Exhibit 10.16
MEMORANDUM AGREEMENT
This Memorandum Agreement (this "Agreement"), dated May 10, 2001, is
entered into by and among The Xxxxxx Group Company, a Delaware corporation
("SGC"), each former shareholder of SGC listed on Schedule A hereto (the "Former
Shareholders"), Red Xxxxx International, Inc., a Nevada corporation ("Red
Xxxxx"), Red Xxxxx Xxxx, Inc. (formerly Red Xxxxx Holding Co., Inc.), a Nevada
corporation and a wholly owned subsidiary of Red Xxxxx ("Red Xxxxx Xxxx"),
Xxxxxx Bench (the "Indenture Trustee"), as trustee of that certain Trust
Indenture Agreement, dated May 11, 2000, by and between Red Xxxxx and the
Indenture Trustee (the "Trust Indenture"), and Bunch Grass Leasing, LLC ("Bunch
Grass Leasing").
RECITALS
A. On May 11, 2000, SGC merged with and into Red Xxxxx Xxxx pursuant to
that certain Agreement and Plan of Merger, dated February 18, 2000, by and among
Red Xxxxx, Red Xxxxx Xxxx, SGC and the Former Shareholders, as amended by that
certain Closing Agreement and Amendment to Merger Agreement, dated as of May 11,
2000, by and among Red Xxxxx, Red Xxxxx Xxxx, SGC and the Former Shareholders
(as so amended, the "Plan of Merger");
B. The Plan of Merger provided for the delivery to the Former Shareholders
of merger consideration equal to (i) an aggregate of 5,480,152 shares of Red
Robin's common stock, par value $0.001 per share (the "Shares") and (ii) an
amount in debentures issued by Red Xxxxx pursuant to the Trust Indenture (the
"Debentures") and/or cash equal to an aggregate of $10,960,301, allocated in the
manner provided in the Plan of Merger and subject to adjustment pursuant to
Section 2.9 of the Plan of Merger;
C. Pursuant to that certain Sinking Fund Agreement, dated September 6,
2000, by and between Red Xxxxx and the Indenture Trustee, Red Xxxxx established
a sinking fund for the payment and performance of the Debentures, which was
subsequently assigned to Bunch Grass Leasing pursuant to that certain Assignment
and Assumption Agreement, dated September 6, 2000, by and among Bunch Grass
Leasing, Red Xxxxx and the Indenture Trustee;
D. The Former Shareholders desire to amend the Plan of Merger and the Trust
Indenture as more fully described herein to correct certain errors that occurred
in connection with the allocation of the Shares and the Debentures to certain of
the Former Shareholders listed on Schedule B hereto, and, subject to the
conditions set forth herein, Red Xxxxx has agreed to such amendment; and
E. Red Xxxxx, SGC and the Former Shareholders have agreed that the
adjustment to the Merger Consideration calculated pursuant to Section 2.9 of the
Plan of Merger is equal to $112,000 (the "Merger Consideration Adjustment"),
which the parties agree shall be payable to the Former Shareholders in
accordance with this Agreement.
Now, therefore, pursuant to provisions in the Plan of Merger and the Trust
Indenture and in consideration of the mutual promises contained herein, the
parties agree as follows:
1. Reallocation of Shares.
----------------------
(a) In order to effect a correction of the Merger Consideration
consisting of common stock of Red Xxxxx to which certain Shareholders were
entitled to pursuant to the Plan of Merger, concurrent with the closing of
the transactions contemplated by this Agreement, (i) each Shareholder
listed on Schedule B hereto agrees to surrender, or cause to be
surrendered, to Red Xxxxx the Shares issued to such Shareholder pursuant to
Section 2.8 of the Plan of Merger and delivered to FINOVA Capital
Corporation, a Delaware corporation (the "Lender"), pursuant to that
certain Stock Pledge Agreement, dated September 6, 2000, by and among the
Lender, Red Xxxxx and certain shareholders of Red Xxxxx (the "Finova
Pledged Shares"), (ii) Red Xxxxx agrees to xxxx the Finova Pledged Shares
"cancelled," (iii) Red Xxxxx agrees to issue to each such Shareholder that
number of shares of common stock of Red Xxxxx, par value $0.001 per share,
set forth opposite such Shareholder's name on Schedule C hereto (the
"Corrected Pledged Shares"), representing a portion of the shares of common
stock of Red Xxxxx to which such Shareholder was entitled to pursuant to
the Plan of Merger, and (iv) in exchange for the Finova Pledged Shares,
each such Shareholder agrees to deliver, or cause to be delivered, the
Corrected Pledged Shares to the Lender.
(b) Red Xxxxx and the Shareholders listed on Schedule B hereto
acknowledge and agree that in order to effect the reallocation of the
Merger Consideration no action is required with respect to (i) the Shares
issued to such Shareholders in connection with the Plan of Merger and
deposited with the Bank of New York, as Escrow Agent, pursuant to that
certain Escrow Agreement, dated May 11, 2000, by and among Red Xxxxx, Red
Xxxxx Xxxx, the Former Shareholders and the Escrow Agent (the "Escrow
Shares"), as set forth on Schedule D hereto, or (ii) the Shares pledged by
Xxxxxxx X. Xxxxxx to Red Xxxxx (the "Red Xxxxx Pledged Shares"), as set
forth on Schedule E hereto. Red Xxxxx and each Shareholder listed on
Schedule B hereto further acknowledge and agree that the Corrected Shares
set forth on Schedule F hereto represent the portion of the Merger
Consideration consisting of common stock of Red Xxxxx to which such
Shareholders was entitled to pursuant to the Plan of Merger.
(c) The reallocation of the Merger Consideration resulting herefrom
shall be effective as of the effective date of the closing of the
transactions contemplated by the Plan of Merger.
2. Reallocation of Debentures.
--------------------------
(a) Concurrent with the transactions contemplated by this Agreement,
(i) each Shareholder listed on Schedule B hereto agrees to surrender, or
cause to be surrendered, to the Indenture Trustee and/or Bunch Grass
Leasing, as agent for and successor to Red Xxxxx with respect to the
Debentures, the Debentures issued to such Shareholder at the closing of the
transactions contemplated by the Plan of Merger, (ii) the Indenture Trustee
and/or Bunch Grass Leasing agree to xxxx such Debentures "cancelled," and
(iii) the Indenture Trustee and/or Bunch Grass Leasing agree to issue to
each such Shareholder that number of debentures set forth opposite such
Shareholder's name on Schedule G hereto (the "Corrected Debentures"). The
parties hereto acknowledge and agree that this Section 2 shall not alter or
affect the satisfaction and release of Red Xxxxx pursuant to Section 3 of
that certain Assignment and Assumption Agreement, dated September 6, 2000,
by and among Red Xxxxx, the Indenture Trustee and Bunch Grass Leasing.
(b) The reallocation of the Merger Consideration resulting herefrom
shall be effective as of the effective date of the closing of the
transactions contemplated by the Plan of Merger.
3. Acknowledgment, Consent and Release by Former Shareholders. Each of the
----------------------------------------------------------
Former Shareholders, other than the Shareholders listed on Schedule B hereto,
acknowledges and agrees that no reallocation of the Merger Consideration
received by such Former Shareholders in connection with the Plan of Merger is
required. Each of the Former Shareholders hereby consents to the correction, in
accordance with this Agreement, of the allocation of the Merger Consideration
consisting of Debentures and common stock of Red Xxxxx to which the Shareholders
listed on Schedule B hereto were entitled to pursuant to the Plan of Merger.
Each of the Former Shareholders hereby releases Red Xxxxx from any and all
obligations or liabilities arising from or in connection with the transactions
contemplated by this Agreement.
4. Merger Consideration Adjustment.
-------------------------------
(a) Red Xxxxx, SGC and the Former Shareholders acknowledge and agree
that the Merger Consideration Adjustment calculated pursuant to Section 2.9
of the Plan of Merger equals $112,000 and has been finally determined in
accordance with the Plan of Merger. Concurrent with the closing of the
transactions contemplated by this Agreement and in fulfillment of Red
Robin's obligations under Section 2.9 of the Plan of Merger: (A) Red Xxxxx
agrees to (i) issue to each Former Shareholder that number of shares of the
common stock of Red Xxxxx, par value $0.001 per share, set forth opposite
such Former Shareholder's name on Schedule H hereto (the "Additional
Shares"), (ii) deposit with the Indenture Trustee or Bunch Grass Leasing an
amount in cash equal to $37,739.94, and (iii) deliver by cash or certified
funds to each Former Shareholder the amount set forth opposite such Former
Shareholder's name on Schedule I hereto (the "Additional Cash
Consideration"); and (B) Bunch Grass Leasing and/or the Indenture Trustee
agrees to issue to each Shareholder listed on Schedule B hereto that number
of debentures listed opposite such Shareholder's
name on Schedule J hereto (the "Additional Debentures"). The parties
acknowledge and agree that the performance of the obligations set forth in
this Section 4(a) are deemed to be in full and complete satisfaction of the
obligations of Red Xxxxx pursuant to Section 2.9 of the Plan of Merger.
(b) The Merger Consideration Adjustment resulting herefrom shall be
effective as of the date hereof.
5. Surrender of Certificates. Concurrent with the closing of the
-------------------------
transactions contemplated by this Agreement, each Shareholder listed on Schedule
B hereto has surrendered, or caused to be surrendered, to Red Xxxxx and the
Indenture Trustee or Bunch Grass Leasing, as provided herein, any certificate
evidencing the Shares or the Debentures which are to be cancelled pursuant to
Sections 1 and 2 above. Each of the Shareholders listed on Schedule B hereto
represents and warrants that each such certificate has not been pledged,
encumbered, or transferred except to Red Xxxxx or in accordance with the Pledge
Agreement.
6. Amendment. This Agreement corrects and amends the Plan of Merger and the
---------
Trust Indenture. Except as amended hereby, the terms of the Plan of Merger and
the Trust Indenture shall continue in full force and effect and shall not be
modified in any manner and shall be controlling as to the enforcement and
interpretation hereof. The Former Shareholders acknowledge that this Agreement
represents an amendment to the Plan of Merger, and hereby consent to and approve
such amendment pursuant to the authority of Section 228 of the Delaware General
Corporation Law.
7. Representations and Warranties. By execution hereof, each person who is
------------------------------
a party hereto represents and warrants that this Agreement has been duly
authorized by such person, that such person has capacity to execute and be bound
by the terms of this Agreement, and that this Agreement constitutes the valid,
binding, and enforceable obligations of such person.
8. Incorporation. The recitals are incorporated in the body of this
-------------
Agreement as if set forth at length.
9. Integration. The Schedules attached hereto, together with all documents
-----------
incorporated by reference therein, form an integral part of this Agreement and
are hereby incorporated into this Agreement wherever reference is made to them
to the same extent as if they were set out in full at the point in which such
reference is made.
10. Facsimile Signatures. This Agreement may be executed by facsimile
--------------------
signature. An executed copy delivered with a facsimile signature shall be deemed
an original for all purposes hereof. Each party executing by a facsimile
signature shall provide an original signed copy to the party entitled thereto
within thirty (30) days of such delivery.
11. Counterparts. This Agreement and any amendment hereto may be executed
------------
in one or more counterparts and by different parties in separate counterparts.
All of such counterparts shall constitute one and the same agreement and shall
become effective (unless otherwise provided) when one or more counterparts have
been signed by each party and delivered to the other parties.
12. Effective Date. This Agreement is effective upon the closing of the
--------------
transactions contemplated by the Plan of Merger with respect to the issuance and
delivery of the Corrected Pledged Shares and the Corrected Debentures to the
Shareholders listed on Schedule B hereto and as of the date hereof with respect
to the issuance and delivery of the Additional Shares, the Additional Debentures
and the Additional Cash.
In witness whereof the parties have set forth their hands, effective as
indicated herein.
Red Xxxxx International, Inc.,
a Nevada corporation
By: /s/ Xxxxx X. XxXxxxxxx
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
The Xxxxxx Group Company,
a Delaware corporation
By:
-------------------------------------
Xxxxxxx Xxxxxx,
Vice President
Red Xxxxx Xxxx, Inc.,
a Nevada corporation
By: /s/ Xxxxx X. XxXxxxxxx
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
Bunch Grass Leasing, LLC,
a Nevada limited liability company
By:
-------------------------------------
Xxxxxx Bench,
Manager
----------------------------------------
Xxxxxx Bench, trustee of the Trust
Indenture dated as of May 11, 2000
----------------------------------------
Xxxxxxx X. Xxxxxx
In witness whereof the parties have set forth their hands, effective as
indicated herein.
Red Xxxxx International, Inc.,
a Nevada corporation
By:
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
The Xxxxxx Group Company,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx,
Vice President
Red Xxxxx Xxxx, Inc.,
a Nevada corporation
By:
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
Bunch Grass Leasing, LLC,
a Nevada limited liability company
By:
-------------------------------------
Xxxxxx Bench,
Manager
----------------------------------------
Xxxxxx Bench, trustee of the Trust
Indenture dated as of May 11, 2000
----------------------------------------
Xxxxxxx X. Xxxxxx
In witness whereof the parties have set forth their hands, effective as
indicated herein.
Red Xxxxx International, Inc.,
a Nevada corporation
By:
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
The Xxxxxx Group Company,
a Delaware corporation
By:
-------------------------------------
Xxxxxxx Xxxxxx,
Vice President
Red Xxxxx Xxxx, Inc.,
a Nevada corporation
By:
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
Bunch Grass Leasing, LLC,
a Nevada limited liability company
By: /s/ Xxxxxx Bench
-------------------------------------
Xxxxxx Bench,
Manager
/s/ Xxxxxx Bench
----------------------------------------
Xxxxxx Bench, trustee of the Trust
Indenture dated as of May 11, 2000
----------------------------------------
Xxxxxxx X. Xxxxxx
In witness whereof the parties have set forth their hands, effective as
indicated herein.
Red Xxxxx International, Inc.,
a Nevada corporation
By:
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
The Xxxxxx Group Company,
a Delaware corporation
By:
-------------------------------------
Xxxxxxx Xxxxxx,
Vice President
Red Xxxxx Xxxx, Inc.,
a Nevada corporation
By:
-------------------------------------
Xxxxx X. XxXxxxxxx,
Chief Financial Officer
Bunch Grass Leasing, LLC,
a Nevada limited liability company
By:
-------------------------------------
Xxxxxx Bench,
Manager
----------------------------------------
Xxxxxx Bench, trustee of the Trust
Indenture dated as of May 11, 2000
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
The Xxxxxxx X. Xxxxxx Intervivos Trust
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx, Trustee
The Xxxxxx Xxxxxx Intervivos Trust
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx, Trustee
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxx Xxxxxxx
Shamrock Investment Company,
a Washington general partnership
By:
-------------------------------------
Name:
Title:
----------------------------------------
Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
X.X. Xxxxx, Xx.
The Xxxxxxx X. Xxxxxx Intervivos Trust
By:
-------------------------------------
Xxxxxxx Xxxxxx, Trustee
The Xxxxxx Xxxxxx Intervivos Trust
By:
-------------------------------------
Xxxxxx Xxxxxx, Trustee
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx
Shamrock Investment Company,
a Washington general partnership
By:
-------------------------------------
Name:
Title:
----------------------------------------
Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
X.X. Xxxxx, Xx.
The Xxxxxxx X. Xxxxxx Intervivos Trust
By:
-------------------------------------
Xxxxxxx Xxxxxx, Trustee
The Xxxxxx Xxxxxx Intervivos Trust
By:
-------------------------------------
Xxxxxx Xxxxxx, Trustee
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxx Xxxxxxx
Shamrock Investment Company,
a Washington general partnership
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name:
Title:
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
X.X. Xxxxx, Xx.
The Xxxxxxx X. Xxxxxx Intervivos Trust
By:
-------------------------------------
Xxxxxxx Xxxxxx, Trustee
The Xxxxxx Xxxxxx Intervivos Trust
By:
-------------------------------------
Xxxxxx Xxxxxx, Trustee
----------------------------------------
Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxx Xxxxxxx
Shamrock Investment Company,
a Washington general partnership
By:
-------------------------------------
Name:
Title:
----------------------------------------
Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
/s/ X.X. Xxxxx, Xx.
----------------------------------------
X.X. Xxxxx, Xx.
Schedule A
Former Shareholders
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, as trustee of the Xxxxxxx X. Xxxxxx Intervivos Trust
Xxxxxx X. Xxxxxx, as trustee of the Xxxxxx X. Xxxxxx Intervivos Trust
Xxxxxxx X. Xxxxx
Xxxxxx Xxxxxxx
Shamrock Investment Company, a Washington general partnership
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxx
X.X. Xxxxx, Xx.
Schedule B
Shareholders with Reallocations
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, as trustee of the Xxxxxxx X. Xxxxxx Intervivos Trust
Xxxxxx X. Xxxxxx, as trustee of the Xxxxxx X. Xxxxxx Intervivos Trust
Schedules C, D, E, F, G
Schedule C Schedule D Schedule E Schedule F Schedule G
Corrected Red Xxxxx Corrected
Shareholder Pledged Shares Escrow Shares Pledged Shares Corrected Shares Debentures
X. Xxxxxx 1,115,083 1,025,008 150,000 2,290,091 $5,540,482.37
X. Xxxxxx Trust 632,542 512,504 1,145,046 $1,809,940.19
X. Xxxxxx Trust 632,542 512,504 1,145,046 $1,809,940.19
--------- --------- ------- --------- -------------
TOTAL 2,380,167 2,050,016 150,000 4,580,183 $9,160,362.75
Schedule H, I and J
Merger Consideration Adjustment
Schedule H Schedule I Schedule J
Additional Cash Additional
Former Shareholder Additional Shares Consideration Debentures
X. Xxxxxx 11,485 $ 4,100.03 $18,869.97
X. Xxxxxx Trust 5,743 $ 2,050.02 $ 9,434.98
X. Xxxxxx Trust 5,743 $ 2,050.02 $ 9,434.98
X. Xxxxx 1,120 $ 2,240.59 -0-
X. Xxxxxxx 1,120 $ 2,240.59 -0-
Shamrock 2,222 $ 4,444.59 -0-
X. Xxxxxx 141 $ 282.73 -0-
X. Xxxxxx 138 $ 276.75 -0-
X. Xxxxx 150 $ 299.37 -0-
X. Xxxxx 150 $ 299.37 -0-
------ ---------- ----------
TOTAL 28,012 $18,284.06 $37,739.94
