ITEM 1.01. Entry into a Material Definitive Agreement.
On March 26, 2020, Red Robin Gourmet Burgers, Inc. (the “Company”) entered
into a cooperation agreement (the “Agreement”) with Vintage Capital Management, LLC (“Vintage Capital”) and Kahn Capital Management, LLC (“Kahn Capital”) (collectively, the
“Vintage Parties”), which together own approximately 11.6% of the Company’s common stock.
Under the terms of the Agreement, the Company will immediately appoint one new independent director to the Company’s
Board of Directors (the “Board”), Anthony Ackil. Mr. Ackil is expected to stand for election at the Company’s 2020 Annual Meeting of
Stockholders (the “2020 Annual Meeting”) and at the Company’s 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”). If Mr.
Ackil resigns, refuses, or is unable to serve as a director at any time prior to the end of the Restricted Period, the Vintage Parties may recommend a substitute independent director that otherwise satisfies the Board’s criteria for selection of
directors subject to the approval of the nomination and governance committee and the Board, such approval not to be unreasonably withheld.
Under the Agreement, the Vintage Parties are permitted to acquire up to 20% of the Company’s common stock without being deemed an “Acquiring Person”
under the Company’s Rights Agreement, dated as of June 4, 2019, or triggering the restrictions on business combinations that would otherwise be imposed under Section 203 of the Delaware General Corporation Law (“Section 203”).
Under the Agreement, the Vintage Parties agreed to certain standstill restrictions until the date that is thirty (30) days prior to the first date on
which stockholders may nominate individuals for election to the Board at the 2022 annual meeting of the Company’s stockholders (the “Restricted Period”), except as otherwise indicated in the Agreement. These standstill restrictions include, but
are not limited to (i) engaging in any solicitation of proxies or consents with respect to the election or removal of directors; (ii) pursuing any change in, or attempting to influence, the Company’s operations, business, corporate strategy or
policies or encouraging, advising or influencing any other person with respect to the giving or withholding of any proxy; (iii) forming or joining a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended)
with respect to the common stock and other voting securities of the Company; (iv) beneficially owning more than 20.0% of the Company’s common stock; (v) selling, offering or agreeing to sell, through swap or hedging transactions or otherwise,
voting rights decoupled from the underlying Company common stock; (vi) making or participating in any tender offer, exchange offer, merger, consolidation, acquisition, business combination, recapitalization, restructuring, liquidation, dissolution
or extraordinary transaction involving the Company or its subsidiaries (an “Extraordinary Transaction”); (vii) entering into a voting trust, arrangement or agreement with respect to any Company voting securities (other than granting proxies in
solicitations approved by the Board); (viii) seeking, alone or in concert with others, representation on the Board or the removal of any member of the Board, except as provided in the Agreement; (ix) making any stockholder proposal; (x) making any
statutory demand for books and records; (xi) making certain public proposals, including with respect to changes in the number or term of directors or filling vacancies on the Board, changes in capitalization or dividend policy, amendments to
governing documents, delisting of securities or termination of registration of securities; (xii) making or causing to be made any statement or announcement that disparages, defames, slanders, impugns, casts in a negative light or could damage the
reputation of, the Company; (xiii) instituting litigation or other proceedings, or entering into negotiations or agreements with third parties, to effect actions prohibited by the standstill restrictions; (xiv) entering into any negotiations,
agreement or understandings with any third party to take, or encouraging any third party to take, any action that the Vintage Parties are prohibited from taking pursuant to the Agreement; or (xv) making any request or submitting any proposal,
directly or indirectly, to amend or waive the terms of the Agreement, in each case which would reasonably be expected to result in a public announcement of such request or proposal.
Following the Restricted Period until the termination of the Agreement, the Vintage Parties may not (x)
nominate, or propose to nominate, such number of individuals for election to the Board that, if elected, would constitute fifty (50%) percent or greater of the then-current size of the Board or (y) take any action to make or otherwise participate
in an Extraordinary Transaction or otherwise make a public proposal to the Company that would reasonably be expected under applicable law to be publicly disclosed regarding any such matters.
Under the Agreement, the Vintage Parties agreed to certain voting commitments. At the 2020 Annual Meeting, the Vintage Parties will cause to be present
for quorum purposes and vote or cause to be voted all common stock beneficially owned by them or their controlling or controlled affiliates in favor of (i) the election of each of the Board’s nominees and (ii) otherwise in accordance with the
Board’s recommendation on any proposal that does not call for voting on the approval or adoption of an Extraordinary Transaction or agreement or plan relating thereto.
At the 2021 Annual Meeting, the Vintage Parties will cause to be present for quorum purposes and vote or cause to be voted all common stock
beneficially owned by them or their controlling or controlled affiliates in favor of the election of each of the Board’s nominees and for all other matters (except for a vote on an Extraordinary Transaction), the Vintage Parties will cause to be
present for quorum purposes and vote or cause to be voted all common stock in excess of 11.6% of the Company’s outstanding common stock beneficially owned by them or their controlling or controlled affiliates proportionate to the other non-Vintage shareholders.
Following the 2021 Annual Meeting until the conclusion of the Restricted Period, the Vintage Parties will cause to be present for quorum purposes and
vote or cause to be voted all common stock in excess of 11.6% of the Company’s outstanding common stock beneficially owned by them or their controlling or controlled affiliates proportionate to the other non-Vintage shareholders (except for a vote
on an Extraordinary Transaction).
By its terms, the Agreement will remain effect until the earlier of (i) fifth (5th) anniversary of the date of the Agreement and (ii) the date that is fifteen (15) days following the date on which the Vintage Parties deliver written notice to the Company that the Vintage Parties, together with all of their
respective affiliates, collectively beneficially own less than 11.6% of the Company’s outstanding common stock.
The Agreement contains various other terms and provisions entered into by the Vintage Parties.
The foregoing description of the terms and conditions of the Agreement does not purport to be complete and is qualified in its entirety by reference to
the full text of the Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated herein by reference.