretation or enforcement of this
Release shall be resolved pursuant to the terms set forth in Section 14 of the
Employment Agreement.

 

B-4

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11. Severability.

 

If any provision of this Release is declared by any court of competent
jurisdiction to be invalid for any reason, such invalidity shall not affect the
remaining provisions. On the contrary, such remaining provisions shall be fully
severable, and this Release shall be construed and enforced as if such invalid
provisions never had been inserted in the Release.

 

RELEASOR

  

Dennis B. Mullen

Date:                                                                          

 

 

STATE OF                                      )

COUNTY OF                                 ) ss:

 

Subscribed and sworn to me a Notary Public in and for the state of
                                 by                                         
         this                          day of                     , 200    .

 

 

Notary Public in and for the State of                         

My commission expires:                                          

 

ACCEPTED FOR EMPLOYER: RED ROBIN GOURMET BURGERS, INC.

RED ROBIN INTERNATIONAL, INC.

By:

   

Title:

   

Date:

   

 

B-5