Exhibit
10.2


MANAGEMENT
SERVICES AGREEMENT


THIS
MANAGEMENT SERVICES AGREEMENT (this “Agreement”)
is entered into as of July 10, 2006, among RED ROBIN INTERNATIONAL, INC., a
Nevada corporation (the “Manager”)
SOUTH SOUND RED ROBIN, INC., a Washington corporation (“South Sound”) and NORTHWEST ROBINS, LLC, a
Washington limited liability company (“Northwest
Robins”).  South Sound and
Northwest Robins are sometimes referred to herein as a “Seller” and collectively as the “Sellers”. 
The Sellers and the Manager are sometimes referred to herein as a “Party” and collectively as the “Parties”.


RECITALS


1.             The
Manager and the Sellers have entered into that certain Asset Purchase Agreement
dated July 1, 2006 (the “Purchase Agreement”)
pursuant to which the Manager has agreed to acquire the Purchased Assets and
assume the Assumed Liabilities of the Restaurants of the Sellers.


2.             Concurrent
with the execution of this Agreement, the Parties have consummated the First
Closing pursuant to which the Manager has acquired the Purchased Assets and
assumed the Assumed Liabilities in connection with all of Seller’s Restaurants
except (i) the Restaurant located at 2233 South 320th Street,
Federal Way, WA 98003 (the “Federal Way
Restaurant”), and (ii) the Restaurant located at 3609 9th Street SW, Puyallup, WA 98373 (the “Puyallup Restaurant” and together with
the Federal Way Restaurant, the “Designated
Restaurants”).


3.             The
Sellers desire to retain the Manager to manage the Designated Restaurants from
the date hereof through the Second Closing Date or the termination of this
Agreement, as applicable, on the terms and conditions set forth in this
Agreement.


4.             Capitalized
terms used but not defined in this Agreement shall have the meaning set forth
in the Purchase Agreement.


NOW, THEREFORE, in
consideration of these premises, the mutual promises herein made, and in
consideration of the representations, warranties, and covenants contained
herein and in the Purchase Agreement, the Parties agree as follows:


1.             Appointment and Authority of the Manager


1.1           Puyallup.  Northwest Robins hereby appoints the Manager
as the managing agent for the Puyallup Restaurant.  Northwest Robins hereby authorizes the
Manager to exercise such powers with respect to the Puyallup Restaurant as may
be necessary for the performance of the Manager’s obligations under the terms
of this Agreement and the Manager accepts such appointment under the terms and
conditions of this Agreement.  The
Manager shall have no right or authority, express or implied, to commit or otherwise
obligate Northwest Robins in any manner whatsoever except to the extent
specifically provided herein.


1.2           Federal Way.  South Sound hereby appoints the Manager as
the managing agent for the Federal Way Restaurant.  South Sound hereby authorizes the Manager to
exercise such 










 



powers with
respect to the Federal Way Restaurant as may be necessary for the performance
of the Manager’s obligations under the terms of this Agreement and the Manager
accepts such appointment under the terms and conditions of this Agreement.  The Manager shall have no right or authority,
express or implied, to commit or otherwise obligate South Sound in any manner
whatsoever except to the extent specifically provided herein.


2.             Services and
Obligations 


2.1           Operation of the Restaurants.


(a)           Services.  During the term of this Agreement, the
Manager shall manage and perform all operations of the Designated Restaurants
in the ordinary course of business.  The
Manager’s services shall include, but not be limited to, purchasing inventory,
preparing and serving food and beverage products, hiring and supervising
employees, collecting revenue, and performing maintenance and janitorial
services.  The Manager shall have the
right to operate and manage the Designated Restaurants in a manner consistent
with the operation of the Manager’s other Restaurants and shall have the right
to, without limitation, (a) remove and/or install any fixtures, furniture,
equipment or other property at the Designated Restaurant and (b) engage
independent contractors and/or agents to provide goods or services pursuant to
this Agreement.  Notwithstanding anything
herein to the contrary, the Manager shall not, without the Sellers’ consent,
which shall not be unreasonably withheld, enter into, terminate or materially modify
or amend any agreement, contract, document, lease or license (or series of
related agreements, contracts, leases or licenses) involving the payment of
$25,000 or more in any twelve-month period, or waive, release, compromise or
assign any material rights or claims except for the purchase of inventory in
the ordinary course of business under existing contracts.


(b)           Expenses.  The
Manager shall directly pay all expenses incurred by it and payable during the
term of this Agreement in connection with the operation and management of the
Designated Restaurants, including, without limitation, (i) wages, salaries,
bonuses and benefits for employees, (ii) costs of recruiting, hiring and
training employees, (iii) inventory costs, (iv) workers’ compensation insurance
and other insurance premiums incurred or paid by the Manager in connection with
the operation of the Designated Restaurants, (v) license and permit fees (vi)
utilities (vii) advertising and promotional expenditures, (viii) repair and
maintenance costs, (xi) janitorial services, waste disposal and pest control,
(x) advertising and promotional expenses, consistent with amounts paid by the
Manager with respect to the Manager’s other Restaurants; and (xi) any other
costs and expenses incurred by the Manager in the normal day-to-day operation
of the Designated Restaurants.  The
Manager shall not be required to pay any amounts in respect of Funded
Indebtedness outstanding with respect to the Designated Restaurants.


2.2           Payment of Accounts Payable and
Accrued Liabilities.  During the term
of this Agreement, the Manager shall pay on Seller’s behalf directly to the
party to whom such payment is due, all amounts associated with the operation of
the Designated Restaurants and reflected on the Closing Date Balance Sheet as accounts payable, accrued expenses, accrued
utilities and accrued rent payable, in each case only to the extent such
amounts were incurred by the Sellers prior to the First Closing in the ordinary
course of business and consistent with Sellers’ past practice, provided,
however, that the Sellers shall pay all of their expenses
incurred in connection 



 2
 






 



with the
consummation of the Transactions contemplated by this Agreement and the
Purchase Agreement.


2.3           Performance Obligations.  During the term of this Agreement, the
Manager shall perform on Seller’s behalf all performance obligations of such
Seller pursuant to the Contracts set forth on Schedule 3.14(a) of the Purchase
Agreement (to the extent such Contracts are associated with the operation of
the Designated Restaurants) and the Real Property Leases set forth on Exhibit A
attached hereto; provided, however, that the Manager shall only
be required to perform Seller’s obligations as such obligations existed
pursuant to the terms of such Contract or Lease as in effect on the date
hereof, without giving effect to any new obligations triggered under such
Contract or Lease  as a result of the
Transactions contemplated by this Agreement or the Purchase Agreement; provided,
further, that to the extent that such performance obligations consist of
payment due from the Seller for goods provided or services rendered, the
Manager shall only be obligated to pay such amounts if required pursuant to
Section 2.2 hereof.


2.4           Employees.  The Manager shall have the duty to hire, pay
and supervise all personnel necessary for the operation of the Designated
Restaurants in accordance with the terms of this Agreement.  The Manager
shall be solely responsible for compliance with all applicable laws and
regulations with respect to its employees.


2.5           Taxes.  During the term of this Agreement, the
Manager shall pay to the appropriate Governmental Entity all amounts due with
respect to any Taxes for the Designated Restaurants, including sales tax and
business and occupancy tax, for periods beginning on or after the First Closing
Date.


2.6           No Assumption.  Nothing
contained herein shall be deemed to be an assumption by the Manager of any
Liabilities of the Seller or any of Seller’s Contracts, Real Property Leases or
Capital Leases.


2.7           Independent Contractor.  Manager is an independent contractor and it
is expressly understood and agreed that any payments for Manager’s services
hereunder shall be compensation from the Seller to the Manager as an
independent contractor and not as a partner or joint venturer of the Sellers.


3.             Compensation.  As compensation for its services hereunder,
the Manager shall be entitled to collect and retain all revenue and receipts
from any source for the sale of food and beverages, goods, articles and any other
merchandise or service, all charges for services performed (including service
charges in lieu of gratuity), whether in the form of cash, credit, coupon,
rebate or otherwise, made and rendered in, about or in connection with the
Designated Restaurants, including, without limitation, (a) receipts derived
from orders taken on the premises regardless of whether the order was filled at
or on the premises, (b) receipts from the operation of vending or gaming
devices located at the Restaurant which represent the Restaurant’s share of
such vending or gaming revenues, (c) receipts or other income related to
catering and permitted wholesale activities and any sales or orders of food
products, food preparation services, and other products provided from or
related to the Designated Restaurants. The Manager shall maintain adequate
accounting records, which in reasonable detail set forth the amount of revenue
earned 



 3
 






 



by and expenses incurred
in the operation of each of the Designated Restaurants during the term of this
Agreement.


4.             Term and
Termination.


4.1           Term.  This term of this Agreement shall commence on
the date hereof and shall continue until the Second Closing Date, unless
earlier terminated as provided herein.


4.2           Termination.  This Agreement may be terminated at any time
before the Second Closing Date as follows:


(a)           Mutual Consent.  By the mutual consent of the Manager and the
Sellers;


(b)           Material Breach.  By
either Manager or Sellers if there has been a material breach or inaccuracy by
the other Party with respect to any representation or warranty contained in the
Purchase Agreement or of any covenant contained in this Agreement or the
Purchase Agreement, including any representation or warranty that was made as
of the First Closing Date, and such breach is not waived by the non-breaching
Party;


(c)           Abandonment. 
(i) By the Manager at any time upon 30 days written notice to the
Sellers; or (ii) by the Sellers upon 30 days written notice to the Manager but
not before October 31, 2006.


(d)           Government Action.  By
either Manager or Sellers, if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement or the Purchase Agreement and such order, decree, ruling or other
action shall have become final and nonappealable.


4.3           Effect of Termination.  Immediately upon the effective date of
termination of this Agreement, the Manager shall have no further obligations to
operate or manage the Designated Restaurants pursuant to this Agreement.  Within thirty (30) days after the effective
date of the termination of this Agreement, the Manager shall deliver (i) to
Sellers an accounting of the operation of the Designated Restaurants during the
term of this Agreement, showing in reasonable detail the services performed by
the Manager under Section 2.1 of this Agreement; and (ii) to the applicable
Seller copies of all books and records pertaining to the Manager’s operation of
the Designated Restaurants.  The Manager
may, subject to coordinating such actions with the Sellers, remove, at its own
cost, any fixtures, furniture, equipment or other property installed at the
Designated Restaurants by the Manager.


5.             Insurance and
Indemnification.


5.1           Insurance.  Manager shall maintain at Manager’s expense
insurance coverage with respect to the Designated Restaurants of a type and
amount customary for entities of similar size engaged in similar lines of
business, including, but not limited to, (a) worker’s compensation and employer’s
liability insurance covering all employees of Manager who work at the
Designated Restaurants, (b) commercial liability insurance against physical
damage to the Designated Restaurants or any of Seller’s the assets located therein,
and (c) comprehensive 



 4
 






 



general liability
insurance against loss, damage or injury to property or persons which might
arise out of the occupancy, management or operation of the Designated
Restaurants by the Manager during the term of this Agreement.  Insurance policies obtained by the Manager as
required under paragraphs (b) and (c) above shall name the applicable Seller as
an additional insured party.


5.2           Indemnification.  Manager shall indemnify and hold the Sellers and
their respective successors, assigns, managers, officers, directors,
stockholders, members and employees (collectively, the “Seller Group”) harmless against any and all Adverse Consequences which they
may suffer, sustain or become subject to as the result of, arising from or in
connection with:


(a)           any suit, arbitration or similar
proceeding instituted by a third party 
alleging negligence or misconduct by the Manager in the performance of
its obligations under this Agreement (“Third
Party Claims”);


(b)           with respect to Adverse Consequences
suffered other than in connection with a Third Party Claim, Manager’s gross
negligence or willful misconduct in the performance of its obligations under
this Agreement;


(c)           any violation or alleged violation by
the Manager of any Liquor License, Permit or any Law or any requirement of any
Governmental Entity in connection with the operation of the Designated
Restaurants;


(d)           any violation of any Law or any
requirement of any Governmental Entity relating to or affecting the employment
by Manager of its employees; or


(e)           any breach or alleged breach by the
Manager in the performance of Seller’s Contracts listed on Schedule 3.14(a) of
the Purchase Agreement;


5.3           Limitations on Indemnification.  Notwithstanding the foregoing, (a) the
Manager shall not be required to indemnify the Seller Group for Adverse
Consequences based on Section 5.2 until the aggregate amount of all Adverse
Consequences exceeds $25,000 (the “Threshold”),
provided  that, in the event the aggregate amount of Adverse
Consequences exceeds the Threshold, the Manager shall be liable to indemnify
the Seller Group for the full amount of Adverse Consequences, not only the
amount in excess of Threshold; provided  further, that the
Threshold shall not apply to Third Party Claims under Section 5.2(a); (b) the
Manager’s obligation to indemnify the Seller Group shall not exceed the amount
of gross profit earned by the Manager from the Designated Restaurants; provided
that, this subsection (b) shall not apply with respect to Third Party
Claims under Section 5.2(a); and (c) any amounts payable by Manager pursuant to
this Section 5 shall be set off against amounts payable by South Sound or
Northwest Robins to the Manager under the indemnification provisions in the
Purchase Agreement.


6.             Right of Entry.  During the term of this Agreement, each
Seller reserves for itself and any of its agents or representatives, a right of
entry into such Seller’s Designated Restaurant at any time and for any purpose
not inconsistent with the rights of the Manager provided pursuant to this
Agreement.



 5
 






 



7.             License Agreements. 
The Parties acknowledge and agree that the License Agreement by and
between South Sound and the Manager dated November 20, 1987 and the License
Agreement by and between Northwest Robins (formerly Great Western Dining LLC)
and the Manager dated August 5, 1996, as amended, (together, the “License Agreements”) shall remain in full
force and effect through the term of this Agreement, provided  however,
that Sellers’ obligations to make royalty payments and pay for advertising as
required by the License Agreements are hereby waived by the Manager for the
term of this Agreement.  In the event
this Agreement is terminated prior to the Second Closing Date, the License
Agreements shall continue in full force and effect pursuant to their terms and
the waiver in the preceding sentence shall expire on the effective date this
Agreement is terminated. 


8.             Miscellaneous  


8.1           No Third Party Beneficiaries.  Except as expressly set forth in Section 5.2,
this Agreement shall not confer any rights or remedies upon any Person other
than the Parties and their respective successors and permitted assigns.


8.2           Entire Agreement.  This Agreement, the Purchase Agreement and
the documents and agreements referred to therein constitute the entire
agreement among the Parties and supersedes any prior understandings, agreements
or representations by or among the Parties, written or oral, that may have
related in any way to the subject matter of this Agreement.


8.3           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.  No Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Parties; provided, however,
that the Manager may assign any of its rights under this Agreement to any
Affiliate of the Manager and/or make a collateral assignment of its rights for
the benefit of its lenders.


8.4           Counterparts.  This Agreement may be executed in two or more
counterparts, including by facsimile, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.


8.5           Headings.  The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.


8.6           Notices.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing.  Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given when delivered personally to
the recipient, telecopied to the intended recipient at the telecopy number set
forth therefor below (with hard copy to follow), or sent to the recipient by
reputable express courier service (charges prepaid) and addressed to the
intended recipient as set forth below:



 6
 






 



If to any of the Sellers:


Great Western Dining

6840 Fort Dent Way

Suite 350

Seattle, WA  98188-2555

Telephone: 206-835-8100

Facsimile: 206-242-0427

Attention: Marcus L. Zanner


with a copy to:


Graham & Dunn, PC

Pier 70

2801 Alaskan Way, Suite 300

Seattle, WA 98121

Telephone:  206-624-8300

Facsimile:  206-340-9599

Attention:  Jack G. Strother


If to the Manager:


Red Robin International, Inc.

6312 S. Fiddler’s Green Circle, #200N

Greenwood Village, CO  80111

Telephone: 303-846-6060

Facsimile: 303-846-6013

Attention: Dennis B. Mullen


with a copy to:


Davis Graham & Stubbs LLP

1550 17th Street, Suite 500

Denver, CO 80202

Telephone:  (303) 892-9400

Facsimile:  (303) 892-7400

Attention:  Ronald R. Levine II


Any Party may send any notice, request, demand,
claim or other communication hereunder to the intended recipient at the address
set forth above using any other means, but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient.  Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to
be delivered by giving the other Party notice in the manner herein set forth.



 7
 






 



8.7           Governing Law.  This Agreement will be governed by and
construed in accordance with the laws of the State of Washington without giving
effect to its conflicts of laws provisions.


8.8           Amendments and Waivers.  No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties.  No waiver by any Party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.


8.9           Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent arises, this Agreement
shall be construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement.  The word “including” shall mean including
without limitation.


8.10         Remedies.  The Parties shall each have and retain all
other rights and remedies existing in their favor at Law or equity, including,
without limitation, any actions for specific performance and/or injunctive or
other equitable relief to enforce or prevent any violations of the provisions
of this Agreement.


8.11         Severability.  It is the desire and intent of the Parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought.  Accordingly,
if any particular provision of this Agreement shall be adjudicated by a court
of competent jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.


8.12         Jurisdiction and Venue.


(a)           Each of the Parties hereby
irrevocably and unconditionally submits, for itself or and its property, to the
nonexclusive jurisdiction of any Washington State court or federal court of the
United States of America sitting in Washington, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or for recognition or enforcement of any judgment, and each of the
Parties hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such Washington State court or, to the extent permitted by law, in such federal
court.  Each of the Parties agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.



 8
 






 



(b)           Each of the Parties irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to the Agreement in
any Washington State court or federal court. 
Each of the Parties irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.


* * * * *



 9
 






 



IN WITNESS WHEREOF, the Parties
have executed this Management and Services Agreement as of the date first above
written.


	
  Manager:

  	
  RED ROBIN INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Houseman

  
	
   

  	
   

  	
  Name: Eric
  Houseman

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
  Sellers:

  	
  SOUTH SOUND RED ROBIN, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcus L. Zanner

  
	
   

  	
   

  	
  Name: Marcus L.
  Zanner

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  NORTHWEST
  ROBINS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcus L. Zanner

  
	
   

  	
   

  	
  Name: Marcus L.
  Zanner

  
	
   

  	
   

  	
  Title: Manager

  



 



 10















EXHIBIT A


Puyallup — Lease covering premises at
3609 Ninth Street Southwest, Puyallup, WA 98373, between Northwest Robins, LLC,
as Lessee, and Cafaro Northwest Partnership, as Landlord.


Federal Way — Lease covering premises at
2233 South 320th, Federal Way,
Washington 98003, between South Sound Red Robin, Inc., as Lessee, and Steadfast
Sea-Tac I-IV, LLC, as Landlord


 



 A-1