Document:

Exhibit 10.1

 

SECOND
AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is
made as of this 10th day of March, 2008, and was originally made and
entered into as of September 7, 2005 and first amended and restated
effective as of April 17, 2007, 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”), entered into an
Employment Agreement with the Executive dated September 7, 2005 and
subsequently amended and restated effective April 17, 2007 (the “Amended
Agreement”) that established the Company’s right to the services of the
Executive in the capacities described below, on the terms and conditions
hereinafter set forth, and the Executive accepted such employment on such terms
and conditions;

 

WHEREAS,
the Company, for itself and RRI, desires to amend certain terms and conditions
of the Amended Agreement.

 

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,
2010, subject to earlier termination 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.  Notwithstanding the foregoing, if, during the
Employment Period, a majority of the Board determines that the Executive should
relinquish his position as Chief Executive Officer in connection with the
hiring or promotion of another individual into such position, and the Executive
remains in his position as Chairman of the Board, this Agreement shall remain
in full force and effect (with such modifications, including appropriate
modifications to Section 2(b) and (c) and Section 3 as
are mutually agreed upon) and such change in officer position shall not
constitute a termination under Section 4 hereof.

 

 

(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 positions as trustee and/or chairman of certain 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, 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 $675,000, payable in accordance with the Company’s and RRI’s
normal payroll policy.  The Executive’s
Annual Base Salary shall be subject to annual review by the Board of Directors
during the Employment Term; provided, however, subject to the
following sentence, that so long as the Executive holds both the office of
Chief Executive Officer and Chairman of the Board, the Executive’s Annual Base
Salary may not be reduced below $675,000. 
In the event that the Executive no longer serves as Chief Executive
Officer but remains Chairman of the Board as contemplated above in Section 2(a),
his Annual Base Salary will be modified to an amount mutually agreed upon by
the Company and the Executive at such time, but in no event, without the
consent of the Executive, shall such amount be less than 50% of the Annual Base
Salary in effect immediately prior to the change in position.

 

(b)           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.  In the event
that the Executive no longer serves as Chief Executive Officer but remains
Chairman of the Board as contemplated above, his target cash bonus will be modified
to an amount mutually agreed upon by the Company and the Executive at such
time, but in no event, without the consent of the Executive, shall such amount
be less than 50% of the target cash bonus in effect immediately prior to the
change in position.

 

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(c)           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.

 

(d)           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”).

 

(e)           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.

 

(f)            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.

 

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

 

(h)           Grant of
Restricted Stock.  Effective as of April 17,
2007, the Company granted to the Executive Seventy-Five Thousand (75,000)
shares of restricted Common Stock under the Company’s 2004 Performance
Incentive Plan, and otherwise on the terms and conditions set forth in the
Restricted Stock Award Agreement between the Company and the Executive.

 

(i)            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.

 

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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.

 

(c)           Transition Event.  With the mutual approval of the Executive and
a majority of the Board, the Company may terminate the Executive’s employment
as Chief Executive Officer and Chairman of the Board in connection with the
hiring or promotion of another individual into such positions (a “Transition
Event”), by delivery of not less than thirty (30) days’ advance written
notice to the Executive of the effective date of termination.

 

(d)           By the Company
without Cause.  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.  In the
event the Board determines that Executive should relinquish his position as
Chief Executive Officer as contemplated by Section 2(a) hereof, but
the parties are unable to agree on appropriate modification to this Agreement,
then so long as the modifications proposed by the Board comply with the minimum
requirements set forth in Sections 3(a) and (b) hereof, the
subsequent termination of the Executive’s employment shall have the same effect
under only this Agreement as a resignation of Executive (and shall not be
deemed a resignation under any other agreement between the Company and
Executive, including the Restricted Stock Grant Agreements dated February 27,
2007 and April 17, 2007).

 

(e)           Change in Control.  Executive’s employment shall terminate upon
the occurrence of a Change in Control Event.

 

(f)            Expiration of
Stated Term.  Unless earlier
terminated pursuant to the preceding subparagraphs of this Section 4 or by
the Executive’s earlier resignation, the Executive’s employment shall otherwise
terminate automatically upon the expiration of the stated term of this
Agreement.

 

(g)           Obligations
of the Company Upon Termination.

 

(i)            Death,
Disability or Resignation.  If the
Executive’s employment is terminated by reason of the Executive’s Death,
Disability or resignation, 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 

 

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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 effective date of
termination; (B) payment on the next bonus payment date immediately
following the effective date of termination, but no later than two and one half
months after the last day of the year that includes 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(b) 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; provided, however, that as conditions precedent to
receiving the payments and benefits provided for in this Section 4(g)(i) in
the event of Executive’s resignation (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 A,
and all rights of the Executive thereunder or under applicable law to rescind
or revoke the release shall have expired.

 

(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 payment of Accrued Obligations
through the date of termination in a lump sum in cash within 30 days of the
effective 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(g)(iv) hereof shall be the
only amounts the Executive may receive on account of his termination.

 

(iii)          Transition Event.  If, prior to the expiration of the stated
term of this Agreement, the Company terminates the Executive’s employment in
connection with a Transition Event, this Agreement shall terminate without
further obligations to the Executive under this Agreement, other than for (A) 
payment of Accrued Obligations through the effective date of termination in a
lump sum in cash within 30 days of the effective date of termination, (B) payment
on the next bonus payment date immediately following the effective date of
termination, but no later than two and one half months after the last day of
the year that includes the effective date of termination, of the pro rata share
(determined on the basis on the number of days during which the Executive
served the Company during the applicable fiscal year prior to the effective
date of termination) of the bonus that would otherwise have been payable 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 

 

5

 

of any applicable
welfare benefit plans; provided, however, that as conditions
precedent to receiving the payments and benefits provided for in this Section 4(g)(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 A, and all rights of the Executive
thereunder or under applicable law to rescind or revoke the release shall have
expired.

 

(iv)          Upon Change in
Control Event or by the Company without Cause.  If, prior to the expiration of the stated
term of this Agreement, the Company terminates the Executive’s employment upon
the occurrence of a Change in Control Event, for any reason other than for Cause
or other than in connection with a Transition Event, this Agreement shall
terminate without further obligations to the Executive other than:

 

(A)          payment of Accrued
Obligations through the effective date of termination in a lump sum in cash
within 30 days of the effective date of termination;

 

(B)           continued payment 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) for a period consisting of (1) twenty-four (24)
months following the effective date of termination in the event of a Change in
Control Event or (2) the lesser of twelve (12) months following the
effective date of termination for any reason other than for Cause or other than
in connection with a Transition Event or the remainder of the existing
Employment Period (the applicable period, being referred to herein as the “Severance
Period”); provided that such payments made before the date which is 6
months after the effective date of termination shall not exceed twice the
lesser of (1) the sum of Executive’s Annual Base Salary and Annual
Incentive Compensation during the year prior to the year that includes the
effective date of termination, or (2) the maximum amount that may be taken
into account under a qualified plan pursuant to Section 401(a)(17) of the
Code ($230,000 in 2008), and any excess amount shall be included in the payment
made to Executive on the regular pay date coincident with or next following the
date which is 6 months after the effective date of termination;

 

(C)           (1) upon a
Change in Control Event, two times the annual bonus amount earned by the
Executive for performance in the last completed calendar year prior to the
Change in Control Event for which bonuses have been paid or are payable (which
annual bonus may be in the aggregate if the Executive has earned more than one
bonus payment for such calendar year), or (2) upon a termination for any
reason other than for Cause or other than in connection with a Transition
Event, payment on the next bonus payment date immediately following the
effective date of 

 

6

 

termination, but
no later than two and one half months after the last day of the year that
includes the effective date of termination, of the pro rata share (determined
on the basis on the number of days during which the Executive served the
Company during the applicable fiscal year prior to the effective date of
termination) of the bonus that would otherwise have been payable had the
Executive continued to be employed by the Company on such bonus payment date,
subject in each case of the benefits in clauses (A), (B) and (C) to
standard withholdings and other authorized deductions; and

 

(D)          payment (or reimbursement
to the Executive) of the cost of continuing coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or otherwise, if
COBRA does not apply, for the Executive and his spouse under the Company’s and
RRI’s then existing medical, dental and prescription insurance plans for the
Severance Period, provided that Executive elects such continuing coverage in
accordance with the requirements of each such plan (provided that during any
period when the Executive is eligible to receive such benefits under any
employer-provided plan or through any government-sponsored program such as
Medicare, the benefits provided under this clause (D) 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(g)(iv) (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 A, and all rights of the Executive
thereunder or under applicable law to rescind or revoke the release shall have
expired.

 

(v)           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, 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(b) 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.

 

(vi)          Exclusive Remedy.  The Executive agrees that the payments
contemplated by this Section 4(g) shall constitute the exclusive and
sole remedy for any termination of his employment, and the Executive covenants
not to assert 

 

7

 

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(g)(vi) 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.

 

(h)           Survival of
Certain Obligations Following Termination. 
Notwithstanding any other provision contained in this Agreement, the
provisions in Sections 6 through 21 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.  Subject to earlier termination
pursuant to Section 4 above, the term of this Agreement shall be deemed to
have commenced as of the Effective Date and shall continue through December 31,
2010.

 

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 later to occur of (a) the date of termination of
Executive’s employment as Chief Executive Officer and (b) the date that
Executive ceases to serve as Chairman, 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 

 

8

 

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 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.

 

9

 

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;

 

(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.

 

“Change in Control Event” means:

 

(i)            The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 30% or more of either (1) the then-outstanding shares of common
stock of the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors 

 

10

 

(the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
definition, the following acquisitions shall not constitute a Change in Control
Event; (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any affiliate
of the Company or a successor, or (D) any acquisition by any entity
pursuant to a transaction that complies with subsections (iii)(A), (B) and
(C) below;

 

(ii)           In the event the
Board is a classified board, a majority of the individuals who serve in the
same class of directors that constitute the Board as of the Effective Date (the
“Incumbent Board”) cease for any reason to constitute at least a
majority of that class of directors, or in the event the Board is not a
classified board, members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election,
or nomination for election by the Company’s stockholders, was approved by a
vote of at least two-thirds of the directors then comprising the Incumbent
Board (including for these purposes, the new members whose election or
nomination was so approved, without counting the member and his predecessor
twice) shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board;

 

(iii)          Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar
corporate transaction involving the Company or any of its Subsidiaries, a sale
or other disposition of all or substantially all of the assets of the Company,
or the acquisition of assets or stock of another entity by the Company or any
of its Subsidiaries (each, a “Business Combination”), in each case
unless, following such Business Combination, (A) all or substantially all
of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock and
the combined voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets directly or through one or more
subsidiaries (a “Parent”)) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any entity resulting from such
Business Combination or a Parent or any employee benefit plan (or related
trust) of the Company or such entity resulting from such Business Combination
or Parent) beneficially owns, directly or indirectly, more than 30% of,
respectively, the then-

 

11

 

outstanding shares
of common stock of the entity resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such entity,
except to the extent that the ownership in excess of more than 30% existed
prior to the Business Combination, and (C) at least a majority of the
members of the board of directors or trustees of the entity resulting from such
Business Combination or a Parent were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or

 

(iv)          Approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company;

 

provided, however, that any of the foregoing events
shall constitute a Change in Control Event only if Executive’s
employment with the Company as Chairman of the Board or as Chief Executive
Officer is involuntarily terminated for a reason other than Cause or Executive
voluntary terminates for Good Reason within eighteen (18) months following such
Change of Control Event.

 

 “Disability” means 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.

 

“Good
Reason” means the occurrence of any of the following after the applicable
Change in Control Event: (i) a reduction in Executive’s compensation; (ii) a
relocation of the Company’s headquarters to a location more than twenty (20)
miles from the location of the Company’s pre-Change of Control Event
headquarters; or (iii) a significant reduction in the then-effective
responsibilities of Executive as Chairman of the Board or Chief Executive
Officer without Executive’s prior written consent; provided that Executive
gives written notice to the Company  of
the existence of such a condition within 90 days of the initial existence of
the condition and the Company has at least 30 days from the date when such
notice is provided to cure the condition without being required to make
payments due to termination by the Company upon Change in Control Event.

 

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 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 

 

12

 

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.

 

(a)           Except
as otherwise provided in Section 20, and to the extent specifically
provided in Section 17, Executive shall be solely liable for Executive’s
tax consequences of compensation and benefits payable under this Agreement,
including any consequences of the application of Section 409A of the Code.

 

(b)           In
order to comply with all applicable federal or state income tax laws or
regulations, the Company may withhold from any payments made under this
Agreement all applicable federal, state, city or other applicable taxes.

 

17.           Section 409A
Savings Clause.

 

(a)           It is the intention
of the parties that compensation or benefits payable under this Agreement not
be subject to the additional tax imposed pursuant to Section 409A of the
Code.  To the extent such potential
payments or benefits could become subject to such Section, the parties shall
cooperate to amend this Agreement with the goal of giving Executive the
economic benefits described herein in a manner that does not result in such tax
being imposed.

 

(b)           Notwithstanding
anything in this Agreement to the contrary, if on the date of termination of
Executive’s employment with the Company,

 

(i)            Executive
would not have a separation from service within the meaning of Section 409A
of the Code and the Treasury Regulations thereunder (“Separation From Service”),
and as a result of such termination of employment would receive any payment
that, absent the application of this Section 17(b)(i), 

 

13

 

would
be subject to additional tax imposed pursuant to Section 409A of the Code,
then such payment shall instead be payable on the date that is the earliest of (A) Executive’s
Separation From Service, (B) the date the Executive becomes disabled
(within the meaning of Section 409A(a)(2)(C) of the Code), (C) the
Executive’s death, or (D) such other date as will not result in such
payment being subject to such additional tax; and if

 

(ii)           Executive
is a specified employee within the meaning of Section 409A(a)(2)(B)(i) of
the Code and would receive any payment sooner than 6 months after
Executive’s separation from service that, absent the application of this Section 17(b)(ii),
would be subject to additional tax imposed pursuant to Section 409A of the
Code as a result of such status as a specified employee, then such payment
shall instead be payable on the date that is the earliest of (A) 6 months
after Executive’s Separation From Service, (B) the Executive’s death, or (C) such
other date as will not result in such payment being subject to such additional
tax.

 

18.           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.

 

19.           Amendment
and Waiver.  The provisions of this
Agreement may be amended or waived only with the prior written consent of the
Board (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.

 

20.           Gross-Up
Payments.

 

(a)           Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Agreement) (a “Payment”) would be subject to the excise tax imposed by
Code Section 4999 or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes imposed upon the Gross-Up Payment (including any
interest or penalties imposed with respect to such taxes), the Executive
retains an amount of the Gross-Up Payment equal to the excise tax imposed upon
the Payments.  Such Gross-Up Payment
shall be made by 

 

14

 

the Company by December 31
of the year following the year in which the Executive is required to remit the
related Excise Tax.  This provision is
intended to override the cut-back provisions of Section 7.7 of the Company’s
2004 Performance Incentive Plan. 
Notwithstanding the foregoing provisions of this Section, if it is
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed by $25,000 the greatest amount that could be paid to the
Executive such that the receipt of Payments would not give rise to any excise
tax (the “Reduced Amount”), then no Gross-Up Payment shall be made to
the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.

 

(b)           Subject to the
provisions of Section 20(c) below, all determinations required to be
made under this Section 20, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a certified public
accounting firm designated by the Board (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and the
Executive.  If the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control Event, the Board shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder).  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.

 

(c)           If the Executive is,
or could be, entitled to receive a Gross-Up Payment, pursuant to Section 20(a) the
Executive shall take any position requested by the Company (a “Requested
Position”) on the Executive’s federal income tax returns with respect to
the treatment of the Payment from the Company, any Gross-Up Payment, the
payment of any Indemnified Amount (as defined below), and the receipt of any
refund or interest paid by the government to the Executive as a result of a
Contest (as defined below), provided that: (i) the Company shall provide
the Executive with an opinion from a nationally recognized accounting firm that
there is “substantial authority” for the Requested Position within the meaning
of Code Section 6662; and (ii) the general long term or senior
unsecured corporate credit rating of the Company or its successor is at least
BBB- as rated by Standard & Poors and Baa3 as rated by Moody’s
Investor Services at the time the Executive would be required to take a
Requested Position or the Company places in an escrow account or otherwise
provides security reasonably requested by Executive to ensure payment to the
Executive of the indemnity amount that could become due to the Executive
pursuant to the following sentence.  The
Company shall indemnify the Executive for any tax, penalty and interest
incurred by him as a result of taking the Requested Position.  The amount for which the Executive is
indemnified under the preceding sentence (the “Indemnified Amount”)
shall be computed on an after-tax basis, taking into account any income, Excise
or other taxes, including interest and penalties.  The Executive shall keep the Company informed
of all developments in any audit with respect to a Requested Position.  Upon payment of the Indemnified Amount, or
(if the Indemnified Amount is not yet payable) upon the Company’s written
affirmation, in form and substance reasonably satisfactory to the Executive, of
the Company’s obligation to indemnify the Executive with respect to the
Requested Position, and provided part (ii) of the first sentence of
this Section 20(c) is satisfied at such time, the Company shall be 

 

15

 

entitled, at its
sole expense, to control the contest of any disallowance or proposed
disallowance of a Requested Position (a “Contest”), and the Executive
agrees to cooperate in connection with a Contest, including, without
limitation, executing powers of attorney and other documents at the reasonable
request of the Company.  The Indemnified
Amount shall be payable whenever an amount is payable to the Internal Revenue
Service as a result of the disallowance of a Requested Position, but shall be
paid no later than December 31 of the year following the year in which
such amount is payable to the Internal Revenue Service.  Following payment by the Company of the
Indemnified Amount, if the Requested Position is sustained by the Internal
Revenue Service or the courts, the Company shall be entitled to any resulting
receipt of interest or refund of taxes, interest and penalties that were
properly attributable to the Indemnified Amount.  If a Requested Position is sustained in whole
or in part in a final resolution of a Contest, and if the Indemnified Amount
therefore exceeds the amount of taxes, penalties and interest payable by the
Executive as a result of the Requested Position (determined on an after-tax
basis after taking into account payments made pursuant to the preceding
sentence and this sentence), any such excess portion of the Indemnified Amount
shall be treated as a loan by the Company to the Executive, which loan the
Executive must repay to the Company together with interest at the applicable
federal rate under Code Section 7872(f)(2).

 

21.           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, 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:

 

Davis
Graham & Stubbs LLP

1550 Seventeenth Street, Suite 500

 

16

 

Denver,
Colorado  80202 

Attention: Ronald R. Levine, II 

Facsimile No.:  303-893-1379

 

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.

Snell & Wilmer 

Tabor Center

1200 Seventeenth Street, Suite 1900

Denver, Colorado  80202

Facsimile No.:  (303) 634-2020

 

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]

 

17

 

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis B. Mullen

  
	
   

  	
   

  	
  Dennis B. Mullen

  

 

18

 

STRICTLY
CONFIDENTIAL

 

EXHIBIT A

 

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 Second Amended and
Restated Employment Agreement dated as of March 10, 2008, 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 damages for any
alleged breach of contract, any tort claim and any alleged personal injury or
emotional injury or damage; and

 

B-1

 

3.                                       All claims for attorneys’ fees;

 

but  excluding my rights to receive
payments and benefits pursuant to Section 4(e)(iv) 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)(iv) 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)(iv) 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)(iv) 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)(iv) of my Employment
Agreement (other than payment of the Accrued Obligations under clause (1) 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.

 

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 

 

B-2

 

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:  Chief Legal Officer

 

and

 

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

 

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 

 

B-3

 

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)(iv) 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.

 

Sections 6
through 21 of the Employment Agreement shall survive the termination of my
employment and 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.

 

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 

 

B-4

 

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-5Exhibit 10.2

 

CHANGE IN CONTROL
AGREEMENT

 

THIS AGREEMENT, dated as of
the 10th day of March, 2008, is made by and between Red Robin Gourmet Burgers, Inc.,
a Delaware corporation (the “Company”)
and Eric C. Houseman (the “Executive”).

 

WHEREAS, the Company
recognizes that it is difficult to attract and retain highly qualified
executives unless a certain degree of security can be offered to such
individuals against organizational and personnel changes which frequently
follow changes in control of a corporation; and

 

WHEREAS, even rumors of
acquisitions or mergers may cause executives to consider major career changes
in an effort to assure financial security for themselves and their families;
and

 

WHEREAS, the Company desires
to assure continuity of management and fair treatment of its executives in the
event of a Change in Control (as defined below) and to allow them to make
critical career decisions without undue time pressure and financial
uncertainty, thereby increasing their willingness to remain with the Company
notwithstanding the outcome of a possible Change in Control transaction; and

 

WHEREAS, the Company
recognizes that its executives will be involved in evaluating or negotiating
any offers, proposals or other transactions which could result in Changes in
Control of the Company and believes that it is in the best interest of the
Company and its stockholders for such executives to be in a position, free from
personal financial and employment considerations, to be able to assess
objectively and pursue aggressively the interests of the Company’s stockholders
in making these evaluations and carrying on such negotiations; and

 

WHEREAS, the Board of
Directors (the “Board”) of the
Company believes it is essential to provide Executive with compensation arrangements
upon a Change in Control that provide Executive with individual financial
security and that are competitive with those of other corporations, and in
order to accomplish these objectives, the Board has caused the Company to enter
into this Agreement.

 

NOW THEREFORE, the parties,
for good and valuable consideration and intending to be legally bound, agree as
follows:

 

1.             Operation and Term of Agreement.  This Agreement shall be effective as of the
date first set forth above.  This
Agreement may be terminated by the Company upon 24 months’ advance written
notice to Executive; provided, however, that after a Change in
Control of the Company during the term of this Agreement, this Agreement shall
remain in effect until all of the obligations of the parties under the
Agreement are satisfied and the Protection Period has expired.  Prior to a Change in Control, this Agreement
shall immediately terminate upon termination of Executive’s employment or upon
Executive’s ceasing to be an officer of the Company.

 

2.             Certain Definitions.  For purposes of this Agreement, the following
words and phrases shall have the following meanings:

 

 

(a)           “Cause” means: (i) Executive’s
continual or deliberate neglect in the performance of Executive’s material
duties; (ii) Executive’s failure to devote substantially all of Executive’s
working time to the business of the Company and its subsidiaries (other than as
expressly permitted in a written employment agreement between the Company and
Executive); (iii) Executive’s willful failure to follow the lawful
directives of the Board or the Company’s Chief Executive Officer in any
material respect; (iv) Executive’s engaging willfully in misconduct in
connection with the performance of any of Executive’s 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 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) 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 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) 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.

 

(b)           “Change in Control” means:

 

(i)            The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 50% or more of either (1) the
then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided,
however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change in Control; (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliate of the Company or a successor, or (D) any
acquisition by any entity pursuant to a transaction that complies with
subsections (iii)(A), (B) and (C) below;

 

(ii)           In the event the
Board is a classified board, a majority of the individuals who serve in the
same class of directors that, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of that class of directors, or in the event the
Board is not a classified board, members of the Incumbent Board cease for any
reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board (including for these purposes, the new members whose election
or nomination was so approved, without counting the member and his predecessor
twice) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption 

 

2

 

of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;

 

(iii)          Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar
corporate transaction involving the Company or any of its Subsidiaries, a sale
or other disposition of all or substantially all of the assets of the Company,
or the acquisition of assets or stock of another entity by the Company or any
of its Subsidiaries (each, a “Business
Combination”), in each case unless, following such Business
Combination, (A) all or substantially all of the individuals and entities
that were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets directly or through one or more subsidiaries (a “Parent”)) in substantially the same
proportions as their ownership immediately prior to such Business Combination
of the Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any entity
resulting from such Business Combination or a Parent or any employee benefit
plan (or related trust) of the Company or such entity resulting from such
Business Combination or Parent) beneficially owns, directly or indirectly, more
than 50% of, respectively, the then-outstanding shares of common stock of the entity
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such entity, except to the extent that
the ownership in excess of more than 50% existed prior to the Business
Combination, and (C) at least a majority of the members of the board of
directors or trustees of the entity resulting from such Business Combination or
a Parent were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

 

(iv)          Approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company.

 

(c)           “Change in Control Date” shall be any date
during the term of this Agreement on which a Change in Control occurs.  Anything in this Agreement to the contrary
notwithstanding, if Executive’s employment or status as an officer with the
Company is terminated within six (6) months before the date on which a
Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated or intended to effect a Change in Control or (ii) otherwise
arose in connection with or anticipation of a Change in Control, then for all
purposes of this Agreement the “Change in Control Date” shall mean the date
immediately before the date of such termination.

 

(d)           “Code” shall mean the Internal Revenue Code
of 1986, as amended.

 

(e)           “Disability” means a “permanent and total
disability” within the meaning of Section 22(e)(3) of the Code or as
otherwise determined by the Board.  The
Company reserves 

 

3

 

the
right, in good faith, to make the determination of disability under this
Agreement based upon information supplied by Executive and/or his medical
personnel, as well as information from medical personnel (or others) selected
by the Company or its insurers.

 

(f)            “Good Reason” means the occurrence of any
of the following after the applicable Change in Control: (i) a reduction
in Executive’s compensation; (ii) a relocation of the Company’s
headquarters to a location more than twenty (20) miles from the location of the
Company’s headquarters immediately prior to the Change in Control Date; (iii) a
significant reduction in the then-effective responsibilities of Executive
without Executive’s prior written consent (for this purpose, if the Company ceases to be a
publicly-traded corporation, Executive will not be deemed to have suffered such
a reduction in the nature and scope of his responsibilities solely because of
the change in the nature and scope thereof resulting from the Company no longer
being publicly-traded); or (iv) any failure by the Company to obtain
the assumption of the obligations contained in this Agreement by any successor
as contemplated in Section 11(c) of this Agreement; provided that
Executive gives written notice to the Company 
of the existence of such a condition within ninety (90) days of the
initial existence of the condition and the Company has at least thirty (30)
days from the date when such notice is provided to cure the condition without
being required to make payments under this Agreement.

 

(g)           “Protection Period” means the period
beginning on the Change in Control Date and ending on the last day of the
18-month period following the Change in Control Date.

 

(h)           “Subsidiary” means a company 50 percent or
more of the voting securities of which are owned, directly or indirectly, by
the Company.

 

3.             Vesting Upon Change in Control.  If, during the Protection Period, Executive’s
employment is terminated by the Company other than for Cause or Disability or
other than as a result of Executive’s death or if Executive terminates his
employment for Good Reason,  any and all
Common Shares (as defined in Section 4(c)), options, restricted shares or
other forms of securities issued by the Company and beneficially owned by
Executive (whether granted before or after the date of this Agreement) that are
unvested, restricted, or subject to any similar restriction that would
otherwise require continued employment by Executive beyond the Change in
Control Date in order to be vested in the hands of Executive shall vest
automatically and become exercisable, or such restrictions shall lapse.

 

4.             Benefits Upon Termination Within a Protection Period.  If, during the Protection Period, Executive’s
employment is terminated by the Company other than for Cause or Disability or
other than as a result of Executive’s death or if Executive terminates his
employment for Good Reason, the Company shall, subject to Sections 7 and 8,
make the following payments to Executive:

 

(a)           All earned and
determinable, but unpaid, wages and all earned and determinable, but unused,
vacation through the date of Executive’s termination shall be paid to Executive
in a lump sum in cash within ten (10) days after the termination of
Executive’s employment;

 

4

 

(b)           A severance amount
equal to two times Executive’s “Annual Compensation” shall be paid to Executive
within ten (10) days after the termination of Executive’s employment, to
the extent such amount is less than or equal to two times the lesser of (i) the
sum of Executive’s Annual Compensation during the year prior to the year that
includes the effective date of termination, or (ii) the maximum amount
that may be taken into account under a qualified plan pursuant to Section 401(a)(17)
of the Code ($230,000 in 2008) (“Initial
Amount”).  To the extent that
the severance amount pursuant to this Section 4(b) exceeds the
Initial Amount, the severance amount in excess of the Initial Amount shall be
paid to Executive on the date that is the
earliest of 6 months after Executive’s “separation from service” within
the meaning of IRC Section 409A (a “Separation
from Service”), Executive’s death, or such other date as will not
result in such payment being subject to additional tax under Section 409A
of the Code.  For purposes of this
Section 4, “Annual Compensation”
shall be an amount equal to the sum of (i) Executive’s annual base salary
from the Company and its Subsidiaries (including scheduled base salary
increases or increases that are budgeted and approved either by the
Compensation Committee of the Board of Directors or by the Board of Directors of
the Company in advance of the Change in Control Date), annualized for any
partial year, in effect immediately prior to the Change in Control Date; and (ii) the
annual bonus amount earned by Executive for performance in the last completed
calendar year prior to the Change in Control Date for which bonuses have been
paid or are payable (which annual bonus may be in the aggregate if Executive
has earned more than one bonus payment for such calendar year);

 

(c)           Upon surrender by
Executive (which surrender shall be at the sole option of Executive) of his
outstanding options to purchase common shares of the Company (“Common Shares”) granted to Executive by
the Company (the “Outstanding Options”),
an amount in respect of each Outstanding Option (whether vested or not) equal
to the difference between the exercise price of such Outstanding Option and the
fair market value of the Common Shares at the time of such termination (but not
less than the closing price for the Common Shares on NASDAQ, or such other
national stock exchange on which such shares may be listed, on the last trading
day such shares traded prior to the date of termination); and

 

(d)           Upon Executive’s
timely election of continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall pay, on Executive’s behalf, the portion of premiums of
Executive’s group health insurance, including coverage for your eligible
dependents, that the Company paid immediately prior to the date of termination
(“COBRA Payments”) for the period
that you are entitled to coverage under COBRA, but not to exceed twenty-four
months (“COBRA Period”).  The Company will pay such COBRA Payments for
Executive’s eligible dependents only for coverage for which those dependents
were enrolled immediately prior to the Date of Termination.  Executive will continue to be required to pay
that portion of the premium of Executive’s health coverage, including coverage
for Executive’s eligible dependents, that Executive was required to pay as an
active employee immediately prior to the date of termination.  Within 30 days following the end of the COBRA
Period, the Company shall pay to Executive in a lump sum an amount equal to the
product of (x) the amount of the COBRA payment paid on Executive’s behalf
for the final month of the COBRA Period and (y) the number of months by
which the Cobra Period was less than twenty-four.

 

5

 

5.             Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or
limit Executive’s continuing or future participation in any benefit, bonus,
incentive, or other plans, practices, policies, or programs provided by the
Company or any of its Subsidiaries and for which Executive may qualify, nor
shall anything in this Agreement limit or otherwise affect such rights as
Executive may have under any stock option or other agreements with the Company
or any of its Subsidiaries.  Amounts that
are vested benefits or that Executive is otherwise entitled to receive under
any plan, practice, policy, or program of the Company or any of its
Subsidiaries at or subsequent to the date of termination shall be payable in
accordance with such plan, practice, policy, or program; provided, however,
that Executive shall not be entitled to severance pay, or benefits similar to
severance pay, under any plan, practice, policy, or program generally
applicable to employees of the Company or any of its Subsidiaries.

 

6.             Full Settlement; No Obligation to Seek Other
Employment; Legal Expenses. 
The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense, or other
claim, right, or action that the Company may have against Executive or
others.  Executive shall not be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this
Agreement.  The Company agrees to pay,
within five days following timely written demand by Executive, but no later
than the last day of the third calendar year following the calendar year in
which Executive experiences a Separation from Service, all legal fees and
expenses Executive may reasonably incur as a result of any dispute or contest
(regardless of outcome) by or with the Company or others regarding the validity
or enforceability of, or liability under, any provision of this Agreement;
provided that such legal fees and expenses are incurred on or before the last
day of the second calendar year following the year in which Executive
experienced a Separation from Service. 
In any such action brought by Executive for damages or to enforce any
provisions of this Agreement, he shall be entitled to seek both legal and
equitable relief and remedies, including, without limitation, specific
performance of the Company’s obligations under this Agreement, in Executive’s
sole discretion.

 

7.             Gross-Up Payments.

 

(a)           Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Agreement) (a “Payment”) would be
subject to the excise tax imposed by Code Section 4999 or any interest or
penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”),
then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes imposed upon the Gross-Up Payment
(including any interest or penalties imposed with respect to such taxes but
excluding any taxes or interest imposed by Section 409A of the Code),
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.  This
provision is intended to override the cut-back provisions of Section 7.7
of the Company’s 2004 Performance Incentive Plan and 2007 Performance Incentive
Plan, and any similar cut-back provision in any plan adopted by the 

 

6

 

Company
following the date of this Agreement. 
Any Gross Up Payment shall be paid to Executive on or before the date
that is ten (10) days prior to the date when Executive is legally required
to remit such taxes.  Notwithstanding the
foregoing provisions of this Section 7, if it is determined that Executive
is entitled to a Gross-Up Payment, but that the Payments do not exceed by
$25,000 the greatest amount that could be paid to Executive such that the
receipt of Payments would not give rise to any excise tax (the “Reduced Amount”), then no Gross-Up Payment
shall be made to Executive and the Payments, in the aggregate, shall be reduced
to the Reduced Amount.

 

(b)           Subject to the
provisions of Section 7(c) below, all determinations required to be
made under this Section 7, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a certified public
accounting firm designated by the Board (the “Accounting
Firm”) which shall provide detailed supporting calculations both to
the Company and Executive.  If the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control Event, the Board shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder).  All fees and expenses
of the Accounting Firm shall be borne solely by the Company.

 

(c)           If Executive is, or
could be, entitled to receive a Gross-Up Payment, pursuant to Section 7(a) Executive
shall take any position requested by the Company (a “Requested Position”) on Executive’s federal income tax
returns with respect to the treatment of the Payment from the Company, any
Gross-Up Payment, the payment of any Indemnified Amount (as defined below), and
the receipt of any refund or interest paid by the government to Executive as a
result of a Contest (as defined below), provided that: (i) the Company
shall provide Executive with an opinion from a nationally recognized accounting
firm that there is “substantial authority” for the Requested Position within
the meaning of Code Section 6662; and (ii) the general long term or
senior unsecured corporate credit rating of the Company or its successor is at
least BBB- as rated by Standard & Poors and Baa3 as rated by Moody’s
Investor Services at the time Executive would be required to take a Requested
Position or the Company places in an escrow account or otherwise provides
security reasonably requested by Executive to ensure payment to Executive of
the indemnity amount that could become due to Executive pursuant to the
following sentence.  The Company shall
indemnify Executive for any tax, penalty and interest incurred by him as a
result of taking the Requested Position. 
The amount for which Executive is indemnified under the preceding
sentence (the “Indemnified Amount”)
shall be computed on an after-tax basis, taking into account any income, Excise
or other taxes, including interest and penalties.  Executive shall keep the Company informed of
all developments in any audit with respect to a Requested Position.  Upon payment of the Indemnified Amount, or
(if the Indemnified Amount is not yet payable) upon the Company’s written
affirmation, in form and substance reasonably satisfactory to Executive, of the
Company’s obligation to indemnify Executive with respect to the Requested
Position, and provided part (ii) of the first sentence of this Section 7(c) is
satisfied at such time, the Company shall be entitled, at its sole expense, to
control the contest of any disallowance or proposed disallowance of a Requested
Position (a “Contest”), and
Executive agrees to cooperate in connection with a Contest, including, without
limitation, executing powers of attorney and other documents at the reasonable
request of the Company.  The Indemnified
Amount shall be paid to Executive on or before the date that is ten 

 

7

 

(10) days
prior to the date when Executive is legally required to remit such payment as a
result of the disallowance of a Requested Position.  Following payment by the Company of the
Indemnified Amount, if the Requested Position is sustained by the Internal
Revenue Service or the courts, the Company shall be entitled to any resulting
receipt of interest or refund of taxes, interest and penalties that were
properly attributable to the Indemnified Amount.  If a Requested Position is sustained in whole
or in part in a final resolution of a Contest, and if the Indemnified Amount
therefore exceeds the amount of taxes, penalties and interest payable by
Executive as a result of the Requested Position (determined on an after-tax
basis after taking into account payments made pursuant to the preceding
sentence and this sentence), any such excess portion of the Indemnified Amount
shall be treated as a loan by the Company to Executive, which loan Executive
must repay to the Company together with interest at the applicable federal rate
under Code Section 7872(f)(2); provided, however, that if at the time the
Company is to make such payment, a loan to Executive would not permitted under
the Sarbanes-Oxley Act of 2002, as amended, because Executive continues to be
an officer or director of the Company, the Company shall pursue such appeal in
a manner that does not require Executive to make such excess payment to the
applicable taxing authority.

 

8.             Code Section 409A Savings Provision.  Notwithstanding anything in this Agreement to
the contrary, the following provisions related to payments treated as deferred
compensation under Code Section 409A shall apply:

 

(a)           If, on the date of
Executive’s Separation from Service, Executive is a “specified employee,”
within the meaning of Sections 409A(a)(2)(A)(i) and 409A(a)(2)(B)(i) of
the Code, and as a result of such Separation from Service Executive would
receive any payment that, absent the application of these provisions, would be
subject to the constructive receipt, interest, and additional tax provisions of
Code Section 409A(a), then any such payment shall be made on the date that
is the earliest of: (i) six (6) months after Executive’s Separation
from Service, (ii) Executive’s date of death, or (iii) such other
earliest date for which such payment will not be subject to such constructive
receipt, interest, and additional tax.

 

(b)           If
Executive would not have a Separation from
Service and, as a result of Executive’s termination of employment, would
receive any payment that, absent the application of this Section 8(b),
would be subject to additional tax imposed pursuant to Section 409A of the
Code, then such payment shall instead be payable on the date that is the
earliest of (i) Executive’s Separation from Service, (ii) the date
Executive becomes disabled (within the meaning of Section 409A(a)(2)(C) of
the Code), (iii) Executive’s death, or (iv) such other
earliest date for which such payment will not be subject to such constructive
receipt, interest, and additional tax.

 

(c)           It is the intention of the parties
that all amounts payable under this Agreement not be subject to the
constructive receipt, interest, and additional tax resulting from the
application of Code Section 409A. 
To the extent such amounts could become subject to such constructive
receipt, interest, and additional tax, the parties shall cooperate to amend
this Agreement with the goal of giving Executive the same or equivalent value
of the benefits described in this Agreement in a manner that does not result in
such constructive receipt, interest, and additional tax.

 

8

 

9.             Confidentiality and Nonsolicitation Provisions.

 

(a)           Confidentiality.  Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge, or data relating to the Company or any of its Subsidiaries, and
their respective businesses, obtained by Executive during Executive’s
employment by the Company or any of its Subsidiaries and that has not become
public knowledge (other than by acts of Executive or Executive’s
representatives in violation of this Agreement).  After the date of termination of Executive’s
employment with the Company, Executive shall not, without the prior written
consent of the Company, communicate or divulge any such information, knowledge,
or data to anyone other than the Company and those designated by it.  In no event shall an asserted violation of
the provisions of this Section constitute a basis for deferring or
withholding any amounts otherwise payable to Executive under this Agreement.

 

(b)           Non-Solicitation.
Executive, for the twelve (12) month period immediately following the date of
termination of Executive’s employment, shall not, either on his own account or
jointly with or as a manager, agent, officer, employee, consultant, partner,
joint venturer, owner or shareholder or otherwise on behalf of any other
person, firm or corporation, directly or indirectly solicit or attempt to
solicit away from the Company any of its officers or employees or offer
employment to any person who, on or during the six (6) months immediately preceding
the date of such solicitation or offer, is or was an officer or employee of the
Company; provided, however, that (i) a
general solicitation or advertisement to which an employee of the Company
responds shall in no event be deemed to result in a breach of this Section 9(b),
and (ii) it shall not be a violation of this Section 9(b) for
Executive to directly or indirectly solicit the employment of, or to hire, his
current executive assistant.

 

(c)           Survival; Reformation. The provisions of this Section 9
shall survive the termination or expiration of this Agreement and Executive’s
employment with the Company and shall be fully enforceable thereafter.  If it shall be finally determined that any
restriction in this Section 9 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of any state or jurisdiction, it
is the intention of the parties that such restriction may be modified or
amended to render it enforceable to the maximum extent permitted by the law of
that state or jurisdiction.

 

(d)           Remedies;
Equitable Relief.  Should Executive violate the
non-solicitation provisions of Section 9(b), Executive will be obligated
to pay back to the Company all payments received pursuant to this Agreement and
the Company will have no further obligation to pay Executive any payments that
may be remaining due under this Agreement. 
In the event that Executive breaches or threatens to breach any of the
provisions of this Section 9, in addition to and without limiting or
waiving any other remedies available to the Company under this Agreement, in
law or in equity, the Company shall be entitled to immediate injunctive relief
in any court, domestic or foreign, having the capacity to grant such relief, to
restrain such breach or threatened breach and to enforce the provisions of this
Section 9.

 

9

 

10.           Successors.

 

(a)           This Agreement is
personal to Executive and without the prior written consent of the Company
shall not be assignable by Executive otherwise than by will or the laws of
descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by Executive’s legal
representatives or successor(s) in interest.  Executive may designate a successor (or
successors) in interest to receive any and all amounts due Executive in
accordance with this Agreement should Executive be deceased at any time of
payment.  Such designation of successor(s) in
interest shall be made in writing and signed by Executive, and delivered to the
Company pursuant to Section 15(b). 
This Section 11(a) shall not supersede any designation of
beneficiary or successor in interest made by Executive, or separately covered,
under any other plan, practice, policy, or program of the Company.

 

(b)           This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns.

 

(c)           The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business or
assets of the Company or any successor and without regard to the form of
transaction utilized to acquire the business or assets of the Company, to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or parentage had taken place. 
As used in this Agreement, “Company”
shall mean the Company as defined above and any successor to its business or
assets as aforesaid (and any Parent of the Company or any successor) that is
required by this clause to assume and agree to perform this Agreement or which
otherwise assumes and agrees to perform this Agreement.

 

11.           Notice of Termination.  Any termination of Executive’s employment by
the Company for Cause or by Executive for Good Reason shall be communicated by
Notice of Termination to the other party given in accordance with Section 15(b) of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination”
means a written notice that (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of Executive’s employment under the provision so indicated, and (iii) if the
date of termination is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 15 days after the
giving of such notice).

 

12.           Requirements and Benefits if Executive Is Employee of
Subsidiary of Company.  If
Executive is an employee of any Subsidiary of the Company, he shall be entitled
to all of the rights and benefits of this Agreement as though he were an
employee of the Company and the term “Company” shall be deemed to include the
Subsidiary by whom Executive is employed. 
The Company guarantees the performance of its Subsidiary under this
Agreement.

 

13.           Release of Claims.  All payments under this Agreement will be
contingent upon the execution of a Release of Claims by and between Executive
and the Company in the form attached as Appendix A to this Agreement.

 

10

 

14.           Miscellaneous.

 

(a)           This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  In the event of any conflict between this
Agreement and the Company’s 1996 Stock Option Plan, 2000 Management Performance
Common Stock Option Plan, 2002 Stock Incentive Plan, 2004 Performance Incentive
Plan, 2007 Performance Incentive Plan, any incentive plan pursuant to which
Executive has awards outstanding as of the date of this Agreement or any other
incentive plan that is adopted by the Company following the date of this
Agreement, the agreement or plan with the more favorable terms to Executive
shall control for purposes of such conflict. 
This Agreement supersedes all prior oral or written promises or agreements
between the parties related to the subject matter hereof.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties or their
respective successors and legal representatives.

 

(b)           All notices and other
communications under this Agreement shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, to the addresses for each party as first
written above or to such other address as either party shall have furnished to
the other in writing in accordance with this Section.  Notices and communications to the Company
shall be addressed to the attention of the Company’s Corporate Secretary.  Notice and communications shall be effective
when actually received by the addressee.

 

(c)           Whenever reference
is made in this Agreement to any specific plan or program of the Company, to
the extent that Executive is not a participant in the plan or program or has no
benefit accrued under it, whether vested or contingent, as of the Change in
Control Date, then such reference shall be null and void, and Executive shall
acquire no additional benefit as a result of such reference.

 

(d)           The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

 

(e)           The Company may
withhold from any amounts payable under this Agreement such Federal, state, or
local taxes as shall be required to be withheld pursuant to any applicable law
or regulation.

 

(f)            Executive’s failure
to insist upon strict compliance with any provision of this Agreement shall not
be deemed to be a waiver of such provision or any other provision.

 

11

 

IN
WITNESS WHEREOF, Executive has set his hand to this Agreement and, pursuant to
the authorization from the Board, the Company has caused this Agreement to be
executed as of the day and year first above written.

 

	
   

  	
  RED ROBIN
  GOURMET BURGERS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis B. Mullen

  
	
   

  	
   

  	
  Name: Dennis B. Mullen

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  /s/ Eric C. Houseman

  
	
   

  	
  Eric C. Houseman

  

 

12

 

APPENDIX
A

 

FORM OF
GENERAL RELEASE

 

I, Eric C. Houseman, for good and valuable
consideration, including the performance by Red Robin Gourmet Burgers, Inc.,
a Delaware corporation (the “Company”),
of certain obligations under that certain Change in Control Agreement dated as
of March 10, 2008 between myself and the Company (the “Change in Control Agreement”), do hereby
release and forever discharge as of the date hereof, the Company and all
present, future and former subsidiaries, affiliates, directors, officers,
agents, attorneys, insurers, shareholders, representatives and employees of the
Company (including all subsidiaries, affiliates, directors, officers, agents,
attorneys, insurers, shareholders, partners, representatives and employees
thereof), and the successors and assigns of each of them (collectively, the “Released Parties”) to the extent provided
below.

 

1.             Except as
provided in Section 2 below, I knowingly and voluntarily release and
forever discharge the Company and the other Released Parties from any and all
claims, controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, damages (however styled, including compensatory, liquidated,
punitive or exemplary damages), claims for costs and attorneys’ fees, or
liabilities of any nature whatsoever in law and in equity, both past and
present (from the beginning of the world through the date of this General
Release) and whether known or unknown, suspected, or claimed against the
Company or any of the Released Parties which I, my spouse, or any of my heirs,
executors, administrators, representatives or assigns, have or may have, which
arise out of or are connected with my employment or association with, or my
separation or termination from, the Company (including, but not limited to, any
allegation, claim or violation, arising under: 
Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991, as amended; the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990, as amended; the Family and Medical
Leave Act of 1993, as amended; the Civil Rights Act of 1866, as amended; the
Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.),
as amended (“ADEA”), subject to Section 15
below; the Worker Adjustment Retraining and Notification Act, as amended; the
Employee Retirement Income Security Act of 1974, as amended; any applicable
Executive Order Programs; the Fair Labor Standards Act, as amended; or their
state or local counterparts; or under any other federal, state or local civil
or human rights law, or under any other local, state, or federal law,
regulation or ordinance; or under any public policy, contract or tort, or under
common law; or arising under any policies, practices or procedures of the
Company; or any claim for wrongful discharge, breach of contract, infliction of
emotional distress, defamation; or any claim for costs, fees, or other
expenses, including attorneys’ fees incurred in these matters) (all of the
foregoing collectively referred to herein as the “Claims”).  As part of
the release set forth in this Section 1, I fully and forever covenant not
to sue or cause to be sued the Company or any other Released Party with respect
to any Claims.

 

2.             This General
Release shall not relinquish, diminish, or in any way affect (i) any
accrued benefits under the terms of the Change in Control Agreement or any
other plans or programs of the Company which are due to me, (ii) rights
for indemnification as a director, officer or employee of the Company under the
Company’s certificate of incorporation or bylaws for duly approved acts taken
prior to the date of this General Release, subject to the provisions

 

 

thereof, or (iii) rights under any director &
officer insurance or similar insurance policies in effect prior to the date of
this General Release.

 

3.             I represent
that I have made no assignment or transfer of any Claims, or any other matter
covered by Section 1 above.  I agree
that I will indemnify, defend and hold harmless the Company from any and all
Claims so assigned and transferred.  I
have not been involved in any personal bankruptcy or other insolvency
proceedings at any time since I began my employment with the Company.  No child support orders, garnishment orders,
or other orders requiring that money owed to me by the Company be paid to any
other person are now in effect.

 

4.             In signing
this General Release, I acknowledge and intend that it shall be effective as a
bar to each and every one of the Claims hereinabove mentioned or implied that
are released by me.  I further
acknowledge and agree that my separation from employment with the Company shall
not serve as the basis for any claim or action. 
I agree that this General Release shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to unknown and unsuspected Claims (notwithstanding any state statute
that expressly limits the effectiveness of a general release of unknown,
unsuspected and unanticipated Claims), if any, as well as those relating to any
other Claims hereinabove mentioned or implied. 
I acknowledge and agree that this waiver is an essential and material
term of this General Release.  I
therefore agree that in the event a Claim is brought seeking damages against me
in violation of the terms of this General Release, or in the event a party
should seek to recover against the other in any Claim brought by a governmental
agency on such party’s behalf, this General Release shall serve as a complete
defense to such Claims.  I further agree
that I am not aware of any pending or threatened charge or complaint of the
type described above as of the execution of this General Release.

 

5.             I agree that,
by my signature below, I hereby resign from all positions, including any board
memberships, related to the Company and its subsidiaries contemporaneously with
the execution of this General Release.

 

6.             I understand
that this General Release embodies the complete agreement and understanding
among the parties with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.

 

7.             Whenever
possible, each provision of this General Release shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this General Release is held by any court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this General Release
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

8.             This General
Release shall be binding in all respects upon, and shall inure to the benefit
of, the heirs, successors and assigns of the parties hereto; provided that I
acknowledge that I may not assign my rights under the this General Release without
the prior written consent of the Company. 
I agree, upon reasonable request of the Company, to execute, acknowledge
and 

 

 

deliver any additional instrument or documents that may be
reasonably required to carry out the intentions of this General Release.  This General Release may be executed in
counterparts and facsimile signatures shall be originals for all purposes.

 

9.             I agree that
this General Release shall be interpreted and construed in accordance with the
laws of the State of Colorado and that any disputes arising under this General
Release or by any asserted breach of it, or from the employment relationship
between the Company and Executive, shall be litigated in the state or federal
courts in Colorado and I consent to such jurisdiction.

 

10.           I represent
that I am over the age of forty (40).  As
part of the release set forth in Section 1, I knowingly and voluntarily
agree to waive any rights or claims arising out of or relating to the ADEA (the
“ADEA Waiver”) and acknowledge
that I have been informed of the following:

 

a.                                       I
represent and acknowledge that I am waiving any and all rights or claims that I
may have arising under the ADEA;

 

b.                                      I
represent and acknowledge that I have been informed of my right to consult with
an attorney regarding these ADEA rights, before executing this General Release;

 

c.                                       I
know and understand that I am not waiving any rights or claims that may arise
after the date this waiver of ADEA rights is executed;

 

d.                                      I
know and understand that in exchange for the waiver of my rights under the
ADEA, I am receiving consideration in addition to any consideration to which I
am already entitled;

 

e.                                       BY
SIGNING THIS GENERAL RELEASE, I REPRESENT AND ACKNOWLEDGE THAT I HAVE BEEN
INVITED AND ADVISED TO CONSULT AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.  I acknowledge and understand that I have been
given a period of at least twenty-one (21) days in which to consider the
terms of the ADEA Waiver provided to me; and

 

f.                                         I
understand that I have the right to revoke this ADEA Waiver contained in this
General Release at any time within seven (7) days after signing this
General Release, by providing written notice to the following address:  Red Robin Gourmet Burgers, Inc., 6312 So
Fiddlers Green Circle, Suite 200, Greenwood Village, CO 80111, Attention:
General Counsel, and that, upon such revocation, this General Release will not
have any further legal force and effect. 
I further understand and agree that this General Release shall not
become effective or enforceable until this seven day revocation period has
expired.

 

 

By signing this General Release, I further represent
and agree that:

 

(i)                                     I
have read it carefully;

 

(ii)                                  I
understand all of its terms and know that I am giving up important rights,
including but not limited to, rights under Title VII of the Civil Rights
Act of 1964, as amended; the Equal Pay Act of 1963, as amended; the Americans
with Disabilities Act of 1990, as amended; and the Employee Retirement Income
Security Act of 1974, as amended;

 

(iii)                               I
voluntarily consent to everything in this General Release;

 

(iv)                              I
have been advised to consult with an attorney before executing this General
Release and I have done so or, after careful reading and consideration I have
chosen not to do so of my own volition;

 

(v)                                 I
have signed this General Release knowingly and voluntarily and with the advice
of any counsel retained to advise me with respect to this General Release;

 

(vi)                              I
agree that the provisions of this General Release may not be amended, waived,
changed or modified except by an instrument in writing signed by an authorized
representative of the Company and by me.

 

	
  DATE:
                                  ,
  20

  	
   

  
	
   

  	
  Eric C. Houseman

  
	
   

  	
   

  

 

Acknowledged and agreed to this
           day of
                              ,

 

	
   

  	
  Red
  Robin Gourmet Burgers, Inc.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

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