<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 4, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-12454
MORRISON RESTAURANTS INC.
(Exact name of registrant as specified in charter)
DELAWARE 63-0475239
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4721 Morrison Drive, Mobile, Alabama 36625
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 344-3000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
$0.01 par value Common Stock New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[X]
<PAGE>
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing sale price of Common Stock on
August 5, 1994 as reported on the New York Stock Exchange, was
approximately $628,717,000. Shares of Common Stock held by each
executive officer and director and by each person who owns 5% or more of
the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates. This determination of affiliate status is
not necessarily a conclusive determination for other purposes.
The number of shares of the Registrant's common stock outstanding at
August 5, 1994 was 35,306,096.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended June 4, 1994 are incorporated by reference into Parts
I and II.
Portions of the Registrant's definitive proxy statement dated August 26,
1994 are incorporated by reference into Part III.
<PAGE>
INDEX
PART I
Page Number
Item 1. Business 4 - 7
Item 2. Properties 8 - 9
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of
Security-Holders 10
Executive Officers of the Registrant 11 - 12
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14
PART III
Item 10. Directors and Executive Officers of the
Registrant 14
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial
Owners and Management 15
Item 13. Certain Relationships and Related Transactions 15
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 16 - 23
<PAGE>
PART I
Item 1. Business.
A(a) General Development of Business
Morrison Restaurants Inc. (hereinafter referred to as the "Registrant"
or "Company"), a Delaware corporation, was founded in 1920 as a unique
cafeteria concept in Mobile, Alabama. In 1928, with just eight
cafeterias, Morrison Restaurants Inc. had its first and only public
stock offering. The first cash dividend on the common shares was
declared in 1936, and has been paid continuously for 58 years.
Beginning October 21, 1993 Morrison Restaurants Inc. common stock was
publicly traded on the New York Stock Exchange under the ticker symbol
"RI". Prior to that, it was traded over-the-counter under the NASDAQ-
NMS Symbol "MORR".
The Company has grown to a diversified restaurant company. During
fiscal 1994 the Company structured its operations into two primary
groups: Ruby Tuesday Group, comprised of the Ruby Tuesday Division and
the Specialty Division, and Morrison Group, comprised of the Health Care
Division, the Family Dining Division and the Hospitality Division.
Certain of the contracts and assets of the Hospitality Division were
sold by the Company on August 8, 1994, with the remaining accounts to be
closed. Collectively, the Registrant operates 733 restaurant operations
in 38 states and Washington, D.C. The Company at year end operated 288
Casual Dining Restaurants and 445 retail and hospital cafeterias and
Fresh Cooking outlets excluding the units of the Hospitality Division.
Through a corporate planning process begun early in 1982, Morrison has
reshaped its business with a series of divestitures and acquisitions
which has resulted in a significant managerial realignment with a
commitment to enhance its position in the restaurant industry. The
Company's strategic objectives were to focus resources and capital on
retail restaurants and contract food service and to become a company in
the business of feeding people. Important milestones in this process
are discussed below.
On April 1, 1982, the Company completed the acquisition of Ruby Tuesday,
Incorporated, which allowed the Company to enter into the mid-scale
casual dining market. Ruby Tuesday's interiors accented with brass and
Tiffany-style lamps, coupled with its specialty selections of salads,
soups, burgers, chicken and ethnic dishes, have propelled the chain into
national prominence. Following the diversification strategy established
by the Company's purchase of Ruby Tuesday, the Company has since
developed and expanded into the casual dining market with the following
concepts: the L&N Seafood Grill (first unit opened March of 1982),
Mozzarella's, formerly Silver Spoon Cafes (first unit opened November
1984) and its newest test concept Sweetpea's (first unit opened June
1993). On June 27, 1994, the Company announced that it will convert 30
of the 38 L&N Seafood Grills to other Ruby Tuesday Group concepts (Ruby
Tuesdays, Mozzarella's, or Sweetpea's) that have greater growth
opportunities. The remaining eight L&N Seafood Grills will be sold or
closed.
The Company acquired Custom Management Corporation located in Kingston,
Pennsylvania in fiscal 1987, Dobbs Food Service Management in fiscal
1988 and Manask Food Services, Inc. in fiscal 1989. Combined with
<PAGE>
Morrison Management Services, the self developed contract feeding
division, this portion of the business later became known as Morrison
Hospitality Group, providing food-management contracts nationwide for
all types of institutions and industry. In fiscal 1994 the Company
structured the contract feeding division of the business into a Health
Care Division and a Hospitality Division. In accordance with the
business and financial plans of the Company approved in fiscal 1994, on
August 8, 1994, the Company disposed of certain education, business and
industry contracts and assets (which were a part of the Morrison Group's
Hospitality Division) as a part of the Company's strategy to invest in
high growth businesses that have or can attain a dominant position in
their respective categories.
Another divestiture was completed in fiscal 1989, when Morco Industries,
a division of the Registrant distributing food products and food service
equipment, was sold to PYA/Monarch, the food service distribution
division of Sara Lee Corporation. This sale enabled Morrison to
redirect the capital resources invested in Morco Industries into greater
growth opportunities.
Fiscal 1992 was a milestone year for the Company as revenues surpassed
$1 billion, establishing the Company as one of the premier restaurant
companies in the nation. On September 30, 1992, with shareholder
approval, management decided to formally change the name of the Company
to "Morrison Restaurants Inc." The name change solidified the direction
of the Registrant as a restaurant company.
Fiscal 1993 was again a record year in sales and earnings. The
Specialty Restaurant Division began testing a new concept, Sweetpea's, a
full service restaurant with a casual atmosphere and freshly prepared
homemade foods. The Family Dining Division began investing in growth
with Fresh Cooking outlets which are located in mall food-courts and
serve selected items from the cafeteria menu. This division also began
investing in a smaller cafeteria style family restaurant with a more
limited menu than existing cafeterias.
Fiscal 1994 marked the Company's third straight year of record sales and
earnings. The Company implemented a new financial strategy in fiscal
1994 that focuses on the maintenance of a targeted capital structure
utilizing prudent amounts of debt to finance the Company's expansion.
The Company's business strategy for the future focuses on more
aggressive growth in each division while increasing prior same-store
sales.
(b) Financial Information About Industry Segments
The information appearing under the caption "Group Information" of the
Registrant's Annual Report to Stockholders for the fiscal year ended
June 4, 1994, and Note 2 of the Notes to Consolidated Financial
Statements included in the Registrant's Annual Report to Stockholders
for the fiscal year ended June 4, 1994 is incorporated herein by
reference.
<PAGE>
(c) Narrative Description of Business
Morrison Restaurants Inc. is a diversified restaurant company with
operations in two primary business groups: Ruby Tuesday Group
encompassing casual dining restaurants and Morrison Group encompassing
retail cafeteria operations and the food contract management of health
care cafeterias. Collectively, the Company operates 733 restaurant
operations in 38 states and Washington, D.C.
The Registrant is not engaged in any material research activities
relating to the development of new products or services or the improve-
ment of existing products or services. Numerous studies are made,
however, on a continuing basis, to improve menus, equipment, and methods
of operations, including planning for new food service concepts.
Raw materials essential to the operation of its business are obtained
from numerous sources but principally from PYA/Monarch under a cost-plus
arrangement. The purchases from PYA/Monarch are in accordance with the
Supply Agreement between the Company and PYA/Monarch which was entered
into on July 8, 1988, in conjunction with the disposal by the Company of
the Morco Industries division. If PYA/Monarch is unable to meet the
Company's supply needs, other sources may be utilized. Because of the
relatively short storage life of inventories, limited storage facilities
at the restaurants themselves, the Registrant's requirement for
freshness and the numerous sources of goods, a minimum amount of
inventory is maintained at the units. Inventories are stated at the
lower of cost (first in-first out) or market.
The Registrant has registered certain trademarks and service marks with
the United States Patent and Trademark Office; "Morrison's" , "Ruby
Tuesday", and "Mozzarella's" are three such marks. The Registrant
believes that these and other related marks are of material importance
to the Registrant's business. Registrations of trademarks and service
marks expire from 1995 to 2014, unless renewed.
Portions of the Company's 1994 working capital were used to fund the
investment in capital expenditures and to repurchase shares of the
Company's common stock. Cash that is not needed in the day-to-day
operation of the Company is invested in temporary investments. The
terms for receivables continue to be net 30 days and inventories are
maintained only at necessary levels. Payables continue to remain high
due to management's program to maximize the use of its assets by taking
advantage of the best terms from its vendors.
Additional information concerning the working capital of the Company is
incorporated herein by reference to information under the caption "2.4
Working Capital" of the Company's 1994 Annual Report to Stockholders.
No material part of the business of the Registrant is dependent upon a
single customer, or a very few customers, the loss of any one of which
would have a materially adverse effect on the Registrant.
Backlog of orders is not significant in the business of the Registrant.
There is no material portion of the Registrant's business that is
subject to renegotiation of profits or termination of contracts or
sub-contracts at the election of the Government.
<PAGE>
The Registrant's activities in the restaurant industry and related
fields are subject to vigorous competition from numerous companies as
well as individuals who are engaged in offering the same type of service
and products as the Registrant.
Compliance with Federal, State and local laws, regulations, ordinances,
rules and provisions which have been enacted or adopted regulating the
discharge of materials into the environment, or otherwise relating to
the protection of the environment, is not expected to have a material
effect upon the capital expenditures, earnings or competitive position
of the Registrant.
The Registrant employs approximately 33,000 full-time and part-time
employees, excluding the employees of the education, business and
industry accounts which were sold on August 8, 1994.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales.
All of Registrant's wholly owned operations are located within the
United States. The Registrant and its subsidiaries have not engaged in
material operations in foreign countries.
<PAGE>
Item 2. Properties.
Information regarding the locations of the Registrant's Ruby Tuesday
Group and Morrison Group (retail and hospital cafeterias) operations is
shown in the list below. The nature of the Health Care Division of the
Morrison Group is professionally managing food and related service
systems on client-owned property. Vending services on client-owned
facilities complement this program. Except for 51 company-owned
properties, the Ruby Tuesday Group and retail cafeteria operations are
conducted in leased premises. Initial lease terms expire at various
dates over the next 23 years and may provide for escalations of rents
during the lease terms. Most of these leases provide for additional
contingent rents based upon sales volume and contain options to renew
(at adjusted rentals for some leases). Operating leases expiring in each
of the next five fiscal years are: 26 in 1995; 31 in 1996; 15 in 1997;
25 in 1998; and 25 in 1999. The Registrant has a policy to remodel
units as needed. Facilities and equipment are repaired and maintained
to assure their adequacy, productive capacity and utilization. The
administrative personnel of the Registrant are located in the executive
and administrative headquarters building located in Mobile, Alabama.
The administrative headquarters has a lease term ending in 1998 and
provides an option to purchase at a nominal amount at the end of the
initial lease term. This building was financed through the sale of
Industrial Development Revenue Bonds from the Industrial Development
Board of the City of Mobile, Alabama.
Additional information concerning the properties of the Registrant and
the lease obligations of the Registrant and its subsidiaries is
incorporated herein by reference to Note 9 of the Notes to Consolidated
Financial Statements included in the Registrant's Annual Report to
Stockholders for the fiscal year ended June 4, 1994.
<PAGE>
Item 2. Properties
<TABLE>
Information regarding the location by state and the number of
the Registrant's Ruby Tuesday and Morrison Group operations is
shown below.
<CAPTION>
Ruby Ruby
Tuesday Morrison Tuesday Morrison
State Group Group State Group Group
<S> <C> <C> <S> <C> <C>
Alabama 17 46 Minnesota 3
Arkansas 1 1 Mississippi 4 19
Arizona 9 Missouri 4
California 26 Nebraska 2
Colorado 3 New Hampshire 1
Connecticut 6 1 New Jersey 5 2
District of New Mexico 4
Columbia 1 3
New York 14 5
Delaware 2 1
North Carolina 6 10
Florida 49 85
Ohio 11 13
Georgia 35 42
Oklahoma 2
Illinois 8 5
Pennsylvania 13 16
Indiana 3 3
Rhode Island 1
Iowa 1
South Carolina 4 18
Kentucky 7 17
Tennessee 24 21
Louisiana 2 9
Texas 2 24
Maine 5
Vermont 1
Maryland 12 12
Virginia 33 27
Massachusetts 4 4
West Virginia 4
Michigan 13 4
Wisconsin 2 1
</TABLE>
<PAGE>
Item 3. Legal Proceedings.
The Registrant is presently, and from time to time, subject to
pending claims and suits arising in the ordinary course of its
business. In the opinion of management, the ultimate resolution
of these pending legal proceedings will not have a materially
adverse effect on the Registrant's operations or consolidated
financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
<TABLE>
Executive Officers of the Registrant.
Executive officers of the Registrant are appointed by and serve at
the discretion of the Registrant's Board of Directors. Information
regarding the Registrant's executive officers as of August 8, 1994
is provided below.
<CAPTION>
Officer
Name Age Position with the Company Since
<S> <C> <S> <C>
S. E. Beall, III 44 President and 1982
Chief Executive Officer
R. D. McClenagan, 46 President, 1985
Ruby Tuesday Division
R. L. Tatum 54 President, 1992
Family Dining Division
P. G. Hunt 58 Senior Vice President, 1972
General Counsel and
Secretary
J. R. Mothershed 46 Senior Vice President, 1992
Finance
R. Vilord 58 Senior Vice President, 1993
Human Resources
A. R. Johnson 42 President, Specialty 1993
Division
G. Davenport 40 President, Morrison's 1994
Health Care Division
</TABLE>
<PAGE>
Mr. Beall was elected Chief Executive Officer effective June
6, 1992. Mr. Beall served as President and Chief Operating
Officer from September of 1986.
Mr. McClenagan was appointed President of the Ruby Tuesday
Division in March 1994. He served as President of the Ruby
Tuesday Group from April 1990 to March 1994 and as Senior Vice
President of the Specialty Restaurant Division from March 1985
to April 1990.
Mr. Tatum was appointed President of the Family Dining
Division in March 1994. Previously, he was Senior Vice
President of Morrison's Family Dining Group and was appointed
President of Morrison's Family Dining Group in March of 1993.
Mr. Hunt joined the Company in June 1968 and was named Senior
Vice President, General Counsel and Secretary in September
1985. From December 1984, to September 1985, he served as
Vice President, General Counsel and Secretary.
Mr. Mothershed joined the Company in July 1972 and was named
Senior Vice President, Finance in March 1994. He served as
Vice President, Controller and Treasurer from March 1989 until
March 1994.
Mr. Vilord joined the Company in April 1988 and was named
Senior Vice President of Human Resources in June 1993. He
served as Vice President of Purchasing from October 1989 until
June 1993.
Mr. Johnson was named President, Specialty Division in March,
1994. Prior thereto, he served as Senior Vice President,
Marketing from June 1993 to March 1994 and as Vice President,
Marketing of the Ruby Tuesday Group from November 1992 to June
1993. Prior to joining the Company in November, 1992, Mr.
Johnson was a consultant to the Ruby Tuesday Group.
Mr. Davenport joined the Company in November 1973 and was
appointed President of Morrison's Health Care Division in
November 1993. Previously, he served as Regional Vice
President of the Hospitality Group and was promoted to Senior
Vice President, Hospitality Group in February 1990.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
Certain information required by this item is incorporated herein
by reference to Note 13 of the Notes to Consolidated Financial
Statements of the Registrant's Annual Report to Stockholders for
the fiscal year ended June 4, 1994.
Under various financing agreements, the Company has agreed to
restrict dividend payments (other than stock dividends) and
purchases of its capital stock to amounts (collectively,
"Restricted Payments") based on earnings after fiscal year 1990.
Specifically, the maximum amount available for Restricted
Payments at any time is an amount equal to the sum of (1)
$27,000,000 plus 50% (or minus 100% in the case of a deficit) of
Consolidated Net Earnings for the period commencing on June 3,
1990, and terminating at the end of the last fiscal quarter
preceding the date of any proposed Restricted Payment, less (2)
the sum of (a) the aggregate amount of all dividends and other
distributions paid or declared by the Company on any class of its
stock after June 2, 1990, and (b) the excess of the aggregate
amount expended by the Company, directly, or indirectly, after
June 2, 1990, for the redemption, purchase or other acquisition
of any shares of its stock, over the aggregate amount received by
the Company after June 2, 1990, as the net cash proceeds of the
sale of any shares of its stock. At June 4, 1994, the maximum
amount of permissible Restricted Payments was $2,146,000.
Item 6. Selected Financial Data.
The information contained under the caption "Summary of
Operations" of the Registrant's Annual Report to Stockholders for
the fiscal year ended June 4, 1994 is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information contained under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" of the Registrant's Annual Report to Stockholders for
the fiscal year ended June 4, 1994 is incorporated herein by
reference.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
The following consolidated financial statements and the related
report of the Company's independent auditors contained in the
Registrant's Annual Report to Stockholders for the fiscal year
ended June 4, 1994, are incorporated herein by reference:
Consolidated Statements of Income - Fiscal years ended
June 4, 1994, June 5, 1993 and June 6, 1992.
Consolidated Balance Sheets - As of June 4, 1994 and June 5,
1993.
Consolidated Statements of Stockholders' Equity - Fiscal
years ended June 4, 1994, June 5, 1993 and June 6, 1992.
Consolidated Statements of Cash Flows - Fiscal years ended
June 4, 1994, June 5, 1993 and June 6, 1992.
Notes to Consolidated Financial Statements.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) The information regarding directors of the Registrant is
incorporated herein by reference to the information set forth in
the table captioned "Director and Director Nominee Information"
under Proposal 1 in the definitive proxy statement of the
Registrant dated August 26, 1994, relating to the Registrant's
annual meeting of stockholders to be held on September 28, 1994.
(b) Pursuant to Form 10-K General Instruction G(3), the
information regarding executive officers of the Registrant has
been included in Part I of this Report under the caption
"Executive Officers of the Registrant".
<PAGE>
Item 11. Executive Compensation.
The information required by this Item 11 is incorporated herein
by reference to the information set forth under the captions
"Executive Compensation" and "Proposal 1 - Election of
Directors - Directors' Fees and Attendance" in the definitive
proxy statement of the Registrant dated August 26, 1994 relating
to the Registrant`s annual meeting of stockholders to be held on
September 28, 1994.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this Item 12 is incorporated herein
by reference to the information set forth in the table captioned
"Beneficial Ownership of Common Stock" in the definitive proxy
statement of the Registrant dated August 26, 1994, relating to
the Registrant's annual meeting of stockholders to be held on
September 28, 1994.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item 13 is incorporated herein
by reference to the information set forth under the caption
"Certain Transactions" in the definitive proxy statement of the
Registrant dated August 26, 1994, relating to the Registrant's
annual meeting of stockholders to be held on September 28, 1994.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) The following documents are incorporated by reference into
or are filed as a part of this report:
1. Financial Statements:
The following consolidated financial statements and the
independent auditors' report thereon, included in the
Registrant's Annual Report to Stockholders for the
fiscal year ended June 4, 1994, a copy of which is
contained in the exhibits to this report, are
incorporated herein by reference:
<TABLE>
<CAPTION>
Page Reference
in paper version
of Annual Report
to Shareholders
<S> <C>
Consolidated Statements of Income for
the fiscal years ended June 4, 1994,
June 5, 1993 and June 6, 1992. 34
Consolidated Balance Sheets as of
June 4, 1994 and June 5, 1993. 35
Consolidated Statements of Stockholders'
Equity for the fiscal years ended
June 4, 1994, June 5, 1993 and
June 6, 1992 36
Consolidated Statements of Cash Flows
for the fiscal years ended June 4, 1994,
June 5, 1993 and June 6, 1992 37
Notes to Consolidated Financial Statements 38 - 47
Report of Independent Auditors 48
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
Reference
in Form 10-K
2. Financial statement schedules:
<S> <C>
Report of Independent Auditors 23
Schedule II - Amounts Receivable from
Related Parties and Underwriters, Promoters
and Employees other than Related Parties 24
Schedule V - Property and Equipment
for the fiscal years ended June 4, 1994,
June 5, 1993 and June 6, 1992 25
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property
and Equipment for the fiscal years
ended June 4, 1994, June 5, 1993 and
June 6, 1992 26
Schedule VIII - Valuation and Qualifying
Accounts for the fiscal years ended June 4,
1994, June 5, 1993 and June 6, 1992 27
Schedule IX - Short-Term Borrowings for the
fiscal years ended June 4, 1994, June 5, 1993
and June 6, 1992 28
Schedule X - Supplementary Income Statement
Information for the fiscal years ended
June 4, 1994, June 5, 1993 and June 6, 1992 29
Financial statement schedules other than those shown
above are omitted because they are either not required
or the required information is shown in the financial
statements or notes thereto.
</TABLE>
<PAGE>
3. Exhibits
The following exhibits are filed as part of this report:
<TABLE>
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
LIST OF EXHIBITS
<CAPTION>
Exhibit
Number Description
<C> <S>
3(a) Certificate of Incorporation.(1)
3(b) Bylaws.
3(c) Certificate of Amendment of Certificate of Incorporation (Change
in name of Corporation).(2)
4(a) Reference is made to Articles IV, V, VII, and X of the
Certificate of Incorporation and Articles II, VI, VIII, IX and
XIII of the Bylaws incorporated by reference as Exhibits 3(a) and
3(b) hereto, respectively.
4(b) Rights Agreement.(3)
4(c) Certificate of Designation of Series A Junior Participating
Preferred Stock.(2)
10(a) Executive Supplemental Pension Plan together with First Amendment
made June 30, 1994.*
10(b) Morrison Restaurants Inc. Stock Incentive Plan.*(2)
10(c) Morrison Restaurants Inc. Stock Incentive and Deferred
Compensation Plan for Directors.*(2)
10(d) 1993 Executive Stock Option Program.*(2)
10(e) 1993 Management Stock Option Program (July 1, 1993 - June 30,
1996).*(2)
10(f) Morrison Restaurants Inc. Long-Term Incentive Plan.*(4)
10(g) Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified
Stock Option Plan, and Related Agreement.*(5)
10(h) Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive
Plan.*(2)
10(i) Morrison Restaurants Inc. Deferred Compensation Plan, as restated
effective January 1, 1994 together with amended and restated
Trust Agreement (dated December 1, 1992) to the Deferred
Compensation Plan.*
10(l) Profit Sharing Plan.*(6)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<C> <S>
10(m) Supply Agreement between Morrison Restaurants Inc. and
PYA/Monarch, Inc.(6)
10(n) Morrison Restaurants Inc. Management Retirement Plan together
with First Amendment made June 30, 1994.*
10(o) Asset Purchase Agreement dated June 27, 1994, by and among
Morrison Restaurants Inc. and Gardner Merchant Food Services,
Inc. and the related exhibits to such agreement.(7)
10(p) Morrison Restaurants Inc. Salary Deferral Plan as amended and
restated December 31, 1993 together with amended and restated
Trust Agreement (effective January 1, 1994) to the Salary
Deferral Plan.*
10(q) Executive Group Life and Executive Accidental Death and
Dismemberment Plan.*(8)
10(r) Form of Morrison Restaurants Inc. Change of Control Agreement
entered into with S.E. Beall, III, P.G. Hunt, R.D. McClenagan,
R.L. Tatum, J.R. Mothershed and R. Vilord.*(9)
10(s) Non-Qualified Option Agreement between the Company and Mr. E.E.
Bishop, dated January 30, 1987.*(9)
10(t) Non-Qualified Option Agreement between the Company and Mr. S.E.
Beall, III dated January 30, 1987.*(9)
10(v) Form of Non-Qualified Stock Option Agreement for Executive
Officers Pursuant to the Morrison Restaurants Inc. Stock
Incentive Plan.*(2)
10(w) Loan Agreement between Morrison Restaurants Inc. and Tias, Inc.
dated November 19, 1993 together with notes dated November 19,
1993.
10(x) First Amendment to Morrison Restaurants Inc. Stock Incentive
Plan.*
10(y) First Amendment to Morrison Restaurants Inc. Long-Term Incentive
Plan.*
10(z) Amendments to Morrison Restaurants Inc. 1987 Stock Bonus and Non-
Qualified Stock Option Plan.*
10(a)(a) Morrison Restaurants Inc. Executive Life Insurance Plan.*
10(b)(b) Performance Stock Rights Agreement dated July 1, 1993 between the
Company and S. E. Beall.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<C> <S>
10(c)(c) Letter agreement dated May 20, 1994 between the Company and J. B.
Byrum relating to severance, salary continuation and commission
arrangements.
10(d)(d) Stock Purchase Agreement dated June 3, 1994 between Custom
Management Corporation, a wholly-owned subsidiary of the Company
("CMC"), and J. B. Byrum relating to the sale of the Company's
35% equity interest in Morrison-Crothall Support Services, Inc.
together with promissory note in the principal amount of
$400,000, Guarantee and Stock Pledge Agreement.
11 Statement regarding computation of per share earnings.
13 Annual Report to Shareholders for the fiscal year ended June 5,
1993 (Only portions specifically incorporated by reference in the
Form 10-K are being filed herewith).
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
</TABLE>
<PAGE>
<TABLE>
MORRISON RESTAURANTS INC.
EXHIBIT FOOTNOTES
<CAPTION>
Exhibit
Footnote Description
<C> <S>
* Management contract or compensatory plan or arrangement.
(1) Incorporated by reference to Exhibit of the same number in the
Registrant's Registration Statement No. 33-20585 on Form S-8.
(2) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 5, 1993.
(3) Incorporated by reference to Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
February 28, 1987.
(4) Incorporated by reference to Exhibit 28 of the Registrant's
Registration Statement No. 2-97120 on Form S-8.
(5) Incorporated by reference to Exhibit 28.1 of the Registrant's
Registration Statement No. 33-13593 on Form S-8.
(6) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
May 28, 1988.
(7) Incorporated by reference to Exhibit (2) in the Registrant's Form
8-K dated July 27, 1994.
(8) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 3, 1989.
(9) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 2, 1990.
</TABLE>
<PAGE>
(b) The Registrant filed no reports on Form 8-K during the last quarter of
the period covered by this report.
(c) Exhibits filed with this report are attached hereto.
(d) The financial statement schedules listed in subsection
(a) (2) above are attached hereto.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Morrison Restaurants Inc.
We have audited the accompanying consolidated balance sheets of Morrison
Restaurants Inc. as of June 4, 1994 and June 5, 1993, and the related
consolidated statements of income, stockholders' equity and cash flows for
each of the three fiscal years in the period ended June 4, 1994. Our
audits also included the financial statement schedules listed in the Index
at Item 14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Morrison Restaurants Inc. at June 4, 1994 and June 5, 1993, and
the consolidated results of its operations and its cash flows for each of
the three fiscal years in the period ended June 4, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
/s/ Ernst & Young
Birmingham, Alabama
June 23, 1994, except for Note 12 of
Notes to Consolidated Financial Statements
as to which the date is August 8, 1994.
<PAGE>
<TABLE>
SCHEDULE II
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,PROMOTERS
AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE FISCAL YEARS ENDED JUNE 4, 1994, JUNE 5, 1993 AND JUNE 6, 1992
(DOLLARS IN THOUSANDS)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
DEDUCTIONS BALANCE AT END OF PERIOD
BALANCE AT (1) (1)
BEGINNING ADDITIONS AMOUNTS AMOUNTS
NAME OF DEBTOR OF PERIOD COLLECTED WRITTEN OFF CURRENT NOT CURRENT
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 4, 1994:
Joe Byrum....................... $ 0 $ 400 $ 0 $ 0 $ 0 $ 400
YEAR ENDED JUNE 5, 1993: N/A N/A N/A N/A N/A N/A
YEAR ENDED JUNE 6, 1992: N/A N/A N/A N/A N/A N/A
(1) In June 1994, the Company sold its interest in Morrison-Crothall Support Services, Inc., a 35.9% owned non-consolidated
affiliate, to an officer/stockholder of the Company in exchange for a $400,000 note receivable. The interest stated on this note
accrues at a rate of 8% per annum. A payment is due June 1995 for accrued interest. Remaining payments of $50,000 plus accrued
interest are due at the end of each fiscal quarter following June 1995 until the note is paid in full. This note is secured by
Morrison Restaurants Inc. Common Stock owned or held under option by Mr. Byrum.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE V
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
FOR THE FISCAL YEARS ENDED JUNE 4, 1994, JUNE 5, 1993 AND JUNE 6, 1992
(DOLLARS IN THOUSANDS)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT OTHER BALANCE AT
BEGINNING ADDITIONS CHANGES (2) END
CLASSIFICATION OF PERIOD AT COST (1) RETIREMENTS ADD (DEDUCT) OF PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 4, 1994:
Land............................. $12,005 $3,748 $ 0 $ 0 $15,753
Buildings........................ 38,110 10,878 578 77 48,487
Improvements to Leased Premises.. 161,958 30,731 5,470 (106) 187,113
Restaurant Equipment............. 158,866 29,294 7,031 (45) 181,084
Other Equipment.................. 46,763 9,724 3,965 (3) 52,519
Construction in Progress......... 16,870 5,955 0 0 22,825
TOTAL......................... $434,572 $90,330 $17,044 ($77) $507,781
YEAR ENDED JUNE 5, 1993:
Land............................. $11,125 $1,264 $383 $(1) $12,005
Buildings........................ 34,671 3,808 348 (21) 38,110
Improvements to Leased Premises.. 145,457 18,939 2,460 22 161,958
Restaurant Equipment............. 141,111 21,503 3,747 (1) 158,866
Other Equipment.................. 40,623 8,811 2,687 16 46,763
Construction in Progress......... 8,209 8,661 0 0 16,870
TOTAL......................... $381,196 $62,986 $ 9,625 $15 $434,572
YEAR ENDED JUNE 6, 1992:
Land............................. $ 9,948 $1,618 $441 $0 $11,125
Buildings........................ 32,279 2,122 500 770 34,671
Improvements to Leased Premises.. 140,426 10,500 4,719 (750) 145,457
Restaurant Equipment............. 130,602 15,767 5,258 0 141,111
Other Equipment.................. 36,635 7,703 3,715 0 40,623
Construction in Progress......... 8,160 49 0 0 8,209
TOTAL......................... $358,050 $37,759 $14,633 $20 $381,196
Depreciation for financial reporting purposes is computed using the straight-line method over the estimated useful
lives of the assets or, for capital lease property, over the term of the lease, if shorter. Annual rates of
depreciation range from 3% to 5% for buildings and improvements to leased premises and from 8% to 34% for
restaurant and other equipment.
Notes:
(1) Additions of property represent the cost of new facilities and improvements to existing facilities purchased
or constructed by the Company.
(2) Transfers among accounts and adjustment to net realizable value of closed cafeteria assets.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VI
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY AND EQUIPMENT
FOR THE FISCAL YEARS ENDED JUNE 4, 1994, JUNE 5, 1993, AND JUNE 6, 1992
(DOLLARS IN THOUSANDS)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
BALANCE AT CHARGED OTHER BALANCE AT
BEGINNING TO COSTS CHANGES (1) END
DESCRIPTION OF PERIOD AND EXPENSES RETIREMENTS ADD (DEDUCT) OF PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 4, 1994:
Buildings......................... $ 11,215 $ 1,808 $ 564 $ 0 $12,459
Improvements to Leased Premises... 74,524 12,671 4,030 0 83,165
Restaurant Equipment.............. 103,220 18,297 6,076 (3) 115,438
Other Equipment................... 25,283 6,995 3,216 0 29,062
TOTAL.......................... $214,242 $39,771 $13,886 $(3) $240,124
YEAR ENDED JUNE 5, 1993:
Buildings......................... $9,938 $1,413 $146 $10 $11,215
Improvements to Leased Premises... 64,730 11,435 1,641 0 74,524
Restaurant Equipment.............. 90,152 16,249 3,185 4 103,220
Other Equipment................... 21,204 6,352 2,261 (12) 25,283
TOTAL.......................... $186,024 $35,449 $7,233 $2 $214,242
YEAR ENDED JUNE 6, 1992:
Buildings......................... $ 8,740 $1,355 $157 $0 $9,938
Improvements to Leased Premises... 56,288 11,133 2,691 0 64,730
Restaurant Equipment.............. 78,711 15,713 4,272 0 90,152
Other Equipment................... 18,400 5,459 2,655 0 21,204
TOTAL.......................... $162,139 $33,660 $9,775 $0 $186,024
Notes:
(1) Transfers among accounts and adjustment to net realizable value of closed cafeteria assets
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED JUNE 4, 1994, JUNE 5, 1993 AND JUNE 6, 1992
(DOLLARS IN THOUSANDS)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
(A)
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING COSTS AND TO OTHER END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 4, 1994:
Trade receivables:
Allowance for doubtful accounts........ $ 3,087 $ 4 $ 0 $ 469 $ 2,622
YEAR ENDED JUNE 5, 1993:
Trade receivables:
Allowance for doubtful accounts........ $ 3,021 $ 551 $ 0 $ 485 $ 3,087
YEAR ENDED JUNE 6, 1992:
Trade receivables:
Allowance for doubtful accounts........ $ 2,439 $ 1,815 $ 0 $ 1,233 $ 3,021
Notes:
(A) Write-off of trade receivables determined to be uncollectible against the allowance for doubtful
accounts.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE IX
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS(1)
FOR THE FISCAL YEARS ENDED JUNE 4, 1994, JUNE 5, 1993 AND JUNE 6, 1992
(DOLLARS IN THOUSANDS)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
(3) (4)
WEIGHTED MAXIMUM AMT. AVERAGE AMT. WEIGHTED AVG.
CATEGORY OF BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
AGGREGATE SHORT-TERM AT END INTEREST DURING THE DURING THE DURING THE
BORROWING OF PERIOD RATE PERIOD PERIOD PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 4, 1994:
Lines of Credit................... $17,416 4.55% $17,416 $1,727 4.5%
YEAR ENDED JUNE 5, 1993:
Lines of Credit (2)............... $ 0 N/A N/A N/A N/A
YEAR ENDED JUNE 6, 1992:
Lines of Credit (2)............... $ 0 N/A N/A N/A N/A
Notes:
(1) All short-term borrowings are derived from lines of credit from various banks.
Each line of credit is subject to review by the bank and may be canceled
by the Company at any time.
(2) There were no short-term borrowings at any time during the periods ended
June 5, 1993 and June 6, 1992.
(3) The average amount outstanding during the period was computed by dividing the total
month-end outstanding principal balances by 12. The Company first incurred short-term
debt in fiscal 1994 during the 4th quarter.
(4) The weighted average interest rate during the period was computed by dividing the actual
interest expense by the average daily balance of short-term debt for the period for
which such short-term borrowings were outstanding.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE X
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE FISCAL YEARS ENDED JUNE 4, 1994, JUNE 5, 1993 AND JUNE 6, 1992
(DOLLARS IN THOUSANDS)
<CAPTION>
COLUMN A COLUMN B
CHARGED
TO COSTS
ITEM AND EXPENSES (A)
<S> <C>
YEAR ENDED JUNE 4, 1994:
Maintenance and repairs.............................. $ 24,567
YEAR ENDED JUNE 5, 1993:
Maintenance and repairs.............................. $ 20,837
YEAR ENDED JUNE 6, 1992:
Maintenance and repairs.............................. $ 19,677
Notes:
(A) Depreciation and amortization of intangible assets, taxes
other than payroll and income taxes, royalties and advertising
costs are not set forth inasmuch as such items do not exceed 1%
of total sales and revenues as shown in the accompanying
consolidated statements of income.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MORRISON RESTAURANTS INC.
Date 08/29/94 By:/s/ Samuel E. Beall, III
Samuel E. Beall, III
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
Date 08/29/94 By:/s/ E. E. Bishop
E. E. Bishop
Chairman of the Board
Date 08/29/94 By:/s/ Samuel E. Beall, III
Samuel E. Beall, III
Chief Executive Officer
and Director
Date 08/29/94 By:/s/ J. Russell Mothershed
J. Russell Mothershed
Senior Vice President, Finance
(Principal Accounting Officer)
Date 08/29/94 By:/s/ Arthur R. Outlaw
Arthur R. Outlaw
Vice-Chairman of the Board
<PAGE>
Date 08/29/94 By:/s/ Robert J. Theis, Sr.
Robert J. Theis Sr.
Director
Date 08/29/94 By:/s/ J. B. McKinnon
J. B. McKinnon
Director
Date 08/29/94 By:/s/ Dr. Donald Ratajczak
Dr. Donald Ratajczak
Director
Date
Claire L. Arnold
Director
Date
Dr. Benjamin F. Payton
Director
Date
Wallace R. Bunn
Director
Date
Dolph W. Von Arx
Director
<PAGE>
<TABLE>
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
LIST OF EXHIBITS
<CAPTION>
Exhibit
Number Description
<C> <S>
3(a) Certificate of Incorporation.(1)
3(b) Bylaws.
3(c) Certificate of Amendment of Certificate of Incorporation (Change
in name of Corporation).(2)
4(a) Reference is made to Articles IV, V, VII, and X of the
Certificate of Incorporation and Articles II, VI, VIII, IX and
XIII of the Bylaws incorporated by reference as Exhibits 3(a) and
3(b) hereto, respectively.
4(b) Rights Agreement.(3)
4(c) Certificate of Designation of Series A Junior Participating
Preferred Stock.(2)
10(a) Executive Supplemental Pension Plan together with First Amendment
made June 30, 1994.*
10(b) Morrison Restaurants Inc. Stock Incentive Plan.*(2)
10(c) Morrison Restaurants Inc. Stock Incentive and Deferred
Compensation Plan for Directors.*(2)
10(d) 1993 Executive Stock Option Program.*(2)
10(e) 1993 Management Stock Option Program (July 1, 1993 - June 30,
1996).*(2)
10(f) Morrison Restaurants Inc. Long-Term Incentive Plan.*(4)
10(g) Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified
Stock Option Plan, and Related Agreement.*(5)
10(h) Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive
Plan.*(2)
10(i) Morrison Restaurants Inc. Deferred Compensation Plan, as restated
effective January 1, 1994 together with amended and restated
Trust Agreement (dated December 1, 1992) to the Deferred
Compensation Plan.*
10(l) Profit Sharing Plan.*(6)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<C> <S>
10(m) Supply Agreement between Morrison Restaurants Inc. and
PYA/Monarch, Inc.(6)
10(n) Morrison Restaurants Inc. Management Retirement Plan together
with First Amendment made June 30, 1994.*
10(o) Asset Purchase Agreement dated June 27, 1994, by and among
Morrison Restaurants Inc. and Gardner Merchant Food Services,
Inc. and the related exhibits to such agreement.(7)
10(p) Morrison Restaurants Inc. Salary Deferral Plan as amended and
restated December 31, 1993 together with amended and restated
Trust Agreement (effective January 1, 1994) to the Salary
Deferral Plan.*
10(q) Executive Group Life and Executive Accidental Death and
Dismemberment Plan.*(8)
10(r) Form of Morrison Restaurants Inc. Change of Control Agreement
entered into with S.E. Beall, III, P.G. Hunt, R.D. McClenagan,
R.L. Tatum, J.R. Mothershed and R. Vilord.*(9)
10(s) Non-Qualified Option Agreement between the Company and Mr. E.E.
Bishop, dated January 30, 1987.*(9)
10(t) Non-Qualified Option Agreement between the Company and Mr. S.E.
Beall, III dated January 30, 1987.*(9)
10(v) Form of Non-Qualified Stock Option Agreement for Executive
Officers Pursuant to the Morrison Restaurants Inc. Stock
Incentive Plan.*(2)
10(w) Loan Agreement between Morrison Restaurants Inc. and Tias, Inc.
dated November 19, 1993 together with notes dated November 19,
1993.
10(x) First Amendment to Morrison Restaurants Inc. Stock Incentive
Plan.*
10(y) First Amendment to Morrison Restaurants Inc. Long-Term Incentive
Plan.*
10(z) Amendments to Morrison Restaurants Inc. 1987 Stock Bonus and Non-
Qualified Stock Option Plan.*
10(a)(a) Morrison Restaurants Inc. Executive Life Insurance Plan.*
10(b)(b) Performance Stock Rights Agreement dated July 1, 1993 between the
Company and S. E. Beall.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<C> <S>
10(c)(c) Letter agreement dated May 20, 1994 between the Company and J. B.
Byrum relating to severance, salary continuation and commission
arrangements.
10(d)(d) Stock Purchase Agreement dated June 3, 1994 between Custom
Management Corporation, a wholly-owned subsidiary of the Company
("CMC"), and J. B. Byrum relating to the sale of the Company's
35% equity interest in Morrison-Crothall Support Services, Inc.
together with promissory note in the principal amount of
$400,000, Guarantee and Stock Pledge Agreement.
11 Statement regarding computation of per share earnings.
13 Annual Report to Shareholders for the fiscal year ended June 5,
1993 (Only portions specifically incorporated by reference in the
Form 10-K are being filed herewith).
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
</TABLE>
<PAGE>
<TABLE>
MORRISON RESTAURANTS INC.
EXHIBIT FOOTNOTES
<CAPTION>
Exhibit
Footnote Description
<C> <S>
* Management contract or compensatory plan or arrangement.
(1) Incorporated by reference to Exhibit of the same number in the
Registrant's Registration Statement No. 33-20585 on Form S-8.
(2) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 5, 1993.
(3) Incorporated by reference to Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
February 28, 1987.
(4) Incorporated by reference to Exhibit 28 of the Registrant's
Registration Statement No. 2-97120 on Form S-8.
(5) Incorporated by reference to Exhibit 28.1 of the Registrant's
Registration Statement No. 33-13593 on Form S-8.
(6) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
May 28, 1988.
(7) Incorporated by reference to Exhibit (2) in the Registrant's Form
8-K dated July 27, 1994.
(8) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 3, 1989.
(9) Incorporated by reference to Exhibit of the same number in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
June 2, 1990.
</TABLE>
RESTATED
BYLAWS
OF
MORRISON RESTAURANTS INC.
As in effect January 6, 1994
[Restated to reflect (i) change in name of RTMC Acquisition Incorporated to
Morrison Incorporated following the reincorporation in September 1987, (ii)
amendment to Section 7.1 adopted on September 26, 1989, (iii) change in
name from Morrison Incorporated to Morrison Restaurants Inc. on September
30, 1992, and (iv) amendments to Sections 3.2, Section 4.1 and 4.2 adopted
on January 5, 1994.]
INDEX
Page
ARTICLE I. OFFICES . . . . . . . . . . . . . . . . . . . . .
ARTICLE II. STOCKHOLDERS' MEETINGS. . . . . . . . . . . . . .
SECTION 2.1 Places of Meetings. . . . . . . . . . . . . . .
SECTION 2.2 Annual Meetings . . . . . . . . . . . . . . . .
SECTION 2.3 Special Meetings. . . . . . . . . . . . . . . .
SECTION 2.4 Meetings Without Notice . . . . . . . . . . . .
SECTION 2.5 Voting. . . . . . . . . . . . . . . . . . . . .
SECTION 2.6 Quorum. . . . . . . . . . . . . . . . . . . . .
SECTION 2.7 List of Stockholders. . . . . . . . . . . . . .
SECTION 2.8 Action Without Meeting. . . . . . . . . . . . .
ARTICLE III.BOARD OF DIRECTORS. . . . . . . . . . . . . . . .
SECTION 3.1 Powers. . . . . . . . . . . . . . . . . . . . .
SECTION 3.2 Number, Qualification and Term. . . . . . . . .
SECTION 3.3 Compensation. . . . . . . . . . . . . . . . . .
SECTION 3.4 Meetings and Quorum . . . . . . . . . . . . . .
SECTION 3.5 Executive Committee . . . . . . . . . . . . . .
SECTION 3.6 Other Committees. . . . . . . . . . . . . . . .
SECTION 3.7 Conference Telephone Meetings . . . . . . . . .
SECTION 3.8 Action Without Meeting. . . . . . . . . . . . .
ARTICLE IV. OFFICERS. . . . . . . . . . . . . . . . . . . . .
SECTION 4.1 Titles and Election . . . . . . . . . . . . . .
SECTION 4.2 Duties. . . . . . . . . . . . . . . . . . . . .
(a) Vice Chairman of the Board of Directors . . .
(b) President . . . . . . . . . . . . . . . . . .
(c) Vice President. . . . . . . . . . . . . . . .
(d) Secretary . . . . . . . . . . . . . . . . . .
(e) Treasurer . . . . . . . . . . . . . . . . . .
SECTION 4.3 Chief Executive Officer and
Chief Operating Officer . . . . . . . . . . .
SECTION 4.4 Chief Financial Officer and
Chief Accounting Officer . . . . . . . . . . .
SECTION 4.5 Delegation of Authority . . . . . . . . . . . .
SECTION 4.6 Compensation. . . . . . . . . . . . . . . . . .
ARTICLE V. RESIGNATIONS, VACANCIES AND REMOVALS. . . . . . .
SECTION 5.1 Resignations. . . . . . . . . . . . . . . . . .
SECTION 5.2 Vacancies . . . . . . . . . . . . . . . . . . .
(a) Directors . . . . . . . . . . . . . . . . . .
(b) Officers. . . . . . . . . . . . . . . . . . .
SECTION 5.3 Removals. . . . . . . . . . . . . . . . . . . .
(a) Directors . . . . . . . . . . . . . . . . . .
(b) Officers. . . . . . . . . . . . . . . . . . .
ARTICLE VI. CAPITAL STOCK . . . . . . . . . . . . . . . . . .
SECTION 6.1 Certificates of Stock . . . . . . . . . . . . .
SECTION 6.2 Transfer of Stock . . . . . . . . . . . . . . .
SECTION 6.3 Stock Transfer Records. . . . . . . . . . . . .
SECTION 6.4 Record Dates. . . . . . . . . . . . . . . . . .
SECTION 6.5 Lost Certificates . . . . . . . . . . . . . . .
ARTICLE VII.FISCAL YEAR, BANK DEPOSITS, CHECKS, ETC.. . . . .
SECTION 7.1 Fiscal Year . . . . . . . . . . . . . . . . . .
SECTION 7.2 Bank Deposits, Checks, Etc. . . . . . . . . . .
ARTICLE VIII.BOOKS AND RECORDS. . . . . . . . . . . . . . . .
SECTION 8.1 Place of Keeping Books. . . . . . . . . . . . .
SECTION 8.2 Examination of Books. . . . . . . . . . . . . .
ARTICLE IX. NOTICES . . . . . . . . . . . . . . . . . . . . .
SECTION 9.1 Requirements of Notice. . . . . . . . . . . . .
SECTION 9.2 Waivers . . . . . . . . . . . . . . . . . . . .
ARTICLE X. SEAL. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XI. POWERS OF ATTORNEY. . . . . . . . . . . . . . . .
ARTICLE XII.INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER PERSONS . . . . . . . . . . .
SECTION 12.1 Action Other Than by or in the
Right of the Corporation 12 . . . . . . . . .
SECTION 12.2 Action by or in the Right of the Corporation .
SECTION 12.3 Determination of Right of Indemnification. . .
SECTION 12.4 Indemnification Against Expenses
of Successful Party
SECTION 12.5 Advances of Expenses . . . . . . . . . . . . .
SECTION 12.6 Right of Agent to Indemnification Upon
Application; Procedure Upon Application . . .
SECTION 12.7 Other Rights and Remedies. . . . . . . . . . .
SECTION 12.8 Insurance of Agents. . . . . . . . . . . . . .
SECTION 12.9 Certain Definitions. . . . . . . . . . . . . .
SECTION 12.10 Indemnification of Other Persons . . . . . . .
SECTION 12.11 Survival of Indemnification. . . . . . . . . .
SECTION 12.12 Savings Clause . . . . . . . . . . . . . . . .
ARTICLE XIIIAMENDMENTS. . . . . . . . . . . . . . . . . . . .
MORRISON RESTAURANTS INC.
RESTATED BYLAWS
ARTICLE I
OFFICES
The Corporation shall at all times maintain a registered office in the
State of Delaware and a registered agent at that address but may have other
offices located in or outside of the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS' MEETINGS
2.1 Places of Meetings. All meetings of stockholders shall be held at
such place or places in or outside of the State of Delaware as the Board of
Directors may from time to time determine or as may be designated in the
notice of meeting or waiver of notice thereof, subject to any provisions of
the laws of the State of Delaware.
2.2 Annual Meetings. The annual meeting of stockholders shall be held
on such date in the month of September each year and at such time as shall be
determined by the Board of Directors from time to time or with respect to any
particular annual meeting for the purpose of electing directors and
transacting such other business as may come properly before the meeting.
Written notice of the date, time and place of the annual meeting shall be
given by mail to each stockholder entitled to vote at his address as it
appears on the records of the Corporation not less than ten (10) nor more than
sixty (60) days prior to the scheduled date thereof, unless such notice is
waived as provided by Article IX of these Bylaws.
2.3 Special Meetings. A special meeting of stockholders may be called
at any time by the Board of Directors, the Chairman of the Board of Directors
or the President. Written notice of the time, place and specific purposes of
such meeting shall be given by mail to each stockholder entitled to vote
thereat at his address as it appears on the records of the Corporation not
less than ten (10) nor more than sixty (60) days prior to the scheduled date
thereof, unless such notice is waived as provided in Article IX of these
Bylaws.
2.4 Meetings Without Notice. Meetings of the stockholders may be held
at any time without notice when all the stockholders entitled to vote thereat
are present in person or by proxy.
2.5 Voting. At all meetings of stockholders, each stockholder entitled
to vote on the record date as determined under Article VI, Section 6.3 of
these Bylaws, or if not so determined, as prescribed under the laws of the
State of Delaware, shall be entitled to one vote for each share of stock
standing of record in his name, subject to any restrictions or qualifications
set forth in the Certificate of Incorporation, and may vote either in person
or by proxy.
2.6 Quorum. At any meeting of stockholders, a majority of the number
of shares of stock outstanding and entitled to vote thereat, present in person
or by proxy, shall constitute a quorum, but a smaller interest may adjourn any
meeting from time to time, and the meeting may be held as adjourned without
further notice, subject to such limitation as may be imposed under the laws
of the State of Delaware. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at
the originally scheduled meeting.
When a quorum is present at any meeting, a majority of the number of
shares of stock entitled to vote present thereat shall decide any question
brought before such meeting, unless the question is one upon which a different
vote is required by express provision of the laws of the State of Delaware,
or the Certificate of Incorporation or these Bylaws, in which case such
express provision shall govern.
2.7 List of Stockholders. At least ten (10) days before every meeting,
a complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order and showing the address of and the number of shares
registered in the name of each stockholder, shall be prepared by the Secretary
or the transfer agent in charge of the stock ledger of the Corporation. Such
list shall be open for examination by any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at least ten
(10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine such list or the books of the Corporation or
to vote in person or by proxy at such meeting.
2.8 Action Without Meeting. Any action required by the laws of the
State of Delaware or the Certificate of Incorporation to be taken at any
annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without
a meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by all the holders of
outstanding stock entitled to vote at such meeting.
ARTICLE III
BOARD OF DIRECTORS
3.1 Powers. The business and affairs of the Corporation shall be
carried on by or under the direction of the Board of Directors, which shall
have all the powers authorized by the laws of the State of Delaware, subject
to such limitations as may be provided by the Certificate of Incorporation or
these Bylaws.
3.2 Number, Qualification and Term. The initial number of directors
shall be such as may be determined by the incorporator(s) and thereafter the
number of directors shall be not less than nine (9) and not more than twelve
(12), the exact number within such minimum and maximum limits to be fixed and
determined from time to time by resolution of a majority of the Board of
Directors or by the affirmative vote of the holders of at least 80% of all
outstanding shares of capital stock entitled to vote in the election of
directors, voting together as a single class, as provided in the Certificate
of Incorporation.
Directors shall be of full age, and no person shall be nominated for the
Board of Directors who shall have attained the age of seventy (70) on or
before the annual meeting of stockholders at which directors are elected,
provided, however, under special conditions in the best interests of the
Corporation, as determined by the Board of Directors or the shareholders, a
person may be nominated for the Board of Directors who has attained the age
of seventy (70) before such meeting. Directors need not be residents of the
State of Delaware, however, directors must be stockholders of the Corporation.
The initial Board of Directors shall be elected by the incorporator(s).
Thereafter, Directors shall be elected at the annual meeting of stockholders
by a plurality of the votes cast at such election. Each director shall serve
until the election and qualification of his successor or until his earlier
death, resignation or removal as provided in the Certificate of Incorporation
and these Bylaws. In case of an increase in the number of directors between
elections by the stockholders, the additional directorships shall be
considered vacancies and shall be filled in the manner prescribed in Article
V of these Bylaws.
The Board of Directors may, by majority vote, elect a Chairman of the
Board of Directors. The Chairman shall be a member of the Board and shall
preside at all meetings of the stockholders and of the Board of Directors and
shall have such other powers and perform such other duties as the Board of
Directors may prescribe from time to time.
3.3 Compensation. The Board of Directors, or a committee thereof, may
from time to time by resolution authorize the payment of fees or other
compensation to the directors for services as such to the Corporation,
including, but not limited to, fees for attendance at all meetings of the
Board of Directors or any committee thereof, and determine the amount of such
fees and compensation. Directors shall in any event be paid their traveling
expenses for attendance at all meetings of the Board of Directors or any
committee thereof. Nothing herein contained shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor in amounts authorized or otherwise approved from time
to time by the Board of Directors or a committee thereof.
3.4 Meetings and Quorum. Meetings of the Board of Directors may be
held either in or outside of the State of Delaware. A quorum shall be one-
third (1/3) of the number of directors then fixed in the manner provided in
Section 3.2 of this Article but not less than two (2) directors. The act of
a majority of the directors present at a meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum is not present at any
meeting, the Directors who are present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
is obtained, subject to such limitation as may be imposed under the laws of
the State of Delaware.
The Board of Directors shall, at the close of each annual meeting of
stockholders and without further notice other than these Bylaws, if a quorum
of directors is then present or as soon thereafter as may be convenient, hold
a regular meeting for the election of officers and the transaction of any
other business.
The Board of Directors may from time to time provide for the holding of
regular meetings with or without notice and may fix the times and places at
which such meetings are to be held, meetings other than regular meetings may
be called at any time by the Chairman of the Board of Directors or the
President and must be called by the Chairman of the Board, the President, the
Secretary or an Assistant Secretary upon the request of at least three
directors.
Notice of each meeting, other than a regular meeting (unless required
by the Board of Directors), shall be given to each director by mailing the
same to each director at his residence or business address at least two (2)
days before the meeting or by delivering the same to him personally or by
telephone or telegraph at least one (1) day before the meeting unless, in case
of exigency, the Chairman of the Board of Directors, the President, the
Secretary or an Assistant Secretary, as the case may be, shall prescribe a
shorter notice to be given personally or by telephone, telegraph, cable or
facsimile transmission to all or any one or more of the directors at their
respective residences or places of business. Notice will be deemed to have
been given at the time it is mailed, postage-prepaid, or sent by telegraph,
cable or facsimile transmission, or given by telephone, as the case may be.
Notice of any meeting shall state the time and place of such meeting,
but need not state the purposes thereof unless otherwise required by the laws
of the State of Delaware, the Certificate of Incorporation or the Board of
Directors.
3.5 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of directors then fixed in the manner provided in
Section 3.2 of this Article, may provide for an Executive Committee of three
or more directors and shall elect the members thereof to serve during the
pleasure of the Board of Directors. The Executive Committee shall elect its
own chairman, unless a chairman has been designated by the Board of Directors.
Special meetings of the Executive Committee may be called by the chairman of
the committee or by the Board of Directors, and notice of meetings of the
Executive Committee shall be given by the chairman of the committee or by the
Secretary, in the manner provided in Article IX of these Bylaws.
The Board of Directors may at any time change the membership of the
Executive Committee, fill vacancies in it, designate alternate members to
replace any absent or disqualified members at any meeting of the Executive
Committee, or dissolve it.
During the intervals between the meetings of the Board of Directors, the
Executive Committee shall possess and may exercise any or all of the powers
of the Board of Directors in the management or direction of the business and
affairs of the Corporation to the extent authorized by resolution adopted by
a majority of the number of directors then fixed in the manner provided in
Section 3.2 of this Article, subject to such limitations as may be imposed by
the laws of the State of Delaware.
Except as inconsistent with these Bylaws or the resolution of the Board
of Directors from time to time, the Executive Committee may determine its
rules of procedure and the notice to be given of its meeting, and it may
appoint such committees as it shall from time to time deem necessary. A
majority of the members of the Executive Committee shall constitute a quorum.
The Executive Committee shall keep minutes of its meetings and shall report
the same to the Board of Directors.
3.6 Other Committees. The Board of Directors may by resolution provide
for such other committees as it deems desirable and may discontinue the same
at its pleasure. Each such committee shall have the powers and perform such
duties, not inconsistent with law, as may be assigned to it by the Board of
Directors.
Each such committee shall elect its own chairman, unless a chairman has
been designated by the Board of Directors.
Except as inconsistent with these Bylaws or the resolution of the Board
of Directors from time to time, each such committee may determine its rules
of procedure and the notice to be given of its meeting, and it may appoint
such committees as it shall from time to time deem necessary. Special meetings
of any such committee may be called by the chairman of that committee or by
the Board of Directors, and notice of any meeting of any such committee shall
be given by the chairman of that committee or by the Secretary in the manner
provided in Article IX of these Bylaws. A majority of the members of any such
committee then in office shall constitute a quorum. Each such committee shall
keep minutes of its meetings and report the same to the Board of Directors.
3.7 Conference Telephone Meetings. Any one or more members of the
Board of Directors or any committee thereof may participate in a meeting by
means of a conference telephone or similar communication equipment by means
of which all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at such meeting.
3.8 Action Without Meeting. To the extent authorized by Delaware law,
any action required or permitted to be taken at any meeting of the Board of
Directors or any committee thereof may be taken without a meeting if all
members of the Board of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board of Director or committee.
ARTICLE IV
OFFICERS
4.1 Titles and Election. The officers of the Corporation shall be the
Vice Chairman of the Board of Directors, the President, one or more Vice
Presidents, the Secretary and the Treasurer, who shall have such authority and
perform such duties as may be prescribed by the Board of Directors or as
otherwise provided in these Bylaws.
The Board of Directors, in its discretion, may also at any time elect
or appoint such other officers as it may deem advisable, each of whom shall
have such authority and shall perform such duties as may be prescribed or
determined from time to time by the Board of Directors or, if not prescribed
or determined by the Board of Directors, as the Chairman of the Board, the
President or the then senior executive officer may prescribe or determine.
The Board of Directors may assign such additional titles and duties to
one or more of the officers as it shall deem appropriate.
Any person may hold more than one office if the duties can be
consistently performed by the same person.
The officers of the Corporation shall initially be elected as soon as
convenient by the Board of Directors and thereafter, in the absence of earlier
deaths, resignations or removals, shall be elected at the first meeting of the
Board of Directors following each annual meeting of stockholders. Each
officer shall hold office at the pleasure of the Board of Directors except as
may otherwise be approved by the Board of Directors, or until his earlier
resignation, removal or other termination of his employment.
The Board of Directors may require any officer or other employee or
agent to give bond for the faithful performance of his duties in such form and
with such sureties as the Board may require.
4.2 Duties. Subject to such extension, limitations, and other
provisions as the Board of Directors may from time to time prescribe or
determine, the following officers shall have the following powers and duties:
(a) Vice Chairman of the Board of Directors. The Vice Chairman
of the Board of Directors shall be a director and, in the absence of the
Chairman of the Board, shall preside at all meetings of the stockholders
and of the Board of Directors and shall have such other powers and
perform such other duties as the Board of Directors may prescribe from
time to time.
(b) President. The President shall exercise the powers and
authority and perform all of the duties commonly incident to his office
and shall perform such other duties as the Board of Directors shall
specify from time to time. In the absence or disability of the Chairman
of the Board, the President shall perform those duties of the Chairman
of the Board not assigned to the Vice Chairman of the Board, unless
otherwise provided by the Board of Directors.
(c) Vice President. The Vice President or Vice Presidents shall
perform such duties and have such powers as may be assigned to them from
time to time by the Board of Directors, the Chairman of the Board or the
President. Any Vice President may have the title of Executive Vice
President, Senior Vice President, Assistant Vice President or such other
title deemed appropriate by the Board of Directors from time to time.
In the absence or disability of the President, the Vice Presidents
in order of seniority may, unless otherwise determined by the Board of
Directors Or the Chairman of the Board, exercise the powers and perform
the duties pertaining to the office of the President.
(d) Secretary. The Secretary, or in his absence an Assistant
Secretary, shall keep the minutes of all meetings of stockholders and
of the Board of Directors and any committee thereof, cause all notices
to be duly given to and served on the stockholders and directors, attend
to such correspondence as may be assigned to him, keep or cause to be
kept in safe custody the seal and corporate records of the Corporation
and affix such seal to all such instruments properly executed as may
require it, have general charge of the stock transfer books of the
Corporation and shall in general perform all duties incident to his
office, and shall have such other duties and powers as may be prescribed
or determined from time to time by the Board of Directors, the Chairman
of the Board or the President.
In the absence or disability of the Secretary, the Assistant
Secretary, or if there he more than one, the Assistant Secretaries in
the order determined by the Board of Directors, or if no such
determination has been made, in the order of their election, shall
perform the duties and exercise the powers of the Secretary. Each
Assistant Secretary also shall perform such other duties and have such
other powers as may be assigned to him from time to time by the Board
of Directors, the Chairman of the Board or the President.
(e) Treasurer. The Treasurer shall have the care and custody of
and be responsible for the moneys, funds, securities, financial records
and other valuable papers of the Corporation (other than his own bond,
if any, which shall be in the custody of the President); shall keep full
and accurate accounts of receipts and disbursements and shall render
account thereof whenever required by the Board of Directors, the
Chairman of the Board or the President; shall have and perform, under
the supervision of the Board of Directors, all the powers and duties
commonly incident to his office; shall deposit or cause to be deposited
all funds of the Corporation in such bank or banks, trust company or
trust companies, or with such firm or firms doing a banking business as
may be designated by the Board of Directors, the Chairman of the Board
or the President; may endorse for deposit or collection all checks,
notes, and similar instruments payable to the Corporation or to its
order; and shall have such other duties as may be prescribed or
determined from time to time by the Board of Directors, the Chairman of
the Board or the President.
In the absence or disability of the Treasurer, the Assistant
Treasurer, or if there be more than one, the Assistant Treasurers in the
order determined by the Board of Directors, or if no such determination
has been made, in the order of their election, shall perform the duties
and exercise the powers of the Treasurer and such other duties as may
be assigned to them from time to time by the Board of Directors, the
Chairman of the Board or the President.
4.3 Chief Executive Officer and Chief Operating Officer. In its
discretion, the Board of Directors may designate either the Chairman of the
Board or the President to serve as the Chief Executive Officer or the Chief
Operating Officer, or both, of the Corporation.
The Chief Executive Officer shall, subject to the direction and control
of the Board of Directors, have general supervision, direction and control of
the business and officers of the Corporation and have the powers and duties
otherwise customary to the office.
The Chief Operating Officer shall, subject to the direction and control
of the Board of Directors, have general supervision, management and control
of the operations and personnel of the Corporation and the powers and duties
otherwise customary to the office.
4.4 Chief Financial Officer and Chief Accounting Officer. In its
discretion, the Board of Directors may at any time designate any officer as
the Chief Financial Officer, the Chief Accounting Officer, or both, of the
Corporation.
4.5 Delegation of Authority. The Board of Directors may at any time
delegate the powers and duties of any officer for the time being to any other
officer, director or employee.
4.6 Compensation. The compensation of the officers shall be fixed by
the Board of Directors or a committee thereof and the fact that any officer
is a director shall not preclude him from receiving compensation or from
voting upon the resolution providing the same.
ARTICLE V
RESIGNATIONS, VACANCIES AND REMOVALS
5.1 Resignations. Any director or officer may resign at any time by
giving written notice thereof to the Board of Directors, the Chairman of the
Board, the President or the Secretary. Any such resignation shall take effect
at the time specified therein or, if the time be not specified, upon receipt
thereof; and unless otherwise specified therein, the acceptance of any
resignation shall not be necessary to make it effective.
5.2 Vacancies.
(a) Directors. Any vacancy in the Board of Directors caused by
reason of death, incapacity, resignation, removal, increase in the
authorized number of directors or otherwise may be filled by a majority
vote of the remaining directors though less than a quorum, or by the
sole remaining director.
Any director so elected by the Board of Directors shall serve
until the next annual meeting of stockholders at which directors of the
class in which such director serves are to be elected and until the
election and qualification of his successor or until his earlier death,
resignation or removal as provided in the Certificate of Incorporation
or these Bylaws. The Board of Directors also may reduce their
authorized number by the number of vacancies in the Board, provided such
reduction does not reduce the Board to less than the minimum authorized
by the laws of the State of Delaware or to less than the number of
directors then in office.
(b) Officers. The Board of Directors may at any time or from
time to time fill any vacancy among the officers of the Corporation.
5.3 Removals.
(a) Directors. The entire Board of Directors, or any individual
member thereof, may be removed only as provided in the Certificate of
Incorporation.
(b) Officers. Subject to the provisions of any validly existing
agreement, the Board of Directors may at any meeting remove from office
any officer, with or without cause, and may elect or appoint a
successor.
ARTICLE VI
CAPITAL STOCK
6.1 Certificates of Stock. Every stockholder shall be entitled to a
certificate or certificates for shares of the capital stock of the Corporation
in such form as may be prescribed or authorized by the Board of Directors,
duly numbered and setting forth the number and kind of shares represented
thereby. Such certificates shall be signed by the Chairman of the Board, the
Vice Chairman of the Board, the President or Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
If and to the extent permitted by Delaware law, any or all of such signatures
may be in facsimile if the certificate is manually signed on behalf of a
transfer agent or a registrar, other than the Corporation itself or an
employee of the Corporation.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on a certificate has ceased to be such
officer, transfer agent or registrar before the certificate has been issued,
such certificate may nevertheless be issued and delivered by the Corporation
with the same effect as if he were such officer, transfer agent or registrar
at the date of issue.
6.2 Transfer of Stock. Shares of the capital stock of the Corporation
shall be transferable only upon the books of the Corporation upon the
surrender of the certificate or certificates properly assigned and endorsed
for transfer.
The Board of Directors may appoint a transfer agent and one or more co-
transfer agents and a registrar and one or more co-registrars and may make or
authorize such agents to make all such rules and regulations deemed expedient
concerning the issue, transfer and registration of shares of stock. If the
Corporation has a transfer agent or registrar acting on its behalf, the
signature of any officer or representative thereof may be in facsimile.
6.3 Stock Transfer Records. Unless the Corporation has a stock
transfer agent to keep such records, the Secretary shall keep a stock book or
books containing the names, alphabetically arranged, with the address of every
stockholder showing the number of shares of each kind, class or series of
stock held of record.
The person in whose name shares of stock stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
6.4 Record Dates. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors shall fix in
advance a record date which, in the case of a meeting, shall not be less than
ten (10) nor more than sixty (60) days prior to the scheduled date of such
meeting and which, in the case of any other action, shall be not more than
sixty (60) days prior to any such action permitted by the laws of the State
of Delaware.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
6.5 Lost Certificates. In case of loss, mutilation or destruction of
a stock certificate, a duplicate certificate may be issued upon such terms as
may be determined or authorized by the Board of Directors, the Chairman of the
Board or the President.
ARTICLE VII
FISCAL YEAR, BANK DEPOSITS, CHECKS, ETC.
7.1 Fiscal Year. The fiscal year of the Corporation shall end on the
first Saturday following May 30 each year.
7.2 Bank Deposits, Checks, Etc. The funds of the Corporation shall be
deposited in the name of the Corporation or of any division thereof in such
banks or trust companies in the United States or elsewhere as may be
designated from time to time by the Board of Directors, or by such officer or
officers as the Board of Directors may authorize to make such designations.
All checks, drafts or other orders for the withdrawal of funds from any
bank account shall be signed by such person or persons as may be designated
from time to time by the Board of Directors. The signatures on checks, drafts
or other orders for the withdrawal of funds may be in facsimile if authorized
in the designation.
ARTICLE VIII
BOOKS AND RECORDS
8.1 Place of Keeping Books. The books and records of the Corporation
may be kept in or outside of the State of Delaware, as the Board of Directors
may from time to time determine.
8.2 Examination of Books. Except as may otherwise be provided by the
laws of the State of Delaware, the Certificate of Incorporation or these
Bylaws, the Board of Directors shall have power to determine from time to time
whether and to what extent and at what times and places and under what
conditions any of the accounts, records and books of the Corporation are to
be open to the inspection of any stockholder. No stockholder shall have any
right to inspect any account or book or document of the Corporation except as
prescribed by law or authorized by express resolution of the stockholders or
of the Board of Directors.
ARTICLE IX
NOTICES
9.1 Requirements of Notice. Whenever notice is required to be given
by statute, the Certificate of Incorporation or these Bylaws, it shall not
mean personal notice unless so specified, but such notice may be given in
writing by depositing the same in a post office, letter box, or mail chute
postage prepaid and addressed to the person to whom such notice is directed
at the address of such person on the records of the Corporation, and such
notice shall be deemed given at the time when the same shall be thus mailed.
9.2 Waivers. Any stockholder, director or officer may, in writing or
by telegram or cable, at any time waive any notice or other formality required
by statute, the Certificate of Incorporation or these Bylaws. Such waiver of
notice, whether given before or after any meeting or action, shall be deemed
equivalent to notice. Presence of a stockholder either in person or by proxy
at any meeting of stockholders and presence of any director at any meeting of
the Board of Directors shall constitute a waiver of such notice as may be
required by any statute, the Certificate of Incorporation or these Bylaws.
ARTICLE X
SEAL
The corporate seal of the Corporation shall be in such form as the Board
of Directors shall determine from time to time and may consist of a facsimile
thereof or the words "Corporate Seal" or "Seal" enclosed in parentheses.
In the absence of the Secretary, any other officer of the Corporation
may affix and attest the seal of the Corporation to any instrument requiring
it, unless otherwise provided by resolution of the Board of Directors.
ARTICLE XI
POWERS OF ATTORNEY
The Board of Directors may authorize one or more of the officers of the
Corporation to execute powers of attorney delegating to named representatives
or agents power to represent or act on behalf of the Corporation, with or
without power of substitution.
In the absence of any action by the Board of Directors, any officer of
the Corporation may execute for and on behalf of the Corporation waivers of
notice of meetings of stockholders and proxies for such meetings of any
company in which the Corporation may hold voting securities.
ARTICLE XII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER PERSONS
12.1 Action Other Than by or in the Right of the Corporation. Subject
to Section 12.3 hereof, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
and whether external or internal to the Corporation (other than a judicial
action or suit brought by or in the right of the Corporation), by reason of
the fact that he is or was a director or officer of the Corporation, or is or
was serving at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
(all such persons being referred to hereafter as an "Agent"), against expenses
(including attorneys' fees), judgments. fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in an manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, that he had reasonable
cause to believe that his conduct was unlawful.
12.2 Action by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed judicial action or suit
brought by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that he is or was an Agent against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity of such expenses which the Court
of Chancery or other such court shall deem proper.
12.3 Determination of Right of Indemnification. Any indemnification
under Sections 12.1 or 12.2 hereof (unless ordered by a court) shall be made
by the Corporation unless a determination is reasonably and promptly made
(i) by the Board of Directors by a majority vote of a quorum consisting of
directors who are or were not parties to such action, suit or proceeding, or
(ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum
of disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders, that such person acted in bad
faith and in a manner that such person did not believe to be in or not opposed
to the best interests of the Corporation, or, with respect to any criminal
proceeding, that such person believed or had reasonable cause to believe that
his conduct was unlawful.
12.4 Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article XII, to the extent that
an Agent has been successful on the merits or otherwise, including the
dismissal of an action without prejudice or the settlement of an action
without admission of liability, in defense of any proceeding or in defense of
any claim, issue or matter therein, such Agent shall be indemnified against
all expenses incurred in connection therewith.
12.5 Advances of Expenses. Except as limited by Section 12.6. expenses
incurred in defending or investigating any action, suit, proceeding or
investigation shall be paid by the Corporation in advance of the final
disposition of such matter, if the Agent shall undertake to repay such amount
in the event that it is ultimately determined, as provided herein, that such
person is not entitled to indemnification. However, no advance shall be made
by the Corporation if a determination is reasonably and promptly made by the
Board of Directors by a majority vote of a quorum of disinterested directors,
or (if such a quorum is not obtainable or, even if obtainable, a quorum of
disinterested directors so directs) by independent legal counsel in a written
opinion, that, based upon the facts known to the Board of Directors or counsel
at the time such determination is made, such person acted in bad faith and in
a manner that such person did not believe to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal proceeding,
that such person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the Board
of Directors or independent legal counsel reasonably determines that such
person deliberately breached his duty to the Corporation or its stockholders.
12.6 Right of Agent to Indemnification Upon Application; Procedure Upon
Application. Any indemnification under Sections 12.2, 12.3 and 12.4 hereof
or advance under Section 12.5 hereof shall be made promptly and in any event
within 45 days, upon the written request of the Agent, unless with respect to
applications under Sections 12.2, 12.3 or 12.5 hereof, a determination is
reasonably and promptly made by the Board of Directors by a majority vote of
a quorum of disinterested directors that such Agent acted in a manner set
forth in such Sections as to justify the Corporation not indemnifying or
making an advance to the Agent. In the event no quorum of disinterested
directors is obtainable, the Board of Directors shall promptly direct that
independent legal counsel shall decide whether the Agent acted in the manner
set forth in such Sections as to justify the Corporation not indemnifying or
making an advance to the Agent. The right to indemnification or advances as
granted by this Article XIl shall be enforceable by the Agent in any court of
competent jurisdiction if the Board of Directors or independent legal counsel
denies the claim, in whole or in part, or if no disposition of such claim is
made within 45 days. The Agent's expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part,
in any such proceeding shall also be indemnified by the Corporation.
12.7 Other Rights and Remedies. The indemnification provided by this
Article XII shall not be deemed exclusive of any other rights to which an
Agent seeking indemnification may be entitled under any agreement, vote of
stockholders or disinterested directors, court order or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. It is the policy of the Corporation that indemnification
of Agents shall be made to the fullest extent permitted by law. All rights
to indemnification under this Article XII shall be deemed to be provided by
a contract between the Corporation and the Agent who serves in such capacity
at any time while these Bylaws and other relevant provisions of the General
Corporation Law of the State of Delaware and other applicable law, if any, are
in effect. Any repeal or modification thereof shall not affect any rights or
obligations then existing.
12.8 Insurance of Agents. To the extent permitted by Delaware law, the
Corporation may purchase and maintain insurance on behalf of any person who
is or was an Agent against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability
under the provisions of this Article XII.
12.9 Certain Definitions. For purposes of this Article XII, references
to the "Corporation" shall include, in addition to the resulting or surviving
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power to indemnify its directors,
officers and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this Article XII
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued; references to "other enterprises" in Section 1 shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed a person with respect to any employee benefit plan; and references
to "serving at the request of the Corporation" shall include any service as
a director or officer of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to any employee benefit
plan, its participants, or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article XII.
12.10 Indemnification and Insurance of Other Persons. The
provisions of this Article XII shall not be deemed to preclude the Corporation
from either indemnifying or purchasing and maintaining insurance on behalf of,
or both, any person who is not an Agent but whom the Corporation has the power
or obligation to indemnify or insure under the provisions of the General
Corporation Law of the State of Delaware or otherwise. The Corporation may,
in its sole discretion, indemnify or insure, or both, an employee, trustee or
other agent as permitted by the General Corporation Law of the State of
Delaware. The Corporation shall indemnify or insure any employee, trustee or
other agent where required by law.
12.11 Survival of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article XII
shall continue as to a person who has ceased to be an Agent and shall inure
to the benefit of the heirs, executors and administrators of such Agent.
12.12 Savings Clause. If this Article XII or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each Agent against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether internal or external, including
a grand jury proceeding and an action or suit brought by or in the right of
the Corporation, to the full extent permitted by any applicable portion of
this Article XII that shall not have been invalidated, or by any other
applicable law.
ARTICLE XIII
AMENDMENTS
Unless otherwise provided by law, the Certificate of Incorporation or
another provision of these Bylaws, these Bylaws may be amended or repealed
either:
(a) at any meeting of stockholders at which a quorum is present
by vote of the holders of a majority of the number of shares of stock
entitled to vote present in person or by proxy at such meeting as
provided in Article II, Sections 2.4 and 2.5 of these Bylaws, or
(b) at any meeting of the Board of Directors by a majority vote
of the directors then in office;
provided the notice of such meeting of stockholders or directors or waiver of
notice thereof contains a statement of the substance of the proposed amendment
or repeal.
01773106.W51
TABLE OF CONTENTS
<PAGE>
ARTICLE I PURPOSE OF PLAN
ARTICLE II DEFINITIONS AND CONSTRUCTION
ARTICLE III SUPPLEMENTAL RETIREMENT BENEFITS
ARTICLE IV RETIREMENT OF PARTICIPANTS
ARTICLE V VESTING AND DISTRIBUTION OF BENEFITS
ARTICLE VI CONDITIONS AND FORFEITURES
ARTICLE VII ADMINISTRATIVE COMMITTEE
ARTICLE VIII MISCELLANEOUS
MORRISON INCORPORATED
EXECUTIVE SUPPLEMENTAL PENSION PLAN
(Effective May 27, 1983)
(Restated June 1, 1986)
NOTE: This document is an important legal instrument with legal
and tax implications. It should be reviewed by legal
counsel prior to adoption.
ARTICLE I
PURPOSE OF PLAN
The purpose of the Plan, as effective May 27, 1983, and as more
fully set forth herein, is to provide supplemental retirement
benefits to Eligible Employees as part of an integrated executive
compensation program. The Plan shall be maintained on an unfunded
basis.
The Plan has been restated in its entirety effective June 1, 1986,
primarily to give a more complete description of the method of
determining plan participation, benefit service, and normal and
early retirement benefits.
<PAGE>
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.01 Definitions:
(a) The term "Annual Base Salary" refers to the base pay and
sales commissions, if payable, received by a Participant
from an Employer during a calendar year, and excluding
any amounts paid to him as overtime, bonuses, incentive
compensation, and contributions to this or any other
pension benefit plan to which an Employer contributes
directly or indirectly.
(b) The term "Accrued Benefit" refers to the annual benefit
to which a Participant would be entitled, determined
pursuant to Section 3.01, based on his Final Base Salary
and his Continuous Service at the date of calculation,
commencing on his Normal Retirement Date in the mode of
a single-life annuity.
(c) The term "Board" refers to the Board of Directors of the
Company, as duly constituted from time-to-time.
(d) The term "Committee" refers to those three members of the
Board who shall be appointed by the Board to manage and
administer the Plan in accordance with the provisions of
Article VII hereof.
(e) The term "Company" refers to Morrison Incorporated, a
Florida corporation, having its administrative offices in
Mobile, Alabama.
(f) The term "Continuous Service" refers to the period of
unbroken employment of an Employee with the Company or
one or more of its subsidiaries from his last date of
employment, but shall not include a period of employment
beyond the Participant's Normal Retirement Date.
Continuous Service shall not include a period of
employment subsequent to an Employee's participation in
this Plan if the Employee's HAY points are less than 850
in the period. Furthermore, Continuous Service shall not
include a period of employment subsequent to an
Employee's participation in this Plan if the Committee
has expressly terminated an Employee's participation in
this Plan.
Continuous Service of an Employee shall not be broken by
and shall include the periods of:
(1) his absence in the Armed Forces of the United
States or any of its allies in time of war in which
the United States shall be engaged, or in the Armed
Forces of the United States while any form of law
requiring compulsory military service shall be in
effect, if the Employee directly enters such Armed
Forces and does not reenlist after the date of
first entering and makes application for
reemployment by the Company within ninety (90)
days, or such longer period as may be prescribed by
applicable law, after discharge or release from
such Armed Forces or from hospitalization
continuing for a period of not more than one year
after discharge or release from such Armed Forces
and is reemployed by the Company; and/or
(2) his absence because of lay-off not in excess of one
(1) years if the Employee returns to employment
with the Company when notified of his recall to
work.
An Employee whose Continuous Service has been
broken because of termination employment and who is
thereafter reemployed by the Company shall be
deemed to be newly employed for all purposes of the
Plan and any previous service shall be disregarded
for purposes of the Plan.
An Employee whose Continuous Service has been
broken because his HAY points have dropped to less
than 850 or because the Committee acted to
terminate his participation in the Plan and who
subsequently has 850 or more HAY points or who
subsequently has his participation in this Plan
reinstated by action of the Committee shall have
his periods of Continuous Service aggregated for
purposes of calculating his Accrued Benefit.
(g) The term "Effective Date" shall mean May 27, 1983.
(h) The term "Eligible Employee" refers to any individual
employed on a full-time basis by the Company or one or
more of its subsidiaries, who has earned at least 850 HAY
points, has three (3) years of service as a year of
service is defined in Morrison Incorporated Retirement
Plan, and has been selected for participation by the
Committee.
(i) The term "Final Base Salary" refers to the dollar amount
determined by obtaining the average of the Participant's
Annual Base Salary over the five (5) consecutive Plan
Years which produce the highest average. If the
Participant retires, terminates employment, or ceases to
accrue Continuous Service due to a drop in HAY points or
action of the Committee, his Annual Base Salary for the
final partial year of participation shall be annualized
for purposes of calculating the Final Base Salary.
As an example of the manner in which this definition is
intended to operate, assume a Participant earns an Annual
Base Salary of Sixty Thousand Dollars ($60,000) in the
fourth and third Plan Years preceding the Plan Year in
which he reaches his Normal Retirement Date, and an
Annual Base Salary of Eighty Thousand Dollars ($80,000)
in the second and first Plan Years preceding such year,
as well as in the year of his normal retirement. Assume
further that in all other Plan Years, the Participant's
Annual Base Salary was less than $60,000. Based on such
assumptions, the Participant's Final Base Salary will
equal:
$ 60,000
60,000
80,000
80,000
80,000 $360,000
--------- --------- =$72,000
$360,000 5
(j) The term "Normal Retirement Date" refers to the 65th
anniversary of the Participant's birth.
(k) The term "Participant" refers to any Eligible Employee
upon his entry into the Plan. Upon retirement,
termination of employment, or if a Participant's HAY
points drop to less then 850 or if the Committee acts to
terminate the participation of an Employee under this
Plan, such Employee's status as a Participant will be
terminated, and he will be classified as a former
Participant.
(l) The term "Plan" refers to the unfunded supplemental
retirement plan embodied herein, as amended from time-to-
time, to be known as the Morrison Incorporated Executive
Supplemental Pension Plan.
(m) The term "Plan Year" refers to any calendar year within
which the Plan shall be in effect.
(n) The term "Primary Social Security Benefit" means the
annual primary insurance amount available to the
Participant at age 65 under the Social Security Act as in
effect at the date of calculation, without regard to
whether such amount actually commences to be paid and
without regard to any increase in the Social Security
Base or benefit levels that may take effect after such
date of calculation.
The Primary Social Security Benefit will be calculated as
though the Participant had a full Social Security
Earnings Record and as though the Participant always
earned at least the Social Security Taxable Wage Base.
The date of calculation will be the retirement date,
termination date, date when HAY points drop below 850, or
date of cessation of participation as determined by the
Committee, whichever is applicable. The Primary Social
Security Benefit will be calculated based on the Social
Security Law in effect on the first day of the calendar
year of the date of calculation, and assuming constant
Social Security Taxable Wage Bases for the future years.
2.02 Construction:
(a) Words used herein in the masculine or feminine gender
shall be construed as the feminine or masculine gender,
respectively, where appropriate.
(b) Words used herein in the singular or plural shall be
construed as the plural or singular, respectively, where
appropriate.
<PAGE>
ARTICLE III
SUPPLEMENTAL RETIREMENT BENEFITS
3.01 Amount of Benefit:
A Participant's Accrued Benefit payable at Normal Retirement
Date in the form of single life annuity shall equal (A) plus
(B) minus (C) minus (D) as follows:
(A) 2.5% of the Participant's Final Base Salary multiplied by
the Participant's years and fractional years of
Continuous Service not in excess of twenty (20) years of
Continuous Service; plus
(B) 1% of the Participant's Final Base Salary multiplied by
the Participant's years and fractional years of
Continuous Service in excess of twenty (20) years of
Continuous Service, but not in excess of thirty (30) such
years; less
(C) The retirement benefit payable at Normal Retirement Date
in the form of a single life annuity to the Participant
under the Morrison Incorporated Retirement Plan; less
(D) The Participant's Primary Social Security Benefit,
calculated in accordance with Section 2.01(n).
For purposes of this Section 3.01, each completed month of
Continuous Service shall equal one-twelfth (1/12th) of a year
of Continuous Service.
3.02 Distribution of Benefits:
Benefits accrued hereunder shall be paid in accordance with
Article V.
3.03 Encumbrance of Award:
No Participant or beneficiary of a Participant shall have any
right to commute, encumber, transfer or otherwise dispose of
or alienate any present or future right or expectancy which he
may have at any time to receive payment of benefits, which
benefits and the right thereto are expressly declared to be
non-assignable and non-transferable. Any attempt to transfer
or assign a benefit, or any rights granted hereunder, by a
Participant or his beneficiaries shall, in the sole discretion
of the Committee after consideration of such facts as it deems
pertinent, be grounds for terminating any rights of the
Participant and his beneficiaries to any portion of the
benefits not previously paid by the Company.
ARTICLE IV
RETIREMENT OF PARTICIPANTS
4.01 Normal Retirement:
A Participant may continue in the service of the Company
beyond his Normal Retirement Date, but shall not be permitted
to continue in the employ of the Company without first
obtaining the Company's consent, subsequent to the age at
which the Company may require the retirement of the
Participant under applicable federal and state laws. If a
Participant continues in service beyond his Normal Retirement
Date, he shall be deemed to be retired upon his Postponed
Retirement Date as determined under the Morrison Incorporated
Retirement Plan.
4.02 Early Retirement:
A Participant may retire from service with the Company or any
of its subsidiaries prior to reaching his Normal Retirement
Date and commence receiving benefits from this Plan if
eligible for Early Retirement under the terms of the Morrison
Incorporated Retirement Plan. The Accrued Benefit under this
Plan, as described in Section 3.01, will be reduced for Early
Retirement using the same factors as are used in the Morrison
Incorporated Retirement Plan, namely:
Age Early Retirement Factor
64 .93
63 .86
62 .79
61 .72
60 .65
59 .62
58 .59
57 .56
56 .53
55 .50
A Participant must commence receiving benefits under this Plan
at the same time as he commences receiving benefits under the
Morrison Incorporated Retirement Plan.
ARTICLE V
VESTING AND DISTRIBUTION OF BENEFITS
5.01 Vesting:
A Participant's Accrued Benefit shall vest in the Participant
at such time as he reaches his Normal or Early Retirement
Date. If a Participant terminates employment other than by
retirement or death, he shall be vested in his Accrued Benefit
is he has completed ten (10) or more Years of Service
determined under the Morrison Incorporated Retirement Plan. If
a Participant terminates employment other than by retirement
or death and has not completed ten (10) or more Years of
Service determined under the Morrison Incorporated Retirement
Plan, he shall not be vested in his Accrued Benefit, his
Accrued Benefit shall be cancelled and he shall not be
entitled to any further benefits from the Plan.
5.02 Payment of Benefits:
When a Participant reaches his Normal Retirement Date, retires
by reason of the Early Retirement provisions of the Plan
(Section 4.02), or otherwise terminates his service with the
Company or any of its subsidiaries, the Committee shall
determine and certify to the Treasurer of the Company the
vested Accrued Benefit of the Participant, if any, and shall
further determine and certify the method by which payments
shall be made. The Company shall thereafter make payments of
the benefits in the manner and at the times so designated,
subject, however, to all other terms and conditions of the
Plan.
A benefit payable under this Plan shall be paid in the same
form and at the same time as the retirement benefit payable to
the retired Participant under the Morrison Incorporated
Retirement Plan. If the benefit payable under this Plan is
paid other than as a life annuity, the amount of the benefit
when paid in such other form shall be determined by using the
actuarial equivalence factors of the Morrison Incorporated
Retirement Plan.
5.03 Death of Participant:
If a Participant shall die during the term of his employment
with the Company or any of its subsidiaries, and prior to his
retirement or other termination from service, the said
employment shall be deemed to have terminated on the date of
the Participant's death and the Company shall have no further
obligation to the Participant, his estate, heirs or
beneficiaries under this Plan, it being specifically the
intention of the Board in creating this Plan that it
supplement, by way of providing living retirement benefits,
the existing insurance benefit program which will protect the
interests of the families of executive employees who die while
in the Continuous Service of the Company or any of its
subsidiaries.
If a Participant shall die after his retirement or other
termination of service, benefit payments shall continue to the
Participant's designated beneficiaries, or his estate, at such
times and in such manner, as is provided for under the form of
payment determined under the provisions of Section 6.02 of the
Plan. Each Participant shall notify the Committee in writing
of the name and address of his primary alternative
beneficiaries, which may be changed from time-to-time by the
Participant by written notice delivered to the Committee.
<PAGE>
ARTICLE VI
CONDITIONS AND FORFEITURES
If a Participant's Continuous Service is terminated because of his
proven or admitted fraud or dishonesty of a material nature, his
willful damage to the property, reputation or goodwill of the
Company, or any of its subsidiaries, his conviction of a felony,
his willful and material insubordination or violation of Company
rules, and/or his gross neglect of duties assigned by the Company;
and if such act or action adversely affects the Company in a
substantial respect, then notwithstanding any other provision of
this Plan, the Committee may determine that any benefits to which
such Participant might otherwise have been entitled under the Plan
shall be forfeited. The decision of the Committee with respect to
sufficiency of the proof or admission of such act or action, the
substantially adverse effect thereof, and the forfeiture resulting
therefrom, as long as made with consistency and sound judgment,
shall be final and binding.
<PAGE>
ARTICLE VII
ADMINISTRATIVE COMMITTEE
7.01 Service, Resignation, Removal:
Members of the Committee shall serve at the pleasure of the
Board and any or all members may be removed by the Board at
any time, with or without cause or notice. Upon the death,
resignation, removal or inability to serve of any member of
the Committee, as now or hereafter constituted (and of such
inability the Board shall be the sole judge), the Board shall
name the successor of such member.
7.02 Procedure:
A majority of the members of the Committee shall constitute a
quorum for any meeting held with respect to the Plan, and the
acts of a majority of the members present at any meeting at
which a quorum is present or the acts unanimously approved in
writing by all such members shall be valid acts of the
Committee.
7.03 Powers and Duties:
The Committee shall have the power and duty to do all things
necessary or convenient to effect the intent and purposes of
the Plan and not inconsistent with any of the provisions
hereof, whether or not such powers and duties are specifically
set forth herein, and, in amplification and not limitation of
the foregoing, the Committee shall have power to:
(a) provide rules and regulations for the administration of
the Plan, and from time-to-time, to amend or supplement
such rules and regulations;
(b) construe the Plan, which construction, as long as made in
good faith, shall be final and conclusive upon all
parties thereto;
(c) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such
extent as it shall deem expedient to carry the same into
effect, and it shall be the sole and final judge of when
such action shall be appropriate.
7.04 Finality of Action:
The acts and determinations of the Committee within the powers
conferred by the Plan shall be final and conclusive for all
purposes of the Plan and shall not be subject to appeal or
review by persons or entities other than the Board.
7.05 Liability:
No member of the Committee shall be directly or indirectly
responsible or under any liability by reason of any action or
default by him as a member of the Committee, or the exercise
of or failure to exercise any power or discretion as such
member, except for his own fraud or willful misconduct; and no
member of the Committee shall be liable in any way for the
acts or defaults of any other member of the Committee or any
of its advisors, agents or representatives. The Company shall
indemnify and save harmless each member of the Committee
against any and all expenses and liabilities arising out of
his own membership on the Committee, except expenses and
liabilities arising out of his own fraud or willful
misconduct.
7.06 Compensation and Expenses:
The members of the Committee may receive such reasonable
compensation for their services as may be authorized from
time-to-time by the Board, and except as otherwise provided
above, shall be entitled to receive their reasonable expenses
incurred in administering the Plan. Any such compensation and
expenses, as well as extraordinary expenses authorized by the
Board, shall be paid by the Company.
7.07 Information Furnished to Committee:
The Company shall furnish to the Committee in writing all
information the Company deems appropriate for the Committee to
exercise its powers and duties in administration of the Plan.
Such information may include, but shall not be limited to, the
names of all Eligible Employees, their Annual Base
Compensation, and their dates of birth, employment,
termination of employment, retirement or death. Such
information shall be conclusive for all purposes of the Plan
and the Committee shall be entitled to rely thereon without
any investigation thereof; provided, however, that the
Committee may correct any errors discovered in any such
information.
7.08 Examination by Participants:
The Committee shall make available to each Participant for
examination by him, at the principal office of the Company or
at such other location as may be reasonably convenient to him,
a copy of the Plan and such of its records or copies thereof
as may pertain toe any benefits of such Participant under the
Plan.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.01 Unfunded Plan:
Any Participant who may have or claim any interest in or right
to any compensation, payment or benefit payable hereunder,
shall rely solely upon the unsecured promise of the Company as
set forth herein for the payment thereof, and nothing herein
contained shall be construed to give to or vest in the
Participant or any other person now or at any time in the
future, any right, title, interest or claim in or to any
specific asset, fund, reserve, account or property of any kind
whatever owned by the Company or in which it may have any
right, title or interest now or at any time in the future.
8.02 Additional Benefits:
It is agreed and understood that any benefits accrued under
this Plan are in addition to any and all employee benefits to
which a Participant may otherwise be entitled under any other
contract, arrangement or voluntary pension, profit sharing or
other compensation plan of the Company, and that this Plan
shall not affect or impair the rights or obligations of the
Company or a Participant under any other such contract,
arrangement or voluntary plan.
8.03 Modification and Cancellation:
This Plan may be amended, modified, suspended or terminated by
the Board as and when it deems such action necessary; however,
no such action shall have the effect of terminating or voiding
a Participant's contractual right to receive that portion of
any award made hereunder which shall have vested in him as of
the time of such Board action.
8.04 Enforceability:
If any term or condition of the Plan shall be invalid or
unenforceable to any extent or in any application, then the
remainder of the Plan, and such term or condition except to
such extent or in such application, shall not be affected
thereby, and each and every term and condition of the Plan
shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
8.05 Notices:
All notices or other communications permitted to be given or
called for pursuant to the Plan shall be in writing and shall
be considered as properly given or made if hand delivered,
mailed from within the United States by certified or
registered mail, or sent by prepaid telegram:
(1) If to the Company, in care of its President and Chief
Executive Officer, 4721 Morrison Drive, P.O. Box 162066,
Mobile, Alabama 36625.
(2) If to a Participant, in care of him at such address as he
shall have provided in writing to the Committee, or in
the absence thereof, to such other address as shall
appear on the books of the Company.
20742508.W51
<PAGE>
FIRST AMENDMENT TO THE
MORRISON INCORPORATED
EXECUTIVE SUPPLEMENTAL PENSION PLAN
THIS FIRST AMENDMENT, made as of the 30th day of June , 1994, by
MORRISON RESTAURANTS INC., f/k/a Morrison Incorporated, a corporation duly
organized and existing under the laws of the State of Delaware (the "Primary
Sponsor");
W I T N E S E T H:
WHEREAS, the Primary Sponsor maintains the Morrison Incorporated
Executive Supplemental Pension Plan under a restated indenture effective as
of June 1, 1986 (the "Plan"); and
WHEREAS, the Primary Sponsor now desires to amend the Plan in order to
make certain changes to its eligibility provisions and for other reasons;
NOW, THEREFORE, the Primary Sponsor does hereby amend the Plan,
effective January 1, 1994, as follows:
1. By deleting existing Section 2.01(d) in its entirety and by substituting
therefor the following: "[Reserved]." In addition, the term "Plan
Administrator" shall be substituted in lieu of the term "Committee" each time
the latter term appears in the Plan.
2. By deleting existing Section 2.01(e) in its entirety and by substituting
therefor the following:
"(e) The term `Company' refers to Morrison Restaurants Inc., f/k/a
Morrison Incorporated, a Delaware corporation."
3. By deleting the existing second and final paragraphs of Section 2.01(f)
in their entirety and by substituting therefor the following:
"With respect to Eligible Employees who were Participants in the Plan
prior to January 1, 1994, Continuous Service shall not include any
period of employment subsequent to an Employee's participation in the
Plan from and after the date the Plan Administrator has expressly
terminated an Employee's participation in the Plan, unless and until he
or she thereafter qualifies as an Eligible Employee in accordance with
the provisions of the immediately succeeding sentence. With respect to
Eligible Employees who first become Participants in the Plan after
December 31, 1993, Continuous Service shall not include any period of
employment subsequent to an Employee's participation in the Plan (i)
during which the Employee no longer holds any one of the Qualifying
Positions, (ii) following three (3) consecutive Plan Years during which
the Participant failed to earn an annual salary, plus bonus, of at least
$120,000 (as adjusted in accordance with Plan Section 2.01(h)); or (iii)
from and after the date the Plan Administrator has expressly terminated
an Employee's participation in the Plan. An Eligible Employee who
experiences a break in Continuous Service as described in this paragraph
who again becomes an Eligible Employee or who is reinstated by action
of the Plan Administrator shall have his periods of Continuous Service
aggregated for purposes of calculating his Accrued Benefit, but in no
event shall such aggregated periods of Continuous Service include
periods during which the Employee no longer holds any Qualifying
Position; any period of employment during which the Employee is not an
Eligible Employee following a three-consecutive Plan Year period in
which the Employee failed to earn at least $120,000 (as adjusted in
accordance with Plan Section 2.01(h)); or after the date the Employee's
participation in the Plan has been expressly terminated by the Plan
Administrator unless and until both the Plan Administrator reverses that
decision and the Employee otherwise qualifies as an Eligible Employee."
4. By deleting Section 2.01(h) in its entirety and by substituting therefor
the following:
"(h) The term `Eligible Employee' means, prior to January 1, 1994, an
individual employed on a full-time basis by the Company or one or
more of its subsidiaries who has earned at least 850 HAY points,
has been credited with at least three (3) `Years of Service,' as
defined under the Morrison Incorporated Retirement Plan and has
been selected for participation by the Plan Administrator and,
after December 31, 1993, an individual employed on a full-time
basis by the Company or one or more of its subsidiaries who earned
an average salary, plus bonus, of at least $120,000 (or such
greater amount as may be determined by the Plan Administrator from
time to time) during the last two (2) Plan Years immediately
preceding the first day of the Plan Year in which an Eligible
Employee becomes a Participant and who has completed at least five
(5) full years of consecutive service, on a calendar-year basis
or otherwise, during which the Employee has held one or more
Qualifying Positions."
5. By deleting the second sentence of the first paragraph of Section
2.01(i) and by substituting therefor the following:
"If the Participant retires, terminates employment or ceases to accrue
Continuous Service in accordance with Plan Section 2.01(f), his Annual
Base Salary for the final partial year of participation shall be
annualized for purposes of calculating Final Base Salary."
6. By deleting the second sentence of Section 2.01(k) and by substituting
therefor the following:
"An Eligible Employee shall become a Participant as of the January 1st
immediately following the date the eligibility criteria stated in Plan
Section 2.01(h) are satisfied. Upon retirement, termination of
employment or cessation of the accrual of Continuous Service in
accordance with Plan Section 2.01(f), a Participant's status shall
become that of a former Participant."
7. By substituting the name "Morrison Restaurants Inc. Executive
Supplemental Pension Plan" for the name "Morrison Incorporated Executive
Supplemental Pension Plan" in Section 2.01(l).
8. By adding new Section 2.01(l)(l), immediately after Section 2.01(l), as
follows:
"(l)(l) The term `Plan Administrator' shall mean the organization
or person designated to administer the Plan by the Board of
Directors or, in lieu of any such designation, the
Company."
9. By deleting the first sentence of the third paragraph of Section 2.01(n)
and by substituting therefor the following:
"The date of calculation will be the retirement date, termination date
or date of the cessation of the accrual of Continuous Service in
accordance with Plan Section 2.01(f), whichever is applicable."
10. By adding new Section 2.01(o) as follows:
"(o) "Qualifying Position" means one or more of the positions within
the Company's organizational hierarchy identified in Appendix A hereto,
as the same may be amended from time to time hereafter by the Chief
Executive Officer of the Company.
11. By deleting Article VII in its entirety and by substituting therefor the
following:
"VIII. ADMINISTRATION OF THE PLAN
A. Operation of the Plan Administrator The Company shall be
the Plan Administrator, unless it appoints another Plan Administrator.
If an organization is appointed to serve as the Plan Administrator, then
the Plan Administrator may designate in writing a person who may act on
behalf of the Plan Administrator. The Company shall have the right to
remove the Plan Administrator at any time by notice in writing. The
Plan Administrator may resign at any time by written notice of
resignation to the Company. Upon removal or resignation, or in the
event of the dissolution of the Plan Administrator, the Company shall
appoint a successor.
B. Duties of the Plan Administrator
1. The Plan Administrator shall perform any act which the
Plan authorizes or requires of the Plan Administrator by action
taken in compliance with the Plan and may designate in writing
other persons to carry out its duties under the Plan. The Plan
Administrator may employ persons to render advice with regard to
any of the Plan Administrator's duties.
2. The Plan Administrator shall from time to time
establish rules, not contrary to the provisions of the Plan, for
the administration of the Plan and the transaction of its
business. All elections and designations under the Plan by a
participating Employee or beneficiary shall be made on forms
prescribed by the Plan Administrator. The Plan Administrator
shall have discretionary authority to construe the terms of the
Plan and shall determine all questions arising in the
administration, interpretation and application of the Plan,
including, but not limited to, those concerning eligibility for
benefits and it shall not act so as to discriminate in favor of
any person. All determinations of the Plan Administrator shall
be conclusive and binding on all Employees and beneficiaries,
subject to the provisions of the Plan and subject to applicable
law.
3. The Plan Administrator shall furnish Employees and
Beneficiaries with all disclosures now or hereafter required by
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Plan Administrator shall file, as required, the
various reports and disclosures concerning the Plan and its
operations as required by ERISA and by the Internal Revenue Code,
and shall be solely responsible for establishing and maintaining
all records of the Plan.
4. The statement of specific duties for a Plan
Administrator in this Section are not in derogation of any other
duties which a Plan Administrator has under the provisions of the
Plan or under applicable law.
5. The Company shall indemnify and hold harmless each
person constituting the Plan Administrator from and against any
and all claims and expenses (including, without limitation,
attorney's fees and related costs) arising in connection with the
performance by the person of his or her duties in that capacity,
other than any of the foregoing arising in connection with the
willful neglect or willful misconduct of the person acting.
C. Action by the Company Any action to be taken by the
Company shall be taken by resolution or written direction duly adopted
by the Board or appropriate governing body, as the case may be;
provided, however, that by such resolution or written direction, the
Board or appropriate governing body, as the case may be, may delegate
to any officer or other appropriate person of the Company the authority
to take any such actions as may be specified in such resolution or
written direction, other than the power to amend or terminate the Plan
or to determine the basis of any payment obligations of the Company.
D. CLAIM REVIEW PROCEDURE
1. In the event that an Employee or beneficiary is denied
a claim for benefits under the Plan, the Plan Administrator shall
provide to such claimant written notice of the denial which shall
set forth:
a. the specific reasons for the denial;
b. specific references to the pertinent provisions
of the Plan on which the denial is based;
c. a description of any additional material or
information necessary for the claimant to perfect the claim
and an explanation of why such material or information is
necessary; and
d. an explanation of the Plan's claim review
procedure.
2. After receiving written notice of the denial of a
claim, a claimant or his or her representative may:
a. request a full and fair review of such denial
by written application to the Plan Administrator;
b. review pertinent documents; and
c. submit issues and comments in writing to the
Plan Administrator.
3. If the claimant wishes such a review of the decision
denying his or her claim to benefits under the Plan, he or she
must submit such written applications to the Plan Administrator
within sixty (60) days after receiving written notice of the
denial.
4. Upon receiving such written application for review,
the Plan Administrator may schedule a hearing for purposes of
reviewing the claimant's claim, which hearing shall take place not
more than thirty (30) days from the date on which the Plan
Administrator received such written application for review.
5. At least ten (10) days prior to the scheduled hearing,
the claimant and his or her representative designated in writing
by him or her, if any, shall receive written notice of the date,
time, and place of such scheduled hearing. The claimant or his
or her representative, if any, may request that the hearing be
rescheduled, for his or her convenience, on another reasonable
date or at another reasonable time or place.
6. All claimants requesting a review of the decision
denying their claim for benefits may employ counsel for purposes
of the hearing.
7. No later than sixty (60) days following the receipt
of the written application for review, the Plan Administrator
shall submit its decision on the review in writing to the claimant
involved and to his or her representative, if any; provided,
however, a decision on the written application for review may be
extended, in the event special circumstances such as the need to
hold a hearing require an extension of time, to a day no later
than one hundred twenty (120) days after the date of receipt of
the written application for review. The decision shall include
specific reasons for the decision and specific references to the
pertinent provisions of the Plan on which the decision is based.
Except as specifically provided herein, the Plan shall remain in full
force and effect as prior to this First Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed as the day and year first above written.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President and Chief Executive
Officer
[CORPORATE SEAL]
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel & Secretary
<PAGE>
APPENDIX A
EXECUTIVE SUPPLEMENTAL PENSION PLAN
ELIGIBLE POSITIONS
President-Chief Executive Officer
Chairman of the Board
President-RTG
President-FDG
President-Health Care
President-Business & Industry
Senior Vice President Marketing-Corp.
Senior Vice President, Human Resources-Corp.
Senior Vice President, Legal-Corp.
Vice President, Finance-Corp.
Vice President, Controller and Treasurer
Senior Vice President, Operations-FDG
Senior Vice President, Operations-RTG
Vice President-Design Construction-RTG
Vice President, Operations-Silver Spoons
Vice President, Financial Planning
Vice President, Controller-RTG
Vice President, Legal-Real Estate
Vice President-Real Estate
Vice President, Human Resources-FDG
Vice President, Human Resources-Health Care
Vice President, Human Resources-RT
Vice President, Ind. Rel.-MHG
Vice President, Controller-FDG
Senior Vice President, Development-FDG
Vice President, Marketing-FDG
Vice President, Controller-MHG
Regional Vice President-Health Care
Regional Vice President-Business & Industry
Vice President, Real Estate-FDG
Director, Operations-FDG
Vice President-Nutritional Services
Vice President-Vending
Vice President-Sales
Regional Director-RTG
Vice President, Human Resources-Business & Industry
MORRISON RESTAURANTS INC.
DEFERRED COMPENSATION PLAN
(As Restated Effective January 1, 1994)
THIS INDENTURE made on the 31 day of December , 1993, by MORRISON
RESTAURANTS INC., a corporation duly organized and existing under the laws
of the State of Delaware (hereinafter called the "Primary Sponsor");
W I T N E S S E T H:
WHEREAS, Primary Sponsor established by indenture effective as of
January 1, 1988 the Morrison Incorporated Deferred Compensation Plan for the
benefit of a select group of management and highly compensated employees,
which was amended and restated by indenture dated December 18, 1989 and which
was last amended by indenture dated December 1, 1992 (the Plan");
WHEREAS, the Primary Sponsor and certain of its affiliates also
maintain the Morrison Restaurants Inc. Salary Deferral Plan, a defined
contribution plan under which eligible employees may contribute on a pre-tax
basis pursuant to a tax-qualified cash or deferred arrangement, within the
meaning of Section 401(k) of the Internal Revenue Code, and to which the
Primary Sponsor and certain of its affiliates make matching contributions
(the "Salary Deferral Plan");
WHEREAS, the Primary Sponsor desires to amend and restate the Plan so
that on and after the effective date of this amendment and restatement the
Plan will benefit primarily those eligible employees whose benefits under,
or contributions on whose behalf to, the Salary Deferral Plan may be limited
by certain provisions of the Internal Revenue Code or by certain provisions
of the Salary Deferral Plan itself;
NOW, THEREFORE, the Primary Sponsor does hereby amend and restate the
Plan, effective January 1, 1994, to read as follows:
<PAGE>
MORRISON RESTAURANTS INC.
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . 3
SECTION 2 ELIGIBILITY . . . . . . . . . . . . . . . . 5
SECTION 3 DEFERRAL ELECTIONS. . . . . . . . . . . . . 5
SECTION 4 CREDITING ACCOUNTS. . . . . . . . . . . . . 7
SECTION 5 HARDSHIP PAYMENTS . . . . . . . . . . . . . 8
SECTION 6 DEATH BENEFITS. . . . . . . . . . . . . . . 9
SECTION 7 PAYMENT OF BENEFITS ON RETIREMENT OR DEATH. . 9
SECTION 8 PAYMENT OF BENEFITS ON OTHER TERMINATIONS OF
EMPLOYMENT. . . . . . . . . . . . . . . . . 10
SECTION 9 ADMINISTRATION OF THE PLAN. . . . . . . . . 10
SECTION 10 CLAIM REVIEW PROCEDURE. . . . . . . . . . . 12
SECTION 11 LIMITATION OF ASSIGNMENT, PAYMENTS TO
LEGALLY INCOMPETENT DISTRIBUTEE AND
UNCLAIMED PAYMENTS. . . . . . . . . . . . . 13
SECTION 12 LIMITATION OF RIGHTS. . . . . . . . . . . . 14
SECTION 13 AMENDMENT TO OR TERMINATION OF THE PLAN . . 14
SECTION 14 ADOPTION OF PLAN BY AFFILIATES. . . . . . . 14
SECTION 15 MISCELLANEOUS . . . . . . . . . . . . . . . 15
<PAGE>
SECTION 1
DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include
the feminine, and the singular to include the plural, unless the context
clearly indicates otherwise, and the following words and phrases shall, when
used herein, have the meanings set forth below:
1.1 "Account" means the bookkeeping accounts established and
maintained by the Plan Administrator to reflect the interest of a Member
under the Plan and shall include the following:
(a) "Company Matching Account" which shall reflect credits to
a Member's Account made on his behalf pursuant to Plan Section 3.2, as
adjusted to reflect designated rates of return and other credits or
charges.
(b) "Employee Deferred Account" which shall reflect credits to
a Member's Account made on his behalf pursuant to Plan Section 3.1, as
adjusted to reflect designated rates of return and other credits or
charges attributable to the investment option selected by the Member
for the investment of his Account.
1.2 "Accrued Benefit" means the balance of a Member's Account.
1.3 "Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Code Section
414(b)) as is a Plan Sponsor and (b) any other trade or business (whether or
not incorporated) under common control (within the meaning of Code Section
414(c)) with a Plan Sponsor.
1.4 "Annual Compensation" means "Annual Compensation," as that term
is defined under the Salary Deferral Plan, as the same may be amended from
time to time, but without regard to the limit on compensation that may be
recognized under Code Section 401(a)(17).
1.5 "Beneficiary" means the person or trust that a Member designated
most recently in writing to the Plan Administrator; provided, however, that
if the Member has failed to make a designation, no person designated is
alive, no trust has been established, or no successor Beneficiary has been
designated who is alive, the "Beneficiary" means (a) the Member's spouse or
(b) if no spouse is alive, the Member's surviving children, or (c) if no
children are alive, the Member's parents, or (d) if no parent is alive, the
legal representative of the deceased Member's estate. Changes in
designations of Beneficiaries may be made upon written notice to the Plan
Administrator in such form as the Plan Administrator may prescribe.
Notwithstanding the foregoing, if the Member is also a participant in the
Salary Deferral Plan, then "Beneficiary" shall mean the person or persons
determined pursuant to the definition of the term "Beneficiary" under the
Salary Deferral Plan.
1.6 "Board of Directors" means the Board of Directors of the Primary
Sponsor.
1.7 "Change of Control" means any event that pursuant to the
requirements of Article X of the Primary Sponsor's Certificate of
Incorporation, as amended from time to time, requires the affirmative vote
of the holders of not less than eighty percent (80%) of the Voting Stock (as
defined therein); provided, however, that no event shall constitute a Change
of Control if approved by the Board of Directors a majority of whom are
"present directors" and "new directors." For purposes of the preceding
sentence, "present directors" shall mean individuals who as of January 1,
1993 were members of the Board of Directors and "new directors" shall mean
any director whose election by the Board of Directors in the event of a
vacancy or whose nomination for election by the Primary Sponsor's
stockholders was approved by a vote of at least three-quarters of the
directors then still in office who are "present directors" and "new
directors;" provided that any director elected to the Board of Directors
solely to settle a threatened or actual proxy contest shall in no event be
deemed to be a "new director."
1.8 "Code" means the Internal Revenue Code of 1986, as amended.
1.9 "Company Stock Rate of Return" means a designated rate of return
that corresponds, in whole or in part, to changes in the value of securities
of the Primary Sponsor or any affiliate.
1.10 "Deferral Amount" means an amount credited to the Employee
Deferred Account of a Member at the election of a Member pursuant to Plan
Section 3.1. Deferred Amounts and Annual Compensation deferred by a Member
under the Salary Deferral Plan are collectively referred to herein as
"Aggregate Deferral Amounts."
1.11 "Disability" means a disability of a Member within the meaning
of Code Section 72(m)(7), to the extent that the Member is, or would be,
entitled to disability retirement benefits under the federal Social Security
Act, provided the Plan Sponsor has been notified in writing of such
entitlement. The determination of whether or not a Disability exists shall
be determined by the Plan Administrator and shall be substantiated by
competent medical evidence.
1.12 "Effective Date" means, as to the Primary Sponsor, January 1,
1988, and as to each other Plan Sponsor which adopts the Plan, the date
designated as such by the adopting Plan Sponsor.
1.13 "Eligible Employee" means, with respect to any Plan Year
commencing on or after ___________ any Employee of a Plan Sponsor who is
during that Plan Year a "highly compensated employee," within the meaning of
Code Section 414(q), as amended.
1.14 "Employee" means any person who is employed by a Plan Sponsor or
an Affiliate for purposes of the Federal Insurance Contributions Act.
1.15 "Entry Date" means the first day of the first payroll period
coinciding with or next following the date an Eligible Employee is designated
by the Plan Administrator for participation in the Plan.
1.16 "Member" means any Eligible Employee or former Eligible Employee
who has become a participant in the Plan, for so long as his benefits
hereunder have not been paid out.
1.17 "Plan Administrator" means the organization or person designated
by the Primary Sponsor to administer the Plan or, in the absence of any such
designation, Morrison Restaurants Inc.
1.18 "Plan Sponsor" means individually the Primary Sponsor and any
other Affiliate or other entity which has adopted the Plan.
1.19 "Plan Year" means the calendar year.
1.20 "Reporting Person" means each Member who, on a particular date
or dates, the Primary Sponsor reasonably believes is subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, with respect
to equity securities of the Primary Sponsor or any affiliate.
1.21 "Retirement Date" means the first day of the month coinciding
with or immediately following the date on which the Member retires on or
after attaining age 55 or becoming subject to a Disability.
1.22 "Valuation Date" means the last day of each month or any other
day which the Plan Administrator declares to be a Valuation Date.
SECTION 2
ELIGIBILITY
2.1 Each Eligible Employee shall become a Member as of the Entry Date
coinciding with or next following the date on which the Plan Administrator
selects the Eligible Employee for participation in the Plan; provided,
however, that any Eligible Employee who is also eligible to participate in
the Salary Deferral Plan may participate in the Plan no later than the date
that the Eligible Employee is first eligible to participate in the Salary
Deferral Plan.
2.2 A Member who ceases to be an Eligible Employee will no longer be
eligible to make further deferrals under the Plan pursuant to Plan Section
3, but shall continue to be subject to all other terms of the Plan so long
as he remains a Member of the Plan.
2.3 In the event the Member participates in a plan of a Plan Sponsor
or Affiliate intended to qualify under Code Section 401(a) and containing a
tax-qualified cash or deferred arrangement qualified under Code Section
401(k), the Member shall be suspended from continued participation under this
Plan to the extent required by such other plan as a result of a hardship
withdrawal made by such Member under such other plan.
SECTION 3
DEFERRAL ELECTIONS
3.1 Each Plan Year, a Member who is an Eligible Employee and (a) who
is not eligible to participate in the Salary Deferral Plan may elect to defer
under the Plan a portion of the Annual Compensation otherwise payable to him
for the Plan Year, which amount shall be at least two percent (2%) of Annual
Compensation and shall be in increments of one percent (1%) of Annual
Compensation, but not in excess of twenty percent (20%) of Annual
Compensation, or (b) who also is eligible to participate in the Salary
Deferral Plan for all or any portion of the Plan Year, shall indicate on the
election form completed as a participant in the Salary Deferral Plan whether
he elects to defer under the Plan that portion of the Annual Compensation
otherwise payable to him for the Plan Year which can not be deferred under
the Salary Deferral Plan because of one or more of the following limitations:
(i) Section 3.1(a) of the Salary Deferral Plan (reflecting a limit on salary
deferrals by "highly compensated employees," within the meaning of Code
Section 414(q)); (ii) Section 3.1(b) of the Salary Deferral Plan (relating
to the annual limit on salary deferrals set forth in Code Section 402(g));
(iii) Section 1.5 of the Salary Deferral Plan (relating to the limit on
includable compensation as set forth in Code Section 401(a)(17); or
(iv) Appendix B of the Salary Deferral Plan (relating to the limit on "annual
additions," within the meaning of Code Section 415. Any election made
pursuant to Plan Section 3.1(b) shall automatically revoke any election then
in effect pursuant to Plan Section 3.1(a).
3.2 All elections to defer Annual Compensation under Plan
Section 3.1(a) may only be made pursuant to a written agreement between the
Member and the Plan Sponsor which shall be in such form and subject to such
rules and limitations as the Plan Administrator may prescribe and shall
specify the amount of the Annual Compensation of the Member that the Member
desires to defer. The written agreement shall be irrevocable with respect
to the first payroll period or bonus payment for which it becomes effective,
although it may be modified, revoked or suspended for subsequent payroll
periods or bonus payments in accordance with this Section 3.2 and subject to
such rules and limitations as the Plan Administrator may prescribe.
Notwithstanding the foregoing, any such election may be modified, revoked or
suspended only once each calendar quarter, and a Member who revokes or
suspends his election may not reenter the Plan until the next Entry Date
following twenty (20) days after the Member notifies the Plan Administrator
of recommencement. With respect to base salary included in Annual
Compensation, the election to defer must be made before the services for
which the Annual Compensation is payable are performed. With respect to any
bonus payments included in Annual Compensation, the election to defer must
be made before the amount of the bonus payment is determinable and payable.
3.3 (a) Each Plan Sponsor proposes to credit on behalf of each
Member employed by that Plan Sponsor for allocation to that Member's
Company Matching Account an amount equal to (X) reduced by (Y) where:
(i) (X) is an amount equal to (A) twenty percent (20%) of
the Aggregate Deferral Amounts of a Member in the case of a
Member who has been employed by a Plan Sponsor for at least
three (3) years, but fewer than ten (10) years; (B) thirty
percent (30%) of the Aggregate Deferral Amounts of a Member in
the case of a Member who has been employed by a Plan Sponsor for
at least ten (10) years, but fewer than twenty (20) years; or
(C) forty percent (40%) of the Aggregate Deferral Amounts of a
Member in the case of a Member who either (I) has been employed
by a Plan Sponsor for at least twenty (20) years or (II) is
designated by the Plan Administrator, with the consent of the
Plan Sponsor, as one of a select group of Members to receive
such a matching credit; and
(ii) (Y) is the matching contribution actually credited
to the Member for the same period under the Salary Deferral
Plan.
Matching credits under Section 3.3(a)(i) for any Plan Year shall only
be credited with respect to annual Aggregate Deferral Amounts of each
Member equal to the Code Section 402(g) limitation, as adjusted
annually for inflation.
(b) For purposes of determining matching amounts to be credited
to a Member's Company Matching Account under Plan Section 3.3(a)(i),
all or a portion of a Member's years of employment with a predecessor
employer may be counted if at the time the individual became an
Employee, or as soon as practicable thereafter, the Plan Sponsor adopts
resolutions providing for the counting of such years of employment in
favor of that Member or of a group or category of individuals that
included the Member. The counting of any such years of employment
shall be specified in those resolutions and shall be subject to such
conditions, if any, provided therein.
SECTION 4
CREDITING ACCOUNTS
4.1 As of each Valuation Date, Deferral Amounts previously elected
by a Member shall be credited to the Member's Employee Deferred Account.
4.2 As of the last Valuation Date of each Plan Year or any earlier
Valuation Dates as may be selected by the Plan Administrator, the amounts to
be credited for the applicable period pursuant to Plan Section 3.2 on behalf
of a Member shall be credited to the Member's Company Matching Account.
4.3 (a) As of each Valuation Date, each Member's Company Matching
Account (other than any Member who has received a distribution of his
Accrued Benefit prior to that Valuation Date) shall be credited with
a Company Stock Rate of Return based upon the amount credited to the
Member's Company Matching Account as of the immediately preceding
Valuation Date.
(b) As of each Valuation Date, each Member's Employee Deferred
Account (other than any Member who has received a distribution of his
Accrued Benefit prior to that Valuation Date) or portions thereof shall
be credited with a designated rate or rates of return, as applicable,
as selected by the Member, based upon the amount credited to the
Member's Employee Deferred Account as of the immediately preceding
Valuation Date. A Member's Employee Deferred Account may be credited
with such rate or rates of return in accordance with the most recent
investment election properly and timely filed by the Member with the
Plan Administrator in accordance with such rules and procedures
designated by the Primary Sponsor. If no election has been properly
or timely filed with the Plan Administrator or if the Plan
Administrator suspends the election of rates of return by Members, the
Member's Employee Deferred Account or Members' Employee Deferred
Accounts, as applicable, shall be credited with a designated rate of
return selected by the Primary Sponsor. Any selection of designated
rates of return by Reporting Persons shall be subject to the
restriction of Plan Section 4.3(d).
(c) As of the last day of any Plan Year, each Member's
Employee Deferred Account (other than any Member who has received a
distribution of his Accrued Benefit prior thereto) may be credited by
the Plan Sponsor with an additional amount as may be determined by the
Plan Sponsor in its sole discretion.
(d) No Reporting Person shall be eligible to select a Company
Stock Rate of Return with respect to any portion of his Employee
Deferred Account. If any Member becomes a Reporting Person during a
Plan Year and that Member then has in effect a Company Stock Rate of
Return for any portion of his Employee Deferred Account, that portion
of the Member's Employee Deferred Account shall be credited with the
Company Stock Rate of Return for the portion of the Plan Year ending
with the Valuation Date immediately prior to the Member's becoming a
Reporting Person and, for the remainder of the Plan Year or until such
earlier time as the Member elects an alternative designated rate of
return, the rate of return (among those designated rates of return made
available by the Plan Administrator for the Plan Year, other than the
Company Stock Rate of Return) earning the lowest return for the Plan
Year.
SECTION 5
HARDSHIP PAYMENTS
5.1 The Plan Administrator may pay all or a portion of a Member's
Deferral Amounts (reduced by negative rates of return experienced) prior to
the time such amounts otherwise become payable in accordance with the
provisions of the Plan; provided, however, that any such distribution shall
be made only if the Member is an Employee and demonstrates that he is
suffering from "Hardship," as that term is defined under the Salary Deferral
Plan, as amended, and any other unforeseeable circumstance determined to
constitute a "Hardship"for purposes of this Section by the Plan
Administrator. For purposes of this Section, the Plan Administrator shall
have the sole and absolute discretion, which shall be exercised in a
nondiscriminatory and uniform manner, to determine if a "Hardship" exists
with respect to a Member.
5.2 Hardship payments shall be made to a Member only in accordance
with such rules, policies, procedures, restrictions, and conditions as the
Plan Administrator may from time to time adopt. Any determination of the
amount to be distributed on account of a Hardship shall be made by the Plan
Administrator in accordance with rules applied in a uniform and
nondiscriminatory manner. A payment under this Section shall be made in a
lump sum in cash to the Member and shall be charged against the Member's
Employee Deferred Account as of the Valuation Date coinciding with or
immediately preceding the date of the payment.
5.3 Notwithstanding the foregoing, a Member who receives a payment
of all or any portion of his Employee Deferred Account pursuant to this
Section 5.3 shall be suspended from making deferrals under Plan Section 3 for
the calendar year immediately following the date the Member receives a
payment under this Section 5.3.
SECTION 6
DEATH BENEFITS
6.1 Upon the death of a Member who dies prior to the date on which
he is entitled to the commencement of payments of his Account, the Member's
Beneficiary shall be entitled to the full value of the Member's Account.
6.2 Upon the death of a Member who is no longer an Employee, but
prior to the complete payment of his Account, the Member's Beneficiary shall
be entitled to receive the unpaid portion of the Member's Account. These
payments shall be made according to the manner and method by which payments
were being made to the Member during his lifetime, except as provided by Plan
Section 6.4.
6.3 If, subsequent to the death of a Member, the Member's Beneficiary
dies while entitled to receive benefits under the Plan, the successor
Beneficiary, if any, or the Beneficiary listed under Subsection (a), (b) or
(c) of the Plan Section containing the definition of the term "Beneficiary"
shall generally be entitled to receive benefits under the Plan. However, if
the deceased Beneficiary was the Member's spouse at the time of the Member's
death, or if no successor Beneficiary shall have been designated by the
Member and be alive and no Beneficiary listed under Subsection (a), (b) or
(c) of the Plan Section containing the definition of the term "Beneficiary"
shall be alive, the Member's unpaid vested Accrued Benefit shall be paid to
the personal representative of the deceased Beneficiary's estate.
6.4 If the Beneficiary is the estate of the Member, the Plan Sponsor
shall make payment of the unpaid balance of the Member's Account in the form
of a single lump-sum payment equal to the unpaid balance of the Member's
Account as of the Valuation Date immediately preceding payment.
6.5 Any benefit payable under this Section 6 shall be paid in
accordance with and subject to the provisions of Plan Section 7 after receipt
by the Plan Administrator of notice of the death of the Member.
SECTION 7
PAYMENT OF BENEFITS ON RETIREMENT OR DEATH
7.1 Upon the retirement or death of a Member, the Accrued Benefit of
the Member shall be determined as of the Valuation Date coinciding with or
immediately preceding the Member's Retirement Date or death, increased by
Deferral Amounts and amounts credited pursuant to Plan Section 3.2(a)
thereafter and adjusted for the appropriate designated rates of return and
any other amounts credited pursuant to Plan Section 3.2(c) through the
Valuation Date immediately preceding the date the Accrued Benefit is paid.
Payment of the Member's Accrued Benefit shall commence no later than sixty
(60) days after the Retirement Date or death of the Member.
7.2 The form of payment of the Accrued Benefit of a Member shall be
selected by the Plan Administrator and shall be in either a lump sum or
annual or more frequent installments. 13
The payment of a Member's Accrued Benefit shall be in cash or such other
property as determined by the Primary Sponsor; except that on or after a
Change of Control, payment of a Member's Accrued Benefit shall be in cash.
Notwithstanding the foregoing, the Accrued Benefit of any Member who is or
was a Reporting Person at any time within six (6) months prior to the date
that his Accrued Benefit is paid shall be paid in cash.
SECTION 8
PAYMENT OF BENEFITS ON OTHER TERMINATIONS OF EMPLOYMENT
8.1 A Member shall be considered to have terminated employment with
the Plan Sponsor or any Affiliate on the date determined by the Plan
Administrator. Transfer of a Member from one Plan Sponsor to another Plan
Sponsor shall not be deemed for any purpose under the Plan to be a
termination of employment by the Member.
8.2 In the event of the termination of employment of a Member for
reasons other than those specified in Sections 6 and 7 above, the Accrued
Benefit of the Member shall be determined as of the Valuation Date coinciding
with or immediately preceding the date of the termination of employment and
shall be increased by any Deferral Amounts credited to the Employee Deferred
Account of the Member since that Valuation Date. While no further amounts
credited pursuant to Plan Section 3.2(a) shall be made to the Member's
Account after that Valuation Date, the Member's Account shall be adjusted for
the appropriate designated rates of return and any other amounts credited
pursuant to Plan Section 3.2(c) through the Valuation Date immediately
preceding the date the Accrued Benefit is paid.
8.3 A Member shall be entitled to payment of his Accrued Benefit in
the form set forth in Plan Section 7.2. Payment shall commence at any time
which the Plan Administrator may select following termination of employment,
which shall not be later than sixty (60) days after the end of the Plan Year
in which the Member attains age 65.
SECTION 9
ADMINISTRATION OF THE PLAN
9.1 Operation of the Plan Administrator. The Primary Sponsor shall
be the Plan Administrator, unless it appoints another Plan Administrator.
If an organization is appointed to serve as the Plan Administrator, then the
Plan Administrator may designate in writing a person who may act on behalf
of the Plan Administrator. The Primary Sponsor shall have the right to
remove the Plan Administrator at any time by notice in writing. The Plan
Administrator may resign at any time by written notice or resignation to the
Primary Sponsor. Upon removal or resignation, or in the event of the
dissolution of the Plan Administrator, the Primary Sponsor shall appoint a
successor.
9.2 Duties of the Plan Administrator.
(a) The Plan Administrator shall perform any act which the Plan
authorizes or requires of the Plan Administrator by action taken in
compliance with the Plan and may designate in writing other persons to
carry out its duties under the Plan. The Plan Administrator may employ
persons to render advice with regard to any of the Plan Administrator's
duties.
(b) The Plan Administrator shall from time to time establish
rules, not contrary to the provisions of the Plan, for the
administration of the Plan and the transaction of its business. All
elections and designations under the Plan by a Member or Beneficiary
shall be made on forms prescribed by the Plan Administrator. The Plan
Administrator shall have discretionary authority to construe the terms
of the Plan and shall determine all questions arising in the
administration, interpretation and application of the Plan, including,
but not limited to, those concerning eligibility for benefits and it
shall not act so as to discriminate in favor of any person. All
determinations of the Plan Administrator shall be conclusive and
binding on all Members and Beneficiaries, subject to the provisions of
the Plan and subject to applicable law.
(c) The Plan Administrator shall furnish Members and
Beneficiaries with all disclosures now or hereafter required by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
The Plan Administrator shall file, as required, the various reports and
disclosures concerning the Plan and its operations as required by ERISA
and by the Code, and shall be solely responsible for establishing and
maintaining all records of the Plan.
(d) The statement of specific duties for a Plan Administrator
in this Section is not in derogation of any other duties which a Plan
Administrator has under the provisions of the Plan or under applicable
law.
(e) Each Plan Sponsor shall indemnify and hold harmless each
person constituting the Plan Administrator from and against any and all
claims and expenses (including, without limitation, attorney's fees and
related costs) arising in connection with the performance by the person
of his duties in that capacity, other than any of the foregoing arising
in connection with the willful neglect or willful misconduct of the
person acting.
8.3 Action by the Primary Sponsor or a Plan Sponsor. Any action to
be taken by the Primary Sponsor or a Plan Sponsor shall be taken by
resolution or written direction duly adopted by its board of directors or
appropriate governing body, as the case may be; provided, however, that by
such resolution or written direction, the board of directors or appropriate
governing body, as the case may be, may delegate to any officer or other
appropriate person of a Plan Sponsor the authority to take any such actions
as may be specified in such resolution or written direction, other than the
power to amend, modify or terminate the Plan or to determine the basis of any
payment obligations of any Plan Sponsor.
SECTION 10
CLAIM REVIEW PROCEDURE
10.1 In the event that a Member or Beneficiary is denied a claim for
benefits under a Plan, the Plan Administrator shall provide to such claimant
written notice of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of the Plan
on which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of
why such material or information is necessary; and
(d) an explanation of the Plan's claim review procedure.
10.2 After receiving written notice of the denial of a claim, a
claimant or his representative may:
(a) request a full and fair review of such denial by written
application to the Plan Administrator;
(b) review pertinent documents; and
(c) submit issues and comments in writing to the Plan
Administrator.
10.3 If the claimant wishes such a review of the decision denying his
claim to benefits under the Plan, he must submit such written applications
to the Plan Administrator within sixty (60) days after receiving written
notice of the denial.
10.4 Upon receiving such written application for review, the Plan
Administrator may schedule a hearing for purposes of reviewing the claimant's
claim, which hearing shall take place not more than thirty (30) days from the
date on which the Plan Administrator received such written application for
review.
10.5 At least ten (10) days prior to the scheduled hearing, the
claimant and his representative designated in writing by him, if any, shall
receive written notice of the date, time, and place of such scheduled
hearing. The claimant or his representative, if any, may request that the
hearing be rescheduled, for his convenience, on another reasonable date or
at another reasonable time or place.
10.6 All claimants requesting a review of the decision denying their
claim for benefits may employ counsel for purposes of the hearing.
10.7 No later than sixty (60) days following the receipt of the
written application for review, the Plan Administrator shall submit its
decision on the review in writing to the claimant involved and to his
representative, if any; provided, however, a decision on the written
application for review may be extended, in the event special circumstances
such as the need to hold a hearing require an extension of time, to a day no
later than one hundred twenty (120) days after the date of receipt of the
written application for review. The decision shall include specific reasons
for the decision and specific references to the pertinent provisions of the
Plan on which the decision is based.
SECTION 11
LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS
11.1 No benefit which shall be payable under the Plan to any person
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall
be void; and no such benefit shall in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements or torts of any person,
nor shall it be subject to attachment or legal process for, or against, such
person, and the same shall not be recognized under the Plan, except to such
extent as may be required by law.
11.2 If any person who shall be entitled to any benefit under the Plan
shall become bankrupt or shall attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge such benefit under the Plan,
then the payment of any such benefit in the event a Member or Beneficiary is
entitled to payment shall, in the discretion of the Plan Administrator, cease
and terminate and in that event the Plan Administrator shall hold or apply
the same for the benefit of such person, his spouse, children, other
dependents or any of them in such manner and in such proportion as the Plan
Administrator shall determine.
11.3 Whenever any benefit which shall be payable under the Plan is to
be paid to or for the benefit of any person who is then a minor or determined
to be incompetent by qualified medical advice, the Plan Administrator need
not require the appointment of a guardian or custodian, but shall be
authorized to cause the same to be paid over to the person having custody of
such minor or incompetent, or to cause the same to be paid to such minor or
incompetent without the intervention of a guardian or custodian, or to cause
the same to be paid to a legal guardian or custodian of such minor or
incompetent if one has been appointed or to cause the same to be used for the
benefit of such minor or incompetent.
11.4 Whenever the Plan Administrator cannot, within a reasonable time
after payments are to commence, locate any person to or for the benefit of
whom such payments are to be made, after making a reasonable effort to locate
such person, the Plan Administrator may direct that the payment and any
remaining payments otherwise due to the Member be cancelled on the records
of the Plan, except that in the event the Member later notifies the Plan
Administrator of his whereabouts and requests the payments due to him under
the Plan, the Plan Sponsor shall re-credit the Member's account and provide
for payment of the re-credited amount to the Member as soon as
administratively feasible.
SECTION 12
LIMITATION OF RIGHTS
Membership in the Plan shall not give any Employee any right or claim
except to the extent that such right is specifically fixed under the terms
of the Plan. The adoption of the Plan by any Plan Sponsor shall not be
construed to give any Employee a right to be continued in the employ of a
Plan Sponsor or as interfering with the right of a Plan Sponsor to terminate
the employment of any Employee at any time.
SECTION 13
AMENDMENT TO OR TERMINATION OF THE PLAN
13.1 The Primary Sponsor reserves the right at any time to modify or
amend or terminate the Plan. No such modifications or amendments shall have
the effect of retroactively changing or depriving Members or Beneficiaries
of benefits already accrued under the Plan. No Plan Sponsor other than the
Primary Sponsor shall have the right to so modify, amend or terminate the
Plan. Notwithstanding the foregoing, each Plan Sponsor may terminate its own
participation in the Plan.
13.2 Each Plan Sponsor other than the Primary Sponsor shall have the
right to terminate its participation in the Plan by resolution of its board
of directors or other appropriate governing body and notice in writing to the
Primary Sponsor. Any termination by a Plan Sponsor shall not be a
termination as to any other Plan Sponsor.
13.3 If the Plan is terminated by the Primary Sponsor it shall
terminate as to all Plan Sponsors.
SECTION 14
ADOPTION OF PLAN BY AFFILIATES
Any corporation or other business entity related to the Primary Sponsor
by function or operation and any Affiliate, if the corporation, business
entity or Affiliate is authorized to do so by written direction adopted by
the Board of Directors, may adopt the Plan by action of the board of
directors or other appropriate governing body of such corporation, business
entity or Affiliate. Any adoption shall be evidenced by certified copies of
the resolutions of the foregoing board of directors
or governing body indicating the adoption by the adopting corporation, or
business entity or Affiliate. The resolution shall state and define the
Effective Date of the adoption of the Plan by the Plan Sponsor.
SECTION 15
MISCELLANEOUS
15.1 All payments provided under the Plan shall be paid from the
general assets of the applicable Plan Sponsor and no separate fund shall be
established to secure payment. Notwithstanding the foregoing, the Primary
Sponsor may establish a grantor trust to assist it and other Plan Sponsors
in funding Plan obligations, and any payments made to a Member or Beneficiary
from such trust shall relieve the Plan Sponsor from any further obligations
under the Plan only to the extent of such payment.
15.2 Each Plan Sponsor shall withhold from any benefits payable under
the Plan all federal, state and local income taxes or other taxes required
to be withheld pursuant to applicable law.
15.3 To the extent not preempted by applicable federal law, the Plan
shall be governed by and construed in accordance with the laws of the State
of Alabama.
IN WITNESS WHEREOF, the Primary Sponsor has caused this indenture to
be executed as of the date first above written.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President and Chief Executive
Officer
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel & Secretary
[CORPORATE SEAL]
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT made as of the 1 day of December , 1992, by
and among Morrison Restaurants Inc., formerly Morrison Incorporated, a
corporation organized under the laws of the State of Delaware (the "Primary
Sponsor"), each related corporation or business executing this Trust
Agreement (the Primary Sponsor and each related corporation or business being
sometimes hereinafter referred to as a "Plan Sponsor"); and AmSouth Bank N.A.
(the "Trustee");
W I T N E S S E T H:
WHEREAS, the Primary Sponsor by indenture effective as of January 1,
1988 established the Morrison Incorporated Deferred Compensation Plan to
provide benefits in the form of deferred compensation to a select group of
management or highly compensated employees of the Primary Sponsor or any of
its related corporations or businesses; and
WHEREAS, the Morrison Incorporated Deferred Compensation Plan has been
renamed the Morrison Restaurants Inc. Deferred Compensation Plan (the
"Plan"); and
WHEREAS, the Primary Sponsor by agreement dated June 16, 1988
established an irrevocable grantor trust (the "Trust"), within the meaning
of Section 671 of the Internal Revenue Code of 1986, as amended (the "Code")
to assist the Primary Sponsor and any of its related corporations or
businesses in meeting its obligations under the Plan; and
WHEREAS, the Primary Sponsor desires to amend and restate the trust
agreement between the Primary Sponsor and AmSouth Bank N.A., dated as of May
1, 1990 and last amended by indenture dated May 8, 1992, which agreement, as
amended, contains the existing terms of the Trust (the "Prior Trust
Agreement"); and
WHEREAS, the Board of Directors of the Primary Sponsor has approved the
amendment and restatement of the Prior Trust Agreement as embodied herein
(the "Trust Agreement");
NOW, THEREFORE, the Primary Sponsor hereby restates the Trust,
effective as of January 1, 1993, as follows:
SECTION 1.
INCORPORATION OF PLAN
All terms and conditions set forth in the Plan are incorporated by
reference except to the extent that the terms of the Trust indicate to the
contrary. In the event of a conflict between the terms and provisions of the
Trust Agreement and those the Plan, the terms and provisions of the Trust
Agreement shall be given precedence. However, nothing contained in the Trust
Agreement is intended to diminish the amount of benefits required to be paid
for the benefit of any participant under the terms of the Plan. To the
extent possible, the terms and provisions of the Plan and those of the Trust
Agreement shall be interpreted as mutually consistent.
SECTION 2.
ESTABLISHMENT OF THE FUND
The Primary Sponsor has established a fund with the Trustee (the
"Fund") to be held and administered in accordance with this Trust. The
Trustee shall accept as part of the Fund all assets as may be delivered by
a Plan Sponsor to the Trustee and shall also include all income accruing
thereon, except as otherwise provided in this Trust Agreement.
SECTION 3.
INVESTMENT OF THE FUND
(a) Subject to the provisions of Subsections (b) and (c) below, the
Trustee shall invest the principal and income of the Fund without distinction
between principal and income in securities or in property, real or personal
and wherever situated, as the Trustee shall deem advisable, in its sole
discretion. Without limiting the foregoing, the Trustee may purchase,
acquire, retain, sell, transfer, pledge or encumber common or preferred
stocks, including stock of the Primary Sponsor or any affiliate, shares of
mutual funds, including mutual funds for which the Trustee is an advisor,
trust and participation certificates, bonds and mortgages, other evidences
of indebtedness or ownership, annuity contracts and ordinary and term life
insurance contracts of life insurance companies, savings accounts or plans,
including savings accounts or plans established or to be established by the
Trustee, and group trusts or collective investment funds including group
trusts or collective investment funds operated by the Trustee.
(b) The Fund shall be invested by the Trustee with the goal of
achieving on an annual basis an average rate of return that equals or exceeds
the weighted average of those designated rates of return to be credited to
Accounts for the same period, as contemplated by Plan Section 4.3 and
identified by the Primary Sponsor from time to time (the "Investment Goal").
The Trustee shall incur no liability merely for a failure to achieve the
Investment Goal for any period; provided that during the period the Fund was
invested in accordance with applicable fiduciary standards and with a view
towards achieving the Investment Goal.
(c) Prior to the date a Change of Control (as defined in Section
13(c) hereof) occurs, the Primary Sponsor, and on or after the date a Change
of Control occurs, the Trustee, may appoint one or more investment managers
(the "Investment Managers") which shall be banks, investment advisers
registered under the Investment Advisers Act of 1940, or insurance companies,
to direct the Trustee as to the investment of all or a portion of the Fund
for the exclusive benefit of the participants of the Plans and their
beneficiaries. Notwithstanding the foregoing, prior to the date a Change of
Control occurs, the Primary Sponsor may appoint the Trustee (or any of its
affiliates) as an Investment Manager, if it is otherwise qualified to serve
as an Investment Manager and in such instance, the Trustee shall have
discretion over the investment of the Fund, subject to the provisions of
Subsection (b) above.
The Primary Sponsor shall notify the Trustee of the appointment of any
Investment Manager (other than the Trustee) under this Subsection by
delivering to the Trustee (i) an executed copy of an instrument under which
the Investment Manager was appointed to act hereunder and setting forth the
investment powers of the Investment Manager and (ii) a written instrument
executed by the Investment Manager in which it acknowledges that it has
agreed to act as such. Any notice of appointment pursuant to this Subsection
shall constitute a representation and warranty by the Primary Sponsor that
the Investment Manager is qualified under and has been appointed in
accordance with the provisions hereof. Notwithstanding anything herein
contained to the contrary, during the term of its appointment, the Investment
Manager shall have the sole responsibility for the investment and
reinvestment of the portion of the Fund for which it was appointed to act,
and, subject to the limitations on the types of appropriate investments set
forth in Subsection (b) hereof, shall have full power in its discretion to
direct the Trustee with respect to the exercise by it of its investment
powers, including the voting of shares (except as otherwise provided by
Section 13(d) hereof). Pending receipt of instructions from any Investment
Manager with respect thereto and subject to any investment guidelines agreed
to in writing from time to time pursuant to Subsection (b) hereof, any cash
received by the Trustee from time to time shall be invested by the Trustee
in demand and term notes (including those commonly known as "master notes")
maturing not more than three years after the date of purchase thereof, United
States Treasury bills, other government and agency obligations maturing not
more than three years after the date of purchase thereof, group annuity or
other contracts providing a guaranteed rate of return with a maturity not
exceeding three years, certificates of deposit, commercial paper, government
guaranteed paper, common or collective trust funds, money market mutual
funds, other money market instruments, savings accounts or other deposits
with a financial institution (including the Trustee, if a financial
institution is serving as such) and part interests in any one or more of the
foregoing.
The Primary Sponsor may terminate its appointment of an Investment
Manager at any time and shall in writing notify the Trustee of such
termination, and may thereafter appoint a successor Investment Manager in the
same manner as provided above in this Subsection. Any successor Investment
Manager shall thereafter, until its appointment is terminated, be deemed to
be an "Investment Manager" for all purposes of this Agreement. If there
shall be more than one Investment Manager, the portion of the Fund to be
invested by each Investment Manager shall be held in a separate account and
the powers and authority of each Investment Manager shall be divided as set
forth in the instruments appointing such Investment Managers.
So long as an Investment Manager (other than the Trustee or one of its
affiliates) is serving as such, the Trustee shall be under no duty or
obligation to review the assets comprising any portion of the Fund managed
by the Investment Manager, to make any recommendations with respect to the
investment or reinvestment thereof, or to determine whether any direction
received from any Investment Manager is proper or within the terms of this
Trust Agreement or to monitor the activities of any Investment Manager.
(d) The Trustee shall have no liability or responsibility to the
Primary Sponsor or any persons claiming any interest in the Fund for acting
without question on the direction of, or for failing to act in the absence
of any direction from, any Investment Manager unless the Trustee participated
knowingly in, or knowingly undertook to conceal, an act or omission of any
Investment Manager constituting a breach of its duties hereunder, knowing
such act or omission was a breach of such duties; provided, however, that the
Trustee shall not be deemed to have "participated" in a breach by any
Investment Manager for the purposes of this undertaking solely as a result
of the performance by the Trustee or its officers, employees or agents of any
custodial, reporting, recording, and bookkeeping functions with respect to
any assets of the Fund managed by any Investment Manager or solely as a
result of settling purchase and sale transactions entered into or directed
by any Investment Manager, or to have "knowledge" of any such breach solely
as a result of the information received by the Trustee or its officers,
employees or agents in the normal course in performing such functions or
settling such transactions. If the Trustee has actual knowledge of a breach
committed by any Investment Manager, it shall promptly notify the Primary
Sponsor in writing thereof, and the Trustee, except as required by applicable
law, shall thereafter have no responsibility to remedy such breach.
(e) The Primary Sponsor may, prior to a Change of Control, direct the
Trustee in writing to transfer any portion of the Fund to a subtrustee and
to enter into an agreement with the subtrustee reflecting the subtrust
arrangement. In the event of a Change of Control, the Primary Sponsor may
only direct the Trustee to transfer a portion of the Fund to a subtrustee
with the consent of a majority of the participants of the Plan and the
designated beneficiaries of deceased participants. The Trustee may terminate
a subtrust at any time and direct the subtrustee to return the portion of the
Fund held by the subtrustee; provided that prior to a Change of Control the
subtrust may only be terminated with the consent of the Primary Sponsor.
SECTION 4.
POWERS OF THE TRUSTEE
In the administration of the Trust, in addition to any powers or
authority of the Trustee under this Trust or which the Trustee may have under
applicable law, the Trustee is authorized and empowered to do the following,
without advertisement, without order of court and without having to post bond
or make any returns or report of its doings to any court:
(a) To purchase or subscribe for any securities or property
including, without limitation, securities of a Plan Sponsor and real property
leased to or used by a Plan Sponsor;
(b) To sell, exchange, convey, transfer, or otherwise dispose of any
securities or property held by it, by private contract or at public auction,
with or without advertising, and no person dealing with the Trustee shall be
bound to see to the application of the purchase money or to inquire into the
validity, expediency or propriety of any disposition;
(c) Except as provided in Section 13(d) hereof, to vote any stocks,
bonds or other securities, including securities of the Plan Sponsor; to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights or
other options, and to make any payments incidental thereto; to oppose,
consent to, or otherwise participate in corporate reorganizations or other
changes affecting corporate securities, to delegate discretionary powers, and
to pay any assessments or charges in connection therewith; and generally to
exercise any of the powers of an owner with respect to securities or other
property held as part of the Fund;
(d) To register any investment in its own name or in the name of a
nominee, and to hold any investment in bearer form or through or by a central
clearing corporation maintained by institutions active in the national
securities markets, but the records of the Trustee shall at all times show
that all the investments are part of the Trust;
(e) To write covered call options and to purchase or sell put options
and financial futures contracts;
(f) To employ and act through suitable agents, accountants,
appraisers, actuaries and attorneys (who may be counsel for the Trustee) and
to pay their reasonable expenses and compensation, to consult with counsel
(who, without limitation, may be counsel to the Trustee) and shall be
protected to the extent the law permits in acting upon the advice of counsel
in regard to legal questions, and the Trustee shall periodically review the
performance of the persons to whom these duties have been delegated, but the
Trustee shall not be liable for relying upon the advice and expertise of any
such person to the extent permitted by law, provided the Trustee's decisions
in selecting and retaining such person were prudently made;
(g) To borrow or raise moneys for the purposes of the Trust in the
amounts, and upon the terms and conditions, as the Trustee in its discretion
may deem advisable; and for any sums borrowed to issue its promissory note
as Trustee, and to secure the repayment thereof by pledging all or any part
of the Trust; and no person lending money to the Trustee shall be bound to
see to the application of the money lent or to inquire into the validity,
expediency or propriety of any borrowing;
(h) To make, execute, acknowledge and deliver any documents of
transfer and conveyance and any other instruments or agreements that may be
necessary or appropriate to carry out the powers of the Trustee under the
Trust or incidental thereto;
(i) To settle, compromise or submit to arbitration any claims, debts
or damages due or owing to or from the Trust, to commence or defend any suits
or legal or administrative proceedings arising, necessary or appropriate in
connection with the Trust, the administration and operation thereof or the
powers or authority of the Trustee under the Trust, and to represent the
Trust in all suits and legal and administrative proceedings;
(j) To keep portions of the Trust in cash or cash balances as the
Trustee may deem to be in the best interest of the Trust;
(k) To register any investment in its own name or in the name of a
nominee, and to hold any investment in bearer form or through or by a central
clearing corporation maintained by institutions active in the national
securities markets, but the records of the Trustee shall at all times show
that all the investments are part of the Trust; and
(l) Generally, to do all acts and to execute and deliver all
instruments as in the judgment of the Trustee may be necessary or desirable
to carry out any powers or authority of the Trustee.
SECTION 5.
FUNDING
(a) Payments to the Trustee by each Plan Sponsor shall be made as
follows:
(i) Contributions shall be paid to the Trustee within a
reasonable period of time after the date that the Deferral Amounts otherwise
would have been paid to Members in an amount equal to (A) the aggregate
Deferral Amounts elected by Members for the period and (B) corresponding
amounts to be credited to Members' Company Matching Accounts under Plan
Section 3.2.
(ii) In the event that the designated rates of return to be
credited to Members' Accounts as of the last Valuation Date of each Plan Year
exceed the aggregate net income, gains and credits of the Trust as of the
same Valuation Date, the Plan Sponsor shall make a contribution to the Trust
within a reasonable period of time after that Valuation Date in an amount
equal to the excess. In the event that the designated rates of return and
other amounts to be credited to Members' Accounts pursuant to Plan
Section 4.3 as of the last Valuation Date of each Plan Year are less than the
aggregate net income, gains and credits of the Trust as of the same Valuation
Date, the Trustee shall apply the difference as a credit towards future
contributions required of the Plan Sponsor pursuant to this Subsection (a),
unless the Primary Sponsor directs otherwise pursuant to Subsection (c)
below.
(b) The Trustee shall be responsible for assets actually received by
it as Trustee and shall have no duty or authority to compute amounts to be
contributed or to review the computation of amounts to be contributed.
(c) Prior to a Change of Control, the Primary Sponsor may from time
to time direct the Trustee to determine the amount by which the assets in the
Trust exceed the amount needed to pay all unpaid benefits accrued under the
Plan (the "Surplus Amount"). If the Trustee determines that the Trust has
a Surplus Amount, the Primary Sponsor may advise the Trustee that the Primary
Sponsor is entitled to receive the Surplus Amount. The Trustee shall make
payment to the Primary Sponsor of the Surplus Amount as soon as
administratively practicable following receipt of the notification provided
for in this Subsection.
SECTION 6.
DUTIES OF THE TRUSTEE
(a) Except for records dealing solely with the Trust and its
investments and disbursements, which shall be maintained by the Trustee, each
Plan Sponsor shall maintain all records contemplated by the Plan.
(b) Each Plan Sponsor shall furnish to the Trustee all the
information necessary to determine the benefits payable to or with respect
to each participant in the Plan, including any benefits payable after a
participant's death. Each Plan Sponsor shall from time to time, and at least
annually, and promptly upon the request of the Trustee furnish updated
information to the Trustee. In the event the Plan Sponsor refuses or
neglects to provide any updated information as contemplated herein, the
Trustee shall rely upon the most recent information furnished to it by the
Plan Sponsor; provided, however, that on or after a Change of Control, the
Trustee shall rely in its discretion upon (i) information furnished to it by
the Plan Sponsor prior to a Change of Control, (ii) information furnished to
it by the Plan Sponsor on or after a Change of Control and/or (iii) any
information received by it from a participant or designated beneficiary
unless the recipient actually knows that any such information is false. The
Trustee has no responsibility to verify information provided to them by the
Plan Sponsor or any participant or designated beneficiary.
(c) Upon proper notification from the Plan Sponsor prior to a Change
of Control or upon an independent determination by the Trustee on or after
a Change of Control (based on such information as the Trustee shall be
entitled to rely upon pursuant to Subsection (b) above), when, in the opinion
of the Plan Sponsor prior to a Change of Control or Trustee on or after a
Change of Control, as applicable, a participant's benefits under the Plan
have become payable, the Plan Sponsor or Trustee, as applicable, shall notify
the participant or the beneficiary of a deceased participant and, if
applicable, the Trustee. Such notice shall include the amount of such
benefits, the terms of payment, the amount of any taxes required to be
withheld from such amount, and the name, address and social security number
of the recipient. Upon the receipt of a notification or after making its
determination, as applicable, the Trustee shall commence distributions from
the Fund in accordance therewith to the person or persons so indicated.
(d) The Plan Sponsors shall have full responsibility for the payment
of all taxes of any nature levied, assessed or imposed upon the Fund,
including the payment of all withholding taxes to the appropriate taxing
authority and shall also furnish each participant or beneficiary with the
appropriate tax information form evidencing such payment and the amount
thereof.
(e) Prior to a Change of Control, the Trustee shall have no
responsibility for determining whether any participant or beneficiary has
died or whether a participant's rights under the terms of the Plan have been
forfeited and shall be entitled to rely upon information furnished by the
Plan Sponsor. On or after a Change of Control, the Trustee shall determine
whether a participant's benefit shall be deemed forfeited or whether a
participant or beneficiary has died based on information supplied under
Subsection (b) hereof; provided, however, that a certified death certificate
received by the Trustee shall be conclusive evidence of the death of any
person regardless of the source of such certificate.
(f) Nothing provided in this Trust Agreement shall relieve a Plan
Sponsor of its liabilities to pay the benefits provided under the Plan except
to the extent such liabilities are met by application of Fund assets.
(g) Each Plan Sponsor agrees that by the establishment of this Trust
it hereby forgoes forgoes any judicial review of any independent
determination by the Trustee as to the benefit payable to any persons
hereunder. If a dispute arises as to the amounts or timing of any such
benefits or the persons entitled thereto under the Plans or this Trust
Agreement, the Plan Sponsor agrees that such dispute shall be resolved by
binding arbitration proceedings convened in Mobile, Alabama and conducted in
accordance with the rules of the American Arbitration Association and that
the results of such proceedings shall be conclusive and shall not be subject
to judicial review. It is expressly understood that pending the resolution
of any such dispute, payment of benefits shall be made and continued by the
Trustee in accordance with its independent determination and that the Trustee
shall have no liability with respect to such payments. The Plan Sponsor also
agrees to pay the entire cost of any arbitration or legal proceeding
initiated by it or by the Trustee or by any participant or beneficiary,
including the legal fees of the Trustee and the participant or other claimant
regardless of the outcome of any such proceeding.
SECTION 7.
DISTRIBUTIONS FROM THE FUND
(a) Consistent with the provisions of Section 9 hereof, the Trustee
is authorized to pay from the Fund reasonable expenses of the Trustee,
including fees of accountants and legal counsel to the Trust, and the
Trustee's compensation.
(b) The Trustee shall make any distribution required pursuant to this
Trust Agreement by mailing its check or other evidence of payment to the
person to whom such distribution or payment is to be made at such address as
was last furnished to the Trustee or, if agreeable to the Plan Sponsor and
the affected participant and so directed in a written notice to the Trustee
by those parties, by crediting the account of such person or by transferring
funds to such person's account by bank or wire transfer. The Trustee shall
not be required to make any investigation to determine the whereabouts or
mailing address of any person. If the person to receive a distribution can
not be found, the Trustee shall hold payment or deposit same in a bank
(including the Trustee, if a financial institution is serving as such) for
the credit of that person without liability for interest thereon. If a check
or other evidence of payment of the benefit hereunder has been mailed to the
last address of the person furnished the Trustee and is returned unclaimed,
the Trustee shall notify the Plan Sponsor and shall discontinue further
payments to the payee until it receives instructions from the Plan Sponsor.
(c) The Trustee shall not be bound by any instruction, direction or
notice unless and until it has been received in writing by the Trustee and
may rely upon any instruction, direction or notice of a continuing nature
until the Trustee receives a writing which revokes that instruction,
direction or notice. The Trustee may without liability assume that any such
instruction, direction or notice is genuine unless it has actual knowledge
or, after receiving notification of a problem, has reasonably determined that
the instruction, direction or notice is not genuine.
(d) The Trustee shall not be responsible for the application of any
assets held as part of the Fund which have been distributed pursuant to the
Plan and the Trust Agreement.
SECTION 8.
CLAIMS OF CREDITORS
(a) The Fund assets shall be treated as general assets of the Plan
Sponsor and shall remain subject to claims of the general creditors of the
Plan Sponsor under applicable state and federal law. Nothing in the Trust
Agreement shall affect the rights of any participant as general creditor of
the Plan Sponsor. No participant shall have a preferred claim on or any
beneficial ownership in the Fund prior to the time for distribution to the
participant under the terms of a Plan or the terms of this Trust Agreement.
In the event that the Plan Sponsor becomes insolvent as described in
Subsection (c) below, each participant shall be deemed to waive any priority
the participant may have under law as an employee with respect to any claim
against the Plan Sponsor and the Trust beyond the rights the participant
would have as a general creditor of the Plan Sponsor.
(b) Except as otherwise provided by Subsection (c) below, no benefit
which shall be payable under the Trust to any person shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of the same
shall be void. No benefit shall in any manner be subject to the debts,
contracts, liabilities, engagements or torts of any person, nor shall it be
subject to attachment or legal process for or against any person, except to
the extent provided by Subsection (c) below and as may otherwise be required
by law.
(c) The board of directors of a Plan Sponsor shall immediately notify
the Trustee in writing of the insolvency of the Plan Sponsor. For purposes
of this Subsection (c), the term "insolvency" shall mean the inability of the
Plan Sponsor to pay its debts as they become due in the usual course of its
business or that the liabilities of the Plan Sponsor are in excess of its
assets. Upon receipt of the written notice, the Trustee shall suspend all
further payments to participants or their beneficiaries and shall hold the
assets of the Trust for the benefit of the creditors of the Plan Sponsor in
the manner directed by a court of competent jurisdiction. If the Trustee
should receive any written allegation of the insolvency of the Plan Sponsor,
the Trustee shall suspend payments to participants and hold the assets of the
Trust for the benefit of the creditors of the Plan Sponsor and, within a
period of thirty (30) days after the receipt of the written allegation,
determine whether the Plan Sponsor is insolvent. If the Trustee determines
that the Plan Sponsor is solvent, it shall immediately resume payments to the
participants or their beneficiaries. In the event that the Trustee has
actual knowledge of the insolvency of the Plan Sponsor, the Trustee shall
hold the assets of the Trust for the benefit of the creditors of the Plan
Sponsor in the manner directed by a court of competent jurisdiction. Unless
the Trustee (i) has been notified in writing by the board of directors of a
Plan Sponsor of the insolvency of a Plan Sponsor, (ii) has received any
written allegation of the insolvency of a Plan Sponsor or (iii) has actual
knowledge of the insolvency of a Plan Sponsor, the Trustee shall have no duty
to inquire whether a Plan Sponsor is insolvent.
SECTION 9.
FEES AND EXPENSES
The compensation and expenses of the Trustee shall be paid from the
assets of the Fund. Expenses of the Trustee shall include the reasonable
expenses and compensation of third parties employed by the Trustee pursuant
to Section 4(f) hereof.
SECTION 10.
ACCOUNTS
(a) The Trustee shall keep such records as the Trustee considers
necessary for the management of the Trust. The Trustee's books and records
of the Fund shall be open to inspection by the Plan Sponsor and participants
during regular business hours of the Trustee.
(b) The Trustee may establish separate accounts within the Fund for
any group or category of the Plan as it determines appropriate to maintain
its books of accounts and other records in accordance with the provisions of
the Plan and the Trust Agreement. The Plan Sponsors shall maintain or cause
to be maintained accounting records for the Plan sufficient to allow the
determination of the portion of the Fund which is allocable both to each of
the Plan Sponsors. Irrespective of the comingling of assets of the Plan for
investment in the Fund, no portion of the Fund which is allocable to any one
of the Plan Sponsors shall be used to pay benefits or discharge liabilities
or obligations specifically allocable or attributable, respectively, to any
other Plan or any other Plan Sponsor.
(c) Within ninety (90) days after the close of each calendar year,
the date of the removal or resignation of the Trustee, or the termination of
the Trust, the Trustee shall render to the Primary Sponsor a written account
of its management of the Fund covering the period since the previous account
and report. The written approval of that accounting and report by the
Primary Sponsor or the failure of the Primary Sponsor to notify the Trustee
of its disapproval of such accounting within ninety (90) days after its
receipt shall be final and binding as to the Trustee's administration of the
Trust for the period upon the Primary Sponsor and all persons who have or may
thereafter have an interest in the Trust.
SECTION 11.
RESIGNATION, REMOVAL AND SUCCESSION
(a) The Trustee may resign at any time upon giving sixty (60) days'
prior written notice to the Primary Sponsor.
(b) The Trustee may be removed by the Primary Sponsor at any time;
provided, however, that in the event of a Change of Control, the Trustee may
thereafter be removed only after securing the written consent of a majority
of the participants of the Plan and the designated beneficiaries of deceased
participants.
(c) Upon the removal or resignation of the Trustee, any successor
appointed shall have the same powers and duties as those conferred upon the
Trustee under this Trust. Prior to a Change of Control, the appointment of
any successor Trustee shall be in the sole discretion of the Primary Sponsor.
On or after a Change of Control, the appointment of any successor Trustee
shall be made only with the consent of a majority of the participants of the
Plans and the designated beneficiaries of deceased participants. Upon
receipt by the Trustee of a written acceptance of the appointment by the
successor Trustee, the Trustee shall transfer to the successor Trustee the
assets constituting the Trust; provided, however, the Trustee shall not be
required to pay over assets to a successor Trustee unless the Trustee shall
be discharged from all liability for any taxes which may be due and owing by
the Trust, or unless the successor Trustee, who must be acceptable to the
Trustee, indemnifies the Trustee and the Trustee in its sole discretion
agrees to accept indemnification. In the event that within ninety (90) days
after the removal or resignation of the Trustee the Primary Sponsor shall
have failed to appoint a successor Trustee or the Trustee shall not have
received a written acceptance from a successor Trustee, then the Trustee may
file an appropriate action in a court of competent jurisdiction and transfer
to the custody of the court the assets then held by the Trustee constituting
the Trust. Upon transfer to a successor Trustee or to the court, as the case
may be, the Trustee shall be relieved of all further responsibilities and
liabilities in connection with the Trust. The Trustee is authorized,
however, to reserve therefrom any assets as it may deem advisable for payment
of its fees and expenses in connection with the settlement of its account or
otherwise, and any balance of the reserve remaining after the payment of the
Trustee's fees and expenses shall be paid over to the successor Trustee or
to the court.
SECTION 12.
AMENDMENT AND TERMINATION
(a) Prior to a Change of Control, the Trust Agreement may be amended
any time and to any extent by a written instrument executed by the Primary
Sponsor, provided, however, that no such amendment shall be effective to the
extent that it purports to make the Trust revocable. In addition, no such
amendment shall have the effect of reducing benefits accrued by participants
under the Plan, delaying the times at which distributions are made from the
Fund to participants and their beneficiaries or allowing a Plan Sponsor or
any other person to receive distributions of the assets of the Fund not then
permitted under the terms of the Trust Agreement. On or after a Change of
Control, this Trust Agreement may only be amended with the consent of a
majority of the participants of the Plan and the designated beneficiaries of
deceased participants. No amendment that purports to increase the duties or
responsibilities of the Trustee or to alter materially the manner in which
the Trustee is to discharge any continuing duties or responsibilities shall
be given effect without the consent of the Trustee and no other amendment
shall be given effect without first providing notice of same to the Trustee.
The Trustee and Primary Sponsor or, if applicable, a majority of the
participants of the Plan and the designated beneficiaries of deceased
participants may amend the Trust Agreement in any manner not otherwise
specifically precluded by this Subsection, including any amendment regarding
the removal of an existing Trustee or the appointment of a successor Trustee.
(b) Notwithstanding any other provisions of the Trust Agreement to
the contrary, the Trust shall terminate and all Fund assets shall be
distributed (i) on the complete distribution of the Fund in accordance with
the terms and provisions of the Plan; (ii) upon the delivery to the Trustee
of a writing terminating the Trust signed by the Primary Sponsor, all
participants of the Plan and the designated beneficiaries of deceased
participants; or (iii) in the event the Internal Revenue Service makes a
final determination that the assets of the Fund constitute compensation
currently taxable as income to participants. Any assets remaining in the
Fund after satisfaction of all liabilities and expenses of the Plan shall be
returned to the Plan Sponsors.
SECTION 13.
MISCELLANEOUS
(a) The Trustee shall under no circumstances be required to recognize
any conveyance, transfer, assignment, mortgage, pledge or encumbrance by any
participant or any person entitled to receive benefits under the Plan, any
part of it, or any interest in it, or to pay any money or thing of value to
any creditor or assignee of any participant or person for any cause
whatsoever; provided, however, this Subsection (a) does not affect the
provisions of Section 8 of the Trust Agreement.
(b) The Primary Sponsor hereby agrees to indemnify and hold harmless
the Trustee from and against any and all losses, claims, damages,
liabilities, costs and expenses, including but not limited to, liability for
any judgments or settlements consented to in writing by the Trustee, as
applicable, which consents will not be unreasonably withheld, and reasonable
attorneys' fees arising out of or in connection with or as a direct or
indirect result of its serving, respectively, as the trustee (including but
not limited to the Trustee's acts or omissions with respect to (i) the voting
of any share of stock held as part of the assets of the Trust;
(ii) establishing or maintaining investment funds or effecting investments
therein in accordance with the terms and provisions of the Trust; (iii) the
determinations by the Trustee of insolvency or of a Change of Control
(including acts or omissions in accordance with the terms and provisions of
the Trust following any determination of insolvency or a Change of Control);
or (iv) the determination by the Trustee of Surplus Amounts or benefits
payable to participants or their beneficiaries), except those losses, claims,
damages, liabilities, costs and expenses, if any, arising out of or in
connection with or as a direct or indirect result of the Trustee's bad faith,
gross negligence or willful neglect or breach of trust. In amplification of
and without limiting the foregoing, the Primary Sponsor specifically agrees
to indemnify and hold the Trustee harmless from and against any and all
liability, loss, damage, cost or expense arising out of or in connection with
(A) the transfer of any portion of the Fund to a subtrustee at the direction
of the Primary Sponsor; (B) any act or omission of a subtrustee, provided the
Trustee had no knowledge of such act or omission acquired through its normal
course of dealings with the subtrustee, or if the Trustee did have such
knowledge either the Trustee timely notified the Primary Sponsor in writing
or the Primary Sponsor otherwise received timely notice of such act or
omission; or (C) any decision by the Trustee to terminate a subtrust
following a Change of Control. Nothing in the immediately preceding sentence
shall require the Primary Sponsor to indemnify and hold the Trustee harmless
from and against any liability, loss, damage, cost or expense attributable
to regulatory action taken by any Federal or state agency having jurisdiction
over the Trustee, as a banking institution, with regard to the establishment
or maintenance of a subtrust. The Trustee shall promptly notify the Primary
Sponsor of any claim, action or proceeding for which it may seek indemnity.
This indemnity is a continuing obligation and shall be binding on the Primary
Sponsor and its successors, whether by merger or otherwise, and assigns. In
addition, this indemnity shall survive the resignation or removal of the
Trustee, the liquidation of the Trust, or both events.
(c) As used in this Trust Agreement, the term "Change of Control"
means any event that pursuant to the requirements of Article X of the Primary
Sponsor's Certificate of Incorporation, as amended from time to time,
requires the affirmative vote of the holders of not less than eighty percent
(80%) of the Voting Stock (as defined therein); provided, however, that no
event shall constitute a Change of Control if approved by the Board of
Directors of the Primary Sponsor a majority of whom are "present directors"
and "new directors." For purposes of the preceding sentence, "present
directors" shall mean individuals who as of the date of this Trust Agreement
were members of the Board of Directors of the Primary Sponsor and "new
directors" shall mean any director whose election by the Board of Directors
of the Primary Sponsor (in the event of vacancy) or whose nomination for
election by the Primary Sponsor's stockholders was approved by a vote of at
least three-fourths of the directors then still in office who are present
directors and new directors; provided that any director elected to the Board
of Directors of the Primary Sponsor solely to settle a threatened or actual
proxy contest shall in no event be deemed to be a new director. The board
of directors of the Primary Sponsor shall immediately notify the Trustee of
the occurrence of a Change of Control. Upon receipt of such written notice
or in the event the Trustee has actual knowledge that a Change of Control has
occurred, the Trustee shall take no action nor facilitate the taking of any
action contemplated by the Trust Agreement as being taken prior to a Change
of Control if (i) an alternative procedure for taking such action is
prescribed on or after a Change of Control, or (ii) any action of the type
described is expressly limited to the period prior to a Change of Control.
If the Trustee should receive any written allegation to the effect that a
Change of Control has occurred, the Trustee shall take no action nor
facilitate the taking of any action described in the immediately preceding
sentence until making an independent determination as to whether a Change of
Control has occurred. The Trustee shall make this determination within a
period of thirty (30) days after the receipt of the written allegation.
Following the determination, the Trustee shall discharge its duties under the
Trust Agreement in a manner consistent with that determination.
(d) Prior to a Change of Control, authority and responsibility with
regard to the voting of and control over any securities of a Plan Sponsor
held in the Trust shall be exercised as follows: (i) the Primary Sponsor
shall direct the Trustee in writing as to the manner in which such securities
are to be voted; and (ii) all other decisions affecting such securities,
including, without limitation, decisions to oppose or consent to tender or
exchange offers, shall be similarly directed by the Primary Sponsor. The
Trustee shall take such steps as may be necessary or appropriate to carry out
the directions of the Primary Sponsor given pursuant to this Subsection. On
or after a Change of Control, voting and all other decisions relating to the
securities of a Plan Sponsor shall be made by the Trustee or, if such
securities are subject to the investment authority of an Investment Manager
by that Investment Manager.
(e) The Trustee shall be required to take any and all reasonable
legal action to enforce the obligations of each Plan Sponsor under the Trust
Agreement.
(f) Whenever the context requires, words of the masculine gender used
herein shall include the feminine and the neuter, and the words used in the
singular shall include the plural.
(g) Each provision of the Trust Agreement is severable and if any
provision is found to be void as against public policy it shall not affect the
validity of any other provision hereof.
(h) The Trust Agreement shall be binding upon the successors and assigns
of each Plan Sponsor and the Trustee.
(i) The providers of the Trust shall be construed according to the laws
of the State of Alabama and, to the extent applicable, according to the United
States.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals the
day and year first above written.
PRIMARY SPONSOR:
Morrison Restaurants Inc.
By: /s/ Samuel E. Beall, III
Title: President and Chief Executive
Officer
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel & Secretary
[CORPORATE SEAL]
TRUSTEE:
Amsouth Bank N.A.
By: /s/ Lynn E. Cushing
Title: Vice President and Trust
Officer
ATTEST:
/s/ Cheryl A. Davidson
Title: Vice President and Trust
Officer
[SEAL]
MORRISON INCORPORATED
MANAGEMENT RETIREMENT PLAN
THIS INDENTURE made and entered into this 28th day of March , 1989,
by MORRISON INCORPORATED, a corporation organized and existing under the laws
of the State of Delaware (hereinafter referred to as the "Company"):
W I T N E S S E T H:
WHEREAS, the Company established the Morrison Incorporated Management
Retirement Plan (the "Plan"), effective June 1, 1989; and
WHEREAS, the Company desires to provide for a select group of management
or highly compensated long-term employees the security of receiving a defined
level of retirement benefits from the Plan, when considered together with
benefits provided from the Company-funded portion of certain other employee
benefits provided by the Company;
NOW, THEREFORE, effective as of June 1, 1989, the Company hereby agrees
to provide certain benefits in accordance with the following terms and
conditions:
ARTICLE I
DEFINITIONS
1.01 "Accrued Benefit" means the benefit payable to a Participant in
accordance with Article IV hereof as a yearly amount, calculated as a single
life annuity for the life of the Participant, equal to 1.5 percent of the
Participant's Final Average Compensation multiplied by the number of Years of
Credited Service not to exceed 20, plus 2 percent of the Participant's Final
Average Compensation multiplied by each additional Year of Credited Service in
excess of 20 but not to exceed 30, minus the sum of (a) the Participant's
Frozen Retirement Plan Benefit, (b) the Participant's Social Security Benefits
and (c) the Participant's Executive Supplemental Pension Plan Benefit.
1.02 "Actuarial Equivalent" means, with respect to a benefit, any
benefit provided under the terms of the Plan which has the same present value
on the date the benefit payment commences. For the purpose of establishing
whether a benefit is the Actuarial Equivalent of another benefit, the Company
shall apply the same factors for determining actuarial equivalence under the
Frozen Retirement Plan.
1.03 "Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) as is the Company, (b) any other trade or business (whether or not
incorporated) controlling, controlled by, or under common control (within the
meaning of Section 414(c) of the Code) with the Company, (c) any other
organization which is a member of an affiliated service group (within the
meaning of Section 414(m) of the Code) with the Company, and (d) any other
entity required to be aggregated with the Company pursuant to regulations
under Section 414(o) of the Code.
1.04 "Board of Directors" means the Board of Directors of the
Company.
1.05 "Break in Service" means any Plan Year during which a
Participant has not completed more than 500 Hours of Service. A Break in
Service shall not occur during:
(a) an absence or leave of absence, with or without pay,
which was authorized by the Company for a period not to exceed one year
provided that the Participant returns to the active service of the
Company at or prior to the termination of the absence or leave;
(b) periods of military service during which time the
Participant's rights were protected by law; or
(c) maternity or paternity leave of absence caused:
(1) by reason of pregnancy of the individual,
(2) by reason of the birth of a child of the Participant,
(3) by reason of the placement of a child in connection
with the adoption of a child by the Participant, or
(4) for purposes of caring for the child during the period
immediately following the birth or placement for adoption.
In the case of (c) above, the Participant shall be considered as having
completed either the number of hours that would have been credited to the
Participant for the absence or, if the normal working hours are unknown, he
shall be credited with eight hours per normal work day during the absence.
However, the total number of hours so credited shall not exceed 501 and
further must be credited only (i) in the year in which that absence begins for
one of the permitted reasons listed herein if the crediting is necessary to
prevent a Break in Service in that year or (ii) in the following year.
1.06 "Code" means the Internal Revenue Code of 1986, as amended.
1.07 "Compensation" means the total compensation that would be
subject to tax under Code Section 3101(a) (but without the dollar limitation
of Code Section 3121(a)(1) and excluding any amounts paid as Long-Term
Disability Benefits) paid to a Participant by the Company, or any Affiliate,
during a Plan Year, including amounts paid or credited to a Participant as
nonqualified deferred compensation by the Company or any Affiliate,
notwithstanding the provisions of Code Section 3121(v)(2), but in no event in
excess of $100,000 (as adjusted from time to time at the sole discretion of
the Company).
1.08 "Deferred Retirement Date" means the date on which a
Participant actually retires under the provisions of Section 4.03 of the Plan.
1.09 "Early Retirement Date" means the date on which a Participant
attains age 55, completes at least 15 Years of Credited Service, and submits
in writing a request to retire on a date prior to his Normal Retirement Date.
1.10 "Executive Supplemental Pension Plan Benefit" means
the benefits under the Morrison, Inc. Executive Supplemental Pension Plan
payable to a Participant or his beneficiary designated under such Plan and
calculated as a single life annuity for the life of the Participant.
1.11 "Final Average Compensation" means the average of a
Participant's Compensation for the five consecutive Years of Credited Service
immediately preceding his retirement date or death. If a Participant
completes at least 1,000 Hours of Service in a Year of Credited Service within
the computation period, but he is not paid compensation for that entire Plan
Year, then his Compensation for that Year of Credited Service shall be
annualized. For the purpose of annualizing a Participant's Compensation, the
component consisting of bonuses shall be the greater of the bonuses paid to
the Participant during the Plan Year or the bonuses paid to the Participant in
the most recent Plan Year.
1.12 "Frozen Retirement Plan" means the Morrison Incorporated
Retirement Plan.
1.13 "Frozen Retirement Plan Benefit" means the benefits under the
Morrison Incorporated Retirement Plan payable to a Participant or his
beneficiary designated under such Plan and calculated as a single life annuity
for the life of the Participant.
1.14 "Hour of Service" means
(a) Each hour for which an Participant is paid or entitled
to payment for the performance of duties for the Company or an
Affiliate. These hours shall be credited to the Participant for the
computation period in which the duties are performed.
(b) Each hour for which an Participant is paid or entitled
to payment by the Company or an Affiliate on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, military
duty or leave of absence. No more than 501 Hours of Service shall be
credited under this Subsection for any single computation period.
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Company or
an Affiliate. The same Hours of Service shall not be credited under
both Subsection (a) or Subsection (b), as the case may be, and also
under this Subsection (c). These hours shall be credited to the
Participant for the computation period or periods in which the award,
agreement, or payment pertains.
(d) Hours of Service shall be credited and determined in
compliance with Section 2530.200b-2 of 29 CFR Part 2530 as prescribed by
the Department of Labor.
1.15 "Long-Term Disability Benefits" mean the annual benefits
payable to a Participant by reason of any long-term disability coverage
attributable to premiums paid by the Company or an Affiliate.
1.16 "Normal Retirement Age" means the date on which a Participant
attains age 65.
1.17 "Normal Retirement Date" means the date on which a Participant
attains Normal Retirement Age.
1.18 "Participant" means any employee of the Company who has become
a Participant pursuant to Article II of the Plan, who retires from employment
with the Company on or after June 1, 1989, and who has not received a full
distribution from the Plan of his Accrued Benefit.
1.19 "Plan Administrator" means the organization, person or persons
appointed by the Board of Directors.
1.20 "Plan Year" means the calendar year.
1.21 "Social Security Benefits" means (a) if the Participant retires
prior to his Normal Retirement Date, the annual primary insurance amount that
would be payable to a Participant at "retirement age" as defined in 42 U.S.C.
Section 416(1) under the Social Security Act, as amended, based on the
assumption that the Participant will continue to receive until reaching
"retirement age" Compensation that would be treated as wages for purposes of
the Social Security Act at the same rate as in the calendar year preceding the
retirement date; or (b) if the Participant retires on or after his Normal
Retirement Date, the annual primary insurance amount payable to a Participant
at "retirement age" as defined in 42 U.S.C. Section 416(1) under the Social
Security Act, as amended.
1.22 "Year of Credited Service" means each calendar year during
which the Participant completes not less than 1,000 Hours of Service. For
purposes of determining Years of Credited Service, the following shall apply:
(a) in the event that the Company or an Affiliate acquires all of the assets
of another corporation or entity or a controlling interest in the stock of
another corporation or merges with another corporation or entity and is the
surviving entity, then an employee who was employed by the prior corporation
or entity and who is employed by the Company or an Affiliate on or about the
time of the acquisition or merger may be credited, at the sole discretion of
the Company, with Years of Credited Service while in the employ of the prior
corporation or entity but for that period shall be credited with no more than
seven and one-half (7-1/2) Years of Credited Service; (b) if a Participant
makes the election under Section 4.04(b) hereof to defer payment of his
Accrued Benefit upon attaining his Early Retirement Date, his Accrued Benefit
shall be determined by crediting him with an additional Year of Credited
Service for each whole calendar year constituting the period of deferral;
(c) if a Participant receives Long-Term Disability Benefits for any period of
time, that period shall not be counted for purposes of determining Years of
Credited Service; (d) in the event a Participant incurs a Break in Service of
more than three consecutive Plan Years, all Years of Credited Service prior to
the initial Break in Service shall be disregarded for all purposes under the
Plan; and (e) in the event a Participant incurs a Break in Service for a
period not in excess of three consecutive Plan Years, the Plan Administrator
shall have the sole discretion to determine how many, if any, Years of
Credited Service prior to the initial Break in Service shall be counted and
for which purposes under the Plan.
ARTICLE II
ELIGIBILITY
2.01 Any person actively employed by the Company or an Affiliate
who, as of June 1, 1989, had 15 Years of Credited Service and whose average
annual Compensation (determined without regard to the $100,000 limit) for the
immediately preceding three-calendar-year period equalled or exceeded $40,000
shall be a Participant as of June 1, 1989.
2.02 Any other person actively employed by the Company or an
Affiliate with 15 Years of Credited Service and whose average annual
Compensation (determined without regard to the $100,000 limit) for a
consecutive three-calendar-year period equals or exceeds $40,000 (as may be
adjusted from time to time hereafter by the Company) shall become a
Participant in the Plan as of the immediately succeeding January 1st.
ARTICLE III
FUNDING
The Plan shall be unfunded and all benefits payable under the Plan shall
be paid solely out of the Company's assets which are available to satisfy the
claims of the Company's general creditors.
ARTICLE IV
RETIREMENT BENEFITS
4.01 Whenever in the Plan reference is made to a retirement date, it
shall mean the Normal Retirement Date, Deferred Retirement Date, or Early
Retirement Date, whichever is applicable. If the amount of the payment
required to commence on a specified date pursuant to this Article IV cannot be
made or ascertained by that date, payment shall commence retroactively to that
date.
4.02 Normal Retirement Date
A Participant who reaches Normal Retirement Age while an employee of the
Company or an Affiliate may retire as of his Normal Retirement Date and shall
be entitled to receive his Accrued Benefit. However, a Participant who is
also a participant in the Frozen Retirement Plan can only receive his Accrued
Benefit if he has begun to receive his Frozen Retirement Plan Benefit. The
benefit under this Section 4.02 shall commence on the first day of the month
following the Participant's Normal Retirement Date and shall be payable in
accordance with Article VII hereof.
4.03 Deferred Retirement
A Participant may elect to remain in the employ of the Company or an
Affiliate beyond his Normal Retirement Date and defer receipt of his benefit
under the Plan until his Deferred Retirement Date. However, a Participant who
is also a participant in the Frozen Retirement Plan can only receive his
Accrued Benefit if he has begun to receive his Frozen Retirement Plan Benefit.
The benefit commencing upon the Participant's actual retirement date will be
his Accrued Benefit calculated as of his Deferred Retirement Date. The
benefit under this Section 4.03 shall commence on the first day of the month
following the Participant's Deferred Retirement Date and shall be payable in
accordance with Article VII hereof.
4.04 Early Retirement
(a) At his Early Retirement Date, a Participant may retire under
this Section 4.04(a) and shall be entitled to receive his Accrued Benefit
calculated as of his Early Retirement Date. However, a Participant who is also
a participant in the Frozen Retirement Plan can only receive his Accrued
Benefit if he has begun to receive his Frozen Retirement Plan Benefit. Except
as provided in Subsection (b) below, the benefit under this Section 4.04 shall
commence on the first day of the month following the Participant's Early
Retirement Date in accordance with Article VII hereof.
(b) At his Early Retirement Date, a Participant may elect to retire
but may request of the Plan Administrator permission to defer the commencement
of the payment of his Accrued Benefit to any point in time beginning at least
12 months after his Early Retirement Date. If a Participant so elects and he
receives the permission of the Plan Administrator, his Accrued Benefit
nevertheless shall be determined based upon his Final Average Compensation as
of his Early Retirement Date although he shall continue to accrue Years of
Credited Service as provided in Section 1.22(b) hereof.
ARTICLE V
DEATH BENEFITS
Upon the death of any married Participant on or after his Early
Retirement Date but prior to the receipt of any benefits hereunder, the spouse
surviving him on the date of death shall be entitled to receive a survivor
annuity providing monthly benefits for life equal to fifty (50) percent of the
annuity which would have been payable during the joint lives of the
Participant and such surviving spouse if the Participant had retired on the
date immediately before his death and received a normal form of distribution
pursuant to Section 7.02 hereof. The benefit shall be paid to such surviving
spouse on the first day of the month following the Participant's death in
accordance with Article VII hereof. If the amount of the payment required to
commence on a specified date pursuant to this Article V cannot be made or
ascertained by that date, payment shall commence retroactively to that date.
ARTICLE VI
TERMINATION OF EMPLOYMENT
6.01 Termination of Employment
In the event a Participant's employment with the Company and its
Affiliates terminates before his Early Retirement Date, his Accrued Benefit
shall be forfeited.
6.02 Leave of Absence
A leave of absence which is authorized by the Company shall not
constitute a termination of employment unless the Participant fails to return
to active employment at or prior to the expiration of the leave. If the
Participant does not return to active employment within the time specified,
then his employment shall be deemed to have terminated as of the commencement
of the leave of absence.
ARTICLE VII
PAYMENT OF BENEFITS UPON RETIREMENT
7.01 All forms of retirement benefits payable under the Plan shall
be the Actuarial Equivalent of the Participant's Accrued Benefit payable as a
single life annuity for the life of the Participant.
7.02 In the case of a Participant who is ineligible to receive
benefits under the Frozen Retirement Plan, the normal form of distribution
made pursuant to this Section 7.02 if the Participant is married on the date
benefits are to commence shall be a joint and fifty (50) percent survivor
annuity providing monthly benefits payable for the life of the Participant
with a survivor annuity for the life of the spouse to whom he is married at
retirement which is fifty (50) percent of the amount of the annuity payable
during the joint lives of the Participant and such surviving spouse, or if the
Participant is not married on the date benefits are to commence, a single life
annuity providing monthly benefits payable for the life of the Participant.
No later than 90 days and no earlier than 120 days prior to his retirement
date, the Participant may request of the Plan Administrator permission to have
payments made in one of the following alternative forms:
(a) an annuity providing for monthly benefits payable for
the life of the Participant;
(b) an annuity providing for monthly benefits payable for
the life of the Participant with 120 or 240 monthly payments guaranteed;
(c) a joint and survivor annuity providing for monthly
benefits payable for the life of the Participant with a survivor annuity
for the life of his joint annuitant designated at retirement (either his
surviving spouse or another designee) at the rate of fifty (50),
seventy-five (75) or one hundred (100) percent of the amount of the
annuity payable during the joint lives of the Participant and such joint
annuitant.
7.03 If a Participant is eligible to receive benefits under the
Frozen Retirement Plan, his Accrued Benefit shall be paid in the same form as
the method of payment selected by the Participant under the Frozen Retirement
Plan.
7.04 No payments of a Participant's Accrued Benefit shall be made
while the Participant is receiving Long-Term Disability Benefits.
ARTICLE VIII
PLAN ADMINISTRATOR
8.01 Organization and Operation of a Plan Administrator
(a) Any person appointed as the Plan Administrator shall
signify his acceptance by filing a written acceptance with the Board of
Directors. If a corporation or organization is appointed to serve as
the Plan Administrator, then the Plan Administrator may designate in
writing a person who may act on behalf of the Plan Administrator. The
Board of Directors shall have the right to remove the Plan Administrator
at any time by notice in writing. The Plan Administrator may resign at
any time by written notice of resignation to the Board of Directors,
which resignation shall become effective upon the date specified
therein. Upon removal or resignation, or in the event of the death of a
person constituting any part of the Plan Administrator, the Board of
Directors shall appoint a successor to the person.
(b) The Plan Administrator shall not receive any
compensation for his services.
8.02 Duties and Responsibilities of the Plan Administrator
(a) The Plan Administrator shall perform any act which the
Plan authorizes or requires of the Plan Administrator.
(b) The Plan Administrator shall compute the amount of any
benefits which shall be payable to any Participant or beneficiary in
accordance with the provisions of the Plan.
(c) The Plan Administrator shall from time to time
establish rules, not contrary to the provisions of this Plan, for the
administration of the Plan and the transaction of its business. The
Plan Administrator shall interpret the Plan and shall determine all
questions arising in the administration, interpretation and application
of the Plan, including determinations of eligibility for, and the amount
of, any Accrued Benefit. All determinations of the Plan Administrator
shall be final and binding on all Participants and beneficiaries,
subject to the provisions of the Plan and applicable law.
(d) The Plan Administrator may designate in writing other
persons to carry out its responsibilities under the Plan. The Plan
Administrator may at any time and from time to time remove any person
designated to carry out its responsibilities under the Plan by notice in
writing to the person.
(e) The Plan Administrator may employ persons to render
advice with regard to any of its responsibilities under the Plan.
Charges for all services rendered shall be directly paid by the Company.
(f) The Company shall indemnify and hold harmless the Plan
Administrator from and against any and all claims, losses, costs,
expenses (including, without limitation, attorney's fees and court
costs), damages, actions or causes of action arising from, on account of
or in connection with the performance by the person of his duties in
that capacity, other than those of the foregoing arising from, on
account of or in connection with the willful neglect or willful
misconduct of the person acting.
(g) The statement of specific duties for a Plan
Administrator in this Section 8.02 is not in derogation of any other
duties which a Plan Administrator has under the provisions of the Plan
or applicable law.
ARTICLE IX
CLAIM REVIEW PROCEDURE
9.01 Any person who makes a claim for benefits under the Plan that
is denied shall have the right to appeal the denial of his claim to the Plan
Administrator for a full and fair review at any time within 60 days after the
claimant receives written notice of the denial. In the event of an appeal,
the Plan Administrator shall afford the claimant or his duly authorized
representative the opportunity:
(a) to review documents pertinent to the claim;
(b) to submit issues and comments in writing; and
(c) to discuss the documents and issues with the Plan
Administrator.
9.02 The final decision of the Plan Administrator shall be made not
later than 60 days after receipt from the claimant of a request for review,
unless special circumstances, such as the need to hold a hearing, require an
extension of time for processing, in which case a decision shall be made as
soon as possible but not later than 120 days after receipt of the request for
review and only after appropriate notice to the claimant of the extension is
given before the end of the initial 60-day period. The decision shall be made
in writing, shall include specific reasons for the decision, shall be written
in a manner calculated to be understood by the claimant, shall include
specific references to pertinent Plan provisions on which the decision is
based, and, to the extent permitted by law, shall be final and binding on the
claimant. The decision of the Plan Administrator shall be the final review
provided by the Plan.
ARTICLE X
LIMITATION OF RIGHTS
Participation in the Plan shall not give any Participant any right or
claim except to the extent that the right is specifically fixed under the
terms of the Plan. The establishment of the Plan shall not be construed to
give any Participant a right to be continued in the employ of the Company or
as interfering with the right of the Company to terminate the employment of
any Participant at any time.
ARTICLE XI
LIMITATION OF ASSIGNMENT
11.01 Nonalienation of Benefits
No benefit which shall be payable under the Plan to any person shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge the same shall be void; and no
benefit shall in any manner be liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of any person, nor shall it be
subject to attachment or legal process for, or against, the person, and the
same shall not be recognized under the Plan, except to the extent as may be
required by law.
11.02 Payments to Minors or Incompetents
Whenever any benefit which shall be payable under the Plan is to be paid
to or for the benefit of any person who is then a minor or determined to be
incompetent by qualified medical advice, the Plan Administrator need not
require the appointment of a guardian or custodian, but shall be authorized to
cause the same to be paid over to the person having custody of the minor or
incompetent, or to cause the same to be paid to the minor or incompetent
without the intervention of a guardian or custodian, or to cause the same to
be paid to a legal guardian or custodian of the minor or incompetent if one
has been appointed or to cause the same to be used for the benefit of the
minor or incompetent.
11.03 Missing Participants
Whenever the Plan Administrator cannot within a reasonable time after
payments are to commence locate any person to or for the benefit of whom
payments are to be made after making a reasonable effort to locate the person,
the Company may hold the amount of the payment until the person entitled
thereto is located.
ARTICLE XII
AMENDMENT OR TERMINATION
12.01 The Company may terminate or amend the Plan at any time.
12.02 Upon termination of the Plan, the Company shall not distribute
Plan benefits at the time of termination, but instead shall make payment of
Plan benefits as otherwise provided in the Plan according to the terms and
conditions of the Plan immediately prior to its termination.
ARTICLE XIII
MISCELLANEOUS
13.01 Severability
In case any one or more of the provisions of the Plan shall, for any
reason, be held or found by final judgment of a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect (a) the
invalidity, illegality or unenforceability shall not affect any other
provisions of the Plan, (b) the Plan shall be construed as if the invalid,
illegal or unenforceable provision had never been contained herein, and (c) if
the effect of a holding or finding that any provision is invalid, illegal or
unenforceable is to modify to the Participant's detriment, reduce or eliminate
any benefit to the Participant intended by the Company, the Company shall
promptly amend the Plan to provide to the Participant (to the extent lawfully
permissible) substantially the same benefit the Participant would have enjoyed
had any provision of this Plan been upheld as legal, valid and enforceable.
13.02 Governing Law
The Plan shall be construed in accordance with and governed for all
purposes by the laws of the State of Alabama, and to the extent applicable, by
the laws of the United States of America.
13.03 Binding Effect
The provisions of the Plan shall be binding upon and shall inure to the
benefit of the successors and assigns of each Plan Sponsor.
13.04 Notices
Any notice required or permitted to be given to the Plan Administrator
under the Plan shall be in writing and shall be deemed to have been given when
delivered in person or when deposited in the United States mail, registered or
certified postage prepaid, and mailed to the Company at the following address:
Morrison Incorporated
P.O. Box 160266
4721 Morrison Drive
Mobile, Alabama 36625-0001
Attention: Plan Administrator
for the Morrison Incorporated
Management Retirement Plan
13.05 Tax Withholding
All federal, state and local income tax and other withholding
obligations shall be satisfied by the Company's withholding from the payments
of Plan benefits the amount of tax or other obligation.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed as of
the day and year first above written.
MORRISON INCORPORATED
By: /s/ S.E. BEALL, III
Title: President
ATTEST:
By: /s/ Pfilip G. Hunt
Title: Secretary
[CORPORATE SEAL]
20742602.W51
<PAGE>
FIRST AMENDMENT TO THE
MORRISON INCORPORATED
MANAGEMENT RETIREMENT PLAN
THIS FIRST AMENDMENT, made as of the 30th day of June, 1994, by MORRISON
RESTAURANTS INC., f/k/a Morrison Incorporated, a corporation duly organized
and existing under the laws of the State of Delaware (the "Primary Sponsor");
W I T N E S S E T H:
WHEREAS, the Primary Sponsor maintains the Morrison Incorporated
Management Retirement Plan under an indenture effective as of June 1, 1989
(the "Plan"); and
WHEREAS, the Primary Sponsor now desires to rename the Plan, to amend
the Plan to allow the Board of Directors to determine from time to time which,
if any, Participants should be permitted to receive retirement benefits
despite terminating employment with the Primary Sponsor and affiliates prior
to attainment of age 55 and for other reasons;
NOW, THEREFORE, the Primary Sponsor does hereby amend the Plan,
effective January 1, 1994, as follows:
1. By renaming the Plan the "Morrison Restaurants Inc. Management
Retirement Plan."
2. By adding to Section 1.01 the phrase "and Section 6.01" immediately
following the phrase "Article IV" therein.
3. By deleting the first sentence of Section 1.11 and by substituting
therefor the following:
"1.11 Final Average Compensation means the average of a
Participant's Compensation for the five consecutive Years of Credited
Service immediately preceding the Participant's retirement, death or
other termination of employment, as the case may be."
4. By substituting in Section 1.21 the phrase "first receives benefit
payments under the Plan" in lieu of the word "retires" each time the same
appears therein.
5. By deleting Subsection (d) of Section 1.22 and by substituting therefor
the following:
"(d) in the event a Participant incurs a Break in Service of more
than three consecutive Plan Years, all Years of Credited Service prior
to the initial Break in Service shall be disregarded for all purposes
under the Plan, unless such action would be inconsistent with any
individual determination by the Board of Directors pursuant to Section
6.01 hereof."
6. By deleting the first sentence of Article V and by substituting therefor
the following:
"Upon the death of any married Participant (a) who is employed
by the Company or its Affiliates on or after age 55 or (b) who
terminated employment with the Company and its Affiliates prior to age
55, retained his Accrued Benefit by action of the Board of Directors in
accordance with Section 6.01 hereof and survived until at least age 55,
the spouse surviving of such Participant shall be entitled to receive a
survivor annuity providing monthly benefits for life equal to fifty
percent (50%) of the annuity which would have been payable to the
Participant and such surviving spouse under the Plan if the Participant
had retired on the day immediately prior to his death and received a
normal form of distribution pursuant to Section 7.02 hereof."
7. By deleting Section 6.01 in its entirety and by substituting therefor
the following:
"6.01 Termination of Employment
The Accrued Benefit of a Participant who terminates employment
with the Company and its Affiliates prior to attaining age 55 shall be
forfeited; provided, however, that the Board of Directors, in its sole
discretion, may determine on a case-by-case basis that the Accrued
Benefit (based upon Final Average Compensation and Years of Credited
Service as of the employment termination date) of any such Participant
shall not be forfeited in which case the affected Participant shall be
entitled to receive his Accrued Benefit with payment commencing upon his
attainment of age 65, unless the affected Participant elects to have
payments commence as early the first day of the month following his
attainment of age 55. An affected Participant who is also a participant
in the Frozen Retirement Plan may not, however, elect to be paid under
this Plan sooner than the date benefits commence under the Frozen
Retirement Plan. The payment of benefits under this Section 6.01 may be
in such forms and shall be subject to the same conditions and
limitations as the payment of retirement benefits under Article VII.
The authority vested in the Board of Directors pursuant to this Section
6.01 to determine, on a case-by-case basis, not to forfeit an otherwise
forfeitable benefit shall not be delegated to any other person or entity
notwithstanding previous delegations of authority by the Board of
Directors pertaining to the administration of the Plan."
8. By deleting Section 12.01 in its entirety and by substituting therefor
the following:
"12.01 The Company may terminate or amend the Plan at any time
by resolution or written direction duly adopted by the Board of
Directors."
Except as specifically provided herein, the Plan shall remain in full
force and effect as prior to this First Amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed as the day and year first above written.
MORRISON RESTAURANTS INC.
By: /s/ SAMUEL E. BEALL, III
Title: President and Chief Executive
Officer
[CORPORATE SEAL]
ATTEST:
/s/ PFILIP G. HUNT
Title: Senior Vice President, General Counsel
and Secretary
MORRISON RESTAURANTS INC.
SALARY DEFERRAL PLAN
THIS INDENTURE made on the 31 day of December, 1993, by MORRISON
RESTAURANTS INC., f/k/a Morrison Incorporated, a corporation duly
organized and existing under the laws of the State of Delaware
(hereinafter called the "Primary Sponsor");
W I T N E S S E T H:
WHEREAS, the Primary Sponsor established by indenture dated June 1,
1968, the Morrison Employees Retirement Savings Trust, which was
subsequently renamed as the Morrison Incorporated Salary Deferral Plan
(the "Plan"), and which was last restated by indenture dated December 29,
1989;
WHEREAS, the Primary Sponsor now wishes to amend and restate the
Plan to comply with legislation subsequent to the Tax Reform Act of 1986,
and various regulations and rulings issued by government agencies thereon
and for other reasons;
WHEREAS, this plan is intended to be a profit sharing plan within
the meaning of Treasury Regulations Section 1.401-1(b)(1)(ii) and also
contains a cash or deferred arrangement as described in Section 401(k) of
the Internal Revenue Code of 1986; and
WHEREAS, the provisions of the Plan, as amended and restated herein,
shall apply only to Plan years beginning after December 31, 1988, and only
with respect to members who perform an Hour of Service (as defined in the
Plan) in Plan years beginning after December 31, 1988, except to the
extent the provisions are required to apply at an earlier date or are not
required to apply until a later date to comply with applicable law;
NOW, THEREFORE, the Primary Sponsor does hereby amend and restate
the Plan in its entirety, generally effective as of January 1, 1989, to
read as follows: <PAGE>
MORRISON RESTAURANTS INC.
SALARY DEFERRAL PLAN
PAGE
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . 1
SECTION 2 ELIGIBILITY . . . . . . . . . . . . . . . . . . 10
SECTION 3 CONTRIBUTIONS . . . . . . . . . . . . . . . . . 11
SECTION 4 ALLOCATIONS . . . . . . . . . . . . . . . . . . 14
SECTION 5 WITHDRAWALS DURING EMPLOYMENT . . . . . . . . . 15
SECTION 6 DEATH BENEFITS. . . . . . . . . . . . . . . . . 17
SECTION 7 PAYMENT OF BENEFITS ON RETIREMENT OR DEATH. . . 18
SECTION 8 PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT 20
SECTION 9 ADMINISTRATION OF THE PLAN. . . . . . . . . . . 21
SECTION 10 CLAIM REVIEW PROCEDURE. . . . . . . . . . . . . 23
SECTION 11 LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS. 25
SECTION 12 PROHIBITION AGAINST DIVERSION . . . . . . . . . 26
SECTION 13 LIMITATION OF RIGHTS. . . . . . . . . . . . . . 26
SECTION 14 AMENDMENT TO OR TERMINATION OF THE PLAN AND THE
TRUST . . . . . . . . . . . . . . . . . . . . . 26
SECTION 15 ADOPTION OF PLAN BY AFFILIATES. . . . . . . . . 28
SECTION 16 QUALIFICATION AND RETURN OF CONTRIBUTIONS . . . 28
SECTION 17 SECTION 16 OF SECURITIES EXCHANGE ACT OF 1934 . 29
SECTION 18 INCORPORATION OF SPECIAL LIMITATIONS. . . . . . 29
APPENDIX ASPECIAL NONDISCRIMINATION RULES. . . . . . . . . A-1
APPENDIX BLIMITATION ON ALLOCATIONS. . . . . . . . . . . . B-1
APPENDIX CTOP-HEAVY PROVISION. . . . . . . . . . . . . . . C-1
SECTION 1
DEFINITIONS
Wherever used herein, the masculine pronoun shall be deemed to
include the feminine, and the singular to include the plural, unless the
context clearly indicates otherwise and the following words and phrases
shall, when used herein, have the meanings set forth below:
1.1 "Account" means the account established and maintained by the
Plan Administrator to reflect the interest of a Member in the Fund. In
addition to any other accounts as the Plan Administrator may establish and
maintain, the Plan Administrator shall establish and maintain separate
accounts (each of which shall be adjusted pursuant to the Plan to reflect
income, gains, losses and other credits or charges attributable thereto)
for each Member to be designated as follows:
(a) "Employee Deferred Account" which shall reflect a
Member's interest in contributions made by a Plan Sponsor under Plan
Section 3.1.
(b) "Company Matching Account" which shall reflect a
Member's interest in matching contributions made by a Plan Sponsor
under Plan Section 3.2. The Company Matching Account shall consist
of a Company Stock Subaccount which shall hold shares of Company
Stock attributable to Plan Sponsor matching contributions and cash
held pending the purchase of shares of Company Stock pursuant to
Plan Section 3.2(c) and an Other Investment Subaccount which shall
hold all other assets attributable to Plan Sponsor matching
contributions.
(c) "Voluntary Contribution Account" which shall reflect a
Member's interest in Voluntary Contributions made by a Member to the
Fund pursuant to Plan Section 3.3.
(d) "Rollover Account" which shall reflect a Member's
interest in Rollover Amounts.
1.2 "Accrued Benefit" means those shares of Company Stock and cash
held pending the purchase of shares of Company Stock credited to a
Member's Company Stock Subaccount of his Company Matching Account and the
value of his Other Investment Subaccount of his Company Matching Account
and the balance of his other Accounts.
1.3 "Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Code Section
414(b)) as is a Plan Sponsor, (b) any other trade or business (whether or
not incorporated) under common control (within the meaning of Code Section
414(c)) with a Plan Sponsor, (c) any other corporation, partnership or
other organization which is a member of an affiliated service group
(within the meaning of Code Section 414(m)) with a Plan Sponsor, and
(d) any other entity required to be aggregated with a Plan Sponsor
pursuant to regulations under Code Section 414(o).
1.4 "Annual Compensation" means the amount paid to, or accrued by,
an Employee by or from a Plan Sponsor (and Affiliates for purposes of
Appendices A and C) during a Plan Year as compensation that would be
subject to income tax withholding under Code Section 3401(a) (but without
regard to any rules that limit the remuneration included in wages based on
the nature or location of the employment or the services performed, such
as the exception for agricultural labor in Code Section 3401(a)(2)), to
the extent not in excess of the Annual Compensation Limit. Notwith-
standing the above, Annual Compensation shall be determined as follows:
(a) (1) in determining with respect to each Plan Sponsor the
amount of contributions made by or on behalf of an Employee under
Plan Section 3 and allocations under Plan Section 4, and (2) for
purposes of applying the provisions of Appendix A hereto for such
Plan Years as the Secretary of the Treasury may allow, Annual
Compensation shall only include amounts received for the portion of
the Plan Year during which the Employee was a Member;
(b) for purposes of applying the Annual Compensation Limit,
with respect to Plan Sections 3 and 4 and Appendix A, the rules
contained in Subsection (c) of the Plan Section containing the
definition of the term "Highly Compensated Employee" shall apply,
except that in applying the rules, the term "family" shall include
only the spouse of the Member and any lineal descendants of the
Member who have not attained age 19 before the close of the Plan
Year; and
(c) for all purposes under the Plan except Appendices B and
C hereto (other than for purposes of determining who is a Key
Employee), Annual Compensation shall include any amount which would
have been paid during a Plan Year, but was contributed by a Plan
Sponsor on behalf of an Employee pursuant to a salary reduction
agreement which is not includable in the gross income of the
Employee under Code Section 125, 402(e)(3), or 402(h); and
(d) for purposes of applying the annual addition limits set
forth in Appendix B, the term Plan Sponsor as used in Plan Section
1.4 shall mean Plan Sponsor as that term is defined in Section 4 of
Appendix B.
1.5 "Annual Compensation Limit" means (a) $200,000 for the Plan
Year beginning on January 1, 1989, which amount may be adjusted for each
subsequent Plan Year through the Plan Year beginning on January 1, 1993,
based on changes in the cost of living as provided in regulations issued
by the Secretary of the Treasury, and (b) $150,000 for the Plan Year
beginning on January 1, 1994, which amount may be adjusted for each
subsequent Plan Year based on changes in the cost of living as provided in
regulations issued by the Secretary of the Treasury.
1.6 "Beneficiary" means the person or trust that a Member
designated most recently in writing to the Plan Administrator; provided,
however, that if the Member has failed to make a designation, no person
designated is alive, no trust has been established, or no successor
Beneficiary has been designated who is alive, the term "Beneficiary" means
(a) the Member's spouse or (b) if no spouse is alive, the Member's
surviving children, or (c) if no children are alive, the Member's parent
or parents, or (d) if no parent is alive, the legal representative of the
deceased Member's estate. Notwithstanding the preceding sentence, the
spouse of a married Member shall be his Beneficiary unless that spouse has
consented in writing to the designation by the Member of some other person
or trust and the spouse's consent acknowledges the effect of the
designation and is witnessed by a notary public or a Plan representative.
A Member may change his designation at any time. However, a Member may
not change his designation without further consent of his spouse under the
terms of the preceding sentence unless the spouse's consent permits
designation of another person or trust without further spousal consent and
acknowledges that the spouse has the right to limit consent to a specific
beneficiary and that the spouse voluntarily relinquishes this right.
Notwithstanding the above, the spouse's consent shall not be required if
the Member establishes to the satisfaction of the Plan Administrator that
the spouse cannot be located, if the Member has a court order indicating
that he is legally separated or has been abandoned (within the meaning of
local law) unless a "qualified domestic relations order" (as defined in
Code Section 414(p)) provides otherwise, or if there are other
circumstances as the Secretary of the Treasury prescribes. If the spouse
is legally incompetent to give consent, consent by the spouse's legal
guardian shall be deemed to be consent by the spouse.
1.7 "Board of Directors" means the Board of Directors of the
Primary Sponsor.
1.8 "Break in Service" means the failure of an Employee, in
connection with a termination of employment other than by reason of death
or attainment of a Retirement Date, to complete more than 500 Hours of
Service in any Plan Year.
1.9 "Code" means the Internal Revenue Code of 1986, as amended.
1.10 "Company Stock" means shares of any class of stock issued by
the Primary Sponsor or any Affiliate and constituting "qualifying employer
securities" within the meaning of ERISA Section 407(d)(5)
1.11 "Deferral Amount" means a contribution of a Plan Sponsor on
behalf of a Member pursuant to Plan Section 3.1.
1.12 "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.13 "Disability" means a disability of a Member within the meaning
of Code Section 72(m)(7), to the extent that the Member is, or would be,
entitled to disability retirement benefits under the federal Social
Security Act or to the extent that the Member is entitled to recover
benefits under any long term disability plan or policy maintained by the
Plan Sponsor. The determination of whether or not a Disability exists
shall be determined by the Plan Administrator and shall be substantiated
by competent medical evidence.
1.14 "Distributee" means an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order (as defined in
Code Section 414(p)) are Distributees with regard to the interest of the
spouse or former spouse.
1.15 "Effective Date" means January 1, 1989.
1.16 "Elective Deferrals" means, with respect to any taxable year
of the Member, the sum of
(a) any Deferral Amounts;
(b) any contributions made by or on behalf of a Member under
any other qualified cash or deferred arrangement as defined in Code
Section 401(k), whether or not maintained by a Plan Sponsor, to the
extent such contributions are not or would not, but for Code
Section 402(g)(1) be included in the Member's gross income for the
taxable year; and
(c) any other contributions made by or on behalf of a Member
pursuant to Code Section 402(g)(3).
1.17 "Eligible Employee" means any Employee of a Plan Sponsor other
than an Employee who is (a) an Employee covered by a collective bargaining
agreement between a union and a Plan Sponsor, provided that retirement
benefits were the subject of good faith bargaining, unless the collective
bargaining agreement provides for participation in the Plan; (b) a leased
employee within the meaning of Code Section 414(n)(2), or deemed to be an
Employee of a Plan Sponsor pursuant to regulations under Code Section
414(o); or, effective May 1, 1989, (c) an Employee who is a Highly
Compensated Employee. A Member who becomes a Highly Compensated Employee
during a Plan Year shall cease to be an Eligible Employee no later than
the first day of the immediately succeeding Plan Year.
1.18 "Eligible Retirement Plan" means an individual retirement
account described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code
Section 403(a) or a qualified trust described in Code Section 401(a) that
accepts the Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
1.19 "Eligible Rollover Distribution" means any distribution of all
or any portion of the Distributee's Account, except that an Eligible
Rollover Distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is
required under Code Section 401(a)(9); and the portion of any distribution
that is not includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
1.20 "Eligibility Service" means a twelve-consecutive-month period
during which the Employee completes no less than 1,000 Hours of Service
beginning on the date on which the Employee first performs an Hour of
Service upon his employment or reemployment with a Plan Sponsor or, in the
event the Employee fails to complete 1,000 Hours of Service in that
twelve-consecutive-month period, any twelve-consecutive-month period
thereafter, beginning on the anniversary of the date the Employee first
performed an Hour of Service upon his employment or reemployment, during
which the Employee completes no less than 1,000 Hours of Service.
1.21 "Employee" means any person who is (a) employed by a Plan
Sponsor or an Affiliate for purposes of the Federal Insurance
Contributions Act, (b) a leased employee within the meaning of Code
Section 414(n)(2) with respect to a Plan Sponsor, or (c) deemed to be an
employee of a Plan Sponsor pursuant to regulations under Code Section
414(o).
1.22 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.23 "Fiduciary" means each Named Fiduciary and any other person
who exercises or has any discretionary authority or control regarding
management or administration of the Plan, any other person who renders
investment advice for a fee or has any authority or responsibility to do
so with respect to any assets of the Plan, or any other person who
exercises or has any authority or control respecting management or
disposition of assets of the Plan.
1.24 "Fund" means the amount at any given time of cash and other
property held by the Trustee pursuant to the Plan.
1.25 "Highly Compensated Employee" means each Employee who is
described in Subsection (a), unless the Plan Sponsor makes an election
pursuant to Subsection (b).
(a) (1) The Employee during the Plan Year immediately
preceding the Plan Year in question:
(A) was at any time an owner of more than five
percent (5%) of the outstanding stock of a Plan Sponsor
or Affiliate or more than five percent (5%) of the total
combined voting power of all stock of a Plan Sponsor or
Affiliate; or
(B) received Annual Compensation in excess of
$96,368 (for the Plan Year beginning in 1993) which
amount shall be adjusted for changes in the cost of
living as provided in regulations issued by the
Secretary of the Treasury; or
(C) received Annual Compensation in excess of
$64,245 (for the Plan Year beginning in 1993) which
amount shall be adjusted for changes in the cost of
living as provided in regulations issued by the
Secretary of the Treasury, and who was in the group
consisting of the most highly compensated twenty percent
(20%) of the Employees; or
(D) was at any time an officer of the Plan
Sponsor or of any Affiliate whose Annual Compensation
was greater than fifty percent (50%) of the amount in
effect under Code Section 415(b)(1)(A) for the calendar
year in which the Plan Year ends, where the term
"officer" means an administrative executive in regular
and continual service to the Plan Sponsor or Affiliate;
provided, however, that in no event shall the number of
officers exceed the lesser of Clause (i) or (ii) of this
Subparagraph (D), where:
(i) equals fifty (50) Employees; and
(ii) equals the greater of (I) three (3)
Employees or (II) ten percent (10%) of the number
of Employees during the Plan Year, with any
non-integer being increased to the next integer.
If for any year no officer of the Plan Sponsor meets the
requirements of this Subparagraph (D), the highest paid
officer of the Plan Sponsor for the Plan Year shall be
considered an officer for purposes of this
Subparagraph (D).
(2) The Employee during the Plan Year in question (A)
is described in Subsection (a)(1)(A), or (B) is both (i)
described in Subsection (a)(1)(B), (a)(1)(C), or (a)(1)(D),
and (ii) one of the 100 Employees who received the most Annual
Compensation during that Plan Year.
The Plan Administrator may make an election to
substitute $64,245 (as adjusted) for $96,368 (as adjusted) in
Subparagraph (B) of Subsection (a)(1) provided that at all
times during the Plan Year the Plan Sponsor and its Affiliates
maintain significant business activities and have Employees in
at least two significantly separate geographic areas and
satisfy such other conditions as the Secretary of the Treasury
prescribes.
For purposes of Subparagraphs (C) and (D) of
Subsection (a)(1), the following shall be excluded when
determining the number of Employees in the most highly
compensated twenty percent (20%) of the Employees and the
number of officers:
(i) Employees who have not completed six (6)
months of service,
(ii) Employees who normally work less than
17-1/2 hours per week,
(iii) Employees who normally work during not more
than six (6) months during any Plan Year,
(iv) Employees who have not attained age 21,
(v) Employees who are included in a unit of
employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement
between employee representatives and the Plan Sponsor or
its Affiliates, provided 90% or more of the Employees
are covered under collective bargaining agreements and
the Plan only covers Employees who are not covered under
the collective bargaining agreements.
(b) Notwithstanding the provisions of Subsection (a), the
Primary Sponsor may elect to determine each Highly Compensated
Employee to be each Employee who during the Plan Year in question is
described in Subsection (a) (determined without regard to the head
language of Subsection (a)(1)), pursuant to the provisions of Treas.
Reg. Section 1.414(q)-1T, Q&A-14(b).
(c) For purposes of this Section, if any Employee is a
member of the family of a five percent (5%) owner as defined in
Subsection (a)(1) of this Section or of a Highly Compensated
Employee whose Annual Compensation is such that he is among the ten
(10) Highly Compensated Employees receiving the greatest amount of
Annual Compensation during the Plan Year, then (1) the Employee
shall not be considered a separate Employee, and (2) any Annual
Compensation paid to the Employee, and any applicable contribution
or benefit on behalf of the Employee, shall be treated as if it were
paid to, or on behalf of, the five percent (5%) owner or the
Employee who is among the ten (10) Highly Compensated Employees
receiving the greatest amount of Annual Compensation during the Plan
Year. For purposes of this Subsection (c), the term "family" means
with respect to any Employee, the Employee's spouse and lineal
descendants or ascendants and the spouses of lineal descendants or
ascendants.
(d) For purposes of this Section, a former Employee shall be
treated as a Highly Compensated Employee if (1) the former Employee
was a Highly Compensated Employee at the time the former Employee
separated from service with the Plan Sponsor or Affiliate or (2) the
former Employee was a Highly Compensated Employee at any time after
the former Employee attained age 55.
(e) For purposes of this Section, Employees who are
nonresident aliens and who receive no earned income from the Plan
Sponsor or an Affiliate from sources within the United States shall
not be treated as Employees.
(f) For purposes of this Section, Annual Compensation shall
include amounts paid by Affiliates and shall be determined without
regard to the Annual Compensation Limit.
1.26 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for a Plan Sponsor or any
Affiliate during the applicable computation period, and such hours
shall be credited to the computation period in which the duties are
performed.
(b) Each hour for which an Employee is paid, or entitled to
payment, by a Plan Sponsor or any Affiliate on account of a period
of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence.
(c) Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by a Plan Sponsor or any
Affiliate, and such hours shall be credited to the computation
period or periods to which the award or agreement for back pay
pertains rather than to the computation period in which the award,
agreement or payment is made; provided, that the crediting of Hours
of Service for back pay awarded or agreed to with respect to periods
described in Subsection (b) of this Section shall be subject to the
limitations set forth in Subsection (e).
(d) Solely for purposes of determining whether a Break in
Service has occurred, each hour during any period that the Employee
is absent from work (1) by reason of the pregnancy of the Employee,
(2) by reason of the birth of a child of the Employee, (3) by reason
of the placement of a child with the Employee in connection with the
adoption of the child by the Employee, or (4) for purposes of caring
for such child for a period immediately following its birth or
placement. The hours described in this Subsection (d) shall be
credited (A) only in the computation period in which the absence
from work begins, if the Employee would be prevented from incurring
a Break in Service in that year solely because of that credit, or
(B), in any other case, in the next following computation period.
(e) The Plan Administrator shall credit Hours of Service in
accordance with the provisions of Section 2530.200b-2(b) and (c) of
the U.S. Department of Labor Regulations or such other federal
regulations as may from time to time be applicable and determine
Hours of Service from the employment records of a Plan Sponsor or in
any other manner consistent with regulations promulgated by the
Secretary of Labor, and shall construe any ambiguities in favor of
crediting Employees with Hours of Service. Notwithstanding any
other provision of this Section, in no event shall an Employee be
credited with more than 501 Hours of Service during any single
continuous period during which he performs no duties for the Plan
Sponsor or Affiliate.
(f) In the event that an individual becomes an Eligible
Employee of a Plan Sponsor by reason of (a) an acquisition by the
Plan Sponsor of substantially all of the assets of another
corporation or entity or a controlling interest of the stock of
another corporation; (b) a merger of the individual's prior employer
with the Plan Sponsor; or (c) the award of a food services or
similar contract to the Plan Sponsor resulting in the hiring of a
group of employees employed immediately prior to the award of the
contract at the same location by an unrelated employer, then each
such Eligible Employee may be credited Hours of Service based on the
services he or she performed with the prior employer in the manner
and subject to such conditions, if any, provided in resolutions
adopted by the Plan Sponsor; provided further that the crediting of
such Hours of Service shall not be permitted in a manner that
discriminates significantly in favor of Highly Compensated
Employees.
1.27 "Investment Committee" means a committee which may be
established to direct the Trustee with respect to investments of the
Fund.
1.28 "Investment Fund" means such subfunds of the Fund as may be
established by the Plan Administrator for the investment of Accounts.
1.29 "Investment Manager" means a Fiduciary, other than the
Trustee, the Plan Administrator, or a Plan Sponsor, who may be appointed
by the Primary Sponsor:
(a) who has the power to manage, acquire, or dispose of any
assets of the Fund or a portion thereof;
(b) who (1) is registered as an investment adviser under the
Investment Advisers Act of 1940; (2) is a bank as defined in that
Act; or (3) is an insurance company qualified to perform services
described in Subsection (a) above under the laws of more than one
state; and
(c) who has acknowledged in writing that he is a Fiduciary
with respect to the Plan.
1.30 "Member" means any Employee or former Employee who has become
a participant in the Plan for so long as his vested Accrued Benefit has
not been fully distributed pursuant to the Plan.
1.31 "Named Fiduciary" means only the following:
(a) the Plan Administrator;
(b) the Trustee;
(c) the Board of Directors;
(d) the Investment Committee; and
(e) the Investment Manager.
1.32 "Normal Retirement Age" means age 65.
1.33 "Plan Administrator" means the organization or person
designated to administer the Plan.
1.34 "Plan Sponsor" means individually the Primary Sponsor and any
Affiliate or other entity which has adopted the Plan and Trust.
1.35 "Plan Year" means the calendar year.
1.36 "Retirement Date" means the date on which the Member
(a) retires on or after attaining Normal Retirement Age or (b) becomes
subject to a Disability.
1.37 "Rollover Amount" means any amount not less than $200
transferred to the Fund by a Member (a) which amount qualifies as an
Eligible Rollover Distribution under Code Section 402(c)(4) or 403(a)(4),
or a rollover contribution under 408(d)(3)(A)(ii) and any regulations
issued thereunder and (b) any other amounts transferred to the Fund on
behalf of a Member in a trust-to-trust transfer from any plan meeting the
requirements of Code Section 401(a) which is not subject to Code Section
401(a)(11) or 417. No portion of a Rollover Amount may consist of after-
tax amounts.
1.38 "Trust" means the trust established under an agreement dated
December 29, 1989, between the Primary Sponsor and the Trustee to hold the
Fund or any successor agreement.
1.39 "Trustee" means the trustee under the Trust.
1.40 "Valuation Date" means the last day of each month or any other
day which the Plan Administrator declares to be a Valuation Date; provided
that, on a prospective basis after January 1, 1994, the Plan Administrator
may in its sole discretion declare that each Individual Fund may be valued
as frequently as each regular business day of the entity maintaining the
investments in which the Individual Funds are invested, in which case each
regular business day shall constitute Valuation Dates.
1.41 "Voluntary Contribution" means a non-deductible contribution
to the Fund made by the Member pursuant to Plan Section 3.3.
1.42 "Year of Service" means each Plan Year during which a Member
has completed no less than 1,000 Hours of Service.
SECTION 2
ELIGIBILITY
2.1 Each individual who was a Member on the day immediately
preceding the Effective Date shall continue to be a Member as the
Effective Date.
2.2 Each Eligible Employee shall become a Member as of the first
day of the first payroll period coinciding with or next following the
later of the date he (a) completes his Eligibility Service or (b) attains
age 21.
2.3 Each former Member who is reemployed by a Plan Sponsor shall
become a Member as of the date of his reemployment as an Eligible
Employee.
2.4 Each former Employee who completes his Eligibility Service but
terminates employment with a Plan Sponsor before becoming a Member shall
become a Member as of the latest of the date he (a) is reemployed,
(b) would have become a Member if he had not terminated employment, or
(c) becomes an Eligible Employee.
2.5 Solely for the purpose of contributing a Rollover Amount to
the Plan, an Eligible Employee who has not yet become a Member pursuant to
any other provision of this Plan Section 2 shall become a Member as of the
date on which the Rollover Amount is contributed to the Plan.
2.6 In the event that an individual becomes an Eligible Employee
of a Plan Sponsor by reason of (1) an acquisition by the Plan Sponsor of
substantially all of the assets of another corporation or entity or a
controlling interest of the stock of another corporation; (2) a merger of
the individual's prior employer with the Plan Sponsor; or (3) the award of
a food services or similar contract to the Plan Sponsor resulting in the
hiring of a group of employees employed immediately prior to the award of
the contract at the same location by an unrelated employer, then any such
Eligible Employee may become a Member on any earlier date than otherwise
specified in this Section 2 in the manner and subject to such conditions,
if any, provided in resolutions adopted by the Plan Sponsor.
SECTION 3
CONTRIBUTIONS
3.1 (a) The Plan Sponsor shall make a contribution to the Fund
on behalf of each Member who is an Eligible Employee and who has
elected to defer a portion of Annual Compensation otherwise payable
to him for the Plan Year and to have such portion contributed to the
Fund. The election must be made before the Annual Compensation is
payable and may only be made pursuant to an agreement between the
Member and the Plan Sponsor which shall be in such form and subject
to such rules and limitations as the Plan Administrator may
prescribe and shall specify the percentage of Annual Compensation
that the Member desires to defer and to have contributed to the
Fund. Once a Member has made an election for a Plan Year, the
Member may revoke or modify his election to reduce the rate of
future deferrals, effective as of the beginning of the payroll
period coinciding with or next following the Plan Administrator's
processing of the revocation or modification pursuant to normal
administrative procedures. Once an election has been revoked or
modified, any subsequent election by the Member shall be effective
as of the first day of the first payroll period coinciding with or
next following the Plan Administrator's processing of the election
pursuant to normal administrative procedures, except that at the
request of a Member in a form acceptable to the Plan Administrator,
the election may be given effect at a later date.
The contribution made by a Plan Sponsor on behalf of a Member
under this Plan Section 3.1(a) shall be in an amount equal to the
amount specified in the Member's deferral agreement, which amount
shall not be less than two percent (2%) nor greater than ten percent
(10%) of the Member's Annual Compensation. The Plan Administrator
may adjust said percentage applicable to a Member who becomes a
Highly Compensated Employees during a Plan Year on a prospective
basis, but in no event shall the percentage be greater than ten
percent (10%) of a Member's Annual Compensation.
(b) Elective Deferrals shall in no event exceed $8,994 (for
1993) in any one taxable year of the Member, which amount shall be
adjusted for changes in the cost of living as provided by the
Secretary of the Treasury. In the event the amount of Elective
Deferrals exceeds $8,994 (for 1993) as adjusted, in any one taxable
year then, (1) not later than the immediately following March 1, the
Member may designate to the Plan the portion of the Member's
Deferral Amount which consists of excess Elective Deferrals, and (2)
not later than the immediately following April 15, the Plan may
distribute the amount designated to it under Paragraph (1) above, as
adjusted to reflect income, gain, or loss attributable to it through
the date of the distribution, and reduced by any "Excess Deferral
Amounts," as defined in Appendix A hereto, previously distributed or
recharacterized with respect to the Member for the Plan Year
beginning with or within that taxable year. The payment of the
excess Elective Deferrals, as adjusted and reduced, from the Plan
shall be made to the Member without regard to any other provision in
the Plan. In the event that a Member's Elective Deferrals exceed
$8,994, as adjusted, in any one taxable year under the Plan and
other plans of the Plan Sponsor and its Affiliates, the Member shall
be deemed to have designated for distribution under the Plan the
amount of excess Elective Deferrals, as adjusted and reduced, by
taking into account only Elective Deferral amounts under the Plan
and other plans of the Plan Sponsor and its Affiliates.
3.2 (a) Each Plan Sponsor proposes to make matching
contributions to the Fund with respect to each Plan Year on behalf
of each Member entitled to an allocation under Plan Section 4.1 in
an amount equal to (i) twenty percent (20%) of the Member's Annual
Compensation deferred by the Member pursuant to Plan Section 3.1 in
the case of a Member who has completed at least three (3) Years of
Service but fewer than ten (10) Years of Service; (ii) thirty
percent (30%) of the Member's Annual Compensation deferred by the
Member pursuant to Plan Section 3.1 in the case of a Member who has
completed at least ten (10) Years of Service but fewer than twenty
(20) Years of Service; and (iii) forty percent (40%) of the Member's
Annual Compensation deferred by the Member pursuant to Plan Section
3.1 in the case of a Member who has completed at least twenty (20)
Years of Service. The Plan Sponsor's contribution shall be reduced
to the extent necessary, if any, to comply with the limitations in
Appendices A and B hereof.
(b) Notwithstanding any other provision of this Plan Section
3.2 to the contrary, in the case of a Member who becomes a Highly
Compensated Employee during a Plan Year, the Plan Sponsor proposes
to make a matching contribution, in lieu of any contribution on
behalf of the Highly Compensated Employee under Plan Section 3.2(a),
on behalf of such Highly Compensated Employee in an amount equal to
twenty percent (20%) of the Highly Compensated Employee's Annual
Compensation contributed to the Member's Employee Deferred Account
pursuant to Plan Section 3.1, regardless of the Member's Years of
Service.
(c) Plan Sponsor contributions made pursuant to this Plan
Section may be made in cash or in kind, including, without
limitation, shares of Company Stock, at the discretion of the Plan
Sponsor. Unless the Primary Sponsor directs otherwise, the Trustee
shall use Plan Sponsor matching contributions made in the form of
cash to acquire shares of Company Stock that are issued and
outstanding. The Primary Sponsor may request the Trustee to acquire
the necessary shares by purchasing (i) newly issued shares of
Company Stock, or (ii) shares of Company Stock held as treasury
shares.
(d) Effective July 1, 1992, for purposes of determining the
amount of matching contributions to be credited to a Member's
Company Matching Account, all or a portion of a Member's years of
employment with a predecessor employer may be counted if the Member
became an Eligible Employee of a Plan Sponsor by reason of (1) an
acquisition by the Plan Sponsor of substantially all of the assets
of another corporation or entity or of a controlling interest of the
stock of another corporation; (2) a merger of the Member's prior
employer with the Plan Sponsor; or (3) the award of a food services
or similar contract to the Plan Sponsor resulting in the hiring of a
group of employees employed immediately prior to the award of the
contract at the same location by an unrelated employer and if, at
the time of the acquisition, merger or award or as soon as
practicable thereafter, the Plan Sponsor adopts resolutions
providing for the counting of such years of employment in favor of a
group or category of similarly situated individuals that included
the Member. The counting of any such years of employment shall be
specified in those resolutions and shall be subject to such
conditions, if any, provided therein; provided further that the
counting of any such years of employment shall not be made in a
manner that discriminates in favor of Highly Compensated Employees.
3.3 Subject to such rules and limitations as the Plan
Administrator may from time to time prescribe, each Member who contributed
at least two percent (2%) of his Annual Compensation under Plan Section
3.1 may contribute to the Fund as a Voluntary Contribution an amount of
his Annual Compensation not in excess of ten percent (10%) thereof;
provided, however, that this limitation shall apply in the aggregate to
all Voluntary Contributions made by a Member to two (2) or more plans
maintained by the Plan Sponsor. Voluntary Contributions shall be made to
the Fund through regular payroll deductions or in such other manner as
shall be agreed upon by each Member and the Plan Administrator. The Plan
Administrator may, at any time, suspend the making of any further
Voluntary Contributions. Any Member who becomes a Highly Compensated
Employee during a Plan Year shall be ineligible to make further Voluntary
Contributions.
3.4 Any Member may, with the consent of the Plan Administrator and
subject to such rules and conditions as the Plan Administrator may
prescribe, transfer a Rollover Amount to the Fund; provided, however, that
the Plan Administrator shall not administer this provision in a manner
which is discriminatory in favor of Highly Compensated Employees.
3.5 Contributions may be made only in cash or other property which
is acceptable to the Trustee. In no event will the sum of contributions
under Plan Sections 3.1, 3.2 and 3.3 exceed the deductible limits under
Code Section 404.
SECTION 4
ALLOCATIONS
4.1 As soon as reasonably practicable following the date of
withholding by the Plan Sponsor, if applicable, and receipt by the
Trustee, Plan Sponsor contributions made on behalf of each Member under
Plan Sections 3.1 and 3.2, Voluntary Contributions and Rollover Amounts
contributed by the Member shall be allocated to the Employee Deferred
Account, Voluntary Contribution Account and Rollover Account,
respectively, of the Member on behalf of whom the contributions were made.
4.2 Except as otherwise provided in the Plan and the Trust, as of
each Valuation Date, the Trustee shall determine the net income or net
loss of the Fund as hereinafter set forth.
(a) The net income or net loss of the Company Stock
Subaccounts shall be determined separately by the Trustee and
allocated to each Member's Account as follows:
(1) Any cash dividends with respect to Company Stock
allocated to the Company Stock Subaccount of a Member as of
the record date on which such cash dividend was declared shall
be immediately allocated to the Other Investment Subaccount of
the Member's Account.
(2) Any additional shares of Company Stock which are
issued with respect to any Company Stock held in a Company
Stock Subaccount for any reason, including, but not limited
to, stock dividends, mergers or stock splits, shall be
immediately allocated to the Company Stock Subaccount as of
the date on which the additional shares of Company Stock are
delivered to the Trustee. The additional shares of Company
Stock shall be credited to each Company Stock Subaccount based
upon the number of shares of Company Stock in each Company
Stock Subaccount as of the record date on which the stock
dividend or other issuance was declared or received, as the
case may be.
(b) The net income or net loss of the Other Investment
Subaccounts shall be determined separately by the Trustee and
allocated to each Member's Account as follows:
(1) To the cash income, if any, since the last
Valuation Date, there shall be added or subtracted, as the
case may be, any net increase or decrease, since the last
Valuation Date, in the fair market value of the assets of each
Individual Fund, any gain or loss on the sale or exchange of
assets of the Individual Fund since the last Valuation Date,
accrued interest since the last Valuation Date with respect to
any interest bearing security as to which the purchaser would
be required to pay such accrued interest in addition to the
quoted price, the amount of any dividend which shall have been
declared since the last Valuation Date but not paid on shares
of stock owned by the Individual Fund if the market quotation
used in determining the value of such shares is ex-dividend,
and the amount of any other assets of the Individual Fund
determined by the Trustee to be income since the last
Valuation Date.
(2) From the sum thereof there shall be deducted all
charges, expenses, and liabilities accrued since the last
Valuation Date which are proper under the provisions of the
Plan and Trust and which in the discretion of the and which in
the discretion of the Trustee are properly chargeable against
income of the Individual Fund for the period.
The net income or net loss so determined shall be allocated as
of the Valuation Date to the Other Investment Subaccounts of each
Member in the proportion that the balance of the Member's Other
Investment Subaccount invested in the Individual Fund as of the
preceding Valuation Date bears to the total value of all Members'
Other Investment Subaccounts invested in the Individual Fund as of
the preceding Valuation Date.
SECTION 5
WITHDRAWALS DURING EMPLOYMENT
5.1 Effective January 1, 1994, subject to the rules and conditions
as the Plan Administrator may prescribe, by request, a Member may receive
a distribution as soon as administratively practicable of all or a portion
of the balance of his Rollover Account and Voluntary Contribution Account;
provided any such Rollover Amounts have been held in the Plan for a
minimum of two (2) years. Any request for a distribution under this
Section must be made on the forms and in the manner prescribed by the Plan
Administrator.
5.2 The Trustee shall, upon the direction of the Plan
Administrator, distribute all or a portion of a Member's Employee Deferred
Account consisting of Deferral Amounts (but not earnings thereon) prior to
the time such account is otherwise distributable in accordance with the
other provisions of the Plan; provided, however, that any such
distribution shall be made only if the Member is an Employee and
demonstrates that he is suffering from "hardship" as determined herein.
For purposes of this Plan Section, a distribution will be deemed to be an
account of hardship if the distribution is on account of:
(a) expenses for medical care described in Code
Section 213(d) incurred by the Member, his spouse, or any
dependents of the Member (as defined in Code Section 152) or
necessary for these persons to obtain medical care described
in Code Section 213(d);
(b) purchase (excluding mortgage payments) of a
principal residence for the Member;
(c) payment of tuition and related educational fees
for the next twelve (12) months of post-secondary education
for the Member, his spouse, children, or dependents;
(d) the need to prevent the eviction of the Member
from his principal residence or foreclosure on the mortgage of
the Member's principal residence; or
(e) any other contingency determined by the Internal
Revenue Service to constitute an "immediate and heavy
financial need" within the meaning of Treasury Regulations
Section 1.401(k)-1(d).
5.3 In addition to the requirements set forth in Plan Section 5.2,
any distribution pursuant to Plan Section 5.2 shall not be in excess of
the amount necessary to satisfy the need determined under Plan Section 5.2
and shall also be subject to the requirements of Subsection (a) or (b) of
this Plan Section.
(a) (1) The Member shall first obtain all distributions,
other than hardship distributions, and all nontaxable loans
currently available under all plans maintained by the Plan
Sponsor;
(2) the Plan Sponsor shall not permit Elective
Deferrals or after-tax employee contributions to be made to
the Plan or any other plan maintained by the Plan Sponsor, for
a period of twelve (12) months after the Member receives the
distribution pursuant to this Plan Section; and
(3) the Plan Sponsor shall not permit Elective
Deferrals to be made to the Plan or any other plan maintained
by the Plan Sponsor for the Member's taxable year immediately
following the taxable year of the hardship distribution in
excess of the limit under Plan Section 3.1(b) for the taxable
year, less the amount of the Elective Deferrals made to the
Plan or any other plan maintained by the Plan Sponsor for the
taxable year in which the distribution under this Plan Section
occurs.
(b) (1) The Member shall first obtain all other
distributions, other than hardship distributions, and all
nontaxable loans available under all plans maintained by the
Plan Sponsor; and
(2) the Plan Administrator shall determine that it can
reasonably rely on the Member's certification by execution of
a form provided by the Plan Administrator that the need
determined under Plan Section 5.2 cannot be relieved --
(A) through reimbursement or compensation by
insurance or otherwise,
(B) by reasonable liquidation of the assets of
the Member, his spouse and minor children, to the extent
that the liquidation would not itself cause an immediate
and heavy financial need and to the extent that the
assets of the spouse and minor children are reasonably
available to the Member,
(C) by cessation of Elective Deferrals, or
(D) by other distributions or nontaxable (at the
time of the distribution) loans from plans maintained by
the Plan Sponsor or any other employer, or by borrowing
from commercial sources on reasonable commercial terms.
Such distribution shall be made only in accordance with such rules,
policies, procedures, restrictions, and conditions as the Plan
Administrator may from time to time adopt. Any determination of the
existence of hardship and the amount to be distributed on account thereof
shall be made by the Plan Administrator (or such other person as may be
required to make such decisions) in accordance with the foregoing rules as
applied in a uniform and nondiscriminatory manner; provided that, unless
the Member requests otherwise, any such distribution shall include the
amount necessary to pay any federal, state and local income taxes and
penalties reasonably anticipated to result from the distribution.
5.4 Any distribution under this Plan Section shall be made in a
lump sum to the Member, and shall be subject to the Eligible Rollover
Distribution requirements set forth in Plan Section 7.3.
SECTION 6
DEATH BENEFITS
6.1 Upon the death of a Member who is an Employee at the time of
his death, his Beneficiary shall be entitled to the full value of his
Accrued Benefit.
6.2 Upon the death of a Member who is not an Employee at the time
of his death, prior to the distribution of his vested Accrued Benefit, his
Beneficiary shall be entitled to his vested Accrued Benefit.
6.3 If, subsequent to the death of a Member, the Member's
Beneficiary dies while entitled to receive benefits under the Plan, the
successor Beneficiary, if any, or the Beneficiary listed under Subsection
(a), (b) or (c) of the Plan Section containing the definition of the term
"Beneficiary" shall generally be entitled to receive benefits under the
Plan. However, if the deceased Beneficiary was the Member's spouse at the
time of the Member's death, or if no successor Beneficiary shall have been
designated by the Member and be alive and no Beneficiary listed under
Subsection (a), (b) or (c) of the Plan Section containing the definition
of the term "Beneficiary" shall be alive, the Member's unpaid vested
Accrued Benefit shall be paid to the personal representative of the
deceased Beneficiary's estate.
6.4 Any benefit payable under this Section 6 shall be paid in
accordance with and subject to the provisions of Plan Section 7 or Plan
Section 8, whichever is applicable, after receipt by the Trustee from the
Plan Administrator of notice of the death of the Member.
SECTION 7
PAYMENT OF BENEFITS ON RETIREMENT OR DEATH
7.1 The Accrued Benefit of a Member who has attained a Retirement
Date or has attained Normal Retirement Age or died while an Employee shall
be fully vested and nonforfeitable. As of a Member's Retirement Date or
death while an Employee, he or his Beneficiary shall be entitled to his
Accrued Benefit to be paid in accordance with this Plan Section 7. The
Accrued Benefit of a Member which is to be paid under this Section 7 shall
be determined as of the Valuation Date coinciding with or immediately
preceding the date the Accrued Benefit is valued for imminent payout
purposes pursuant to normal administrative procedures, and shall be
increased by any amounts allocated to the Member's Account after that
Valuation Date and reduced by any distributions made from the Member's
account after that Valuation Date. Payments to a Member, or to the
Beneficiary of a deceased Member, shall commence as soon as
administratively feasible after the Member's Retirement Date or death. If
the amount of the payment required to commence on a date cannot be
ascertained by that date, payment shall commence retroactively to that
date and shall commence no later than sixty (60) days after the earliest
date on which the amount of payment can be ascertained.
7.2 The payment of a Member's Accrued Benefit shall be in the form
of one lump sum in cash. If the Member's interest in the Morrison Stock
Fund (as defined in the Trust) equals or exceeds the value of one hundred
(100) shares of Company Stock, that interest may be distributed in the
form of whole shares of Company Stock if the Member so elects by written
instrument delivered to the Plan Administrator.
7.3 Notwithstanding any provisions of the Plan to the contrary
that would otherwise limit a Distributee's election under this Plan
Section 7, effective January 1, 1993, a Distributee may elect, at the time
and in the manner prescribed by the Plan Administrator, to have any
portion of a distribution pursuant to this Plan Section which is an
Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a direct rollover so long as all
Eligible Rollover Distributions to a Distributee for a calendar year total
or are expected to total at least $200 and, in the case of a Distributee
who elects to directly receive a portion of an Eligible Rollover
Distribution and directly roll the balance over to an Eligible Rollover
Plan, the portion that is to be directly rolled over totals at least $500.
7.4 Notwithstanding any provision of the Plan to the contrary,
effective January 1, 1994, if a Member's vested Accrued Benefit exceeds
$3,500, it shall not be distributed before the Member's "required
beginning date," as defined in Plan Section 7.5(c), or death without the
consent of the Member.
7.5 Notwithstanding any other provisions of the Plan,
(a) Prior to the death of a Member, all retirement payments
hereunder shall --
(1) be distributed to the Member not later than the
required beginning date (as defined below) or,
(2) be distributed, commencing not later than the
required beginning date (as defined below)--
(A) in accordance with regulations prescribed by
the Secretary of the Treasury, over the life of the
Member or over the lives of the Member and his
designated individual Beneficiary, if any, or
(B) in accordance with regulations prescribed by
the Secretary of the Treasury, over a period not
extending beyond the life expectancy of the Member or
the joint life and last survivor expectancy of the
Member and his designated individual Beneficiary, if
any.
(b) (1) If --
(A) the distribution of a Member's retirement
payments have begun in accordance with Subsection (a)(2)
of this Plan Section, and
(B) the Member dies before his entire vested
Accrued Benefit has been distributed to him,
then the remaining portion of his vested Accrued Benefit shall
be distributed at least as rapidly as under the method of
distribution being used under Subsection (a)(2) of this Plan
Section as of the date of his death.
(2) If a Member dies before the commencement of
retirement payments hereunder, the entire interest of the
Member shall be distributed within five (5) years after his
death.
(3) If --
(A) any portion of a Member's vested Accrued
Benefit is payable to or for the benefit of the Member's
designated individual Beneficiary, if any,
(B) that portion is to be distributed, in
accordance with regulations prescribed by the Secretary
of the Treasury, over the life of the designated
individual Beneficiary or over a period not extending
beyond the life expectancy of the designated individual
Beneficiary, and
(C) the distributions begin not later than one
(1) year after the date of the Member's death or such
later date as the Secretary of the Treasury may by
regulations prescribe,
then, for purposes of Paragraph (2) of this Subsection (b),
the portion referred to in Subparagraph (A) of this Paragraph
(3) shall be treated as distributed on the date on which the
distributions to the designated individual Beneficiary begin.
(4) If the designated individual Beneficiary referred
to in Paragraph (3)(A) of this Subsection (b) is the surviving
spouse of the Member, then --
(A) the date on which the distributions are
required to begin under Paragraph (3)(C) of this
Subsection (b) shall not be earlier than the date on
which the Member would have attained age 70-1/2, and
(B) if the surviving spouse dies before the
distributions to such spouse begin, this Subsection (b)
shall be applied as if the surviving spouse were the
Member.
(c) For purposes of this Plan Section, the term "required
beginning date" means April 1 of the calendar year following the
calendar year in which the Member attains age 70-1/2.
Notwithstanding the foregoing, in the case of a Member who is not
described in Section 1(b)(3) of Appendix C hereto and who has
attained age 70-1/2 before January 1, 1988, the term "required
beginning date" means April 1 of the calendar year following the
calendar year in which the Member retires or otherwise terminates
employment.
(d) Distributions will be made in accordance with the
regulations under Code Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Treas. Reg. Section
1.401(a)(9)-2.
SECTION 8
PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT
8.1 Transfer of a Member from one Plan Sponsor to another Plan
Sponsor or to an Affiliate shall not be deemed for any purpose under the
Plan to be a termination of employment of the Member.
8.2 In the event of the termination of employment of a Member for
reasons other than death or attainment of a Retirement Date, the Member's
Accrued Benefit shall be determined as of the Valuation Date coinciding
with or immediately preceding the date the Member's Accrued Benefit is
valued for imminent payout purposes pursuant to normal administrative
procedures, increased by any contributions or Rollover Amounts allocated
to the Account of the Member after that Valuation Date and reduced by any
distributions therefrom.
8.3 That portion of a Member's Accrued Benefit in which he is
vested shall be the balance of his Account as of the Valuation Date
coinciding with or immediately preceding the date his Accrued Benefit is
paid.
8.4 The Member shall be entitled to payment in the form of payment
set forth in Plan Section 7.2. Payment shall be made as soon as
administratively feasible after the Member terminates employment;
provided, however, effective January 1, 1994, if the Member's vested
Accrued Benefit exceeds $3,500 it will not be distributed before the
Member's "required beginning date," within the meaning of Plan
Section 7.5(c), or death without the Member's consent. In no event shall
payment be made later than sixty (60) days after the end of the Plan Year
in which the Normal Retirement Age of the Member occurs. Payment shall be
subject to the minimum distribution requirements set forth in Plan Section
7.5, and the Eligible Rollover Distribution requirements set forth in Plan
Section 7.3.
8.5 If a Member who has terminated employment with a Plan Sponsor
is reemployed by a Plan Sponsor or an Affiliate on or prior to the payment
to the payment to the Member of the full amount of his Accrued Benefit,
the Member's Account shall be treated as the Account of a Member who has
not terminated employment other than in regard to allocations of Plan
Sponsor contributions which would have been made to his Account at any
Valuation Date occurring while the Member was not employed by a Plan
Sponsor.
8.6 In the event that a Plan amendment directly or indirectly
changes the vesting schedule, the vesting percentage for each Member in
his Accrued Benefit accumulated to the date when the amendment is adopted
shall not be reduced as a result of the amendment. In addition, any
Member with at least three (3) Years of Service may irrevocably elect to
remain under the pre-amendment vesting schedule with respect to all of his
benefits accrued both before and after the amendment.
SECTION 9
ADMINISTRATION OF THE PLAN
9.1 Trust Agreement. The Primary Sponsor shall establish a Trust
with the Trustee designated by the Board of Directors for the management
of the Fund, which Trust shall form a part of the Plan and is incorporated
herein by reference.
9.2 Operation of the Plan Administrator. The Primary Sponsor
shall appoint a Plan Administrator. If an organization is appointed to
serve as the Plan Administrator, then the Plan Administrator may designate
in writing a person who may act on behalf of the Plan Administrator. The
Primary Sponsor shall have the right to remove the Plan Administrator at
any time by notice in writing. The Plan Administrator may resign at any
time by written notice of resignation to the Trustee and the Primary
Sponsor. Upon removal or resignation, or in the event of the dissolution
of the Plan Administrator, the Primary Sponsor shall appoint a successor.
9.3 Fiduciary Responsibility.
(a) The Plan Administrator, as a Named Fiduciary, may
allocate its fiduciary responsibilities among Fiduciaries other than
the Trustee, designated in writing by the Plan Administrator and may
designate in writing persons other than the Trustee to carry out its
fiduciary responsibilities under the Plan. The Plan Administrator
may remove any person designated to carry out its fiduciary
responsibilities under the Plan at any time by notice in writing to
such person.
(b) The Plan Administrator and each other Fiduciary may
employ persons to perform services and to render advice with regard
to any of the Fiduciary's responsibilities under the Plan. Charges
for all such services performed and advice rendered may be directly
paid by each Plan Sponsor but until paid shall constitute a charge
against the Fund.
(c) Each Plan Sponsor shall indemnify and hold harmless each
person constituting the Plan Administrator or the Investment
Committee, if any, from and against any and all claims, losses,
costs, expenses (including, without limitation, attorney's fees and
court costs), damages, actions or causes of action arising from, on
account of or in connection with the performance by such person of
his duties in such capacity, other than such of the foregoing
arising from, on account of or in connection with the willful
neglect or willful misconduct of such person.
9.4 Duties of the Plan Administrator.
(a) The Plan Administrator shall advise the Trustee with
respect to all payments under the terms of the Plan and shall direct
the Trustee in writing to make such payments from the Fund;
provided, however, in no event shall the Trustee be required to make
such payments if the Trustee has actual knowledge that such payments
are contrary to the terms of the Plan and the Trust.
(b) The Plan Administrator shall from time to time establish
rules, not contrary to the provisions of the Plan and the Trust, for
the administration of the Plan and the transaction of its business.
All elections and designations under the Plan by a Participant or
Beneficiary shall be made on forms prescribed by the Plan
Administrator. The Plan Administrator shall have discretionary
authority to construe the terms of the Plan and shall determine all
questions arising in the administration, interpretation and
application of the Plan, including, but not limited to, those
concerning eligibility for benefits and it shall not act so as to
discriminate in favor of any person. All determinations of the Plan
Administrator shall be conclusive and binding on all Employees,
Members, Beneficiaries and Fiduciaries, subject to the provisions of
the Plan and the Trust and subject to applicable law.
(c) The Plan Administrator shall furnish Members and
Beneficiaries with all disclosures now or hereafter required by
ERISA or the Code. The Plan Administrator shall file, as required,
the various reports and disclosures concerning the Plan and its
operations as required by ERISA and by the Code, and shall be solely
responsible for establishing and maintaining all records of the Plan
and the Trust.
(d) The statement of specific duties for a Plan
Administrator in this Plan Section is not in derogation of any other
duties which a Plan Administrator has under the provisions of the
Plan or the Trust or under applicable law.
9.5 Investment Manager. The Primary Sponsor may, by action in
writing certified by notice to the Trustee, appoint an Investment
Manager. Any Investment Manager may be removed in the same manner in
which appointed, and in the event of any removal, the Investment Manager
shall, as soon as possible, but in no event more than thirty (30) days
after notice of removal, turn over all assets managed by it to the Trustee
or to any successor Investment Manager appointed, and shall make a full
accounting to the Primary Sponsor with respect to all assets managed by it
since its appointment as an Investment Manager.
9.6 Investment Committee. The Primary Sponsor may, by action in
writing certified by notice to the Trustee, appoint an Investment
Committee. The Primary Sponsor shall have the right to remove any person
on the Investment Committee at any time by notice in writing to such
person. A person on the Investment Committee may resign at any time by
written notice of resignation to the Primary Sponsor. Upon such removal
or resignation, or in the event of the death of a person on the Investment
Committee, the Primary Sponsor may appoint a successor. Until a successor
has been appointed, the remaining persons on the Investment Committee may
continue to act as the Investment Committee.
9.7 Action by a Plan Sponsor. Any action to be taken by a Plan
Sponsor shall be taken by resolution or written direction duly adopted by
its board of directors or appropriate governing body, as the case may be;
provided, however, that by such resolution or written direction, the board
of directors or appropriate governing body, as the case may be, may
delegate to any officer or other appropriate person of a Plan Sponsor the
authority to take any such actions as may be specified in such resolution
or written direction, other than the power to amend, modify or terminate
the Plan or the Trust or to determine the basis of any Plan Sponsor
contributions.
SECTION 10
CLAIM REVIEW PROCEDURE
10.1 If a Member or Beneficiary is denied a claim for benefits
under a Plan, the Plan Administrator shall provide to the claimant written
notice of the denial within 90 days after the Plan Administrator receives
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension of time for processing is
required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial 90-day period. In no
event shall the extension exceed a period of 90 days from the end of such
initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the
Plan Administrator expects to render the final decision.
10.2 If the claimant is denied a claim for benefits, the Plan
Administrator shall provide, within the time frame set forth in Plan
Section 10.1, written notice of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of the
Plan on which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation
of why the material or information is necessary; and
(d) an explanation of the Plan's claim review procedure.
10.3 After receiving written notice of the denial of a claim, a
claimant or his representative may:
(a) request a full and fair review of the denial by written
application to the Plan Administrator;
(b) review pertinent documents; and
(c) submit issues and comments in writing to the Plan
Administrator.
10.4 If the claimant wishes a review of the decision denying his
claim to benefits under the Plan, he must submit the written application
to the Plan Administrator within sixty (60) days after receiving written
notice of the denial.
10.5 Upon receiving the written application for review, the Plan
Administrator may schedule a hearing for purposes of reviewing the
claimant's claim, which hearing shall take place not more than thirty (30)
days from the date on which the Plan Administrator received the written
application for review.
10.6 At least ten (10) days prior to the scheduled hearing, the
claimant and his representative designated in writing by him, if any,
shall receive written notice of the date, time, and place of the scheduled
hearing. The claimant or his representative may request that the hearing
be rescheduled for his convenience on another reasonable date or at
another reasonable time or place.
10.7 All claimants requesting a review of the decision denying
their claim for benefits may employ counsel for purposes of the hearing.
10.8 No later than sixty (60) days following the receipt of the
written application for review, the Plan Administrator shall submit its
decision on the review in writing to the claimant involved and to his
representative, if any; provided, however, a decision on the written
application for review may be extended, in the event special circumstances
such as the need to hold a hearing require an extension of time, to a day
no later than one hundred twenty (120) days after the date of receipt of
the written application for review. The decision shall include specific
reasons for the decision and specific references to the pertinent
provisions of the Plan on which the decision is based.
SECTION 11
LIMITATION OF ASSIGNMENT, PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE AND UNCLAIMED PAYMENTS
11.1 No benefit which shall be payable under the Plan to any
person shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge
the same shall be void; and no such benefit shall in any manner be liable
for, or subject to, the debts, contracts, liabilities, engagements or
torts of any person, nor shall it be subject to attachment or legal
process for, or against, such person, and the same shall not be recognized
under the Plan, except to such extent as may be required by law.
Notwithstanding the above, this Plan Section shall not apply to a
"qualified domestic relations order" (as defined in Code Section 414(p)),
and benefits may be paid pursuant to the provisions of such an order. The
Plan Administrator shall develop procedures (in accordance with applicable
federal regulations) to determine whether a domestic relations order is
qualified, and, if so, the method and the procedures for complying
therewith.
11.2 If any person who shall be entitled to any benefit under the
Plan shall become bankrupt or shall attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge such benefit under the Plan,
then the payment of any such benefit in the event a Member or Beneficiary
is entitled to payment shall, in the discretion of the Plan Administrator,
cease and terminate and in that event the Trustee shall hold or apply the
same for the benefit of such person, his spouse, children, other
dependents or any of them in such manner and in such proportion as the
Plan Administrator shall determine.
11.3 Whenever any benefit which shall be payable under the Plan is
to be paid to or for the benefit of any person who is then a minor or
determined to be incompetent by qualified medical advice, the Plan
Administrator need not require the appointment of a guardian or custodian,
but shall be authorized to cause the same to be paid over to the person
having custody of such minor or incompetent, or to cause the same to be
paid to such minor or incompetent without the intervention of a guardian
or custodian, or to cause the same to be paid to a legal guardian or
custodian of such minor or incompetent if one has been appointed or to
cause the same to be used for the benefit of such minor or incompetent.
11.4 If the Plan Administrator cannot ascertain the whereabouts of
any Member to whom a payment is due under the Plan, the Plan Administrator
may direct that the payment and all remaining payments otherwise due to
the Member be cancelled on the records of the Plan and the amount thereof
applied as a forfeiture to reduce Plan Sponsor contributions, except that,
in the event the Member later notifies the Plan Administrator of his
whereabouts and requests the payments due to him under the Plan, the Plan
Sponsor shall contribute to the Plan an amount equal to the payment to be
paid to him as soon as administratively feasible.
SECTION 12
PROHIBITION AGAINST DIVERSION
At no time shall any part of the Fund be used for or diverted to
purposes other than the exclusive benefit of the Members or their
Beneficiaries, subject, however, to the payment of all taxes and
administrative expenses and subject to the provisions of the Plan with
respect to returns of contributions.
SECTION 13
LIMITATION OF RIGHTS
Membership in the Plan shall not give any Employee any right or
claim except to the extent that such right is specifically fixed under the
terms of the Plan. The adoption of the Plan and the Trust by any Plan
Sponsor shall not be construed to give any Employee a right to be
continued in the employ of a Plan Sponsor or as interfering with the right
of a Plan Sponsor to terminate the employment of any Employee at any time.
SECTION 14
AMENDMENT TO OR TERMINATION OF THE
PLAN AND THE TRUST
14.1 The Primary Sponsor reserves the right at any time to modify
or amend or terminate the Plan or the Trust in whole or in part; provided,
however, that the Primary Sponsor shall have no power to modify or amend
the Plan in such manner as would cause or permit any portion of the funds
held under a Plan to be used for, or diverted to, purposes other than for
the exclusive benefit of Members or their Beneficiaries, or as would cause
or permit any portion of a fund held under the Plan to become the property
of a Plan Sponsor; and provided further, that the duties or liabilities of
the Trustee shall not be increased without its written consent. No such
modifications or amendments shall have the effect of retroactively
changing or depriving Members or Beneficiaries of rights already accrued
under the Plan. No Plan Sponsor other than the Primary Sponsor shall have
the right to so modify, amend or terminate the Plan or the Trust.
Notwithstanding the foregoing, each Plan Sponsor may terminate its own
participation in the Plan and Trust pursuant to the Plan.
14.2 Each Plan Sponsor other than the Primary Sponsor shall have
the right to terminate its participation in the Plan and Trust by
resolution of its board of directors or other appropriate governing body
and notice in writing to the Primary Sponsor and the Trustee unless such
termination would result in the disqualification of the Plan or the Trust
or would adversely affect the exempt status of the Plan or the Trust as to
any other Plan Sponsor. If contributions by or on behalf of a Plan
Sponsor are completely terminated, the Plan and Trust shall be deemed
terminated as to such Plan Sponsor. Any termination by a Plan Sponsor,
shall not be a termination as to any other Plan Sponsor.
14.3 (a) If the Plan is terminated by the Primary Sponsor or if
contributions to the Trust should be permanently discontinued, it
shall terminate as to all Plan Sponsors and the Fund shall be used,
subject to the payment of expenses and taxes, for the benefit of
Members and Beneficiaries, and for no other purposes, and the
Account of each affected Member shall be fully vested and
nonforfeitable, notwithstanding the provisions of the Plan Section
which sets forth the vesting schedule.
(b) In the event of the partial termination of the Plan,
each affected Member's Account shall be fully vested and
nonforfeitable, notwithstanding the provisions of the Plan Section
which sets forth the vesting schedule.
14.4 In the event of the termination of the Plan or the Trust with
respect to a Plan Sponsor, the Accounts of the Members with respect to the
Plan as adopted by such Plan Sponsor shall be held subject to the
instructions of the Plan Administrator; provided that the Trustee shall
not be required to make any distribution until it receives a copy of an
Internal Revenue Service determination letter to the effect that the
termination does not affect the qualified status of the Plan or the exempt
status of the Trust or, in the event that such letter is applied for and
is not issued, until the Trustee is reasonably satisfied that adequate
provision has been made for the payment of all taxes which may be due and
owing by the Trust.
14.5 In the case of any merger or consolidation of the Plan with,
or any transfer of the assets or liabilities of the Plan to, any other
plan qualified under Code Section 401, the terms of the merger,
consolidation or transfer shall be such that each Member would receive (in
the event of termination of the Plan or its successor immediately
thereafter) a benefit which is no less than the benefit which the Member
would have received in the event of termination of the Plan immediately
before the merger, consolidation or transfer.
14.6 Notwithstanding any other provision of the Plan, an amendment
to the Plan --
(a) which eliminates or reduces an early retirement benefit,
if any, or which eliminates or reduces a retirement-type subsidy (as
defined in regulations issued by the Department of the Treasury), if
any, or
(b) which eliminates an optional form of benefit
shall not be effective with respect to benefits attributable to service
before the amendment is adopted. In the case of a retirement-type subsidy
described in Subsection (a) above, this Plan Section shall be applicable
only to a Member who satisfies, either before or after the amendment, the
preamendment conditions for the subsidy.
SECTION 15
ADOPTION OF PLAN BY AFFILIATES
Any corporation or other business entity related to the Primary
Sponsor by function or operation and any Affiliate, if the corporation,
business entity or Affiliate is authorized to do so by written direction
adopted by the Board of Directors, may adopt the Plan and the related
Trust by action of the board of directors or other appropriate governing
body of such corporation, business entity or Affiliate. Any adoption
shall be evidenced by certified copies of the resolutions of the foregoing
board of directors or governing body indicating the adoption and by the
execution of the Trust by the adopting corporation, or business entity or
Affiliate. The resolution shall state and define the effective date of
the adoption of the Plan by the Plan Sponsor and, for the purpose of Code
Section 415, the "limitation year" as to such Plan Sponsor.
Notwithstanding the foregoing, however, if the Plan and Trust as adopted
by an Affiliate or other corporation or business entity under the
foregoing provisions shall fail to receive the initial approval of the
Internal Revenue Service as a qualified Plan and Trust under Code Sections
401(a) and 501(a), any contributions by the Affiliate or other corporation
or business entity after payment of all expenses will be returned to such
Plan Sponsor free of any trust, and the Plan and Trust shall terminate, as
to the adopting Affiliate or other corporation or business entity.
SECTION 16
QUALIFICATION AND RETURN OF CONTRIBUTIONS
16.1 If the Plan and the related Trust fail to receive the initial
approval of the Internal Revenue Service as a qualified plan and trust
within one (1) year after the date of denial of qualification (a) the
contribution of a Plan Sponsor after payment of all expenses will be
returned to a Plan Sponsor free of the Plan and Trust, (b) contributions
made by a Member shall be returned to the Member who made the
contributions, and (c) the Plan and Trust shall thereupon terminate.
16.2 All Plan Sponsor contributions to the Plan are contingent
upon deductibility. To the extent permitted by the Code and other
applicable laws and regulations thereunder, upon a Plan Sponsor's request,
a contribution which was made by reason of a mistake of fact or which was
nondeductible under Code Section 404, shall be returned to a Plan Sponsor
within one (1) year after the payment of the contribution, or the
disallowance of the deduction (to the extent disallowed), whichever is
applicable.
In the event of a contribution which was made by reason of a mistake
of fact or which was nondeductible, the amount to be returned to the Plan
Sponsor shall be the excess of the contribution above the amount that
would have been contributed had the mistake of fact or the mistake in
determining the deduction not occurred, less any net loss attributable to
the excess. Any net income attributable to the excess shall not be
returned to the Plan Sponsor. No return of any portion of the excess
shall be made to the Plan Sponsor if the return would cause the balance in
a Member's Account to be less than the balance would have been had the
mistaken contribution not been made.
SECTION 17
SECTION 16 OF SECURITIES EXCHANGE ACT OF 1934
Notwithstanding any other provision of this Plan, the provisions of
this Plan that set forth the formula or formulas that determine the
amount, price or timing of awards to persons subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934 (the
"Act") and any other provisions of this Plan of the type referred to in
Section 16b-3(c)(2)(ii) of the Act shall not be amended more than once
every six months, other than to comport with changes in the Code, ERISA,
or the rules thereunder. Further, to the extent required, the persons
described in the preceding sentence shall be subject to such withdrawal,
investment and other restrictions necessary to satisfy Rule 16b-3 under
the Act. This Section 17 is intended to comply with Rule 16b-3 under the
Act and shall be effective only to the extent required by such rule and
shall be interpreted and administered in accordance with such rule.
SECTION 18
INCORPORATION OF SPECIAL LIMITATIONS
Appendices A, B, and C to the Plan, attached hereto, are
incorporated by reference and the provisions of the same shall apply
notwithstanding anything to the contrary contained herein.
IN WITNESS WHEREOF, the Primary Sponsor has caused this indenture to
be executed as of the date first above written.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President and Chief Executive
Officer
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel and Secretary
[CORPORATE SEAL]<PAGE>
APPENDIX A
SPECIAL NONDISCRIMINATION RULES
SECTION 1
As used in this Appendix, the following words shall have the
following meanings:
(a) "Eligible Member" means a Member who is an Employee
during any particular Plan Year.
(b) "Highly Compensated Eligible Member" means any Eligible
Member who is a Highly Compensated Employee.
(c) "Matching Contribution" means any contribution made by a
Plan Sponsor to a Company Matching Account and any other
contribution made to a plan by a Plan Sponsor or an Affiliate on
behalf of an Employee on account of a contribution made by an
Employee or on account of an Elective Deferral.
(d) "Qualified Matching Contributions" means Matching
Contributions which are immediately nonforfeitable when made, and
which would be nonforfeitable, regardless of the age or service of
the Employee or whether the Employee is employed on a certain date,
and which may not be distributed, except upon one of the events
described under Code Section 401(k)(2)(B) and the regulations
thereunder.
(e) "Qualified Nonelective Contributions" means
contributions of the Plan Sponsor or an Affiliate, other than
Matching Contributions or Elective Deferrals, which are non-
forfeitable when made, and which would be nonforfeitable regardless
of the age or service of the Employee or whether the Employee is
employed on a certain date, and which may not be distributed, except
upon one of the events described under Code Section 401(k)(2)(B) and
the regulations thereunder.
SECTION 2
In addition to any other limitations set forth in the Plan, for each
Plan Year one of the following tests must be satisfied:
(a) the actual deferral percentage for the Highly
Compensated Eligible Members must not be more than the actual
deferral percentage of all other Eligible Members multiplied by
1.25; or
(b) the excess of the actual deferral percentage for the
Highly Compensated Eligible Members over that of all other Eligible
Members must not be more than two (2) percentage points, and the
actual deferral percentage for the Highly Compensated Eligible
Members must not be more than the actual deferral percentage of all
other Eligible Members multiplied by two (2).
The "actual deferral percentage" for the Highly Compensated Eligible
Members and all other Eligible Members for a Plan Year is the average in
each group of the ratios, calculated separately for each Employee, of the
Deferral Amounts contributed by the Plan Sponsor on behalf of an Employee
for the Plan Year to the Annual Compensation of the Employee in the Plan
Year. In addition, for purposes of calculating the "actual deferral
percentage" as described above, Deferral Amounts of Employees who are not
Highly Compensated Employees which are prohibited by Code Section
401(a)(30) shall not be taken into consideration. Except to the extent
limited by Treasury Regulation Section 1.401(k)-1(b)(5) and any other
applicable regulations promulgated by the Secretary of the Treasury, all
or part of the Qualified Matching Contributions and Qualified Nonelective
Contributions made pursuant to the Plan may be treated as Deferral Amounts
for purposes of determining the "actual deferral percentage."
SECTION 3
If the Deferral Amounts contributed on behalf of any Highly
Compensated Eligible Member exceeds the amount permitted under the "actual
deferral percentage" test described in Section 2 of this Appendix A for
any given Plan Year, then before the end of the Plan Year following the
Plan Year for which the Excess Deferral Amount was contributed, (a) the
amount of the Excess Deferral Amount for the Plan Year, as adjusted to
reflect income, gain, or loss attributable to it through the date the
Excess Deferral Amount is distributed to the Member and reduced by any
excess Elective Deferrals as determined pursuant to Plan Section 3.1
previously distributed to the Member for the Member's taxable year ending
with or within the Plan Year, may be distributed to the Highly Compensated
Eligible Member or (b) to the extent provided in regulations issued by the
Secretary of the Treasury, the Plan Administrator may, in its discretion,
allow each affected Member to elect, within two and one-half months after
the end of the Plan Year for which the Excess Deferral Amount was
contributed, to treat the Excess Deferral Amount, unadjusted for earnings,
gains, and losses, but as so reduced, as an amount distributed to the
Member and then contributed as an after-tax contribution by the Member to
the Plan ("recharacterized amounts"). The income allocable to such Excess
Deferral Amount shall be determined in a similar manner as described in
Plan Section 4.2. The Excess Deferral Amount to be distributed or
recharacterized shall be reduced by Deferral Amounts previously
distributed or recharacterized for the taxable year ending in the same
Plan Year, and shall also be reduced by Deferral Amounts previously
distributed or recharacterized for the Plan Year beginning in such taxable
year. For all other purposes under the Plan other than this Appendix A
recharacterized amounts shall continue to be treated as Deferral Amounts.
In the event the multiple use of limitations contained in Sections 2(b)
and 5(b) of this Appendix, pursuant to Treasury Regulations Section
1.401(m)-2 as promulgated by the Secretary of the Treasury, requires a
corrective distribution, such distribution shall be made pursuant to this
Section 3, and not Section 6 of Appendix A.
For purposes of this Section 3, "Excess Deferral Amount" means, with
respect to a Plan Year, the excess of:
(a) the aggregate amount of Deferral Amounts contributed by
a Plan Sponsor on behalf of Highly Compensated Eligible Members for
the Plan Year, over
(b) the maximum amount of Deferral Amounts permitted under
Section 2 of this Appendix A for the Plan Year, which shall be
determined by reducing the Deferral Amounts contributed on behalf of
Highly Compensated Eligible Members in order of the actual deferral
percentages beginning with the highest of such percentages.
Distribution of the Excess Deferral Amounts for any Plan Year shall be
made to the Highly Compensated Eligible Members on the basis of the
respective portions of the Excess Deferral Amount attributable to each
Highly Compensated Eligible Member. As to any Highly Compensated Employee
who is subject to the family aggregation rules of Subsection (b) of the
Plan Section containing the definition of the term "Highly Compensated
Employee," any distribution of such Highly Compensated Employee's
allocable portion of the Excess Deferral Amount for a Plan Year shall be
allocated among the family members of such Highly Compensated Employee who
are combined to determine the actual deferral percentage in proportion to
the Deferral Amounts taken into account under this Section 3.
SECTION 4
The Plan Administrator shall have the responsibility of monitoring
the Plan's compliance with the limitations of this Appendix A and shall
have the power to take all steps it deems necessary or appropriate to
ensure compliance, including, without limitation, restricting the amount
which Highly Compensated Eligible Members can elect to have contributed
pursuant to Plan Section 3.1. Any actions taken by the Plan Administrator
pursuant to this Section 4 shall be pursuant to non-discriminatory
procedures consistently applied.
SECTION 5
In addition to any other limitations set forth in the Plan, Matching
Contributions under the Plan and the amount of nondeductible employee
contributions under the Plan, for each Plan Year must satisfy one of the
following tests:
(a) The contribution percentage for Highly Compensated
Eligible Members must not exceed 125% of the contribution percentage
for all other Eligible Members; or
(b) The contribution percentage for Highly Compensated
Eligible Members must not exceed the lesser of (1) 200% of the
contribution percentage for all other Eligible Members, and (2) the
contribution percentage for all other Eligible Members plus two (2)
percentage points.
Notwithstanding the foregoing, for purposes of this Section 5, the terms
Highly Compensated Eligible Member and Eligible Member shall not include
any Member who is not eligible to receive a Matching Contribution under
the provisions of the Plan, other than as a result of the Member failing
to contribute to the Plan or failing to have an Elective Deferral
contributed to the Plan on the Member's behalf. Notwithstanding the
foregoing, if Qualified Matching Contributions are taken into account for
purposes of applying the test contained in Section 2 of this Appendix A,
they shall not be taken into account under this Section 5. In applying
the above tests, the Plan Administrator shall comply with any regulations
promulgated by the Secretary of the Treasury which prevent or restrict the
use of the test contained in Section 2(b) of this Appendix A and the test
contained in Section 5(b) of this Appendix A. The "contribution
percentage" for Highly Compensated Eligible Members and for all other
Eligible Members for a Plan Year shall be the average of the ratios,
calculated separately for each Member, of (A) to (B), where (A) is the
amount of Matching Contributions under the Plan (excluding Qualified
Matching Contributions which are used to apply the test set forth in
Section 2 of this Appendix A or Matching Contributions which are used to
satisfy the minimum required contributions to the Accounts of Eligible
Members who are not Key Employees pursuant to Section 1 of Appendix C to
the Plan) and nondeductible employee contributions made under the Plan for
the Eligible Member for the Plan Year, and where (B) is the Annual
Compensation of the Eligible Member for the Plan Year. Except to the
extent limited by Treasury Regulation Section 1.401(m)-1(b)(5) and any
other applicable regulations promulgated by the Secretary of the Treasury,
a Plan Sponsor may elect to treat Deferral Amounts and Qualified
Nonelective Contributions as Matching Contributions for purpose of
determining the "contribution percentage," provided the Deferral Amounts,
excluding those treated as Matching Contributions, satisfy the test set
forth in Section 2 of Appendix A.
SECTION 6
If the Matching Contributions and nondeductible employee
contributions and, if taken into account under Section 5 of this
Appendix A, the Deferral Amounts made by or on behalf of Highly
Compensated Eligible Members exceed the amount permitted under the
"contribution percentage test" for any given Plan Year, then, before the
close of the Plan Year following the Plan Year for which the excess
aggregate contributions were made, the amount of the excess aggregate
contributions attributable to the Plan for the Plan Year, as adjusted to
reflect any income, gain or loss attributable to such contributions
through the date the excess aggregate contributions are distributed, shall
be distributed. The income allocable to such contributions shall be
determined in a similar manner as described in Plan Section 4.2. As to
any Highly Compensated Employee, any distribution of his allocable portion
of the excess aggregate contributions for a Plan Year shall first be
attributed to any nondeductible employee contributions made by the Member
during the Plan Year for which no corresponding Plan Sponsor contribution
is made and then to any remaining nondeductible employee contributions
made by the Member during the Plan Year and any Matching Contributions
thereon. As between the Plan and any other plan or plans maintained by
the Plan Sponsor in which excess aggregate contributions for a Plan Year
are held, each such plan shall distribute a pro-rata share of each class
of contribution based on the respective amounts of a class of contribution
made to each plan during the Plan Year. The payment of the excess
aggregate contributions shall be made without regard to any other
provision in the Plan. In the event the multiple use of limitations
contained in Sections 2(b) and 5(b) of this Appendix, pursuant to Treasury
Regulation Section 1.401(m)-2 as promulgated by the Secretary of the
Treasury, requires a corrective distribution, such distribution shall be
made pursuant to Section 3 of Appendix A, and not this Section 6.
For purposes of this Section 6, with respect to any Plan Year,
"excess aggregate contributions" means the excess of:
(a) the aggregate amount of the Matching Contributions and
nondeductible employee contributions and, if taken into account
under Section 5 of this Appendix A, the Deferral Amounts actually
made on behalf of Highly Compensated Eligible Members for the Plan
Year, over
(b) the maximum amount of the contributions permitted under
the limitations of Section 5 of this Appendix A, determined by
reducing contributions made on behalf of Highly Compensated Eligible
Members in order of their contribution percentages beginning with
the highest of such percentages.
Distribution of nondeductible employee contributions or Matching
Contributions in the amount of the excess aggregate contributions for any
Plan Year shall be made with respect to Highly Compensated Employees on
the basis of the respective portions of the excess aggregate contributions
attributable to each Highly Compensated Employee. As to any Highly
Compensated Employee who is subject to the family aggregation rules of
Subsection (b) of the Plan Section containing the definition of the term
"Highly Compensated Employee," any distribution of such Highly Compensated
Employee's allocable portion of the excess aggregate contributions for a
Plan Year shall be allocated among the family members of such Highly
Compensated Employee which are combined to determine the contribution
percentage in proportion to the contributions taken into account under
this Section 6.
The determination of the amount of excess aggregate contributions under
this Section 6 shall be made after (1) first determining the excess
Elective Deferrals under Plan Section 3.1(b), and (2) then determining the
Excess Deferral Amounts under Section 3 of this Appendix A.
SECTION 7
Except to the extent limited by rules promulgated by the Secretary
of the Treasury, if a Highly Compensated Eligible Member is a participant
in any other plan of the Plan Sponsor or any Affiliate which includes
Matching Contributions, deferrals under a cash or deferred arrangement
pursuant to Code Section 401(k), or nondeductible employee contributions,
any contributions made by or on behalf of the Member to the other plan
shall be allocated with the same class of contributions under the Plan for
purposes of determining the "actual deferral percentage" and "contribution
percentage" under the Plan; provided, however, contributions that are made
under an "employee stock ownership plan" (within the meaning of Code
Section 4975(e)(7)) shall not be combined with contributions under any
plan which is not an employee stock ownership plan (within the meaning of
Code Section 4975(e)(7)).
Except to the extent limited by rules promulgated by the Secretary
of the Treasury, if the Plan and any other plans which include Matching
Contributions, deferrals under a cash or deferred arrangement pursuant to
Code Section 401(k), or nondeductible employee contributions are
considered as one plan for purposes of Code Section 401(a)(4) and
410(b)(1), any contributions under the other plans shall be allocated with
the same class of contributions under the Plan for purposes of determining
the "contribution percentage" and "actual deferral percentage" under the
Plan; provided, however, contributions that are made under an "employee
stock ownership plan" (within the meaning of Code Section 4975(e)(7))
shall not be combined with contributions under any plan which is not an
employee stock ownership plan (within the meaning of Code Section
4975(e)(7)).
<PAGE>
APPENDIX B
LIMITATION ON ALLOCATIONS
SECTION 1
The "annual addition" for any Member for any one limitation year may
not exceed the lesser of:
(a) $30,000 (or, if greater, one-quarter of the dollar
limitation in effect under Code Section 415(b)(1)(A)), adjusted for
changes in the cost of living as provided in regulations issued by
the Secretary of the Treasury); or
(b) 25% of the Member's Annual Compensation.
SECTION 2
For the purposes of this Appendix B, the term "annual addition" for
any Member means for any limitation year, the sum of certain Plan Sponsor
and Member contributions, and other amounts as determined in Code
Section 415(c)(2) in effect for that limitation year.
SECTION 3
In the event that a Plan Sponsor maintains a defined benefit plan
under which a Member also participates, the sum of the defined benefit
plan fraction and the defined contribution plan fraction for any
limitation year for any Member may not exceed 1.0.
(a) The defined benefit plan fraction for any limitation
year is a fraction:
(1) the numerator of which is the projected annual
benefit of the Member under the defined benefit plan
(determined as of the close of such year); and
(2) the denominator of which is the lesser of
(A) the product of 1.25, multiplied by the
maximum annual benefit allowable under Code
Section 415(b)(1)(A), or
(B) the product of
(i) 1.4, multiplied by
(ii) the amount which may be taken into
account under Code Section 415(c)(1)(B) (or Code
Section 415(c)(7), if applicable) with respect to the
Member for the limitation year.
SECTION 6
For purposes of this Appendix B, the term "limitation year" shall mean
a Plan Year unless a Plan Sponsor elects, by adoption of a written resolution,
to use any other twelve-month period adopted in accordance with regulations
issued by the Secretary of the Treasury. For purposes of applying the
limitations set forth in this Appendix B, the term "Plan Sponsor" shall mean
a Plan Sponsor and any other corporations which are members of the same
controlled group of corporations (as described in Code Section 414(b), as
modified by Code Section 415(h)) as is a Plan Sponsor, any other trades or
businesses (whether or not incorporated) under common control (as described
in Code Section 414(c), as modified by Code Section 415(h)) with a Plan
Sponsor, any other corporations, partnerships, or other organizations which
are members of an affiliated service group (as described in Code
Section 414(m)) with a Plan Sponsor, and any other entity required to be
aggregated with a Plan Sponsor pursuant to regulations under Code
Section 414(o).
SECTION I.
For purposes of applying the limitations of this Appendix B, all defined
contribution plans maintained or deemed to be maintained by a Plan Sponsor
shall be treated as one defined contribution plan, and all defined benefit
plans now or previously maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined benefit plan. In the event any of the
actions to be taken pursuant to Section 6 of this Appendix or pursuant to any
language of similar import in another defined contribution plan are required
to be taken as a result of the annual additions of a Member exceeding the
limitations set forth in Section 1 of this Appendix because of the Member's
participation in more than one defined contribution plan, the actions shall
first be taken with respect to this Plan.
SECTION II.
In the event that as a result of a reasonable error in estimating the
Member's Annual Compensation, the annual addition allocated to the Account of
a Member exceeds the limitations set forth in Section 1 of this Appendix B or
in the event that the aggregate contributions made on behalf of a Member under
both a defined benefit plan and a defined contribution plan, subject to the
reduction of allocations in other defined contribution plans required by
Section 5 of this Appendix B, cause the aggregate limitation fraction set
forth in Section 3 of this Appendix B to be exceeded, the Plan Administrator
shall, in writing, direct the Trustee to take such of the following actions
as the Plan Administrator shall deem appropriate, specifying in each case the
amount or amounts of contributions involved:
1. A Member's annual addition shall be reduced by distributing
to the Member Voluntary Contributions made by the Member which cause the
annual addition to exceed such limitations;
2. If further reduction is necessary, contributions made by the
Plan Sponsor on behalf of the Member pursuant to Plan Section 3.1 with
respect to which no contribution is made under Plan Section 3.2 shall
be reduced in the amount of the remaining excess and distributed to the
Member;
3. If further reduction is necessary, contributions made by the
Plan Sponsor on behalf of the Member pursuant to Plan Section 3.1 and
contributions of the Plan Sponsor thereon pursuant to Plan Section 3.2
shall be reduced in the amount of the remaining excess. The amount of
the reduction under Plan Section 3.1 shall be distributed to the Member.
The amount of the reduction under Plan Section 3.2 shall be reallocated
to the Company Matching Accounts of Members who are not affected by the
limitation in the same proportion as the contribution of the Plan
Sponsor for the year is allocated under Plan Section 4.1 to the Accounts
of such Members; and
4. If the contribution of the Plan Sponsor would cause the
annual addition to exceed the limitations set forth herein with respect
to all Members under the Plan, the portion of such contribution in
excess of the limitations shall be segregated in a suspense account.
While the suspense account is maintained, (1) no Plan Sponsor
contributions under the Plan shall be made which would be precluded by
this Appendix B, (2) income, gains and loses of the Fund shall not be
allocated to such suspense account and (3) amounts in the suspense
account shall be allocated in the same manner as Plan Sponsor
contributions under the Plan as of each Valuation Date on which Plan
Sponsor contributions may be allocated until the suspense account is
exhausted. In the event of the termination of the Plan, the amounts in
the suspense account shall be returned to the Plan Sponsor to the extent
that such amounts may not then be allocated to the Members' Accounts.
<PAGE>
APPENDIX C
TOP-HEAVY PROVISIONS
SECTION 1
As used in this Appendix, the following words shall have the following
meanings:
(a) "Determination Date" means, with respect to any Plan Year,
the last day of the preceding Plan Year, or, in the case of the first
Plan Year, means the last day of the first Plan Year.
(b) "Key Employee" means an Employee or former Employee
(including a Beneficiary of a Key Employee or former Key Employee) who
at any time during the Plan Year containing the Determination Date or
any of the four (4) preceding Plan Years is:
(1) An officer described in the Subsection of the Plan
Section containing the definition of the term "Highly Compensated
Employee";
(2) One of the ten (10) Employees owning both (A) more
than one-half percent (1/2%) of the outstanding stock of the Plan
Sponsor or an Affiliate, more than one-half percent (1/2%) of the
total combined voting power of all stock of the Plan Sponsor or
an Affiliate, or more than one-half percent (1/2%) of the capital
or profits interest in the Plan Sponsor or an Affiliate, and (B)
the largest percentage ownership interests in the Plan Sponsor or
any of its Affiliates, and whose Annual Compensation is equal to
or greater than the amount in effect under Section 1(a) of
Appendix B to the Plan for the calendar year in which the
Determination Date falls; or
(3) An owner of more than five percent (5%) of the
outstanding stock of the Plan Sponsor or an Affiliate or more than
five percent (5%) of the total combined voting power of all stock
of the Plan Sponsor or an Affiliate; or
(4) An owner of more than one percent (1%) of the
outstanding stock of the Plan Sponsor or an Affiliate or more than
one percent (1%) of the total combined voting power of all stock
of the Plan Sponsor or an Affiliate, and who in such Plan Year had
Annual Compensation from the Plan Sponsor and all of its
Affiliates of more than $150,000.
Employees other than Key Employees are sometimes referred to in this
Appendix as "non-key employees."
(c) "Required Aggregation Group" means:
(1) each plan of the Plan Sponsor and its Affiliates which
qualifies under Code Section 401(a) in which a Key Employee is a
participant, and
(2) each other plan of the Plan Sponsor and its Affiliates
which qualifies under Code Section 401 (a) and which enables any
plan described in Subsection (a) of this Section to meet the
requirements of Code Section 401(a)(4) or 410.
(d) (1) "Top-Heavy" means:
(A) if the Plan is not included in a Required
Aggregation Group, the Plan's condition in a Plan Year for
which, as of the Determination Date:
(i) the present value of the cumulative
Accrued Benefits under the Plan for all Key Employees
exceeds 60 percent of the present value of the
cumulative Accrued Benefits under the Plan for all
Members; and
(ii) the Plan, when included in every
potential combination, if any, with any or all of:
(I) any Required Aggregation Group, and
(II) any plan of the Plan Sponsor which
is not part of any Required Aggregation Group
and which qualifies under Code Section 401 (a)
is part of a Top-Heavy Group (as defined in
Paragraph (2) of this Subsection); and
(B) if the Plan is included in a Required
Aggregation Group, the Plan's condition in a Plan Year for
which, as of the Determination Date:
(i) the Required Aggregation Group is a
Top-Heavy Group (as defined in Paragraph (2) of this
Subsection); and
(ii) the Required Aggregation Group, when
included in every potential combination, if any, with
any or all of the plans of the Plan Sponsor and its
Affiliates which are not part of the Required
Aggregation Group and which qualify under Code
Section 401(a), is part of a Top-Heavy Group (as
defined in Paragraph (2) of this Subsection).
(C) For purposes of Subparagraphs (A)(ii) and
(B)(ii) of this Paragraph (1), any combination of plans
must satisfy the requirements of Code Sections 401(a)(4)
and 410.
(2) A group shall be deemed to be a Top-Heavy Group if:
(A) the sum, as of the Determination Date, of the
present value of the cumulative accrued benefits for all
Key Employees under all plans included in such group
exceeds
(B) 60 percent of a similar sum determined for all
participants in such plans.
(3) (A) For purposes of this Section, the present value
of the accrued benefit for any participant in a defined
contribution plan as of any Determination Date or last day
of a plan year shall be the sum of:
(i) as to any defined contribution plan
other than a simplified employee pension, the account
balance as of the most recent valuation date
occurring within the plan year ending on the
Determination Date or last day of a plan year, and
(ii) as to any simplified employee pension,
the aggregate employer contributions, and
(iii) an adjustment for contributions due as
of the Determination Date or last day of a plan year.
In the case of a plan that is not subject to the minimum
funding requirements of Code Section 412, the adjustment in
Clause (iii) of this Subparagraph (A) shall be the amount
of any contributions actually made after the valuation date
but on or before the Determination Date or last day of the
plan year to the extent not included under Clause (i) or
(ii) of this Subparagraph (A); provided, however, that in
the first plan year of the plan, the adjustment in
Clause (iii) of this Subparagraph (A) shall also reflect
the amount of any contributions made thereafter that are
allocated as of a date in such first plan year. In the
case of a plan that is subject to the minimum funding
requirements, the account balance in Clause (i) and the
aggregate contributions in Clause (ii) of this
Subparagraph (A) shall include contributions that would be
allocated as of a date not later than the Determination
Date or last day of a plan year, even though those amounts
are not yet required to be contributed, and the adjustment
in Clause (iii) of this Subparagraph (A) shall be the
amount of any contribution actually made (or due to be
made) after the valuation date but before the expiration of
the extended payment period in Code Section 412(c)(10) to
the extent not included under Clause (i) or (ii) of this
Subparagraph (A).
(B) For purposes of this Subsection, the present
value of the accrued benefit for any participant in a
defined benefit plan as of any Determination Date or last
day of a plan year must be determined as of the most recent
valuation date which is within a 12-month period ending on
the Determination Date or last day of a plan year as if
such participant terminated as of such valuation date;
provided, however, that in the first plan year of a plan,
the present value of the accrued benefit for a current
participant must be determined either (i) as if the
participant terminated service as of the Determination Date
or last day of a plan year or (ii) as if the participant
terminated service as of such valuation date, but taking
into account the estimated accrued benefit as of the
Determination Date or last day of a plan year. For
purposes of this Subparagraph (B), the valuation date must
be the same valuation date used for computing plan costs
for minimum funding, regardless of whether a valuation is
performed that year. The actuarial assumptions utilized in
calculating the present value of the accrued benefit for
any participant in a defined benefit plan for purposes of
this Subparagraph (B) shall be established by the Plan
Administrator after consultation with the actuary for the
plan, and shall be reasonable in the aggregate and shall
comport with the requirements set forth by the Internal
Revenue Service in Q&A T-26 and T-27 of Regulation
Section 1.416-1.
(C) For purposes of determining the present value
of the cumulative accrued benefit under a plan for any
participant in accordance with this Subsection, the present
value shall be increased by the aggregate distributions
made with respect to the participant (including
distributions paid on account of death to the extent they
do not exceed the present value of the cumulative accrued
benefit existing immediately prior to death) under each
plan being considered, and under any terminated plan which
if it had not been terminated would have been in a Required
Aggregation Group with the Plan, during the 5-year period
ending on the Determination Date or last day of the plan
year that falls within the calendar year in which the
Determination Date falls.
(D) For purposes of this Paragraph (3), participant
contributions which are deductible as "qualified retirement
contributions" within the meaning of Code Section 219 or
any successor, as adjusted to reflect income, gains,
losses, and other credits or charges attributable thereto,
shall not be considered to be part of the accrued benefits
under any plan.
(E) For purposes of this Paragraph (3), if any
employee is not a Key Employee with respect to any plan for
any plan year, but such employee was a Key Employee with
respect to such plan for any prior plan year, any accrued
benefit for such employee shall not be taken into account.
(F) For purposes of this Paragraph (3), if any
employee has not performed any service for any Plan Sponsor
or Affiliate maintaining the plan during the five-year
period ending on the Determination Date, any accrued
benefit for that employee shall not be taken into account.
(G) (i) In the case of an "unrelated rollover"
(as defined below) between plans which qualify under
Code Section 401(a), (a) the plan providing the
distribution shall count the distribution as a
distribution under Subparagraph (C) of this
Paragraph (3), and (b) the plan accepting the
distribution shall not consider the distribution part
of the accrued benefit under this Section; and
(ii) in the case of a "related rollover" (as
defined below) between plans which qualify under Code
Section 401(a), (a) the plan providing the
distribution shall not count the distribution as a
distribution under Subparagraph (C) of this
Paragraph (3), and (b) the plan accepting the
distribution shall consider the distribution part of
the accrued benefit under this Section.
For purposes of this Subparagraph (G), an "unrelated rollover" is a rollover
as defined in Code Section 402(c)(4) or 408(d)(3) or a plan-to-plan transfer
which is both initiated by the participant and made from a plan maintained by
one employer to a plan maintained by another employer where the employers are
not Affiliates. For purposes of this Subparagraph (G), a "related rollover"
is a rollover as defined in Code Section 402(c)(4) or 408(d)(3) or a
plan-to-plan transfer which is either not initiated by the participant or made
to a plan maintained by the employer or an Affiliate.
SECTION 2
(a) Notwithstanding anything contained in the Plan to the
contrary, except as otherwise provided in Subsection (b) of this
Section, in any Plan Year during which the Plan is Top-Heavy,
allocations of Plan Sponsor contributions for the Plan Year for the
Account of each Member who is not a Key Employee and who has not
separated from service with the Plan Sponsor prior to the end of the
Plan Year shall not be less than 3 percent of the Member's Annual
Compensation. For purposes of this Subsection, an allocation to a
Member's Account resulting from any Plan Sponsor contribution
attributable to a salary reduction or similar arrangement shall not be
taken into account.
(b) (1) The percentage referred to in Subsection (a) of this
Section for any Plan Year shall not exceed the percentage at which
allocations are made or required to be made under the Plan for the
Plan Year for the Key Employee for whom the percentage is highest
for the Plan Year. For purposes of this Paragraph, an allocation
to the Account of a Key Employee resulting from any Plan Sponsor
contribution attributable to a salary reduction or similar
agreement shall be taken into account.
(2) For purposes of this Subsection (b), all defined
contribution plans which are members of a Required Aggregation
Group shall be treated as part of the Plan.
(3) This Subsection (b) shall not apply to any plan which
is a member of a Required Aggregation Group if the plan enables
a defined benefit plan which is a member of the Required
Aggregation Group to meet the requirements of Code Section
401(a)(4) or 410.
(4) If the Plan Sponsor maintains a defined benefit plan
which is qualified under Code Section 401(a) and which would be
Top-Heavy within the meaning of the Plan for its plan year ending
within or coincident with the Plan Year, no allocation shall be
made pursuant to Subsection (a) of this Section on behalf of any
Member who participates in the defined benefit plan and acquires
a year of service within the meaning of paragraphs (4), (5) and
(6) of Code Section 411(a) under the defined benefit plan for the
plan year, if the defined benefit plan provides generally that the
accrued benefit of the member when expressed as an annual
retirement benefit shall not, when expressed as a percentage of
the Member's compensation, be less than the lesser of (A) 2
percent multiplied by the number of such Years of Service in plan
years during which such plan was Top-Heavy, or (B) 20 percent.
SECTION 3
In any limitation year (as defined in Section 4 of Appendix B to the
Plan) which contains any portion of a Plan Year in which the Plan is Top-
Heavy, the number "1.0" shall be substituted for the number "1.25" in Section
3 of Appendix B to the Plan.
SECTION 4
Notwithstanding anything contained in the Plan to the contrary, in any
Plan Year during which the Plan is Top-Heavy, a Member's interest in his
Accrued Benefit shall not vest at any rate which is slower than the following
schedule, effective as of the first day of that Plan Year:
Full Years Percentage
of Service Vested
Less than 3 0%
3 or more 100%
The Schedule set forth above in this Section 4 shall be inapplicable to a
Member who has failed to perform an Hour of Service after the Determination
Date on which the Plan has become Top-Heavy. When the Plan ceases to be Top-
Heavy, the Schedule set forth above in this Section 4 shall cease to apply;
provided however, that the provisions of the Plan Section dealing with changes
in the vesting schedule shall apply.
<PAGE>
TRUST AGREEMENT
TO THE
MORRISON RESTAURANTS INC.
SALARY DEFERRAL PLAN
THIS TRUST AGREEMENT made as of the 31 day of December, 1993, by and
between MORRISON RESTAURANTS INC., f/k/a/ Morrison Incorporated, a
corporation organized and existing under the laws of the State of Delaware
(the "Primary Sponsor"); each other Affiliate or other entity adopting the
Morrison Restaurants Inc. Salary Deferral Plan (the "Plan"), as provided
therein and executing this trust pursuant thereto; and AMSOUTH BANK N.A. of
Birmingham, Alabama (the "Trustee");
W I T N E S S E T H:
WHEREAS, the Primary Sponsor maintains the Plan and related trust (the
"Trust"), which is intended to qualify as a profit sharing plan under section
401(a) of the Internal Revenue Code and also contains a cash or deferred
arrangement as described in Section 401(k) of the Internal Revenue Code, for
the exclusive benefit of Members thereunder and their Beneficiaries;
WHEREAS, the Primary Sponsor and Trustee previously entered into
certain trust agreements reflecting the terms of the Trust, the most recent
of which was dated December 29, 1989 (the "Prior Trust Agreement");
WHEREAS, the Primary Sponsor has restated the Plan, generally effective
January 1, 1989; and
WHEREAS, the Primary Sponsor and Trustee desire to restate the Prior
Trust Agreement to make conforming amendments;
NOW, THEREFORE, in consideration of the foregoing and of the further
obligations and undertakings as hereinafter set forth, the Primary Sponsor
and Trustee hereby amend and restate the Prior Trust Agreement, effective
January 1, 1994, as follows:
SECTION 1
DEFINITIONS
All terms and definitions contained in the Plan are hereby incorporated
in the Trust Agreement by reference except to the extent that the terms of
the Trust Agreement clearly indicate to the contrary.
SECTION II
THE FUND
The Primary Sponsor hereby establishes the Fund with the Trustee. The
Fund shall be held, managed and administered by the Trustee in trust in
accordance with the provisions of the Plan and of the Trust without
distinction between principal and income. At no time shall any part of the
Fund be used for or diverted to purposes other than the exclusive benefit of
the Members or their Beneficiaries, subject, however, to the payment of taxes
and administrative expenses and to the return of contributions to a Plan
Sponsor under the specific conditions set forth in the Plan.
SECTION III
MAINTENANCE OF AND DISTRIBUTIONS FROM ACCOUNTS
A. The Plan Administrator shall maintain Accounts in accordance with
the Plan.
B. The Trustee may rely upon a notice given in accordance with the
terms of the Plan. The Trustee shall not be charged with any notice unless
given in accordance with the Plan, including notification of any changes in
the identity or authority of any Fiduciary (other than the Trustee) or any
other person acting in regard to the Plan.
C. The Trustee shall make payments out of the Fund to the persons,
in the manner and in the amounts specified in written directions received by
it from the Plan Administrator. The Plan Administrator assumes all
responsibility with respect to the directions and the application of the
payments. The Trustee is under no duty to enforce payments of any
contributions to the Fund and is not responsible for the adequacy of the Fund
to discharge liabilities arising in connection with the Plan or Trust.
D. If any dispute arises as to the persons to whom the payment of
any funds or delivery of any assets shall be made by the Trustee, the Trustee
may withhold the payment or delivery until the dispute has been determined
by a court of competent jurisdiction or has been settled by the parties
concerned and may, in its sole discretion, submit the dispute to a court of
competent jurisdiction.
SECTION 5
INVESTMENTS
A. Subject to the provisions of Sections V, VI and VIII hereof, the
Trustee agrees to invest the assets of the Fund with the care, skill and
diligence under the circumstances then prevailing that a prudent man acting
in like capacity and familiar with such matters pursuant to the Trust would
use in the conduct of an enterprise of a like character and with like aims.
B. Subject to the terms of the Plan and the Trust Agreement and the
provisions of ERISA, the Trustee shall invest the principal and income of the
Fund without distinction between principal and income, in such securities or
in such property, real, personal, or mixed and wherever situated, as the
Trustee in its sole discretion deems advisable. Without limiting the
foregoing, the Trustee may make investments in, and may purchase, acquire,
obtain, retain, sell, transfer, pledge, hypothecate or encumber common or
preferred stocks, shares of mutual funds, trust and participation
certificates, bonds and mortgages, other evidences of indebtedness or
ownership, annuity contracts of life insurance companies, savings accounts
or plans, including, without limitation, savings accounts or plans
established by the Trustee, covered call options, put options, and financial
futures contracts, irrespective of whether the securities or property shall
be of a character authorized by applicable state law for trust investments.
C. The Trustee shall not invest in any securities issued by a Plan
Sponsor or any affiliate (as defined in ERISA Section 407(d)(7)) of a Plan
Sponsor unless the securities are "Qualifying Employer Securities," which
means (i) securities of a Plan Sponsor or any affiliate which are stock, or
(ii) a marketable obligation, as defined in ERISA Section 407(e), of a Plan
Sponsor or any affiliate. Also, the Trustee shall not invest in any real
property leased to or used by a Plan Sponsor or any affiliate of a Plan
Sponsor unless the real property is "Qualifying Employer Real Property,"
which means parcels of real property and related personal property which are
leased to the Plan Sponsor or to any affiliate and which are geographically
dispersed and are suitable (or adaptable without excessive cost) for more
than one use. The Trustee may invest up to one hundred percent (100%) of the
Fund in Qualifying Employer Securities, but shall not be required to invest
in either Qualifying Employer Securities or Qualifying Employer Real Property
if the Trustee makes a good faith determination that the investment would be
contrary to ERISA or the Code.
D. In addition to any other investments proper under the Trust, the
Trustee shall, after receiving written approval from the Primary Sponsor,
from time to time invest all or any part of the Fund in one or more group
trusts or collective investment funds (including, without limitation, such
trusts or funds now or hereafter established by the then Trustee and, more
specifically, the AmSouth Bancorporation Collective Investment Trust and the
funds maintained thereunder, including the General Equity Fund, the General
Fixed Income Fund, the General Intermediate Maturity Fund, the General
Limited Maturity Fund, and the Short-Term Investment Fund and the AmSouth
Master Money Market Account of AmSouth Bank N.A.) which contemplate the
commingling for investment purposes of the funds therein with trust assets
of other pension plans as defined in ERISA which are qualified under Code
Section 401 and which may be established by other businesses, institutions
and organizations other than the Trustee. To the extent required by Revenue
Ruling 81-100 and to the extent consistent with the Trust, the terms and
provisions of the declaration of trust creating any group trust or collective
investment fund in which the Fund is invested are hereby adopted and made a
part hereof, and any part of the Fund so invested shall be subject to all of
the terms and provisions of any declaration of trust creating the group trust
or collective investment fund. The Trustee shall from time to time withdraw
from the group trust or collective investment fund such part of the Fund, as
the Primary Sponsor directs.
E. The Trustee shall invest the assets of the Plan allocated to
Company Matching Accounts primarily in shares of Qualifying Employer
Securities; otherwise, the normal investment goals and objectives of the
Trustee are capital growth, conservation of principal and production of
income through the receipt of interest or dividends from investments.
SECTION 6
INVESTMENT MANAGER
A. If an Investment Manager is designated in accordance with the
Plan, the Trustee shall either (1) turn over to the Investment Manager for
investment all or such portion of the Fund as is specified in a written
direction to the Trustee from the Primary Sponsor, in which case the assets
shall continue to be a part of the Fund, even though not in the Trustee's
possession, or (2) invest and reinvest all or such portion of the Fund as is
specified in a written direction to the Trustee from the Primary Sponsor in
the manner in which the Investment Manager directs the Trustee in writing.
In either event, whether the Trustee actually gives the Investment Manager
possession of a portion of the Fund or is required to invest a portion of the
Fund as directed by the Investment Manager, the Trustee shall have no
discretion with respect to the investment or reinvestment of that portion of
the Fund and shall not be liable for that portion of the Fund or for any acts
or omissions of the Investment Manager or for following or for taking or
refraining from taking any action at any direction of the Investment Manager
given prior to receipt by the Trustee of written notice from the Primary
Sponsor of revocation of the designation of the Investment Manager or for the
failure of the Investment Manager to give a direction or for any act or
omission in connection with its failure. The Trustee shall have no
responsibility for any assets of the Fund while in the possession of the
Investment Manager or while the assets have not been returned to the
possession of the Trustee, and the Trustee shall be entitled to rely upon
notice of the designation of an Investment Manager from the Primary Sponsor
until notified in writing by the designating party that the designation is
no longer in effect.
B. During any period of time in which an Investment Manager directs
the investment of a portion of the Fund, the Trustee, or its designated
agent, shall continue to receive all securities purchased against payment
therefor and to deliver all securities sold against receipt of the proceeds
therefrom. Any Investment Manager authorized to direct investments may issue
orders on behalf of the Trustee for the purchase or sale of securities
directly to a broker or dealer and for such purpose the Trustee shall, upon
request, execute and deliver to the Investment Manager one or more trading
authorizations. Written notification of the issuance of each order shall be
given promptly to the Trustee by the Investment Manager and the execution of
each order shall be confirmed by the broker to the Investment Manager and the
Trustee. The notification shall be authority of the Trustee to receive
securities purchased against payment therefor and to deliver securities sold
against receipt of the proceeds therefrom. All directions concerning invest-
ments of the Investment Manager shall be signed by any person acting on
behalf of the Investment Manager as may be duly authorized in writing. The
transmission by the Investment Manager to the Trustee of directions by
photostatic teletransmission with duplicate or facsimile signatures shall be
considered a delivery in writing of the directions until the Trustee is
notified in writing by the Primary Sponsor that the use of any device
transmitting duplicate or facsimile signatures is no longer authorized. The
Trustee may rely upon directions which it receives by photostatic
teletransmission prior to receipt of notice from the Primary Sponsor that
they are no longer authorized, and the Trustee shall not be responsible for
the consequences of any unauthorized use of a device which use was not known
by the Trustee at the time to be unauthorized.
C. The Trustee shall be under no duty to make any review of
investments acquired for the Plan at the direction or order of an Investment
Manager or to make any recommendation with respect to disposing of or
continuing to retain any such investment.
D. The Trustee shall have no obligation to determine the existence
of any conversion, redemption, exchange, subscription or other right relating
to any securities purchased, of which notice was given prior to the purchase
of the securities, and shall have no obligation to exercise any right unless
the Trustee is informed of its existence by the Investment Manager and is
requested in writing by the Investment Manager to exercise the right within
a reasonable time before the time for its exercise expires.
E. In the event that the Trustee is directed to purchase securities
issued by any foreign government or agency thereof, or by any corporation
domiciled outside of the continental limits of the United States or its
territories, it shall be the responsibility of the Investment Manager to
advise the Trustee in writing with respect to any laws or regulations of any
such foreign countries which shall apply to the securities, including, but
not limited to, receipt of dividends or interest by the Trustee from such
securities.
SECTION 7
INVESTMENT COMMITTEE
A. If an Investment Committee is designated by the Primary Sponsor
in accordance with the Plan, the Trustee shall, unless the Primary Sponsor
otherwise directs the Trustee in writing, invest the Fund as the Investment
Committee directs. However, the Trustee shall only be subject to proper
directions of the Investment Committee which are made in accordance with the
terms of the Plan and which are not contrary to ERISA.
B. The Primary Sponsor may in writing direct that only a portion of
the Fund shall be invested as the Investment Committee directs, in which case
the Trustee shall invest the balance of the Fund pursuant to Section IV
hereof, subject to Sections V and VIII hereof.
SECTION 8
TRUSTEE POWERS
In the administration of the Trust, in addition to, and not in
limitation of, any powers or authority of the Trustee under the Trust or
which the Trustee may have under applicable law in addition thereto (all such
additional powers and authority being specifically hereby granted to the
Trustee), the Trustee is authorized and empowered to do the following,
without advertisement and without order of court and without having to post
bond or make any returns or report of its doings to any court:
A. To purchase or subscribe for any securities or property,
including, without limitation, shares of mutual funds and to retain the same
in trust;
B. To sell, exchange, convey, transfer, or otherwise dispose of, any
securities or property held by it, by private contract or at public auction,
with or without advertising, and no person dealing with the Trustee shall be
bound to see to the application of the purchase money or to inquire into the
validity, expediency or propriety of any sale or other disposition;
C. To vote any stocks, bonds or other securities; to give general
or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights or
other options, and to make any payments incidental thereto; to oppose or to
consent to, or otherwise participate in, corporate reorganizations or other
changes affecting corporate securities, and to delegate discretionary powers,
and to pay any assessments or charges in connection therewith; and generally
to exercise any of the powers of an owner with respect to stocks, bonds,
securities or other property held as part of the Fund; provided, however,
that the voting, tendering or similar rights with respect to any Qualifying
Employer Securities which are subject to investment direction by Members
shall be exercised by Members or, where applicable, their Beneficiaries;
D. To register any investment held as a part of the Fund in its own
name or in the name of a nominee, and to hold any investment in bearer form
or through or by a central clearing corporation maintained by institutions
active in the national securities markets, but the books and records of the
Trustee shall at all times show that all investments are part of the Fund;
E. To write covered call options and to purchase or sell put options
and financial futures contracts;
F. To employ and act through suitable agents, accountants,
appraisers and attorneys (who may be counsel for the Trustee) and to pay
their reasonable expenses and compensation, and the Trustee may consult with
counsel (who, without limitation, may be counsel to the Trustee or to a Plan
Sponsor), and shall be protected to the extent the law permits in acting upon
the advice of counsel in regard to legal questions, and may also employ
agents and expert assistants and delegate to them the ministerial duties
which it sees fit, in which event the Trustee shall periodically review the
performance of the persons to whom these duties have been delegated;
G. To borrow or raise money for the purposes of the Trust in such
amounts and upon such terms and conditions as the Trustee in its absolute
discretion may deem advisable; and for any sums so borrowed to issue its
promissory note as Trustee, and to secure the repayment thereof by pledging
all or any part of the Fund; and no person lending money to the Trustee shall
be bound to see to the application of the money lent or to inquire into the
validity, expediency or propriety of the borrowing;
H. To make, execute, acknowledge and deliver any and all documents
of transfer and conveyance and all other instruments or agreements that may
be necessary or appropriate to carry out the powers of the Trustee under the
Trust or incidental thereto;
I. To settle, compromise or submit to arbitration any claims, debts
or damages due or owing to or from the Fund, to commence or defend any legal
or administrative proceedings arising, necessary or appropriate in connection
with the Plan, the Trust, the Fund, the administration thereof or the powers
or authority of the Trustee under the Trust, and to represent the Plan, the
Trust, and the Fund in all legal and administrative proceedings;
J. To keep such portions of the Fund in cash or cash balances as the
Trustee may deem to be in the best interest of the Trust, it being understood
that the Trustee shall not be required to pay any interest on any cash
balances; and
K. Generally, to do all acts and to execute and deliver all
instruments as in the judgment of the Trustee may be necessary or desirable
to carry out any powers or authority of the Trustee, without advertisement,
without order of court and without having to post bond or make any returns
or report of its doings to any court.
SECTION 9
INVESTMENT FUNDS
A. The assets of the Fund shall be invested in at least four (4)
Individual Funds, with varying investment objectives, as the Primary Sponsor
shall from time to time determine with consent of the Trustee. One such
Individual Fund shall be established for investments in Qualifying Employee
Securities.
B. The Primary Sponsor, in its sole discretion may, from time to
time, establish one or more additional Individual Funds, or may change or
terminate the availability of any then existing Individual Fund or Individual
Funds for all Members, provided, however, that four (4) or more Individual
Funds remain available.
C. As to each of the Individual Funds, the Trustee shall be
authorized to purchase short-term investments pending the selection and
purchase of investments suitable for a particular Individual Fund. The
decision of the Trustee as to whether or not an investment is of a type which
may be purchased for any Individual Fund shall be conclusive. Pending the
selection and purchase of suitable investments, or the payment of expenses
or other anticipated distributions, the Trustee may retain in cash, without
liability for interest, such portion of an Individual Fund as it shall deem
reasonable under the circumstances.
D. The Trustee, at any time, may purchase for an Individual Fund any
property of another Individual Fund which would then be appropriate for
purchase by that Individual Fund and may exchange property of one Individual
Fund for property of another Individual Fund if the exchanged properties
would be appropriate for purchase by the respective Individual Funds. Each
purchase or exchange shall be made at the fair market value of the property
so purchased or exchanged.
E. The terms and provisions of this Section shall not in any way
limit the authority, powers, and duties of the Trustee as set forth in this
Trust except to the extent that Section 404(c) of ERISA applies to the
investment election made by any Member pursuant to the Plan and Trust. The
Trustee shall exercise or perform the same in regard to any Individual Fund
only in accordance with the purposes thereof. Further, the authority,
powers, and duties of the Trustee shall be subject to the limitations
provided in Sections V and VI of the Trust if an Investment Manager or an
Investment Committee is appointed as provided therein, which Investment Mana-
ger or Investment Committee may be appointed in respect of all or a part of
any Individual Fund or the Fund, but shall exercise or perform its authority,
powers, and duties only in a manner consistent with the purpose of the
Individual Fund or the Fund, as the case may be.
SECTION 10
INVESTMENT DIRECTION BY MEMBERS
A. Subject to any other rules and restrictions as the Plan
Administrator may prescribe from time to time, with respect to amounts
allocated to Employee Deferred Accounts and Rollover Accounts only, each
Member may (1) direct that a portion or all of his interest in one or more
of the Individual Funds be transferred to one or more of the other Individual
Funds or (2) change his election as to the Individual Funds in which future
contributions on his behalf to his Employee Deferred Account and Rollover
Account shall be invested. The provisions of this Section are contingent
upon the availability of transfers among the Individual Funds under the terms
of the investments made by each Individual Fund. An investment direction,
once given, shall be deemed to be a continuing direction until changed as
otherwise provided herein.
B. If no investment election is outstanding, all such contributions
shall be allocated to such Individual Fund as the Plan Administrator shall,
in its sole discretion, determine.
C. Investment directions by Members shall be subject to the
following:
(a) Each direction shall be on a form provided by the Plan
Administrator, shall state the Individual Fund(s) to which all or a
portion of the Member's Account shall be transferred, or, if
applicable, shall state how future contributions shall be invested
among the Individual Funds.
(b) Directions may be given effect for the immediately
succeeding Valuation Date occurring after written notice is given if
delivered to the Plan Administrator on or before the date required by
the Plan Administrator. Directions shall be effective only for the
date in respect of which they are given, unless the Plan Administrator
allows otherwise.
D. Each direction under the preceding paragraphs received by the Plan
Administrator shall be promptly delivered to the Trustee, and shall be
effective as to the Trustee only when received by the Trustee. If a Member
directs that all or a portion of his Account be invested in a particular
Individual Fund, the Trustee shall use its best efforts to carry out the
investment as soon as practicable. However, the Trustee shall never be held
liable for failure to carry out an investment direction within the terms of
the Trust if the Trustee has made a bona fide effort to follow the direction.
E. Any distribution to a Member pursuant to the Plan shall be pro
rata from each Individual Fund in which he has an interest or in such other
manner determined by the Plan Administrator and applied uniformly.
SECTION 11
VALUATION AND ALLOCATION
A. For all purposes under the Plan and the Trust, including
particularly, but without limitation, valuing the Fund and each Member's
Account and allocating to each Member's Account its share of the net income
or net loss of the Fund, the following rules shall apply:
(a) Transfers or payments of funds or assets and the income,
gain, loss, or expenses attributable thereto between Individual Funds
shall be deemed made as of the Valuation Date coinciding with or
immediately preceding the actual date of transfer or payment and the
funds or assets shall not be credited or charged after such date with
any earnings or losses of the Individual Fund from which transferred
or paid but shall be credited or charged after such date with any
earnings or losses of the Individual Fund to which transferred or paid.
(b) Transfers or payments from an Individual Fund to a Member
or his Beneficiary between Valuation Dates shall be charged against the
interest of the Member in the Individual Fund as of the next preceding
Valuation Date and contributions to an Individual Fund which are
allocated to the Account of a Member between Valuation Dates shall be
credited to the interest of such Member in such Individual Fund as of
the next succeeding Valuation Date.
(c) Fair market value of the assets of each Individual Fund
shall be determined separately and the net income or net loss of each
Individual Fund shall be determined separately.
(d) The value of a Member's Account, to the extent invested in
Individual Funds, shall be the sum of his proportionate interests in
each of the Individual Funds, and the aggregate net income or net loss
allocated to a Member's Account shall be the aggregate of the net
income or net loss allocated to his proportionate interests in each of
the Individual Funds.
B. Subject to the provisions of Subsections C. and D. below, the
Trustee shall as of each Valuation Date, and at such additional times as the
Primary Sponsor may in writing direct, determine the net income or net loss
and the fair market value of the assets in the Fund and each Individual Fund,
respectively, as determined below:
(e) To the cash income, if any, since the last Valuation Date,
there shall be added or subtracted, as the case may be, any net
increase or decrease, since the last Valuation Date, in the fair market
value of the assets of the Fund or Individual Fund, as applicable,
since the last Valuation Date, any gain or loss on the sale or exchange
of assets of the Fund or Individual Fund, as applicable, since the last
Valuation Date, accrued interest since the last Valuation Date with
respect to any interest-bearing security as to which the purchaser
would be required to pay the accrued interest in addition to the quoted
price, the amount of any dividend which shall have been declared since
the last Valuation Date but not paid on shares of stock owned by the
Trustee if the market quotation used in determining the value of such
shares is ex-dividend, and the amount of any other assets of the Fund
or Individual Fund determined by the Trustee to be income since the
last Valuation date;
(f) From the sum thereof there shall be deducted all charges,
expenses, and liabilities accrued since the last Valuation Date which
are proper under the provisions of the Plan and the Trust and which in
the discretion of the Trustee are properly chargeable against income
for the period.
C. Notwithstanding Subsection B hereof, in the event that an
Investment Manager is designated by the Primary Sponsor and if the Investment
Manager either directs the investment of or itself invests any assets of the
Fund, or in the event that an Investment Committee is appointed by the
Primary Sponsor and directs the investment of any assets of the Fund, and if
any of such assets are non-listed securities or are not publicly traded or
if the fair market value of any of such assets cannot be readily determined,
then the Investment Manager or the Investment Committee, whichever is
applicable, shall determine the net income or net loss and the fair market
value of such assets and the Trustee shall be entitled to rely upon such
determination.
D. In the event that an Investment Manager is designated by the Plan
Sponsor and if the Trustee gives the Investment Manager possession of any
portion of the assets of the Fund, then the Investment Manager shall
determine the net income or net loss and the fair market value of those
assets and the Trustee shall be entitled to rely upon the determination.
SECTION 12
TRUSTEE COMPENSATION
A. The Trustee's compensation shall be the amount agreed upon in a
separate written agreement between the Primary Sponsor and the Trustee. If
the Primary Sponsor fails to pay to the Trustee its compensation and expenses
within thirty (30) days after the Trustee presents its invoice to the Primary
Sponsor, the Trustee is authorized to use the assets held by it under the
Trust to pay its unpaid compensation and expenses. No person who serves as
the Trustee and who receives full-time pay from a Plan Sponsor shall be
entitled to receive any compensation from the Fund, except for the
reimbursement of expenses properly and actually incurred by him in his role
as Trustee.
B. All taxes of whatever kind or nature that may be levied or
assessed under existing or future laws upon, or in respect of, the Plan, the
Trust, the Fund or the income or gains thereof or therefrom shall be paid
from the Fund.
SECTION 13
TRUSTEE RESPONSIBILITY
The Trustee is not responsible for the application, investment or other
disposition of any funds or property held or managed by, or otherwise subject
to direction by, any person other than the Trustee. The Trustee is not
responsible for the application of any funds or property held by it under the
Trust which have been paid to the Plan Administrator or which have been paid
pursuant to the Plan and Trust or as directed by the Plan Administrator. The
Trustee has no responsibility with respect to any administration of the Plan
or the payment of any benefits under the Plan.
SECTION 14
RECORDKEEPING
The Trustee shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions pursuant to the
Plan and the Trust, and all books and records relating thereto shall be open
to inspection and audit at all reasonable times by the Plan Administrator.
Within ninety (90) days following the later of the close of each Plan year
or the receipt of a Plan Sponsor's contribution, and within ninety (90) days
after a Report Date (which for purposes of this Trust shall mean the date of
the death, removal or resignation of any Trustee from time to time serving
hereunder, or the date of the termination of the Trust) the Trustee shall
file with the Plan Administrator its written account. The account shall set
forth (i) all investments, receipts, disbursements and other transactions
effected by it during such Plan Year or during the period from the last
Valuation Date to the Report Date and (ii) the determination of the Trustee
of the net income or net loss of the Fund for such Plan Year or during the
period from the last Valuation Date to the Report Date and the determination
of the Trustee of the fair market value of the assets of the Fund as at the
Valuation Date or as at the Report Date, as the case may be. Unless a Report
Date is also a Valuation Date, no allocation of earnings, gains or losses
shall be made to a Member's Account.
SECTION 15
REMOVAL OR RESIGNATION OF TRUSTEE,
AND AMENDMENT OR TERMINATION OF TRUST
A. The Trustee, or an individual Trustee, as applicable, may be
removed by the Primary Sponsor at any time upon thirty (30) days' notice in
writing to the Trustee and the Plan Administrator. Any Trustee serving
hereunder may resign at any time without leave of court, upon thirty (30)
days' notice in writing to the Plan Sponsor and the Plan Administrator.
B. Upon the death, removal or resignation of a Trustee, the Primary
Sponsor shall appoint a successor Trustee as soon as possible. If the former
Trustee was one of several Trustees, the remaining persons constituting the
Trustee may continue to act as Trustee until the Primary Sponsor appoints a
successor co-Trustee.
C. Any removal of a Trustee or appointment of a successor Trustee
shall be without leave of court by notice in writing signed by the Primary
Sponsor and delivered to the Trustee being removed or appointed, with a copy
to the Plan Administrator. Any successor Trustee serving at any time
hereunder shall serve with the same powers and duties as the Trustee named
herein.
D. Upon receipt by the Trustee (or by the Primary Sponsor in the
event of the death of a last remaining individual Trustee) of the designated
successor's acceptance of its appointment as successor Trustee hereunder, the
funds and properties then constituting the Fund shall be transferred to the
successor Trustee. However, the Trustee is not required to transfer funds
and properties to a successor trustee unless the Trustee is discharged from
all liability for any taxes which may be due and owing by the Plan and Trust,
or unless either (1) the successor trustee, who must be acceptable to the
Trustee, indemnifies the Trustee against any such liability or (2) each Plan
Sponsor so indemnifies the Trustee in a manner acceptable to the Trustee.
E. If the Primary Sponsor fails to appoint a successor trustee
before the expiration of the thirty (30) day notice period, or no written
acceptance is received from a successor Trustee, then at any time after the
end of the thirty (30) day notice period the Trustee may file an appropriate
action in a court of competent jurisdiction and assign to the custody of the
court the funds and properties then held by the Trustee constituting the
Fund.
F. Upon the transfer of the Fund to a successor trustee or to a
court of competent jurisdiction, as the case may be, the Trustee shall be
relieved of all further responsibilities in connection with the Plan, the
Trust or the Fund. The Trustee is authorized, however, to reserve therefrom
such money or property as it may deem advisable for payment of its fees and
expenses in connection with the settlement of its account or otherwise, and
any balance of the reserve remaining after the payment of such fees and
expenses shall be paid over to the successor trustee or to the court.
G. The Primary Sponsor reserves the right to amend this Trust
Agreement by written notice to the Trustee. However, no amendment which
affects the rights, duties or responsibilities of the Trustee may be made
without the Trustee's consent.
H. The Trust shall continue for such time as may be necessary to
accomplish the purposes for which it was created and shall terminate only
upon the complete distribution of the Fund. The Trust may be terminated as
of any date by the Primary Sponsor by written notice to the Trustee and the
Plan Administrator given in the manner prescribed in the Plan which specifies
the date as of which the Trust shall terminate. Upon termination of the
Trust, if the Trustee has not received instructions to the contrary from the
Primary Sponsor, the Trustee shall liquidate the Fund and, after paying the
reasonable expenses of the Trust, including expenses involved in the
termination, distribute the balance thereof according to the written
directions of the Plan Administrator. The Trustee is not required to make
any distribution until it receives a copy of an Internal Revenue Service
determination letter to the effect that the termination does not affect
either the qualified status of the Plan or the exempt status of the Trust,
or, if such letter is not issued, until the Trustee is reasonably satisfied
that adequate provision has been made for the payment of all taxes which may
be due and owing by the Trust. In no event shall any distribution be made
by the Trustee until the Trustee is reasonably satisfied that the
distribution will not be contrary to the applicable provisions of the Plan
dealing with terminations of the Plan and the Trust.
I. The Trust and the contributions made by each Plan Sponsor to the
Trustee are conditioned upon the conditions set forth in the Plan as to
qualification and returns of contributions, and the returns of contributions
by the Trustee to the Plan Sponsors in certain events is governed by such
provisions of the Plan.
J. If at any time more than one person or entity is serving as the
Trustee, the persons or entities so serving shall act by the action of a
majority, with or without a meeting, and any action may be evidenced by a
writing executed by a majority of the persons or entities constituting the
Trustee.
K. Each Plan Sponsor agrees at its sole cost and expense to
indemnify and hold harmless the Trust and the Trustee from and against any
claim, liability, loss, cost, expense, action or cause of action resulting
from or in connection with any claim asserted by any person or persons where
the Trustee has acted in good faith pursuant to the Trust or in reliance on
a written notice to the extent the notice is authorized in the Plan or Trust
and has been given in accordance with the terms and conditions of the Plan.
L. The Trust shall be administered, construed and enforced according
to the laws of the State of Alabama to the extent not preempted by federal
laws, and the Trustee shall be liable to account only in the courts of that
state and in any court of appropriate jurisdiction of the United States of
America. All transfers of funds or other property to or from the Trustee
shall be deemed to take place in the State of Alabama.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be executed on the day and year first above written.
PRIMARY SPONSOR:
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President and Chief
Executive Officer
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel & Secretary
[CORPORATE SEAL]
TRUSTEE:
AMSOUTH BANK N.A.
By: /s/ Lynn E. Cushing
Title: Senior Vice President
ATTEST:
/s/ Donna P. Price
Title: Assistant Vice President
and Trust Officer
[SEAL]
LOAN AGREEMENT
BETWEEN
TIAS, INC.,
a Texas corporation
AND
MORRISON RESTAURANTS INC.
INDEX
Page
ARTICLE 1 The Loans. . . . . . . . . . . . . . . . . . . . . . . .
1.1 The Loans . . . . . . . . . . . . . . . . . . . . . . .
1.2 Over-advances . . . . . . . . . . . . . . . . . . . . .
1.3 Interest. . . . . . . . . . . . . . . . . . . . . . . .
1.4 Repayment and Prepayment. . . . . . . . . . . . . . . .
1.5 Note and Loan Account . . . . . . . . . . . . . . . . .
1.6 Manner of Payment . . . . . . . . . . . . . . . . . . .
ARTICLE 2 Conditions Precedent . . . . . . . . . . . . . . . . . .
2.1 Conditions Precedent to Closing . . . . . . . . . . . .
2.2 Conditions Precedent to Each Advance Subsequent
to the Agreement Date . . . . . . . . . . . . . . . . .
ARTICLE 3 Representations and Warranties . . . . . . . . . . . . .
3.1 Representations and Warranties. . . . . . . . . . . . .
3.2 Survival of Representations and Warranties. . . . . . .
ARTICLE 4 General Covenants. . . . . . . . . . . . . . . . . . . .
4.1 Preservation of Existence and Similar Matters . . . . .
4.2 Compliance with Applicable Law. . . . . . . . . . . . .
4.3 Maintenance of Properties . . . . . . . . . . . . . . .
4.4 Insurance . . . . . . . . . . . . . . . . . . . . . . .
4.5 Payment of Taxes and Claims . . . . . . . . . . . . . .
4.6 Visits and Inspections. . . . . . . . . . . . . . . . .
4.7 ERISA . . . . . . . . . . . . . . . . . . . . . . . . .
4.8 Further Assurances. . . . . . . . . . . . . . . . . . .
4.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . .
4.10 Additional Units. . . . . . . . . . . . . . . . . . . .
ARTICLE 5 Information Covenants. . . . . . . . . . . . . . . . . .
5.1 Audited Annual Financial Statements and
Information; Certificate of No Default. . . . . . . . .
5.2 Monthly Financial Statements and Information. . . . . .
5.3 Copies of Other Reports . . . . . . . . . . . . . . . .
5.4 Notice of Litigation and Other Matters. . . . . . . . .
ARTICLE 6 Negative Covenants . . . . . . . . . . . . . . . . . . .
6.1 Indebtedness. . . . . . . . . . . . . . . . . . . . . .
6.2 Liquidation; Change in Ownership, Name, or Fiscal
Year; Disposition or Acquisition of Assets. . . . . . .
6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . .
6.4 Guaranties. . . . . . . . . . . . . . . . . . . . . . .
6.5 Investments . . . . . . . . . . . . . . . . . . . . . .
6.6 Sales and Leasebacks. . . . . . . . . . . . . . . . . .
6.7 Payment of Wages. . . . . . . . . . . . . . . . . . . .
6.8 Material Events . . . . . . . . . . . . . . . . . . . .
ARTICLE 7 Default. . . . . . . . . . . . . . . . . . . . . . . . .
7.1 Events of Default . . . . . . . . . . . . . . . . . . .
7.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 8 Miscellaneous. . . . . . . . . . . . . . . . . . . . . .
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . .
8.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . .
8.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . .
8.4 Set-Off . . . . . . . . . . . . . . . . . . . . . . . .
8.5 Assignment. . . . . . . . . . . . . . . . . . . . . . .
8.6 Counterparts. . . . . . . . . . . . . . . . . . . . . .
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . .
8.8 Severability. . . . . . . . . . . . . . . . . . . . . .
8.9 Interest and Charges. . . . . . . . . . . . . . . . . .
8.10 Headings. . . . . . . . . . . . . . . . . . . . . . . .
8.11 Pronouns. . . . . . . . . . . . . . . . . . . . . . . .
8.12 Entire Agreement; Amendments. . . . . . . . . . . . . .
8.13 Termination . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 9 Definitions. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 10 Waiver of Jury Trial, Etc.. . . . . . . . . . . . . . .
10.1 Consent to Venue. . . . . . . . . . . . . . . . . . . .
10.2 Waiver of Jury Trial. . . . . . . . . . . . . . . . . .
LOAN AGREEMENT
Between
TIAS, INC., a Texas corporation
and
MORRISON RESTAURANTS INC.,
a Delaware corporation
Agree as follows as of the 19th day of November, 1993:
ARTICLE 1 The Loans.
Section 1.1 The Loans. The Lender agrees, upon the terms and
subject to the conditions of this Agreement, to lend to the Borrower, prior
to the Maturity Date, amounts which in the aggregate principal amount do not
exceed the Applicable Commitment.
Section 1.2 Over-advances. If at any time the Loans exceed the
Applicable Commitment, or any other applicable limitation set forth in this
Agreement, such Loans shall nevertheless constitute Obligations that are
secured by the Collateral and are entitled to all benefits thereof. In the
event that the Lender, in its sole and absolute discretion, shall make any
Loans which give rise to an Over-advance, Loans in an aggregate principal
amount equal to such Over-advance shall be payable on demand.
Section 1.3 Interest. The Borrower shall pay interest on the
outstanding unpaid principal amount of the Loans until the Loans shall be due
(whether at maturity, by reason of acceleration or otherwise) as provided in
the Note.
Section 1.4 Repayment and Prepayment. Subject to mandatory
repayment events set forth herein, the principal amount of the Loans shall
be repaid as provided in the Note. Loans may be repaid prior to the Maturity
Date at any time without penalty.
Section 1.5 Note and Loan Account.
(a) The Loans shall be evidenced by the Note. The Note shall
be issued by the Borrower to the Lender and shall be duly executed and
delivered by one of the Authorized Signatories.
(b) The Lender shall open and maintain on its books in the name
of the Borrower a loan account with respect to the Loans and interest
thereon. The Lender shall debit such loan account for accrued interest
on the Loans, and shall credit such loan account for each payment on
account of principal of or interest on the Loans.
Section 1.6 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loans and any other
amount owed to the Lender under this Agreement or the Note shall be
made not later than 12:00 noon (Eastern time) on the date specified for
payment under this Agreement to the Lender in lawful money of the
United States of America in immediately available funds.
(b) If any payment under this Agreement or the Note shall be
specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, and such
extension of time shall in such case be included in computing interest
and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees, and
all other amounts due hereunder or under the Note without set-off or
counterclaim or any deduction whatsoever.
(d) Prior to the acceleration of the Loans under Section 7.2
hereof, if some but less than all amounts due from the Borrower are
received by the Lender, the Lender shall apply such amounts to the
Obligations in the following order of priority: (i) to the costs and
expenses (including attorneys' fees and expenses), if any, incurred by
the Lender in the collection of such amounts under this Agreement or
any of the other Loan Documents; (ii) to the payment of interest then
due and payable on the Loans; (iii) to the payment of all other amounts
not otherwise referred to in this Section 1.6 then due and payable
hereunder or under the other Loan Documents; and (iv) to the payment
of principal then due and payable on the Obligations in such order as
the Lender shall determine. Subsequent to the acceleration of the
Obligations under Section 7.2 hereof, all amounts received from any
source whatsoever by the Lender with respect to the Borrower shall be
applied by the Lender to the Obligations in such manner as the Lender
in its sole discretion elects.
ARTICLE 2 Conditions Precedent.
Section 2.1 Conditions Precedent to Closing. The obligation of
the Lender to make the initial Advance of the Loans is subject to the
fulfillment of each of the following conditions prior to or contemporaneously
with the making of the initial Advance of the Loans:
(a) The Lender shall have received each of the following, in
form and substance satisfactory to the Lender: (i) copies of a
preliminary lien search and report conducted with respect to the
Borrower, which search and report shall include a review of all Uniform
Commercial Code indices, tax lien records, general execution dockets,
and plaintiff/defendant pending case tables as filed and recorded in
the records of the applicable public office in each jurisdiction in
which the Borrower may own assets or do business; (ii) a completed Loan
Certificate on behalf of the Borrower; (iii) the duly executed Note;
(iv) the duly executed Security Agreement; (v) the duly executed
Company Option Agreement; (vi) the duly executed Shareholder Option
Agreement; (vii) acknowledgment copies evidencing the appropriate
filing of all Uniform Commercial Code financing statements required to
be filed in connection with the perfection of the Lender's security
interest in the Collateral; (viii) copies of insurance binders or
certificates covering the Collateral, naming the Lender as loss payee
and meeting the requirements of Section 4.4 hereof; (ix) audited
financial statements for the Borrower for the fiscal year ended
December 31, 1992, and unaudited financial statements for the Borrower
for the period ended September 30, 1993; (x) the Opinion of Counsel;
(xi) the duly executed Trademark Security Agreement; (xii) the duly
executed Stock Pledge and Security Agreement, together with undated
stock powers relating to the shares pledged thereby and executed in
blank by the appropriate pledgor; (xiii) certified copy of the articles
of incorporation of the Borrower certified by the secretary of state
of the state of the Borrower's incorporation; (xiv) certified copy of
the By-Laws of the Borrower, certified by the secretary of the Borrower
to be true and correct and demonstrating the amendment of such By-Laws
as authorized by the resolution of the directors of the Borrower
attached as Schedule 11 hereto; (xv) a duly executed Request for
Advance; (xvi) a duly executed Intercreditor Agreement; (xvii) a duly
executed Right of First Refusal; and (xviii) the Lender shall have
received evidence reasonably satisfactory to it that all Necessary
Authorizations have been obtained or made, are in full force and
effect, and are not subject to any pending or threatened reversal or
cancellation;
(b) All of the representations and warranties of the Borrower
under this Agreement shall be true and correct in all material
respects, and the Lender shall have received a certificate to that
effect signed by an Authorized Signatory of the Borrower and dated the
Agreement Date;
(c) The Lender shall have received reasonable evidence, in
summary form, that any requested Advance relates to Approved Project
Expenses and all such other documents as the Lender may reasonably
request.
Section 2.2 Conditions Precedent to Each Advance Subsequent to
the Agreement Date. The obligation of the Lender to make each Advance is
subject to the fulfillment of each of the following conditions immediately
prior to or contemporaneously with such Advance:
(a) Approved Project Expenses shall be determined with respect
to the Unit or Units for which the Advance is requested.
(b) All of the representations and warranties of the Borrower
under this Agreement, which, pursuant to Section 3.2 hereof are made
at and as of the time of such Advance, shall be true and correct in all
material respects at such time, both before and after giving effect to
the Advance, and the Lender shall have received a certificate to that
effect from an Authorized Signatory of the Borrower;
(c) There shall not exist, as of the date of the making of the
Advance and after giving effect thereto, a Default or an Event of
Default hereunder, and the Lender shall have received a duly executed
Request for Advance so stating; and
(d) The Lender shall have received reasonable evidence, in
summary form, that the requested Advance relates to Approved Project
Expenses and such other documents or opinions in connection with the
Advance as the Lender may reasonably request.
ARTICLE 3 Representations and Warranties.
Section 3.1 Representations and Warranties. The Borrower hereby
represents and warrants as follows and agrees that the following
representations and warranties shall survive the execution and delivery
hereof by the Lender or the making of the Loans under this Agreement:
(a) Organization; Power; Qualification. The Borrower is a
corporation duly organized, validly existing, and in good standing
under the laws of the state of Texas, has the power and authority, to
own or lease and operate its properties and to carry on its business
as now being and hereafter proposed to be conducted, and is duly
qualified and is in good standing as a foreign corporation, and
authorized to do business, in each jurisdiction in which the character
of its properties or the nature of its business requires such
qualification or authorization.
(b) Authorization; Enforceability. The Borrower has the
corporate power and has taken all necessary corporate action to
authorize it to execute, deliver, and perform this Agreement and each
of the other Loan Documents to which it is a party in accordance with
the terms and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by the
Borrower, and is, and each of the other Loan Documents to which
Borrower is a party is, a legal, valid, and binding obligation of the
Borrower, enforceable in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency and other laws
affecting creditors' rights generally, and except that the availability
of certain remedies may be limited by the effect of general principles
of equity, whether applied by a court of law or equity.
(c) Subsidiaries. The Borrower has no Subsidiaries other than
Tias Beverage Company, a Texas corporation, forty percent (40%) of the
outstanding common stock of which is owned by the Borrower and the
balance of which is owned by Lavine.
(d) Capital Stock and Related Matters. The authorized capital
stock of the Borrower consists of Nine Million Six Hundred Thousand Six
Hundred (9,600,600) shares of common stock, $0.01 par value per share,
of which Two Million Seven Hundred Twenty-Five Thousand (2,725,000)
shares are currently issued and outstanding as of the Agreement Date
and are fully paid and non-assessable and Five Million Six Hundred
Thousand and Six Hundred (5,600,600) shares of Series A Preferred
Stock, $0.01 par value per share, of which Two Million (2,000,000)
shares are currently issued and outstanding as of the Agreement Date
and are fully paid and non-assessable. All of such issued and
outstanding shares are owned or held of record as of the Agreement Date
as shown on Schedule 1 attached hereto, and are not subject to any
Liens or other rights except as set forth on Schedule 1. As of the
Agreement Date, except for the option granted to the Lender pursuant
to the Company Option Agreement and the Shareholder Option Agreement,
there are no options, warrants, purchase agreements, put agreements,
call agreements or any other agreements to which the Borrower is a
party which relate to or affect, the purchase or sale of the capital
stock of the Borrower, except as otherwise set forth on Schedule 2
hereto.
(e) Compliance with Laws, Other Loan Documents, and
Contemplated Transactions. The execution, delivery, and performance
of this Agreement and each of the other Loan Documents in accordance
with their respective terms and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) violate any
Applicable Law, (ii) conflict with, result in a breach of, or
constitute a default under the articles of incorporation or by-laws of
the Borrower or under any indenture, agreement, or other instrument to
which the Borrower or any Shareholder is a party or by which they or
any of their respective properties may be bound, or (iii) result in or
require the creation or imposition of any Lien upon or with respect to
any property now owned or hereafter acquired by the Borrower or any
Shareholder except Permitted Liens.
(f) Necessary Authorizations. The Borrower and each
Shareholder have secured all Necessary Authorizations, and all such
Necessary Authorizations are in full force and effect and not subject
to any pending attack or revocation.
(g) Title to Properties. The Borrower has good, marketable,
and legal title to, or a valid leasehold interest in, all of its
material properties and assets, and none of such properties or assets
is subject to any Liens other than Permitted Liens. Schedule 3
attached hereto sets forth each lease or rental agreement to which the
Borrower is a party as of the Agreement Date, identifying the title of
such documents, the parties thereto, the property to which such
document relates, the date of execution and referring to each material
amendment or waiver thereto.
(h) Taxes. All federal, state, and other tax returns of the
Borrower required by law to be filed have been duly filed, and all
federal, state, and other taxes, assessments, and other governmental
charges or levies upon the Borrower and any of its properties, income,
profits, and assets, which are due and payable, have been paid, except
any such the payment of which the Borrower is contesting in good faith
by appropriate proceedings and for which adequate reserves have been
provided on the books of the Borrower to the extent required by GAAP.
(i) Financial Statements. As of the Agreement Date, the
Borrower has furnished, or caused to be furnished, to the Lender
financial statements for the Borrower which present fairly in all
material respects in accordance with GAAP, except for notes and
disclosures and year-end adjustments, the financial position of the
Borrower as at September 30, 1993, and the results of operations for
the period then ended.
(j) No Adverse Change. Since September 30, 1993, there has
occurred no event which would have a Materially Adverse Effect.
(k) Liabilities, Litigation, etc. Except for liabilities
incurred in the normal course of business, the Borrower has no material
(individually or in the aggregate) liabilities, direct or contingent,
nor any litigation, to the knowledge of Borrower (pending or
threatened) as of the Agreement Date except as disclosed or referred
to in the financial statements referred to in Section 3.1(i) above or
Schedule 4 hereto.
(l) ERISA. The Borrower and each ERISA Affiliate and each of
their respective Plans are in material compliance with ERISA and the
Code, and neither the Borrower nor any of its ERISA Affiliates has
incurred any accumulated funding deficiency with respect to any such
Plan within the meaning of ERISA or the Code. Except as may be
otherwise disclosed in a signed letter by the Borrower to the Lender
dated as of the Agreement Date, the Borrower and each of its ERISA
Affiliates have complied in all material respects with all requirements
of ERISA Sections 601 through 608 and Code Section 4980B. Neither the
Borrower nor any of its ERISA Affiliates has made any promises of
retirement or other benefits to employees, except as set forth in the
Plans. The Borrower has not incurred any material liability to the
Pension Benefit Guaranty Corporation in connection with any such Plan.
The assets of each such Plan which is subject to Title IV of ERISA are
sufficient to provide the benefits under such Plan, the payment of
which the Pension Benefit Guaranty Corporation would guarantee if such
Plan were terminated, and such assets are also sufficient to provide
all other "benefit liabilities" (as defined in ERISA Section
4001(a)(16), due under the Plan upon termination. No Reportable Event
has occurred and is continuing with respect to any such Plan. No such
Plan or trust created thereunder, or party in interest (as defined in
Section 3(14) of ERISA), or any fiduciary (as defined in Section 3(21)
of ERISA), has engaged in a "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) which
would subject such Plan or any other Plan of the Borrower or any of its
ERISA Affiliates, any trust created thereunder, or any such party in
interest or fiduciary, or any party dealing with any such Plan or any
such trust to the penalty or tax on "prohibited transactions" imposed
by Section 502 of ERISA or Section 4975 of the Code. Neither the
Borrower nor any of its ERISA Affiliates is a participant in or is
obligated to make any payment to a Multiemployer Plan.
(m) Compliance with Regulations G, T, U, and X. The Borrower
is not engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying,
and the Borrower does not own or presently intend to acquire, any
"margin security" or "margin stock" as defined in Regulations G, T, U,
and X (12 C.F.R. Parts 221 and 224) of the Board of Governors of the
Federal Reserve System (herein called "margin stock"). None of the
proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose
of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of
said Regulations G, T, U, and X.
(n) Solvency. The Borrower is Solvent.
(o) Name and Location of Chief Executive Office of Borrower.
The Borrower has not changed its name within the preceding five (5)
years from the Agreement Date, and has not transacted business under
any other name or trade name except as set forth on Schedule 5 hereto.
As of the Agreement Date, the Borrower's chief executive office and
Federal employer identification number are set forth in the Security
Agreement.
(p) Environmental Matters. Except as would not, individually
or in the aggregate, have a Materially Adverse Effect, and except as
is described on Schedule 6 attached hereto with respect to each of the
Properties:
(i) The Properties do not contain, in, on or under,
including, without limitation, the soil and groundwater
thereunder, any Hazardous Materials in violation of
Environmental Laws or in amounts that have given or are
reasonably expected to give rise to liability under
Environmental Laws.
(ii) The Properties and all operations and facilities at
the Properties are in compliance in all material respects with
all Environmental Laws, and there is no contamination or
violation of any Environmental Law which has given or reasonably
is expected to interfere with the continued operation of any of
the Properties or impair the financial condition of the
Borrower.
(iii) The Borrower has not received from any governmental
authority any complaint, notice of violation, alleged violation,
investigation or advisory action or notice of potential
liability regarding matters of environmental protection or
permit compliance under applicable Environmental Laws with
regard to the Properties, nor is the Borrower aware that any
governmental authority is contemplating delivering to the
Borrower any such notice. To the knowledge of Borrower, there
has been no pending or threatened complaint, notice of
violation, alleged violation, investigation or notice of
potential liability under Environmental Laws with regard to any
of the Properties.
(iv) Hazardous Materials have not been generated,
treated, stored, disposed of, at, on or under any of the
Properties by the Borrower in violation of any Environmental
Laws or in a manner that has given or could reasonably be
expected to give rise to liability under Environmental Laws nor
have any Hazardous Materials been transported or disposed of
from any of the Properties by the Borrower to any other location
in violation of any Environmental Laws or in a manner that has
given or could reasonably be expected to give rise to liability
under Environmental Laws.
(v) There are no governmental administrative actions or
judicial proceedings pending under any Environmental Law to
which the Borrower is a party with respect to any of the
Properties obligating the Borrower, nor are there any consent
decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial
requirements obligating the Borrower outstanding under any
Environmental Law with respect to any of the Properties.
(vi) There has been no release or threat of release by
the Borrower of Hazardous Materials into the environment at or
from any of the Properties, or arising from or relating to the
operations of the Borrower, in violation of Environmental Laws
or in amounts that has given or could reasonably be expected to
give rise to liability under Environmental Laws.
(q) OSHA. All of the Borrower's operations are conducted in
substantial compliance with all applicable rules and regulations
promulgated by the Occupational Safety and Health Administration of the
United States Department of Labor.
(r) Representations and Warranties Relating to Equipment. With
respect to all Equipment, the Borrower hereby warrants and represents
that:
(i) The Equipment is in good operating condition and
repair, ordinary wear and tear excepted, and all necessary
replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment shall be
maintained and preserved, ordinary wear and tear excepted, and
except for items in repair and which are obsolete; and
(ii) The Borrower will not permit any of the Equipment to
become affixed to any real property leased to the Borrower so
that an interest arises therein under the real estate laws of
the applicable jurisdiction unless the landlord of such real
property has executed a landlord waiver or leasehold mortgage in
favor of the Lender, and the Borrower will not permit any of the
Equipment to become an accession to any personal property other
than Equipment subject to first priority Liens in favor of the
Lender or Permitted Liens.
(s) Banking Relationships. Except as set forth on Schedule 7
hereto, identifying the institution, account balance, account number
and type of account, the Borrower maintains no checking accounts,
deposit accounts, cash maintenance accounts or other banking
relationships as of the Agreement Date.
(t) Borrower's Operations. As of the Agreement Date, the
Borrower operates eleven (11) Units, the mailing address, county, state
and general manager of each of which are set forth on Schedule 8
hereto.
Section 3.2 Survival of Representations and Warranties. All
representations or warranties made under this Agreement shall be deemed to
be made, and shall be true and correct in all material respects, at and as
of the Agreement Date and (except to the extent a representation or warranty
is stated to be as of the Agreement Date) the date of each Advance.
ARTICLE 4 General Covenants.
So long as any of the Obligations is outstanding and unpaid or the
Lender has an obligation to make Advances hereunder, and unless the Lender
shall otherwise consent in writing:
Section 4.1 Preservation of Existence and Similar Matters. The
Borrower will (a) preserve and maintain its existence and all Necessary
Authorizations and (b) qualify and remain qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its businesses requires such qualification or authorization.
Section 4.2 Compliance with Applicable Law. The Borrower will
comply with the requirements of all Applicable Law, except where the non-
compliance with such would not have a Materially Adverse Effect.
Section 4.3 Maintenance of Properties. The Borrower will maintain
or cause to be maintained in the ordinary course of business consistent with
past practices, in good repair, working order, and condition all properties
(including, without limitation, the Equipment) used or useful in its business
(whether owned or held under lease), ordinary wear and tear excepted, and
from time to time to make or cause to be made all needed and appropriate
repairs, renewals, replacements, additions, betterments, and improvements
thereto.
Section 4.4 Insurance. The Borrower will:
(a) Maintain insurance including, but not limited to, public
liability insurance from responsible companies in such amounts and
against such risks as shall be reasonably acceptable to the Lender;
(b) Keep the Collateral insured by insurers on terms and in a
manner reasonably acceptable to the Lender against loss or damage by
fire, theft, burglary, pilferage, loss in transit, explosions, flood,
and hazards insured against by extended coverage, and, with respect to
any properties and assets located in a designated flood plain, flood
insurance, all in amounts reasonably satisfactory to the Lender and all
premiums thereon to be paid by the Borrower; and
(c) Require that each such insurance policy referred to in
Section 4.4(b) above shall be provided to the Lender, shall name the
Lender as additional loss payee to the extent of the Obligations, and
shall provide for at least thirty (30) days' prior written notice to
the Lender of any default under, termination of, or proposed
cancellation of such policy. All such amounts paid in respect of such
policy directly to the Lender shall be applied by it to the payment of
any of the Obligations at the time due and payable as set forth in
Section 1.6 hereof, or as otherwise required by law. If no Default or
Event of Default shall then exist or be outstanding, Borrower shall be
entitled to obtain and retain any insurance proceeds which are payable
by virtue of damage to or destruction of property, provided such
proceeds are used only to repair or replace such damaged or destroyed
property.
Section 4.5 Payment of Taxes and Claims. The Borrower will pay
and discharge all taxes, assessments, and governmental charges or levies
imposed upon it or upon its income or profits or upon any properties
belonging to it, and all lawful claims for labor, materials, and supplies
which, if unpaid, would become a choate, vested or perfected Lien upon any
of its properties; except that, no such tax, assessment, charge, levy, or
claim need be paid which is being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books to the extent required by GAAP. The Borrower shall timely
file all information returns required by federal, state, or local tax
authorities.
Section 4.6 Visits and Inspections. The Borrower will permit
representatives of the Lender to visit and inspect the properties, books and
records of the Borrower during normal business hours, make copies of such
books and records and discuss with its principal officers its businesses,
financial positions, and results of operations.
Section 4.7 ERISA. The Borrower shall make, or cause to be made,
timely payment of contributions required to meet the minimum funding
standards set forth in ERISA with respect to its and its ERISA Affiliates'
Plans; promptly after the filing thereof, furnish to the Lender copies of any
annual report required to be filed pursuant to ERISA in connection with each
such Plan of it and its ERISA Affiliates; notify the Lender as soon as
practicable of any Reportable Event and of any additional act or condition
arising in connection with any such Plan which the Borrower believes would
constitute grounds for the termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan; and furnish to the
Lender, promptly upon the Lender's request therefor, such additional
information concerning any such Plan as may be reasonably requested by the
Lender.
Section 4.8 Further Assurances. Upon the reasonable request of
the Lender, the Borrower will promptly cure, or cause to be cured, defects
in the creation and issuance of the Note and the execution and delivery of
the Loan Documents resulting from any act or failure to act by the Borrower
or any employee or officer thereof, and the perfection of any Liens in favor
of the Lender, and shall execute any additional documents reasonably
requested by the Lender in order to maintain the Lender's first priority
perfected security interest in all of the Collateral, subject to Permitted
Liens, including any property, real or personal hereafter acquired by
Borrower.
Section 4.9 Use of Proceeds. The Borrower shall use the proceeds
of Advances hereunder for the payment of Approved Project Expenses and for
no other purpose without the prior written consent of Lender.
Section 4.10 Additional Units. With respect to (a) any real
property acquired in fee by the Borrower at any time following the Agreement
Date, the Borrower will execute such mortgages, deeds to secure debt or
similar documents as may be necessary, in the sole discretion of the Lender,
to convey to the Lender a first priority perfected security interest in such
real property, subject to Permitted Liens, and (b) any real property first
leased by the Borrower at any time following the Agreement Date, the Borrower
will execute such collateral assignments as may be necessary, in the sole
discretion of the Lender, to convey to the Lender a first priority perfected
security interest in such lease, subject to Permitted Liens.
ARTICLE 5 Information Covenants.
So long as any of the Obligations is outstanding and unpaid or so long
as the Lender has any obligation to make Advances hereunder, and unless the
Lender shall otherwise consent in writing, the Borrower will furnish or cause
to be furnished to the Lender:
Section 5.1 Audited Annual Financial Statements and Information;
Certificate of No Default. Within one hundred twenty (120) days after the
end of each fiscal year of the Borrower, the balance sheets of the Borrower
as of the end of such fiscal year and the related statements of income,
retained earnings, and cash flow of the Borrower for such fiscal year,
setting forth in comparative form the figures as of the end of and for the
previous fiscal year and certified without qualifications, or with only such
qualifications as shall be acceptable to the Lender, by Price Waterhouse or
other independent certified public accountants of recognized standing
reasonably satisfactory to the Lender, whose opinion shall include a
statement certifying that no Default or Event of Default was detected during
the examination of the Borrower, and who shall have authorized the Borrower
to deliver such financial statements and opinion thereon to the Lender
pursuant to this Agreement.
Section 5.2 Monthly Financial Statements and Information. Within
thirty (30) days after the last day of each month or similar fiscal period
in each fiscal year of the Borrower, the balance sheet of the Borrower as at
the end of such month or similar fiscal period and the related statements of
income, retained earnings, and cash flow of the Borrower for such month or
similar fiscal period and for the elapsed portion of the year ended with the
last day of such month or similar fiscal period and certified by the chief
financial officer of the Borrower, to, in his opinion, present fairly, in all
material respects in accordance with GAAP, such statements of the Borrower
as at the end of each period, subject only to normal year-end adjustments and
without notes.
Section 5.3 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if
any, submitted to the Borrower by the Borrower's independent public
accountants regarding the Borrower, including, without limitation, any
management report prepared in connection with the annual audit referred
to in Section 5.1 hereof; and
(b) From time to time and promptly upon each request, such
data, certificates, reports, plans, projections, statements, opinions
of counsel, documents, or further information regarding the Collateral
or the business, assets, liabilities, financial position, projections,
results of operations, or business prospects of the Borrower as the
Lender reasonably may request.
Section 5.4 Notice of Litigation and Other Matters. Prompt notice
of the following events after Borrower has received notice thereof:
(a) The commencement of all proceedings and investigations by
or before any governmental body and all actions and proceedings in any
court or before any arbitrator (i) against, or (ii) (to the extent
known to the Borrower) in any other way relating adversely to, the
Borrower or any of its assets or businesses;
(b) Any material adverse change with respect to the business,
assets, liabilities, financial position, results of operations, or
business prospects of the Borrower other than changes in the ordinary
course of business the effects of which have not had a Materially
Adverse Effect;
(c) Any Default or Event of Default or the occurrence or non-
occurrence of any event which constitutes, or which with the passage
of time or giving of notice (or both) would constitute a default by the
Borrower under any material agreement other than this Agreement to
which the Borrower is a party or by which its properties may be bound,
giving in each case a reasonable description thereof and specifying the
action proposed to be taken with respect thereto;
(d) The occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan of the Borrower or
any of its ERISA Affiliates or the institution or threatened
institution by the Pension Benefit Guaranty Corporation of proceedings
under ERISA to terminate or to partially terminate any such Plan or the
commencement or threatened commencement of any litigation regarding any
such Plan or naming it or the Trustee of any such Plan with respect to
such Plan; and
(e) The occurrence of any event subsequent to the Agreement
Date which, if such event had occurred prior to the Agreement Date,
would have constituted an exception to the representation and warranty
in Sections 3.1(e), (g), (h), (l), (p) or (q) of this Agreement.
ARTICLE 6 Negative Covenants.
So long as any of the Obligations is outstanding and unpaid or the
Lender has any obligation to make Advances hereunder, and unless the Lender
shall otherwise consent in writing:
Section 6.1 Indebtedness. The Borrower will not create, assume,
incur, or otherwise become or remain obligated in respect of, or permit to
be outstanding, any Indebtedness or liability on account of deposits or
advances for borrowed money or for the deferred purchase price of any
property or services, except the following (collectively, the "Permitted
Indebtedness"):
(a) Indebtedness under this Agreement and the other Loan
Documents;
(b) Trade or accounts payable and/or similar obligations, and
accrued expenses, incurred in the ordinary course of business, other
than for borrowed money;
(c) Indebtedness expressly subordinated to the Indebtedness
owed to the Lender hereunder and under the other Loan Documents upon
terms approved in advance by the Lender, in writing;
(d) Indebtedness existing on the Agreement Date and all
renewals and extensions thereof which do not increase the principal
amount outstanding on the date hereof;
(e) Indebtedness consisting of accrued dividends with respect
to the Series A Preferred Stock;
(f) From and after the date on which the Approved Project
Expenses paid or committed shall be not less than $8,000,000, and
provided no Event of Default then exists or would be caused thereby,
the Borrower may incur additional Indebtedness, subject to the Right
of First Refusal, so long as such additional Indebtedness is incurred
solely for the purpose of Project Expenses; and
(g) With respect to any Permitted Indebtedness of the kind
described in Section 6.1(f) hereof, which Permitted Indebtedness is
secured by Permitted Liens, the Lender agrees to execute any releases
or similar documents reasonably requested to confirm such third party
lender's claim to such Permitted Liens.
Section 6.2 Liquidation; Change in Ownership, Name, or Fiscal
Year; Disposition or Acquisition of Assets. The Borrower shall not, at any
time:
(a) Liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, or sell, lease, abandon, transfer,
or otherwise dispose of all or any substantial part of its assets,
property or business;
(b) Become a partner or joint venturer with any third party
other than Tias Beverage Company;
(c) Acquire (i) all or any substantial part of the assets,
property or business of, or (ii) any assets that constitute a division
or operating unit of the business of, any other Person, except for
Approved Project Expenses or the assets or stock of Tias Beverage
Company;
(d) Merge or consolidate with any other Person;
(e) Change its corporate name;
(f) Create any Subsidiary;
(g) Change its fiscal year-end from December 31, except for a
year ending on the Sunday nearest December 31;
(h) Sell, issue or issue any warrants or options to obtain any
shares of capital stock of the Borrower, except (i) to the Lender
pursuant to the Company Option Agreement, (ii) as permitted by
Exhibit A to the Company Option Agreement, (iii) pursuant to a public
offering of any capital securities of the Borrower which public
offering shall result in net proceeds (after deducting from the gross
proceeds thereof all commissions, fees, discounts and expenses of such
offering) to the Borrower of not less than Twelve Million Dollars
($12,000,000), (iv) stock options to employees of the Borrower pursuant
to the Incentive Stock Option Plan, and (v) the issuance of common
stock upon the conversion of Series A Preferred Stock or the exercise
of outstanding options or warrants or options which may be granted
pursuant to the Incentive Stock Option Plan;
(i) Cease to operate the Units according to the Tia's Format
except for the closing of Units in the ordinary course of business; or
(j) Sell, lease or otherwise dispose of or transfer any of the
Equipment or any part thereof without the prior written consent of the
Lender; provided, however, that the foregoing restriction shall not
apply, for so long as no Default or Event of Default exists, to
(i) dispositions of Equipment which, in the aggregate during any
consecutive twelve-month period, has a fair market value or book value,
whichever is more, of $100,000 or less, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with
Equipment of like kind, function and value, provided that the
replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, and the
replacement Equipment shall be free and clear of Liens other than
Permitted Liens.
Section 6.3 Liens. The Borrower will not create, assume, incur,
or permit to exist or to be created, assumed, or permitted to exist, directly
or indirectly, any Lien on any of its property, real or personal, now owned
or hereafter acquired, except for Permitted Liens.
Section 6.4 Guaranties. The Borrower will not at any time enter
into or Guaranty, or assume, be obligated with respect to, or permit to be
outstanding, any Guaranty, other than (a) obligations under agreements to
indemnify persons or entities which have issued bid or performance bonds or
letters of credit in the ordinary course of business of the Borrower securing
performance by the Borrower of activities permissible hereunder,
(b) obligations under agreements of the Borrower entered into in connection
with the acquisition of services, supplies, and equipment by the Borrower in
the ordinary course of business of the Borrower, (c) any Guaranty in favor
of the Lender, and (d) the reimbursement of ordinary business expenses
incurred by employees.
Section 6.5 Investments. The Borrower will not make any loan,
advance, or otherwise acquire for consideration evidences of Indebtedness,
capital stock, partnership interests or other securities of or equity
interests in any third party, except that the Borrower may purchase or
otherwise acquire and own, (a) marketable, direct obligations of the United
States of America and its agencies maturing within three hundred sixty-
five (365) days of the date of purchase, (b) commercial paper issued by
corporations, each of which shall (i) have a consolidated net worth of at
least $250,000,000, and (ii) conduct substantially all of its business in the
United States of America, which commercial paper will mature within one
hundred eighty (180) days from the date of the original issue thereof and is
rated "P-1" or better by Moody's Investors Service, Inc., or "A-1+" or better
by Standard & Poor's Corporation, (c) certificates of deposit maturing within
three hundred sixty-five (365) days of the date of purchase and issued by
a United States national or state bank having deposits totaling more than
$250,000,000, and whose short-term debt is rated "P-1" or better by Moody's
Investors Service, Inc. or "A-1+" or better by Standard & Poor's Corporation
and (d) up to $100,000 per institution and up to $1,000,000 in the aggregate
in (i) short-term obligations issued by any local commercial bank or trust
company located in those areas where the Borrower conducts its business,
whose deposits are insured by the Federal Deposit Insurance Corporation, or
(ii) commercial bank-insured money market funds, or any combination of
investments described in clauses (i) and (ii). Notwithstanding the
foregoing, however, the Borrower may repurchase the stock of employees
subject to the Incentive Stock Option Plan and advance funds to employees for
ordinary travel and business expenses.
Section 6.6 Sales and Leasebacks. The Borrower will not enter
into, any arrangement, directly or indirectly, with any third party whereby
the Borrower shall sell or transfer any property, real or personal, whether
now owned or hereafter acquired, and whereby the Borrower shall then or
thereafter rent or lease as lessee such property or any part thereof or other
property which the Borrower intends to use for substantially the same purpose
or purposes as the property sold or transferred.
Section 6.7 Payment of Wages. The Borrower shall at all times
comply, in all material respects, with the requirements of the Fair Labor
Standards Act, as amended, including, without limitation, the provision of
such Act relating to the payment of minimum and overtime wages as the same
may become due from time to time.
Section 6.8 Material Events. Except with the prior written
consent of the Lender, the Borrower will not:
(a) cause the annual salary of Larry Lavine to exceed the sum
of One Hundred Sixty-Seven Thousand Five Hundred and No/100 Dollars
($167,500.00);
(b) acquire or develop any additional restaurant units or
select any sites for Additional Units;
(c) acquire or dispose of any assets in a single transaction,
or in a series of related transactions, having a value, in the
aggregate, of more than $100,000;
(d) issue any shares of capital stock or any warrants, options
or other rights to acquire the same, other than pursuant to a public
offering of the kind described in Section 2(a)(ii) of the Shareholder
Option Agreement or as permitted by Section 6.2(h);
(e) declare or pay any dividend with respect to any class of
capital stock of the Borrower (other than with respect to the Series
A Preferred Stock), or repurchase or redeem any capital stock or other
securities of the Borrower, other than redemptions of stock issued upon
exercise of employee stock options granted pursuant to the Incentive
Stock Option Plan of the Borrower;
(f) incur any Indebtedness (other than any accrued dividends
with respect to the Series A Preferred Stock) in excess of $100,000,
except as otherwise permitted by Section 6.1;
(g) enter into any transaction with any Affiliate or
Shareholder of the Borrower, or any Affiliate of such Shareholder,
other than the Loan Documents and the agreements recited or permitted
therein and existing agreements with Affiliates;
(h) create any Subsidiary; or
(i) amend the Articles of Incorporation or Bylaws of the
Borrower.
ARTICLE 7 Default.
Section 7.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any order, rule, or
regulation of any governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement or
any other Loan Document shall prove incorrect or misleading in any
material respect when made;
(b) The Borrower shall default in (i) the payment of any
interest under the Note which default shall remain uncured after
10 days' notice or (ii) any payment of principal under the Note when
due;
(c) The Borrower shall default in the performance or observance
of any agreement or covenant contained in Article 6 hereof;
(d) The Borrower shall default in the performance or observance
of any other agreement or covenant contained in this Agreement not
specifically referred to elsewhere in this Section 7.1, and such
Default shall not be cured to the Lender's reasonable satisfaction
within a period of thirty (30) days after notice thereof by the Lender
to the Borrower;
(e) There shall occur any default in the performance or
observance of any agreement or covenant or breach of any representation
or warranty contained in any of the Loan Documents (other than this
Agreement), which shall not be cured within any applicable grace period
set forth therein, or the Borrower shall in any way challenge, or any
proceedings shall in any way be brought to challenge (and, in the case
of a proceeding brought by someone other than the Borrower, shall
continue unstayed for a period of thirty (30) days), the prior and
perfected status of the Lender's security interest with respect to the
Collateral subject to Permitted Liens or the validity or enforceability
of such security interest;
(f) There shall be entered a decree or order by a court having
jurisdiction in the premises constituting an order for relief in
respect of the Borrower under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal
or state bankruptcy law or other similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or similar
official of the Borrower or of any substantial part of its properties,
or ordering the winding-up or liquidation of the affairs of the
Borrower and any such decree or order shall continue in effect for a
period of forty-five (45) consecutive days;
(g) The Borrower shall file a petition, answer, or consent
seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy law or other similar law, or the Borrower shall
consent to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment or taking of possession of
a receiver, liquidator, assignee, trustee, custodian, sequestrator, or
other similar official of the Borrower or of any substantial part of
its properties, or the Borrower shall fail generally to pay its debts
as such debts become due, or the Borrower shall take any corporate
action in furtherance of any such action;
(h) A final judgment shall be entered by any court against the
Borrower for the payment of money which exceeds $100,000, or a warrant
of attachment or execution or similar process shall be issued or levied
against property of the Borrower which, together with all other such
property of the Borrower subject to other such process, exceeds in
value $100,000 in the aggregate, and if, within thirty (30) days after
the entry, issue, or levy thereof, such judgment, warrant, or process
shall not have been paid or discharged or stayed pending appeal, or if,
after the expiration of any such stay, such judgment, warrant, or
process shall not have been paid or discharged;
(i) Lavine shall terminate his employment with the Borrower or
Lavine shall die or become permanently disabled (provided, however,
that Borrower's termination of Lavine's employment shall not be deemed
to be a default hereunder);
(j) Any event shall occur which has a Materially Adverse
Effect;
(k) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with
respect to any Plan maintained by the Borrower or any of its ERISA
Affiliates, or to which the Borrower or any of its ERISA Affiliates has
any liabilities, or any trust created thereunder; or a trustee shall
be appointed by a United States District Court to administer any such
Plan; or the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any such Plan; or the Borrower or any of its
ERISA Affiliates shall incur any liability to the Pension Benefit
Guaranty Corporation in connection with the termination of any such
Plan; or any Plan or trust created under any Plan of the Borrower or
any of its ERISA Affiliates shall engage in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the
Code) which would subject any such Plan, any trust created thereunder,
any trustee or administrator thereof, or any party dealing with any
such Plan or trust to the tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code; or the
Borrower or any of its ERISA Affiliates shall enter into or become
obligated to contribute to a Multiemployer Plan;
(l) Any Loan Document or provision thereof shall at any time
and for any reason be declared by a court of competent jurisdiction to
be null and void, or a proceeding shall be commenced by the Borrower
or any of its Subsidiaries, or by any governmental authority having
jurisdiction over the Borrower, or any of its Subsidiaries, seeking to
establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or the Borrower
or any of its Subsidiaries, shall deny that it has any liability or any
obligation for the payment of principal or interest purported to be
created under any Loan Document; or
(m) Tias Beverage Company shall take any action which would
impair the ability of the Borrower to conduct its business.
Section 7.2 Remedies. If an Event of Default shall have occurred
and shall be continuing, the Lender shall have the right and option, in its
sole discretion, to do any one or more of the following:
(a) Terminate the Commitment, declare the principal of and
interest on the Loans and the Note, all other amounts owed under this
Agreement or the Note, and all other Obligations to be forthwith due
and payable whereupon all such amounts shall immediately become
absolute and due and payable, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived, anything
in this Agreement or in the Note to the contrary notwithstanding;
(b) Exercise all of the rights granted to it under the Loan
Documents upon the occurrence of any Default or Event of Default; and
(c) Exercise all rights and remedies available to it at law or
in equity.
ARTICLE 8 Miscellaneous.
Section 8.1 Notices.
(a) All notices and other communications required or permitted
under this Agreement shall be in writing and, if mailed by prepaid
first-class mail or certified mail, return receipt requested, at any
time other than during a general discontinuance of postal service due
to strike, lockout or otherwise, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business
Days after the postmarked date thereof and, if telecopied, shall be
followed forthwith by letter and shall be deemed to have been received
on the next Business Day following dispatch and acknowledgment of
receipt by the recipient's telecopy machine. In addition, notices
hereunder may be delivered by hand or overnight courier, in which event
the notice shall be deemed effective when delivered and received. All
notices and other communications under this Agreement shall be given
to the parties hereto at the following addresses:
(i) If to the Borrower, to it at:
Tias, Inc.
4600 Greenville Avenue
Suite 160
Dallas, Texas 75206
Attn: Mr. Frank Sbordone
Telecopy No.: (214) 739-5222
with a copy to:
Gardere & Wynne, L.L.P.
1601 Elm Street
Suite 3000
Dallas, Texas 75201
Attn: Richard A. Tulli, Esq.
Telecopy No.: (214) 999-4667
(ii) If to the Lender, to it at:
Morrison Restaurants Inc.
4721 Morrison Drive
P.O. Box 160266
Mobile, Alabama 36625-0001
Attn: Pfilip G. Hunt, Esq.
Senior Vice President,
General Counsel and Secretary
Telecopy No.: (205) 344-9513
with a copy to:
Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Attn: Thomas R. McNeill, Esq.
Telecopy No.: (404) 572-6999
Persons receiving copies of notices hereunder need only receive
copies of notices sent pursuant to Article 7 hereof.
(b) Any party hereto may change the address to which notices
shall be directed under this Section 8.1 by giving ten (10) days'
written notice of such change to the other parties.
Section 8.2 Expenses. The Borrower will promptly pay:
(a) Upon closing of this Agreement, fifty percent of all out-
of-pocket expenses of the Lender and the Borrower in connection with
the preparation, negotiation, execution, and delivery of this
Agreement, the Note, and the other Loan Documents, including all
post-closing matters, and the transactions contemplated hereunder and
thereunder and the making of the Loan hereunder including, but not
limited to, recording fees, and intangible, documentary stamp and other
taxes and the reasonable attorneys' fees and disbursements of counsel
for the Lender and the Borrower;
(b) All out-of-pocket expenses of the Lender in connection with
the administration of the Loan and the Loan Documents in accordance
with the provisions thereof, the restructuring, refinancing and "work-
out" of the transaction herein contemplated, and the preparation,
negotiation, execution, and delivery of any waiver, amendment, or
consent by the Lender relating to this Agreement or the other Loan
Documents, including, but not limited to, the reasonable attorneys'
fees and disbursements of counsel for the Lender, wire transfer fees
and post-closing filing fees; and
(c) All costs and out-of-pocket expenses of obtaining
performance under this Agreement or the other Loan Documents and all
costs and out-of-pocket expenses of collection if default is made in
the payment of the Note, which in each case shall include reasonable
fees and expenses of counsel for the Lender.
Section 8.3 Waivers. The rights and remedies of the Lender under
this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No
failure or delay by the Lender in exercising any right shall operate as a
waiver of it. Any waiver or indulgence granted by the Lender shall not
constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing by
the Lender at variance with the terms of this Agreement such as to require
further notice by the Lender of the Lender's intent to require strict
adherence to the terms of this Agreement in the future.
Section 8.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default, the Lender and any subsequent
holder of the Note are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower, or to any other Person, any
such notice being hereby expressly waived, to set-off, to appropriate and to
apply any other Indebtedness at any time held or owing by the Lender or such
holder to or for the credit or the account of the Borrower, as the case may
be, against and on account of the obligations and liabilities of the
Borrower, as the case may be, to the Lender or such holder under this
Agreement, the Note, and any other Loan Document, including, but not limited
to, all claims of any nature or description arising out of or connected with
this Agreement, the Note, or any other Loan Document, irrespective of whether
or not (a) the Lender or the holder of the Note shall have made any demand
hereunder or (b) the Lender shall have declared the principal of and interest
on the Loan and the Note and other amounts due hereunder to be due and
payable as permitted by Section 7.2 hereof and although said obligations and
liabilities, or any of them, shall be contingent or unmatured.
Section 8.5 Assignment.
(a) Neither the Borrower nor the Lender may assign or transfer
any of their respective rights or obligations hereunder or under the
Note without prior written consent.
(b) Except as specifically set forth in Section 8.5(b) hereof,
nothing in this Agreement or the Note, expressed or implied, is
intended to or shall confer on any person other than the respective
parties hereto and thereto and their successors and assignees permitted
hereunder and thereunder any benefit or any legal or equitable right,
remedy, or other claim under this Agreement or the Note.
Section 8.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 8.7 Governing Law. The laws of the State of Alabama
(other than its conflict-of-laws principles) shall govern the validity or
enforceability and the interpretation or construction of all of the
provisions of this Agreement and the Note and all issues hereunder and
thereunder, including (without limitation) the determination of the maximum
lawful rate of interest that may be contracted for, charged or received with
respect to the Loans.
Section 8.8 Severability. Any provision of this Agreement which
is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of
such provision in any other jurisdiction.
Section 8.9 Interest and Charges. The Borrower and the Lender
hereby agree that (a) the only charge imposed by the Lender upon the Borrower
for the use of money in connection with the Loans is and shall be the
interest expressed herein, as provided in the Note and (b) all other charges
imposed by the Lender upon the Borrower in connection with the Loans,
including, without limitation, default and late charges, are and shall be
deemed to be charges made to compensate the Lender for administrative
services and costs, and other services and costs performed and incurred, and
to be performed and incurred, by the Lender in connection with the Loans, and
shall under no circumstances be deemed to be charges for the use of money.
All charges referred to in herein shall be fully earned when due and non-
refundable when paid.
Section 8.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation
of any provision hereof.
Section 8.11 Pronouns. The pronouns used herein shall include,
when appropriate, either gender and both singular and plural, and the
grammatical construction of sentences shall conform thereto.
Section 8.12 Entire Agreement; Amendments. This Agreement and the
other Loan Documents represent the entire agreement between the Borrower and
the Lender with respect to the subject matter of this transaction. No
amendment or modification of the terms and provisions of this Agreement shall
be effective unless in writing and signed by the Lender and the Borrower.
Section 8.13 Termination. This Agreement shall terminate upon the
satisfaction of all the Obligations of the Borrower (excluding any Obligation
arising under the Shareholder Option Agreement, the Company Option Agreement,
the Right of First Refusal Agreement, the Voting Agreement, and the Amended
and Restated Agreement to Defer Dividends).
ARTICLE 9 Definitions.
For the purposes of this Agreement:
"Additional Units" shall mean, collectively, those Units at any time
in operation, other than those Units in operation on the Agreement Date; and
"Additional Unit" shall refer to any one of the foregoing Additional Units.
"Advance" shall mean amounts of the Loans advanced by the Lender to the
Borrower pursuant to the terms hereof on the occasion of any borrowing.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Borrower.
"Agreement" shall mean this Agreement.
"Agreement Date" shall mean the date as of which this Agreement is
dated.
"Applicable Commitment" shall mean (a) from and after the Agreement
Date but before the Conversion Date the sum of Five Million and No/00 Dollars
($5,000,000.00) (the "Base Commitment") and (b) from and after the Conversion
Date, (i) if the financial performance of the Borrower shall have met or
exceeded the First Annual Goal as demonstrated by the applicable unaudited
financial statements and profit and loss statements for the fiscal year of
the Borrower then ended, certified by the chief financial officer of the
Borrower, (A) the sum of Eight Million and No/00 Dollars ($8,000,000.00) less
(B) from and after the Option Exercise Date (as defined in the Company Option
Agreement) the Option Exercise Price, (as defined in the Company Option
Agreement), as may be paid or credited to the Borrower upon such exercise,
and (ii) if the financial performance of the Borrower shall not have met or
exceeded the First Annual Goal as demonstrated by such financial statements,
the Base Commitment.
"Applicable Law" shall mean in respect of any Person, all provisions
of constitutions, statutes, rules, regulations and orders of governmental
bodies or regulatory agencies applicable to such Person, and all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party or by which it or its properties are bound.
"Approved Project Expenses" shall mean those Project Expenses which
(a) have been approved by each member of the board of directors of the
Borrower in a meeting duly held or by consent in lieu of a meeting and the
copies of which resolutions or written consent actions have been provided to
the Lender and (b) are acceptable to the Lender in the exercise of its
reasonable discretion.
"Authorized Signatory" shall mean such executive officers of the
Borrower as may be duly authorized and designated in writing by the Borrower
to execute documents, agreements, and instruments on behalf of the Borrower.
"Borrower" shall mean Tias, Inc., a Texas corporation.
"Business Day" shall mean a day on which the chief executive office of
the Lender is open for the transaction of business required for this
Agreement in Mobile, Alabama.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean and include all real and personal property of
the Borrower, whether now owned or hereafter acquired by the Borrower or in
which the Borrower has or hereafter acquires any interest with respect to
which the Lender has, or is entitled to have, a security interest,
assignment, lien, trust title, or security title pursuant to the terms of
this Agreement, the Security Agreement, or any other Security Document.
"Commitment" shall mean the obligation of the Lender to make Loans to
the Borrower in the aggregate sum not exceeding the Applicable Commitment
from time to time in effect.
"Company Option Agreement" shall mean that certain Company Option
Agreement of even date herewith between the Lender and the Borrower
substantially in form of Exhibit F hereto.
"Conversion Date" shall mean the date which is fourteen (14) days
following the Lender's receipt of unaudited financial statements, certified
by the chief financial officer of the Borrower with respect to the fiscal
year of the Borrower ending on the First Anniversary, unless such date is not
a Business Day, in which case the "Conversion Date" shall be the first
Business Day immediately following such date.
"Crosspoint" shall mean Crosspoint Venture Partners III, a California
limited partnership.
"Default" shall mean any of the events specified in Section 7.1 hereof,
regardless of whether there shall have occurred any passage of time or giving
of notice, or both, that would be necessary in order to constitute such event
an Event of Default.
"Environmental Laws" shall mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any governmental authority regulating, relating
to or imposing liability or standards of conduct concerning environmental
protection matters, including without limitation, Hazardous Materials, as now
or may at any time hereafter be in effect.
"Equipment" shall mean all personal property, machinery, apparatus,
equipment, fittings, furniture, trade fixtures, motor vehicles and other
tangible personal property (other than Inventory) of every kind and
description owned by the Borrower or in which the Borrower has an interest,
whether now owned or hereafter acquire by the Borrower and wherever located,
and all parts, accessories and special tools and all increases and accessions
thereto and substitutions and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect on the Agreement Date and as such Act may be amended thereafter
from time to time.
"ERISA Affiliate" shall mean any Person whose employees together with
the employees of the Borrower are treated as employed by a single employer
for purposes of Section 414 of the Code.
"Event of Default" shall mean any of the events specified in Section
7.01 hereof, provided that any requirement for notice or lapse of time has
been satisfied.
"First Anniversary" shall mean January 1, 1995.
"First Annual Goal" shall mean, with respect to the Borrower, as of the
fiscal year ended nearest to the First Anniversary: (a) the profit and loss
statement of the Borrower shall demonstrate financial performance in respect
of revenues and pre-tax income not less than the projected results set forth
in the pro forma financial statement attached hereto as Schedule 9; provided,
however, that in measuring such financial performance, the Borrower and the
Lender shall disregard the effect of any amount paid by the Borrower to Dean
Witter Reynolds, Inc. not exceeding $350,000.00, and (b) the Borrower shall
have placed in operation not less than three (3) Additional Units with
respect to which either (i) the annualized gross revenues of each of the
first three (3) Additional Units then in operation shall equal or exceed Two
Million and No/00 Dollars ($2,000,000.00) or (ii) the annualized gross
revenues of the first three (3) Additional Units then in operation, on the
average, shall equal or exceed Two Million Two Hundred Fifty Thousand and
No/00 Dollars ($2,250,000.00).
"GAAP" shall mean, as in effect from time to time, generally accepted
accounting principles consistently applied.
"Guaranty" or "Guarantee", as applied to an obligation of another
Person (each a "primary obligation"), shall mean and include (a) any
guaranty, direct or indirect, in any manner, of any part or all of such
primary obligation, and (b) any agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of any
part or all of such primary obligation, including, without limiting the
foregoing, any reimbursement obligations as to amounts drawn down by
beneficiaries of outstanding letters of credit, and any obligation of such
Person (the "primary obligor"), whether or not contingent, (i) to purchase
any such primary obligation or any property or asset constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of such primary obligation or (2) to maintain working
capital, equity capital or the net worth, cash flow, solvency or other
balance sheet or income statement condition of any other Person, (iii) to
purchase property, assets, securities or services primarily for the purpose
of assuring the owner or holder of any primary obligation of the ability of
the primary obligor with respect to such primary obligation to make payment
thereof or (iv) otherwise to assure or hold harmless the owner or holder of
such primary obligation against loss in respect thereof.
"Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances, petroleum
products (including crude oil or any fraction thereof) defined or regulated
as such in or under any Environmental Law.
"Incentive Stock Option Plan" shall mean that certain Tias, Inc. 1990
Stock Option Plan adopted by the Board of Directors and Shareholders of the
Borrower on March 23, 1990 and as duly modified and amended from time to
time.
"Indebtedness" shall mean, with respect to any Person, (a) all items,
except items of partners' equity or capital stock or surplus or general
contingency or deferred tax reserves, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of
a balance sheet of such Person, (b) all direct or indirect obligations
secured by any Lien to which any property or asset owned by such Person is
subject, whether or not the obligation secured thereby shall have been
assumed, (c) to the extent not otherwise included, all obligations of other
Persons which such Person has guaranteed, including but not limited to, all
obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, and (d) to
the extent not otherwise included, all capitalized lease obligations of such
Person and all obligations of such Person with respect to leases constituting
part of a sale and leaseback arrangement.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement of even date herewith among the Lender, Crosspoint and Lavine,
substantially in the form of Exhibit A hereto.
"Lavine" shall mean Mr. Larry Lavine, an individual resident of Dallas
County, Texas.
"Lavine Employment Agreement" shall mean that certain Employment
Agreement of even date herewith between the Borrower and Lavine substantially
in the form of Exhibit I hereto.
"Lease Obligation" shall mean any obligation of the Borrower as lessee
under a lease for property, whether real or personal, services of any kind
or any other lease of any kind.
"Lender" shall mean Morrison Restaurants Inc., a Delaware corporation.
"Lien" shall mean, with respect to any property, any security deed,
mortgage, deed to secure debt, deed of trust, lien, pledge, assignment,
charge, security interest, title retention agreement, levy, execution,
seizure, attachment, garnishment, or other encumbrance of any kind in respect
of such property, whether or not choate, vested, or perfected.
"Loans" shall mean and include any and all loans and advances made by
the Lender to or for the benefit of the Borrower hereunder or under any of
the Loan Documents.
"Loan Certificate" shall mean a corporate loan certificate of the
Borrower substantially in the form of Exhibit B attached hereto, including
applicable exhibits, schedules, and attachments thereto.
"Loan Documents" shall mean this Agreement, the Note, the Security
Agreement, the Company Option Agreement, the Shareholder Option Agreement,
the Intercreditor Agreement and all other documents, agreements,
certificates, reports, and instruments now or hereafter executed in
connection herewith or contemplated hereby.
"Materially Adverse Effect" shall mean any materially adverse effect
upon the business, assets, liabilities, financial condition or results of
operations of the Borrower or upon the ability of the Borrower to perform any
material obligations under this Agreement or any other Loan Document; in any
case, whether resulting from any single act, omission, situation, status,
event, or undertaking, or taken together with other such acts, omissions,
situations, statuses, events, or undertakings.
"Maturity Date" shall mean May 31, 1999 or such earlier date as payment
of the Loan shall be due (whether by acceleration or otherwise).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Necessary Authorizations" shall mean all material authorizations,
consents, approvals, permits, licenses and exemptions of, filings and
registrations with, and reports to, all governmental and other regulatory
authorities, whether federal, state, or local, and all agencies thereof
(including, without limitation, any specific authorizations, licenses,
franchises, etc.) that may be required for the due operation of the business
of the Borrower and for the performance of the obligations of the Borrower
and the Shareholders of the Borrower contemplated hereby.
"Note" shall mean that certain promissory note of even date herewith
in the original principal amount of $8,000,000 issued to the Lender by the
Borrower, substantially in the form of Exhibit C attached hereto, and any
other notes executed and delivered by the Borrower to the Lender hereunder,
and any amendments, renewals or extensions of the foregoing.
"Obligations" shall mean all payment and performance duties,
liabilities, and obligations of the Borrower to the Lender, whether now
existing or hereafter created, incurred, or arising, and whether direct or
indirect, absolute or contingent, primary or secondary, due or to become due,
including without limitation, all liabilities now or at any time or times
hereafter owing to the Lender.
"Opinion of Counsel" shall mean the legal opinion of Gardere & Wynne,
L.L.P., counsel to the Borrower, in the form and substance approved by the
Lender and its counsel.
"Over-advance" shall mean the extent to which Loans exceed the
Applicable Commitment.
"Permitted Indebtedness" is used herein as defined in Section 6.1
hereof.
"Permitted Liens" shall mean, as applied to any Person, (a) Liens
securing taxes, assessments, and other governmental charges or levies
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or
the claims of materialmen, mechanics, carriers, warehousemen, lessors or
landlords for labor, materials, supplies, or rentals incurred in the ordinary
course of business, but (i) in all cases only if payment shall not at the
time be required to be made or are being contested in good faith in
appropriate proceedings and (ii) in the case of warehousemen, lessors or
landlords (other than landlords or lessors existing on the Agreement Date),
only if such Liens are junior to the security interest and Liens granted and
conveyed by the Borrower to secure the Obligations; (b) Liens consisting of
deposits or pledges made in the ordinary course of business in connection
with, or to secure payment of, obligations under worker's compensation,
unemployment insurance, or similar legislation; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements, and rights or
restrictions of record on use of real property which do not materially
detract from the value of such property or impair the use thereof in the
business of the Borrower; (d) Liens as of the Agreement Date described on
Schedule 1 and Schedule 10 attached hereto; and (e) Liens in favor of the
Lender; (f) purchase money security interests which arise by operation of law
for a period of ten (10) days after the inception thereof and limited to
Liens on assets so purchased; and (g) Liens securing Permitted Indebtedness
of the kind described in Section 6.1(f) hereof, providing such Liens extend
only to assets of the Borrower pertaining to Additional Units not in
operation as of the Agreement Date.
"Person" shall mean an individual, corporation, partnership, trust, or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" shall mean an employee benefit plan within the meaning of
Section 3(3) of ERISA or any other employee benefit plan maintained for
employees of any Person or any Affiliate of such Person.
"Project Expenses" shall mean those charges and expenses proposed to
be incurred, and set forth in a detailed budget, by the Borrower in
connection with the construction, planning and commencement of operations of
any Additional Unit.
"Properties" shall mean, all parcels of real property owned or operated
by the Borrower; and "Property" shall mean any of the foregoing parcels.
"Reportable Event" shall have the meaning set forth in Title IV of
ERISA.
"Request for Advance" shall mean any certificate signed by an
Authorized Signatory requesting an Advance hereunder which will increase the
aggregate amount of the Loans outstanding, which certificate shall be
denominated a "Request for Advance," and shall be in substantially the form
of Exhibit D attached hereto. Each Request for Advance shall, among other
things, (a) specify the date of the Advance, which shall be a Business Day,
the amount of the Advance, (b) state that there shall not exist, on the date
of the requested Advance and after giving effect thereto, a Default or an
Event of Default and (c) state that the requested Advance shall be used for
the payment of Approved Project Expenses.
"Right of First Refusal" shall mean that certain Right of First Refusal
Agreement of even date herewith between the Borrower and the Lender.
"Security Agreement" shall mean that certain Security Agreement of even
date herewith between the Borrower and the Lender in the form of Exhibit E
hereto.
"Security Documents" shall mean any agreement or instrument whether now
or hereafter in existence, and any filings, instruments, agreements, and
other documents related thereto or to this Agreement, and providing the
Lender with Collateral for the Obligations, including, without limitation,
the Security Agreement and the Trademark Security Agreement.
"Shareholders" shall mean Lavine, Crosspoint and Jack Lavine, and
"shareholder" shall mean any one of the foregoing Shareholders, individually.
"Solvent" shall mean, as to any Person, that such Person has capital
reasonably sufficient to carry on its business and transactions in which it
is about to engage and is able to pay its debts as they mature and owns
property having a value, both at fair valuation and at present fair salable
value, greater than or equal to the amount required to pay its debts.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation
of which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a
majority of its board of directors (or other governing body), regardless of
the existence at the time of a right of the holders of any class or classes
(however designated) of securities of such corporation to exercise such
voting power by reason of the happening of any contingency, or any
partnership of which fifty percent (50%) or more of the outstanding
partnership interests is, at the time, owned directly or indirectly by such
Person, or by one or more Subsidiaries of such Person, or by such Person and
one or more Subsidiaries of such Person, and (b) any other entity which is
directly or indirectly controlled or capable of being controlled by such
Person, or by one or more Subsidiaries of such Person, or by such Person and
one or more Subsidiaries of such Person.
"Tia's Format" shall refer to the format used by the Borrower for
presenting and operating mid-market restaurants, using the name "Tia's," and
featuring a menu consisting primarily of Mexican foods.
"Trademark Security Agreement" shall mean that certain Trademark
Security Agreement between the Lender and the Borrower of even date herewith
substantially in the form of Exhibit H.
"Units" shall refer, collectively, to each sales location of the
Borrower in operation at any time in the Tia's Format; and "Unit" shall refer
to anyone of the foregoing Units.
"Voting Agreement" shall mean that certain Voting Agreement of even
date herewith among the Lender and the Shareholders substantially in the form
of Exhibit G hereto.
Each definition of a document in this Article 9 shall include such
document, as amended, modified, or supplemented from time to time with the
prior consent of the Lender and, except where the context otherwise requires,
definitions imparting the singular shall include the plural and vice versa.
Except where restricted, reference to a party to a Loan Document includes
that party and its successors and permitted assigns. All accounting terms
used herein without definitions shall be used as defined under GAAP.
ARTICLE 10 Waiver of Jury Trial, Etc.
Section 10.1 Consent to Venue. The Borrower hereby irrevocably
waives any objection it would make now or hereafter for the laying of venue
of any suit, action, or proceeding arising out of or relating to this
Agreement or any other Loan Document brought in the state court of general
jurisdiction in Mobile County, Alabama, or, at the election of the Lender,
in the Southern District of Alabama of the federal courts of the United
States of America, and hereby irrevocably waives any claim that any such
suit, action, or proceeding brought in any such court has been brought in an
incorrect forum.
Section 10.2 Waiver of Jury Trial. THE BORROWER AND THE LENDER
HEREBY AGREE TO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY
ACTION OR PROCEEDING OF ANY TYPE IN WHICH THE BORROWER, THE LENDER, OR ANY
OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND
THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN
THIS ARTICLE 10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed by their duly authorized officers, all as of the day
and year first above written.
BORROWER: TIAS, INC.,
a Texas corporation
By: /s/ Frank B. Sbordone, Jr.
Title: Vice President
LENDER: MORRISON RESTAURANTS INC.,
a Delaware corporation
By: /s/ Pfilip G. Hunt
Title: Sr. Vice President
22680373.W51
A04319.0119
November 19, 1993
Tias, Inc.
4600 Greenville Avenue
Suite 160
Dallas, Texas 75206
Gentlemen:
The undersigned holder (the "Holder") of the Existing Indebtedness, as
described and defined in the second paragraph of the Promissory Note that is
Exhibit A hereto (the "Renewal Note"), of Tias, Inc., a Texas corporation
(the "Company"), hereby agrees with the Company as follows:
(a) The terms of the Original Note (as described and defined in the
second paragraph of the Renewal Note) are hereby modified,
renewed, and extended to be in accordance with the terms of the
Renewal Note. The Renewal Note amends, restates, and supersedes
in its entirety the Original Note.
(b) The modification, renewal, and extension of the Existing
Indebtedness do not constitute the cancellation or extinguishment
of any of the Existing Indebtedness or any of the liens or
security interests now securing the payment of the Existing
Indebtedness.
(c) Upon the substitution of the Renewal Note for the Original Note,
the Loan Papers, as defined and used in the Loan Agreement (which
is described and defined in the second paragraph of the Renewal
Note) shall consist, on the date hereof, of the Loan Agreement,
as amended hereby; the Renewal Note; the financing statement
filed with the Secretary of State of Texas on March 23, 1990, as
amended to reflect the assignment to the undersigned by the
previous lender by a financing statement amendment on Form UCC-3
filed with the Secretary of State of Texas on December 23, 1991;
and a financing statement on Form UCC-1 filed with the Secretary
of State of Texas on April 3, 1992. The Holder also acknowledges
that the Existing Indebtedness and his rights and remedies under
the Loan Papers shall also be subject to the terms of the
Intercreditor Agreement dated as of this date among the Company,
the Holder, Morrison Restaurants Inc. ("MRI"), and Crosspoint
Venture Partners III, which is being executed and delivered in
connection with the Loan Agreement dated as of this date between
the Company and MRI (the "MRI Loan Agreement").
(d) The references to the Loan and to the Note in the Loan Agreement
are hereby amended to be references to the Existing Indebtedness
evidenced by the Renewal Note and to the Renewal Note,
respectively.
(e) All references in the Loan Agreement, whether on behalf of the
Company or the Holder, to "4060 Greenville Avenue" are hereby
amended to be references to "4600 Greenville Avenue."
(f) All references in the Loan Agreement to the Operating Plan are
hereby deleted and of no further force and effect, though any
exceptions to covenants referring to the "ordinary course of
business" in connection with the Operating Plan shall continue to
the extent of the "ordinary course of business."
(g) Sections 4.H, 5.A, 5.F, 6.G, and 6.H of the Loan Agreement are
hereby terminated and of no further force and effect, and the
Holder hereby waives any Default under the terms of this Loan
Agreement which may now exist as the result of any noncompliance
by the Company of any of those Sections of the Loan Agreement.
(h) The Holder hereby (1) consents to the MRI Loan Agreement and the
Company's consummation of the various transactions, and
performance of its various obligations, contemplated by the MRI
Loan Agreement and (2) waives any Default under the terms of the
Loan Agreement which may exist or arise as the result of the
foregoing.
All references to the Holder in this letter agreement shall be deemed
to include his heirs, legal representatives, successors, and assigns, and all
covenants and agreements contained herein by the Holder shall be binding upon
his heirs, legal representatives, successors and assigns.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
/s/ Larry D. Lavine
LARRY D. LAVINE
Agreed to by the Company:
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance<PAGE>
Exhibit A
PROMISSORY NOTE
$999,997.10 November 19, 1993
FOR VALUE RECEIVED, Tias, Inc., a Texas corporation ("Maker"), hereby
promises to pay to the order of Larry D. Lavine ("Payee"), at 4600 Greenville
Avenue, Suite 160, Dallas, Dallas County, Texas 75206, the principal amount
of Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Seven and 10/100
Dollars ($999,997.10), together with interest, as hereinafter described.
This Note is a modification, extension, and renewal of the outstanding
principal amount of the indebtedness of Maker to Payee (the "Existing
Indebtedness") evidenced by a Promissory Note of Maker in favor of Payee
dated September 20, 1991, in the original principal amount of Nine Hundred
Ninety-Nine Thousand Nine Hundred Ninety-Seven and 10/100 Dollars
($999,997.10) (the "Original Note"), that was executed and delivered pursuant
to a Loan Agreement between Maker and Payee dated as of September 20, 1991
(as now existing, and as may hereafter be amended, the "Loan Agreement").
Maker hereby affirms that the Existing Indebtedness is outstanding and that
it shall continue to be outstanding as modified, extended, and renewed in
accordance with the terms of this Note and the Loan Agreement (including the
amendments thereto set forth in a letter agreement dated November 19, 1993,
between Maker and Payee). This Note does not cancel or extinguish any of the
existing Indebtedness, but amends, restates and supersedes in its entirety
the Original Note evidencing the Existing Indebtedness.
The unpaid principal amount of this Note shall bear simple interest at
a rate per annum of nine and three-quarters percent (9-3/4%), calculated on
a basis of actual days elapsed and computed in accordance with the number of
days in each calendar year. Accrued interest on the unpaid principal amounts
of this Note shall be due and payable in monthly installments commencing on
December 31, 1993, and continuing on the last day of each month thereafter
until May 31, 1999, when all amounts under this Note shall be due and
payable. At each interest payment date and at maturity (stated or by
acceleration), the interest then payable shall be calculated from the date
thereof on the principal amount hereof from day to day unpaid at the interest
rate set forth above in this paragraph; provided, that (a) any interest
previously paid shall be deducted from the interest then payable, and (b) the
total interest payable through such date shall not exceed the Highest Lawful
Rate (as defined below) over the then elapsed term hereof. All of the
principal amount of this Note is due and payable on May 31, 1999. All of the
unpaid principal amount of this Note, together with all interest accrued
thereon, shall also be due and payable upon the sale of all or substantially
all of the capital stock of Maker, including (without limitation) any
consolidation or merger of Maker with and into any other entity.
Maker may prepay all or any part of the principal or accrued interest
at any time and from time to time, without premium or penalty. All partial
prepayments shall be applied first to accrued and unpaid interest and then
to principal.
The holder hereof may declare the entire unpaid principal of and
accrued interest on this Note immediately due and payable, without notice,
demand, or presentment, all of which are hereby waived, foreclose any liens
or security interests securing all or any part hereof, offset against this
Note any sum or sums owed by the holder hereof to Maker, or exercise any
other right or remedy to which the holder hereby may be entitled by agreement
at law, or in equity, upon a Default, as defined in the Loan Agreement. Each
right and remedy available to the holder hereof shall be cumulative of and
in addition to each other such right and remedy. No delay on the part of the
holder hereof in the exercise of any right or remedy available to the holder
hereof shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude other or further exercise thereof or exercise of
any other such right or remedy. At the option of the holder hereof, all
past-due principal and accrued interest shall, from maturity (stated or by
acceleration) until paid, bear simple interest at a rate per annum equal to
thirteen percent (13%).
If this Note is placed in the hands of an attorney for collection, or
if it is collected through any legal proceedings, Maker agrees to pay court
costs, reasonable attorneys' fees, and other costs of collection of the
holder hereof.
Regardless of any provision contained herein, the holder hereof shall
never be entitled to receive, collect, or apply, as interest on this Note,
any amount in excess of the Highest Lawful Rate, and, in the event the holder
hereof ever receives, collects, or applies as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment
of principal and treated hereunder as such; and, if the principal hereof is
paid in full, any remaining excess shall forthwith be paid to Maker. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, Maker and the holder hereof
shall, to the maximum extent permitted under applicable law, (a) treat all
advances hereunder as but a single extension of credit, (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(c) exclude voluntary prepayments and the effects thereof, and (d) "spread"
the total amount of interest throughout the entire contemplated term hereof;
provided, that if the principal hereof is paid in full prior to the end of
the full contemplated term hereof, and if the interest received for the
actual period of existence thereof exceeds the Highest Lawful Rate, the
holder hereof shall refund to Maker the amount of such excess, and, in such
event, the holder hereof shall not be subject to any penalties provided by
any laws for contracting for, charging, taking, reserving, or receiving
interest in excess of the Highest Lawful Rate. As used herein, the term the
"Highest Lawful Rate" means the maximum rate of interest (or, if the context
so requires, an amount calculated at such rate) which the holder hereof is
allowed to contract for, charge, take, reserve, or receive under applicable
law after taking into account, to the extent required by applicable law, any
and all relevant payments or charges made in connection with this Note. To
the extent the laws of the State of Texas are applicable for purposes of
determining the Highest Lawful Rate, such term shall mean the "indicated rate
ceiling" from time to time in effect under Article 1.04, Title 79, Revised
Civil Statutes of Texas, 1925, as amended, or, if permitted by applicable law
and effective upon the giving of the notices required by such Article 1.04
(or effective upon any other date otherwise specified by applicable law), the
"monthly ceiling," the "quarterly ceiling," or the "annualized ceiling" from
time to time in effect under such Article 1.04, whichever the holder hereof
shall elect to substitute for the "indicated rate ceiling," and vice versa,
each such substitution to have the effect provided in such Article 1.04; and
the holder hereof shall be entitled to make such election from time to time
and one or more times and, without notice to Maker, to leave any such
substitute rate in effect for subsequent periods in accordance with
subsection (h)(1)g of such Article 1.04. Pursuant to Article 15.10(b) of
Chapter 15, Title 79, Revised Civil Statutes of Texas, 1925, as amended,
Maker and the holder hereof expressly agree that such Chapter 15 shall not
govern or in any manner apply to this Note or to the indebtedness covered
hereby.
Maker and each surety, endorser, guarantor, and other party ever liable
for payment of any part hereof jointly and severally waive presentment and
demand for payment, protest, notice of intention to accelerate, and notice
of protest and nonpayment, and agree that their liability on this Note shall
not be affected by, and hereby consent to, any renewal or extension in the
time of payment hereof, any indulgences, or any release or change in any
security for the payment of this Note.
THE VALIDITY, CONSTRUCTION, AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
20742511.W51
November 19, 1993
Tias, Inc.
4600 Greenville Avenue
Suite 160
Dallas, Texas 75206
Gentlemen:
The undersigned holder (the "Holder") of the Existing Indebtedness, as
described and defined in Paragraph 1 of the Promissory Note that is Exhibit
A hereto (the "Renewal Note"), of Tias, Inc., a Texas corporation (the
"Company"), hereby agrees with the Company as follows:
(a) The Existing Indebtedness and all of its terms are hereby
modified, renewed, and extended to be in accordance with the
terms of the Renewal Note.
(b) The Renewal Note, with the Security Documents, as described and
defined in Paragraph 6 of the Renewal Note, are all of the
agreements between the Company and the Holder relating to the
Existing Indebtedness as modified, renewed, and extended.
(c) The documents referred to in the preceding clause (b) of this
letter agreement amend and restate in their entirety, and
supersede, all prior instruments and other documents evidencing
or governing the Existing Indebtedness as modified, renewed, and
extended. Without limiting the generality of the foregoing, the
Holder hereby acknowledges and agrees that the conversion rights
and subordination provisions of the prior instruments and other
documents evidencing or governing the Existing Indebtedness are
hereby terminated and of no further force and effect.
(d) The modification, renewal, and extension of the terms of the
Existing Indebtedness and all of its terms do not constitute the
cancellation or extinguishment of any of the Existing
Indebtedness or any of the liens or security interests now
securing the payment of the Existing Indebtedness; provided,
however, that the Holder hereby acknowledges that the Assignment
of Accounts by the Company in favor of the Holder and the
Assignment of Accounts by Larry Lavine in favor of the Holder,
both dated as of August 1, 1991, have previously been
terminated.
(e) The references to the Loan and to the Debenture in the Security
Agreement, as described and defined in Paragraph 6 of the
Renewal Note, are hereby amended to be references to the
indebtedness evidenced by the Renewal Note and to the Renewal
Note, respectively.
(f) In light of the termination of the subordination provisions
included in the prior instruments and other documents evidencing
or governing the Existing Indebtedness, Section H of the
Security Agreement is hereby deleted and of no further force and
effect, and all references to the Senior Lender and the Senior
Loan Documents in the Security Agreement are hereby deleted and
of no further force and effect. Nevertheless, the Holder hereby
acknowledges and agrees that the Existing Indebtedness and the
Holder's rights and remedies under the Renewal Note and the
Security Documents shall be subject to the terms of the
Intercreditor Agreement dated as of this date among the Company,
the Holder, Morrison Restaurants Inc. ("MRI"), and Larry Lavine,
which is being executed and delivered in connection with the
Loan Agreement dated as of this date between the Company and MRI
(the "MRI Loan Agreement").
(g) All references to Previous Security Interests in Section E.2 of the
Security Agreement are hereby amended to be references to Permitted
Liens as defined in the MRI Loan Agreement.
(h) The Company shall have no further obligations to the undersigned
under the Purchase Agreement, as described and defined in Paragraph
4(b) of the Renewal Note, except for the registration rights granted
to the undersigned by the Company in Section 9.03 of the Purchase
Agreement with respect to the Common Stock (as defined in the
Purchase Agreement) purchased by the undersigned pursuant to the
Purchase Agreement, but not with respect to the Conversion Shares or
the Conversion Common Shares (both as defined in the Purchase
Agreement), which have no further applicability because the Holder
has no further conversion rights with respect to any of the Existing
Indebtedness.
(i) The references in the Security Agreement to events of default set
forth in the Purchase Agreement are hereby modified to be references
to the Events of Default set forth in Paragraph 4 of the Renewal
Note.
(j) The Holder hereby (1) consents to the MRI Loan Agreement and the
Company's consummation of the various transactions, and performance
of its various obligations, contemplated by the MRI Loan Agreement
and (2) waives any Event of Default under the terms of the Renewal
Note and the Security Agreement which may exist or arise as the
result of the foregoing.
All references to the Holder in this letter agreement shall be deemed to
include its successors and assigns, and all covenants and agreements contained
herein by the Holder shall be binding upon its successors and assigns.
This letter agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
Renewal Note shall be modified to reflect the average interest rate
currently earned on all Existing Indebtedness.
CROSSPOINT VENTURE PARTNERS III
By: /s/ John B. Muford
John B. Mumford
General Partner
Agreed to by the Company:
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
20742512.W51
<PAGE>
PROMISSORY NOTE
November 19, 1993
TIAS, INC., a Texas corporation (the "Company"), for value received, hereby
promises to pay to the order of Crosspoint Venture Partners III, a California
limited partnership ("Crosspoint"), the principal amount of One Million Five
Hundred Twenty Thousand Five Hundred Three and 41/100 Dollars ($1,520,503.41)
and interest on the unpaid balance of such principal amount at the rate
specifiedbelow from the date hereof until the due date at the time or times and
in the manner hereinafter provided.
1. Modification and Renewal. This Note is a combination, modification,
extension, and renewal of outstanding indebtedness of the Company to Crosspoint
consisting of the following (collectively, the "Existing Indebtedness"): (a) the
principal amount of Nine Hundred Ninety-Seven Thousand One Hundred Seventy and
33/100 Dollars ($997,170.33) evidenced by a Convertible Subordinated Debenture
of the Company in favor of Crosspoint dated August 1, 1991, in the original
principal amount of One Million One Hundred Ninety-Nine Thousand Dollars
($1,199,000) (the "Debenture"), (b) the principal amount of Two Hundred
Seventy Thousand Three Hundred Six and 58/100 Dollars
($270,306.58) evidenced by a Subordinated Promissory Note of the Company in
favor of Crosspoint dated September 30, 1992, in the same principal amount (the
"1992 Note"), (c) One Hundred Thousand Dollars ($100,000) advanced by
Crosspoint to the Company on February 25, 1993, which is not evidenced by any
written payment instrument of the Company, but which has borne interest from
the date of advancement through the date of this Note at the rate of fourteen
percent (14%) per annum (the "Advance"), (d) all accrued interest payable
to Crosspoint under the Debenture from October 1, 1992, through the date
of this Note, (e) accrued interest payable to Crosspoint under the 1992 Note,
and (f) all accrued interest payable to Crosspoint on the Advance from the date
thereof through the date of this Note. The Company hereby affirms that the
Existing Indebtedness is outstanding and that it shall continue to be
outstanding as modified, extended, and renewed in accordance with
the terms of this Note. This Note does not cancel or extinguish any of
the Existing Indebtedness, but, with the Security Documents (as defined in
Paragraph 6 of this Note), amends, restates, and supersedes the Debenture, the
1992 Note, and any other instrument or document evidencing or governing the
Existing Indebtedness in their entirety.
2. Interest and Payments. The underpaid principal sum of this Note
shall bear simple interest at the rate of twelve and 61/100 percent (12.61%)
per annum. Accrued interest on the unpaid principal amount of this Note shall
be due and payable in monthly installments commencing December 31, 1993, and
continuing on the last day of each month thereafter until
May 31, 1999, when all amounts under this Note shall be due and payable. The
principal amount of this Note shall be due and payable on May 31,
1999. All of the unpaid principal amount of this Note, together with all
interest accrued thereon, shall also be due and payable upon the sale of all
or substantially all of the capital stock of the Company. The
principal of and interest on this Note shall be payable at the principal office
of Crosspoint at One First Street, Los Altos, California 94022, or at such other
address as Crosspoint or any other holder of this Note shall from time to time
designate. At the option of the holder hereof, all past due principal and
interest shall bear simple interest, from its due date or maturity (stated or by
acceleration) until paid, at the rate of thirteen percent (13%) per annum.
3. Prepayments. This Note may, at the option of the Company, be prepaid in
whole or in part prior to maturity on any date by the payment of the principal
amount of this Note to be prepaid, together with accrued interest to the
prepayment date. The Company shall give the holder of this Note at least ten
(10) days' prior written notice of the Company's intent to prepay this Note,
stating the prepayment date, the principal amount of this Note to be prepaid on
the prepayment date, and the amount of interest to be paid to such holder on the
prepayment date. The prepayment shall be in integral multiples of principal of
One Thousand Dollars ($1,000), or if this Note is prepaid in full, in the amount
of the unpaid principal balance hereof. The prepayment shall be applied
first to accrued interest, then to the principal amount of this Note.
4. Events of Default. If any of the following events (herein
collectively called "Events of Default") shall occur:
(a) the Company shall default in the payment of any principal of or
interest on this Note when due and payable, whether at any stated due date or
maturity or by acceleration or otherwise;
(b) the Company shall default in the performance of or compliance with any
covenant contained in the Security Agreement (as defined in Paragraph 6 of this
Note) or in Section 9.03 of the Debenture and Common Stock Purchase Agreement
dated as of August 1, 1991, between the Company and Crosspoint, as amended by
the First Amendment to Debenture and Common Stock Purchase Agreement dated as of
September 30, 1992, between the Company and Crosspoint (as so amended, the
"Purchase Agreement"), other than any covenant the performance of or compliance
with which has been waived in accordance with Paragraph 9 of this Note, and such
default shall not have been remedied within thirty (30) days after written
notice thereof shall have been given to the Company by Crosspoint or the other
holder hereof;
(c) the company shall (i) permit its Articles of Incorporation or its
Bylaws to be amended hereafter in a manner that materially affects the rights of
or the benefits to Crosspoint arising from this Note or the Security Documents;
(ii) consolidate or merge with any other corporation or other entity unless the
Company is the survivor thereof; or (iii) sell, lease, or otherwise dispose of
all or substantially all of the properties and assets of the Company;
(d) any material representation or warranty made by the Company in this
Note shall prove to have been false or incorrect in any material respect on the
date as of which made;
(e) the Company shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due; or an
order for relief is entered, or deemed entered, against the Company under any
provision of the U.S. Bankruptcy Code, as amended, pursuant to a petition filed
by or on behalf of the Company; or the Company shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting the material allegations of a
petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the properties
of the Company; or the Company or its board of directors or shareholders
shall take any action looking to the dissolution or liquidation of the Company;
(f) within ninety (90) days after the commencement of any proceeding
against the Company seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been
dismissed;
or, within ninety (90) days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company,
such appointment shall not have been vacated;
then, and in any such event, the holder hereof may at any time at its option, by
written notice or notices to the Company, declare the entire unpaid principal
amount of and accrued interest on this Note to be due and payable, whereupon the
same shall forthwith mature and become due and payable without presentment,
demand, protest or notice, notice of intention to accelerate or notice of
acceleration, all of which are hereby waived.
5. Remedies on Default, etc. The holder hereof, upon the occurrence and
during the continuance of any Event of Default, may proceed to protect and
enforce its rights by a suit in equity, action at law or other appropriate
proceeding, including (but not limited to) the enforcement
of any rights under any of the Security Agreements (as hereinafter defined),
whether for the collection of amounts due under this Note (by acceleration
or otherwise), for the specific performance of any agreement contained
herein, or for an injunction against a violation of any of the terms or
provisions hereof or thereof or in aid of the exercise of any power granted
hereby or thereby or by law. No course of dealing and no delay on
the part of any holder of this Note in exercising any right shall operate
as a waiver thereof or otherwise prejudice such holder's rights. No
remedy conferred hereby upon any holder of this Note shall be exclusive of any
other remedy referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise. Upon the occurrence and during the
continuance of an Event of Default, if this Note is placed in the hands of an
attorney for collection (whether or not suit is filed) or if this Note is
collected by suit or legal proceedings or through bankruptcy proceedings, the
Company agrees to pay, in addition to all amounts then due hereunder, all
expenses of collection, including (without limitation) reasonable attorneys'
fees.
6. Collateral. The full and complete payment of any and all amounts due
under the terms of this Note shall be entitled to all of the benefits of the
security interests in certain properties made and granted by all documents
executed or used to create or evidence the liens and security interests in the
property securing the payment of the Existing Indebtedness, consisting (as of
this date) of the Security Agreement between the Company and Crosspoint dated
asof August 1, 1991 (the "Security Agreement"), as amended by the letter
agreement between the Company and Crosspoint dated as of November 19, 1993, and
the financing statement by the Company and Crosspoint filed with the Secretary
of State of Texas on April 27, 1992 (collectively with the Security Agreement
(as now amended), the "Security Documents").
7. Waivers of Demand, etc. The Company hereby waives presentment and
demand for payment, protest and notice of protest, nonpayment, acceleration and
intention to accelerate and agrees that liability hereunder or under any
guaranty of payment hereof shall not be affected by any renewal or extension in
time of payment hereof.
8. Usury Savings. It is the intention of the parties hereto to comply
with the usury laws of the State of Texas. Accordingly, it is agreed that,
notwithstanding any provisions to the contrary in this Note or in any of the
documents securing payment hereof or otherwise relating hereto, in no event
shall this Note or such documents require the payment or permit the collection
of interest in excess of the maximum amount permitted by such laws. If any such
excess of interest is contracted for, charged, or received under this Note or
under the terms of any of the documents securing payment hereof or otherwise
relating hereto, or in the event the maturity of the indebtedness evidenced by
this Note is accelerated in whole or in part, or in the event that all or part
of the principal or interest of this Note shall be prepaid, so that under any of
of such circumstances the amount of interest contracted for, charged, or
received under this Note or under any of the documents securing payment hereof
or otherwise relating hereto, on the amount of principal actually outstanding
from time to time under this Note shall exceed the maximum amount of interest
permitted by the usury laws of the State of Texas, then in any such event
(a) the provisions of this Paragraph 8 shall govern and control, (b)
neither the Company nor any other person or entity now or hereafter
liable for the payment hereof shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount
of interest permitted by the usury laws of the State of Texas, (c) any such
excess which may have been collected shall be either applied as a credit against
the then unpaid principal amount hereof or refunded to the Company, at the
holder's option, and (d) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest allowed under the usury laws of
the State of Texas as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged,
or received under this Note or under such other documents which are
made for the purpose of determining whether such rate exceeds the maximum
lawful rate of interest shall be made, to the extent permitted by the laws
of the State of Texas, by amortizing, prorating, allocating, and spreading in
equal parts during the period of the full stated term of the indebtedness
evidenced hereby all interest at any time contracted for, charged, or received
from the Company or otherwise by the holder or holders hereof in connection
with such indebtedness.
9. Waivers; Amendments. The Company's performance of or compliance with
any of the provisions, covenants, and conditions set forth in this Note may be
waived, or any of such provisions, covenants, or conditions may be modified or
amended, only upon the prior written consent of Crosspoint or the other holder
of this Note.
10 Modification of References. All references to the Loan and to the
Debenture in the Security Agreements are hereby modified or amended to be
references to the indebtedness evidenced by this Note and to this Note,
respectively. Further, the references in the Security Agreements to events of
default set forth in the Purchase Agreement are hereby modified to be references
to the Events of Default set forth in Paragraph 4 of this Note.
11. Successors and Assigns. All references to the Company herein shall,
and shall be deemed to, include its successors and assigns, and all covenants,
stipulations, promises, and agreements contained herein by or on behalf of the
Company shall be binding upon its successors and assigns, whether so expressed
or not.
12. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its
corporate name and on its behalf by the officer designated below, and this Note
to be dated, issued, and delivered, all effective as of November 19, 1993, such
officer being thereunto duly authorized.
TIAS, INC.
By: /s/ Frank B. Sbordone, Jr.
Frank B. Sbordone, Jr.
Vice President-Finance
20742512.W51
FIRST AMENDMENT TO THE
MORRISON RESTAURANTS INC. STOCK INCENTIVE PLAN
THIS FIRST AMENDMENT, made this 31 day of March, 1993, by Morrison
Restaurants Inc., a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter called the "Company");
W I T N E S S E T H:
WHEREAS, the Company maintains the Morrison Restaurants Inc. Stock
Incentive Plan under an indenture which became effective as of September 30,
1992 (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to provide the committee
which administers the Plan with the authority to delegate certain
administrative responsibilities; and
WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan, effective
immediately, as follows:
1. By deleting the third sentence of Plan Section 2.3 and by substituting
therefor the following:
"Subject to the provisions of the Plan, the Committee shall have full
and conclusive authority to interpret the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the respective Stock Incentive Agreements and
to make all other determinations necessary or advisable for the proper
administration of the Plan; provided, however, that, as to any
Participant who is not a `reporting person' for purposes of Section 16
of the Securities Exchange Act of 1934, the Committee may delegate to
any member of the Board of Directors the authority contemplated by Plan
Section 3.8, but only as that authority may be exercised with respect
to Stock Incentives other than Incentive Stock Options."
2. Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to the adoption of this First Amendment.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed on the day and year first above written.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President & Chief Executive Officer
ATTEST:
By: /s/ Pfilip G. Hunt
Title: Sr. Vice President,
General Counsel & Secretary
(CORPORATE SEAL)
FIRST AMENDMENT TO THE
MORRISON INCORPORATED 1984 LONG TERM INCENTIVE PLAN
THIS FIRST AMENDMENT, made this 31 day of March, 1993, by Morrison
Restaurants Inc., a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter called the "Company");
W I T N E S S E T H:
WHEREAS, the Company maintains the Morrison Incorporated 1984 Long Term
Incentive Plan under an indenture which became effective as of September 24,
1984 (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to provide for the
extension of option periods in favor of certain optionees under certain
circumstances; and
WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan, effective
immediately, as follows:
1. By substituting for all Plan references to the "Morrison Incorporated
1984 Long Term Incentive Plan" the title "Morrison Restaurants Inc. 1984 Long
Term Incentive Plan."
2. By deleting the first sentence of Plan Section 2 and by substituting
therefor the following:
"The Plan shall be administered by a committee of not less than three
(3) members of the Board of Directors of the Company who shall be
appointed by the Board (the "Committee"); provided, however, that, as
to any participant who is not a `reporting person' for purposes of
Section 16 of the Securities Exchange Act of 1934, the Committee may
delegate to any member of the Board of Directors of the Company the
authority contemplated by Plan Section 12."
3. By adding the following new final paragraph to Plan Section 12 as
follows:
"Notwithstanding anything to the contrary in this Section 12, the
term of any stock option previously granted under the terms of the Plan
to a participant who suffers a termination of employment for any reason
may be extended by the Committee in its sole discretion for any period
not longer than the original option term, as determined pursuant to Plan
Section 6."
Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to the adoption of this First Amendment.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed on the day and year first above written.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President & Chief Executive Officer
ATTEST:
By: /s/ Pfilip G. Hunt
Title: Sr. Vice President,
General Counsel & Secretary
(CORPORATE SEAL)
FIRST AMENDMENT TO
MORRISON INCORPORATED 1987 STOCK BONUS AND
NON-QUALIFIED STOCK OPTION PLAN
THIS AMENDMENT is made the 25th day of September, 1990, by MORRISON
INCORPORATED, a corporation organized and doing business under the laws of the
State of Delaware (the "Company");
W I T N E S S E T H:
WHEREAS, the Company has previously adopted the Morrison Incorporated
1987 Stock Bonus and Non-Qualified Stock Option Plan, effective November 30,
1986 (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to clarify the procedure
for determining the price of the shares of Company stock subject to options
issued under the Plan and for other reasons;
NOW, THEREFORE, the Plan is hereby amended, effective as of September
25, 1990, as follows:
1.
Section 2 of the Plan shall be amended by deleting Subsection (a) in its
entirety and by substituting therefor the following:
"(a) to determine which eligible employees
described in Section 3 below (the "Eligible
Employees") may purchase shares of Company common
stock, $.01 par value (the "Shares"), from the
Company and the maximum value of Shares each Eligible
Employee may purchase."
2.
Section 2 of the Plan also shall be amended by deleting from Subsection
(b) thereof the phrase "with a portion of their cash bonuses."
3.
Section 5 of the Plan shall be amended by deleting the phrase "with Cash
Bonuses" from the heading and by deleting the first paragraph thereof and by
substituting therefor the following:
"Each year the Committee shall decide which
employees who are awarded cash bonuses by the Company
will be Eligible Employees. Each Eligible Employee
will receive notification of his eligibility on a
form substantially similar to the form attached
hereto as Exhibit B. The notification also will
inform the Eligible Employee of the maximum value of
Shares he may purchase from the Company at their fair
market value on the date designated in the
notification. Shares may be purchased at any time
within thirty (30) days commencing with the date
designated by the Committee (the "Offer Period"). No
later than the expiration day of the Offer Period,
each Eligible Employee who desires to purchase Shares
shall notify the Company by filing an irrevocable
election with the Company on a form substantially
similar to the form also contained in Exhibit B
specifying the value of Shares he desires to purchase
and the manner of payment. For all purposes under
the Plan, the date of purchase of the Shares shall be
the day the election form is delivered to the
Company. Payment for the Shares shall be made no
later than the day on which the Offer Period expires
and may be made in cash or, if the Eligible Employee
is not a person required by Section 16(a) of the
Securities Exchange Act of 1934 to file reports with
respect to the common stock of the Company, with
shares of previously owned common stock of the
Company, or any combination thereof. The Company
will not be obligated to sell fractional Shares but
may round the number of Shares to be purchased down
to the next whole number."
4.
Section 5 of the Plan also shall be amended by deleting the last
paragraph and by substituting therefor the following:
"The Shares may not be sold, transferred,
conveyed or pledged by the Eligible Employee for
three (3) years after the date on which they were
purchased and issued to him, except to the extent
that these restrictions on transfers are waived by
the Committee. A legend to this effect shall be
placed on the Share certificates. An Eligible
Employee may, subsequent to the purchase and issuance
of the Shares, request the Committee to waive the
restrictions on transfer. As a condition to granting
this request, the Committee may require the Eligible
Employee to accept a reduction in the number of
Shares subject to the Option granted pursuant to
Section 6 equal to three (3) times the aggregate
number of Shares issued to the Eligible Employee
pursuant to the provisions of Section 5 multiplied by
a fraction, the numerator of which is the number of
Shares for which the restrictions on transfer will
not be waived and the denominator of which is three
(3) times the number of Shares purchased by and
issued to the Eligible Employee pursuant to this
Section 5. In the event of any transfer, conveyance
or pledge of the Shares during the period the
restrictions on transfer are applicable that is
effected without the consent of the Committee, the
reduction in the number of Shares subject to the
Option granted pursuant to Section 6 will occur
automatically as of the date of that transfer,
conveyance or pledge. If an Eligible Employee
terminates employment with or retires from the
Company prior to the time restrictions on transfer
lapse, then the restrictions on transfer
automatically shall be deemed to have been waived by
the Committee effective as of the time of termination
or retirement."
5.
Section 6 of the Plan is hereby amended by deleting the first paragraph
thereof and by substituting therefor the following:
"Each Eligible Employee who elects to purchase
Shares, as described in Section 5 above, shall be
granted an option to purchase Shares in an amount
equal to three (3) times the aggregate number of
Shares issued to him under the provisions of Section
5 above, subject to reduction if the restrictions on
transfer described in Section 5 are waived."
6.
Section 6 of the Plan is hereby amended by deleting the existing
Subsection (b) thereof and by substituting therefor the following:
"(b) state the option price which shall be the
fair market value of the Shares as of the date
designated by the Committee, which fair market value
shall be determined in accordance with Section 5(i),
(ii) or (iii) of the Plan;"
7.
Section 6 of the Plan also is hereby amended by deleting from Subsection
(h) thereof the following:
", reducing the resultant product by the number of
Shares which the Eligible Employee has previously
purchased under the Option".
8.
Section 7 of the Plan shall be amended by deleting therefrom the phrase:
"equal in value to fifteen (15%) percent of the fair market value of Shares
an Eligible Employee has elected to purchase,".
Except as specifically amended by this First Amendment, the Plan shall
remain in full force and effect as prior to this First Amendment.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed on the day and year first above written.
MORRISON INCORPORATED
By: /s/ E. E. Bishop
Title: Chief Executive Officer
ATTEST:
/s/ Pfilip G. Hunt
Title:Secretary
[CORPORATE SEAL]
<PAGE>
SECOND AMENDMENT TO MORRISON INCORPORATED
1987 STOCK BONUS AND NON-QUALIFIED STOCK OPTION PLAN
THIS SECOND AMENDMENT is made as of the 27th day of June, 1991, by
MORRISON INCORPORATED, a corporation organized and doing business under the
laws of the State of Delaware (the "Company");
W I T N E S S E T H:
WHEREAS, the Company has previously adopted the Morrison Incorporated 1987
Stock Bonus and Non-Qualified Stock Option Plan, effective November 30, 1986
(the "Plan"); and
WHEREAS, the Company desires to amend the Plan to clarify certain
transferability and exercisability provisions under the Plan; and
WHEREAS, the Board of Directors of the Company has approved the adoption
of the amendment contained herein;
NOW, THEREFORE, the Plan is hereby amended, effective as of June 27, 1991,
by adding the following as the new second paragraph to Plan Section 5:
"The right to make the election to purchase may not be
transferred other than to the extent specifically permitted by
the will of the Eligible Employee or the laws of descent and
distribution, and, in any event, the election may be made
during the lifetime of the Eligible Employee only by the
Eligible Employee or by his guardian or by his legal
representative."
Except as specifically amended by this Second Amendment, the Plan shall
remain in full force and effect as prior to this Second Amendment.
IN WITNESS WHEREOF, the Company has caused this Second Amendment to be
executed as of the day and year first above written.
MORRISON INCORPORATED
By: /s/ E. E. Bishop
Title: Chairman of the Board
and Chief Executive Officer
ATTEST:
/s/ Pfilip G. Hunt
Title:Secretary
[CORPORATE SEAL]
<PAGE>
THIRD AMENDMENT TO THE
MORRISON INCORPORATED 1987 STOCK BONUS
AND NON-QUALIFIED STOCK OPTION PLAN
THIS THIRD AMENDMENT, made this 31 day of March, 1993, by Morrison
Restaurants Inc., a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter called the "Company");
W I T N E S S E T H:
WHEREAS, the Company maintains the Morrison Incorporated 1987 Stock Bonus
and Non-Qualified Stock Option Plan under an indenture which became effective
as of November 30, 1986 and which was last amended by an indenture dated as
of June 27, 1991 (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to provide for the
extension of option periods in favor of certain optionees under certain
circumstances; and
WHEREAS, the Board of Directors of the Company has duly approved and
authorized this amendment to the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan, effective
immediately, as follows:
1. By substituting for all Plan references to the "Morrison Incorporated 1987
Stock Bonus and Non-Qualified Stock Option Plan" the title "Morrison
Restaurants Inc. 1987 Stock Bonus and Non-Qualified Stock Option Plan."
2. By deleting the first sentence of Plan Section 2 and by substituting
therefor the following:
"The Plan shall be administered by a committee of not less than three (3)
members of the Board of Directors of the Company who shall be appointed
by the Board (the "Committee"); provided, however, that, as to any
Eligible Employee who is not a `reporting person' for purposes of Section
16 of the Securities Exchange Act of 1934, the Committee may delegate to
any member of the Board of Directors of the Company the authority
contemplated by Plan Section 6(j)."
3. By deleting Plan Section 6(g) and by substituting therefor the following:
"(g) provide that if the employment of the Eligible Employee
terminates prior to the fifth (5th) anniversary of the date of the grant
of the Option, the Option shall terminate at that time, except as provided
in Sections 6(h), (i) and (j) below;".
4. By deleting the period at the end of Plan Section 6(i) and by substituting
therefor a semi-colon.
5. By adding a new Plan Section 6(j) as follows:
"(j) Notwithstanding anything to the contrary in this Section 6, the
term of any Option previously granted under the terms of the Plan to an
Eligible Employee who suffers a termination of employment for any reason
may be extended by the Committee in its sole discretion for any period not
longer than the original option term, as determined pursuant to Plan
Section 6(d)."
Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to the adoption of this Third Amendment.
IN WITNESS WHEREOF, the Company has caused this Third Amendment to be
executed on the day and year first above written.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President & Chief Executive Officer
ATTEST:
By: /s/ Pfilip G. Hunt
Title: Sr. Vice President,
General Counsel & Secretary
(CORPORATE SEAL)
MORRISON RESTAURANTS INC.
EXECUTIVE LIFE INSURANCE PLAN
TABLE OF CONTENTS
I. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . .
II. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .
III. PARTICIPATION. . . . . . . . . . . . . . . . . . . . .
IV. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . .
V. DIVIDENDS OR CREDITED INTEREST . . . . . . . . . . . .
VI. OWNERSHIP. . . . . . . . . . . . . . . . . . . . . . .
VII. COLLATERAL ASSIGNMENT OF SECURITY INTEREST . . . . . .
VIII.ANNUAL BENEFIT . . . . . . . . . . . . . . . . . . . .
IX. ENFORCEMENT OF COLLATERAL ASSIGNMENT . . . . . . . . .
X. TAX LIABILITY AND WITHHOLDING. . . . . . . . . . . . .
XI. BENEFICIARY DESIGNATION. . . . . . . . . . . . . . . .
XII. ERISA PLAN . . . . . . . . . . . . . . . . . . . . . .
XIII.ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . .
XIV. CLAIM REVIEW PROCEDURE . . . . . . . . . . . . . . . .
XV. LIMITATION OF ASSIGNMENT . . . . . . . . . . . . . . .
XVI. LIMITATION OF RIGHTS . . . . . . . . . . . . . . . . .
XVII.AMENDMENT TO OR TERMINATION OF THE PLAN. . . . . . . .
XVIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . .
MORRISON RESTAURANTS INC.
EXECUTIVE LIFE INSURANCE PLAN
I. PURPOSE
This Plan provides a select group of management or highly compensated
employees of the Company and its affiliates with assistance in purchasing
individual life insurance coverage.
II. DEFINITIONS
For the purposes of the Plan, the following terms shall have the meanings
indicated:
A. "Annual Benefit" means the annual premium paid by the Company on
behalf of each participant during a Plan Year.
B. "Beneficiary" means the person or persons designated as such in
accordance with Section XI.
C. "Board" means the Board of Directors of Morrison Restaurants Inc.
D. "Company" means Morrison Restaurants Inc.
E. "Compensation" means a level of compensation paid or previously
paid to an Employee, to a maximum of $1,000,000, as determined by
the Board on an annualized basis for each participant for purposes
of Section VIII.
F. "Economic Benefit" means the annually calculated cost of the
Employee's net insurance benefit, based on the lesser of the
Insurer's non-convertible term rates and the Internal Revenue
Service published "PS-58" rates.
G. "Employee" means, except as provided in Section IV, an employee
from among a select group of management or highly compensated
employees of the Company or any of its affiliates who is selected
by the Board, in its sole discretion, to be eligible to
participate in the Plan.
H. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
I. "Final Compensation" means the highest level of Compensation
determined by the Board for an Employee during his or her
participation in the Plan.
J. "Insurer" means the insurance company chosen to issue a Policy on
the life of the Employee.
K. "Net Premium Outlay" means, with respect to a Split Dollar Policy
and at any given time, the sum of the premiums paid by the Company
on the Split Dollar Policy, less the amount of cumulative bonuses
paid to the Employee not to exceed the aggregate Economic Benefit
costs, as calculated by the Company, less the amount of any
outstanding borrowing by the Company against the Split Dollar
Policy.
L. "Plan" means the Morrison Restaurants Inc. Executive Life
Insurance Plan.
M. "Plan Administrator" means the organization or person designated
by the Board to administer the Plan or, in the absence of any such
designation, the Company.
N. "Plan Year" means from January 1 to December 31.
O. "Policy" refers to a life insurance policy that will be issued by
the Insurer on the life of an Employee participating in this Plan.
P. "Retirement" means an Employee's termination of employment with
the Company and its affiliates following:
1. attainment of at least age fifty-five (55) and completion
of at least ten (10) years of service with the Company and
its affiliates; or
2. permanent disability, which shall be determined by a
licensed physician selected by the Company.
Q. "Split Dollar Life Insurance Agreement" means the agreement
entered into between the Company and an Employee.
R. "Split Dollar Policy" means the Policy controlled by the
applicable Split Dollar Life Insurance Agreement.
III. PARTICIPATION
A. Eligibility
An Employee shall become eligible to be a participant in the Plan as of
the date he or she is notified in writing by the Plan Administrator of
his or her eligibility.
B. Insurability
Notwithstanding Section III. A. above, an Employee shall not participate
in the Plan unless and until he or she satisfies the requirements for
obtaining a Policy.
C. Election Not to Participate
An Employee may elect not to participate in the Plan at any time. Such
election shall be in writing and shall become effective upon its receipt
by the Plan Administrator. No compensation or benefits in place of
participation in the Plan shall be paid to an Employee who elects not
to participate.
D. Cessation of Participation
An Employee shall cease to be a Plan participant as of the date the
Company ceases to make further premium payments on the Split Dollar
Policy owned by the Participant at such time as determined by the Plan
Administrator in its sole discretion, except as otherwise may be
provided by the terms of the applicable Split Dollar Life Insurance
Agreement.
IV. ASSIGNMENT
Subject to the Split Dollar Life Insurance Agreement and the collateral
assignment in favor of the Company attached as Exhibit "A" thereto, an
Employee may assign to one or more individuals or trustees all or any part of
the Employee's right, title, claim, interest, benefit and all other incidents
of ownership that the Employee may have in the Split Dollar Policy. Such
assignee shall then have all rights and obligations that have been assigned.
In the event that there has been such an assignment, the term "Employee" shall
mean the Employee's assignee (or any subsequent assignee) as the context
requires unless the assignee is the Company.
V. DIVIDENDS OR CREDITED INTEREST
All dividends or credited interest paid on an Employee's Split Dollar Policy
while such Employee is a participant in this Plan will be applied to purchase
additional life insurance within the Split Dollar Policy on the life of the
Employee.
VI. OWNERSHIP
The Employee will be the owner of the Split Dollar Policy and will hold the
right to exercise all ownership rights granted by the terms of the Split
Dollar Policy, except to the extent such rights are specifically limited by
the terms of the Plan or the applicable Split Dollar Life Insurance Agreement.
VII. COLLATERAL ASSIGNMENT OF SECURITY INTEREST
An Employee will be required to assign certain rights of the Employee in the
Split Dollar Policy to the Company to secure the Company's rights under the
Split Dollar Policy. This assignment will be made by the Employee's execution
of a Split Dollar Life Insurance Agreement and the collateral assignment
attached thereto as Exhibit "A" at the time the Employee becomes a participant
in the Plan. The Company will not assign its security interest in the Split
Dollar Policy to anyone other than the Employee.
VIII.ANNUAL BENEFIT
The Annual Benefit provided to an Employee participating in the Plan shall be
an amount equal to a premium amount, together with the portion of the premium
amount paid by the Employee, necessary to maintain in effect the Split Dollar
Policy for that Plan Year at a level of life insurance coverage as follows:
A. During Employment
If the Employee dies prior to termination of employment with the Company
and any of its affiliates, the Employee's Beneficiary would be entitled
to receive as a death benefit under the Split Dollar Policy an amount
equal to the Employee's Final Compensation multiplied by four (4),
rounded to the next highest $1,000, less the amount of the Employee's
group term life insurance coverage then provided by the Company.
B. After Retirement
At the time of an Employee's Retirement, the Split Dollar Policy's cash
surrender value would be intended to be sufficient to provide a post-
retirement death benefit equal to the Employee's Final Compensation
multiplied by two (2), rounded to the next highest $1,000.
The Company does not guarantee the sufficiency of its premium payment
assistance to maintain the level of insurance coverages described in this
Section VIII.
IX. ENFORCEMENT OF COLLATERAL ASSIGNMENT
Upon an Employee's cessation of participation in the Plan, the Company shall
withdraw or borrow from or against the Split Dollar Policy an amount equal to
its Net Premium Outlay or, where applicable, the full cash surrender value of
the Split Dollar Policy and, if applicable, the amount of any tax withholding
obligations as described in Section X. Upon recovering such amounts, the
Company will reassign its rights in the Split Dollar Policy to the Employee,
and the Employee's rights with respect to the Split Dollar Policy will be
unrestricted.
X. TAX LIABILITY AND WITHHOLDING
The rights of an Employee in the Split Dollar Policy may cause the Employee
to be treated as having gross income for federal, state or local income tax
purposes. These circumstances may also impose upon the Company an obligation
to deduct and collect federal, state or local withholding taxes. Unless the
Employee otherwise provides the Company the amounts it is required to
withhold, the Company may satisfy its withholding obligations by borrowing
against the Split Dollar Policy in an amount equal to its withholding tax
liability.
XI. BENEFICIARY DESIGNATION
The Employee shall have the right, at any time, to designate any person or
persons as the Beneficiary to whom payment under the Plan shall be made in the
event of the Employee's death. The filing of a new Beneficiary designation
form, when accepted by the Insurer, will cancel any Beneficiary designation
previously filed.
If an Employee fails to designate a Beneficiary as provided above, or if all
designated Beneficiaries predecease the Employee or die prior to the complete
distribution of the Employee's death benefits, the Employee's death benefits
shall be paid to the Employee's then surviving spouse, or, if none, to the
Employee's estate, unless directed otherwise by the court that has
jurisdiction over the assets belonging to the Employee's probate estate.
XII. ERISA PLAN
This Plan is covered by Title I of ERISA as a welfare benefit plan. The
Company is the "named fiduciary" of the Plan.
XIII.ADMINISTRATION OF THE PLAN
A. Operation of the Plan Administrator The Company shall be the Plan
Administrator, unless it appoints another Plan Administrator. If an
organization is appointed to serve as the Plan Administrator, then the Plan
Administrator may designate in writing a person who may act on behalf of the
Plan Administrator. The Company shall have the right to remove the Plan
Administrator at any time by notice in writing. The Plan Administrator may
resign at any time by written notice of resignation to the Company. Upon
removal or resignation, or in the event of the dissolution of the Plan
Administrator, the Company shall appoint a successor.
B. Duties of the Plan Administrator
1. The Plan Administrator shall perform any act which the Plan
authorizes or requires of the Plan Administrator by action taken in
compliance with the Plan and may designate in writing other persons to
carry out its duties under the Plan. The Plan Administrator may employ
persons to render advice with regard to any of the Plan Administrator's
duties.
2. The Plan Administrator shall from time to time establish
rules, not contrary to the provisions of the Plan, for the
administration of the Plan and the transaction of its business. All
elections and designations under the Plan by a participating Employee
or Beneficiary shall be made on forms prescribed by the Plan
Administrator. The Plan Administrator shall have discretionary
authority to construe the terms of the Plan and shall determine all
questions arising in the administration, interpretation and application
of the Plan, including, but not limited to, those concerning eligibility
for benefits and it shall not act so as to discriminate in favor of any
person. All determinations of the Plan Administrator shall be
conclusive and binding on all Employees and Beneficiaries, subject to
the provisions of the Plan and subject to applicable law.
3. The Plan Administrator shall furnish Employees and
Beneficiaries with all disclosures now or hereafter required by ERISA.
The Plan Administrator shall file, as required, the various reports and
disclosures concerning the Plan and its operations as required by ERISA
and by the Internal Revenue Code, and shall be solely responsible for
establishing and maintaining all records of the Plan.
4. The statement of specific duties for a Plan Administrator
in this Section is not in derogation of any other duties which a Plan
Administrator has under the provisions of the Plan or under applicable
law.
5. The Company shall indemnify and hold harmless each person
constituting the Plan Administrator from and against any and all claims
and expenses (including, without limitation, attorney's fees and related
costs) arising in connection with the performance by the person of his
or her duties in that capacity, other than any of the foregoing arising
in connection with the willful neglect or willful misconduct of the
person acting.
C. Action by the Company Any action to be taken by the Company
shall be taken by resolution or written direction duly adopted by the Board
or appropriate governing body, as the case may be; provided, however, that by
such resolution or written direction, the Board or appropriate governing body,
as the case may be, may delegate to any officer or other appropriate person
of the Company the authority to take any such actions as may be specified in
such resolution or written direction, other than the power to amend or
terminate the Plan or to determine the basis of any payment obligations of the
Company.
XIV. CLAIM REVIEW PROCEDURE
A. In the event that an Employee or Beneficiary is denied a claim for
benefits under the Plan, the Plan Administrator shall provide to such claimant
written notice of the denial which shall set forth:
1. the specific reasons for the denial;
2. specific references to the pertinent provisions of the Plan
on which the denial is based;
3. a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of
why such material or information is necessary; and
4. an explanation of the Plan's claim review procedure.
B. After receiving written notice of the denial of a claim, a
claimant or his or her representative may:
1. request a full and fair review of such denial by written
application to the Plan Administrator;
2. review pertinent documents; and
3. submit issues and comments in writing to the Plan
Administrator.
C. If the claimant wishes such a review of the decision denying his
or her claim to benefits under the Plan, he or she must submit such written
applications to the Plan Administrator within sixty (60) days after receiving
written notice of the denial.
D. Upon receiving such written application for review, the Plan
Administrator may schedule a hearing for purposes of reviewing the claimant's
claim, which hearing shall take place not more than thirty (30) days from the
date on which the Plan Administrator received such written application for
review.
E. At least ten (10) days prior to the scheduled hearing, the
claimant and his or her representative designated in writing by him or her,
if any, shall receive written notice of the date, time, and place of such
scheduled hearing. The claimant or his or her representative, if any, may
request that the hearing be rescheduled, for his or her convenience, on
another reasonable date or at another reasonable time or place.
F. All claimants requesting a review of the decision denying their
claim for benefits may employ counsel for purposes of the hearing.
G. No later than sixty (60) days following the receipt of the written
application for review, the Plan Administrator shall submit its decision on
the review in writing to the claimant involved and to his or her
representative, if any; provided, however, a decision on the written
application for review may be extended, in the event special circumstances
such as the need to hold a hearing require an extension of time, to a day no
later than one hundred twenty (120) days after the date of receipt of the
written application for review. The decision shall include specific reasons
for the decision and specific references to the pertinent provisions of the
Plan on which the decision is based.
XV. LIMITATION OF ASSIGNMENT
A. No benefit which shall be payable under the Plan to any person
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall
be void; and no such benefit shall in any manner be liable for, or subject to,
the debts, contracts, liabilities, engagements or torts of any person, nor
shall it be subject to attachment or legal process for, or against, such
person, and the same shall not be recognized under the Plan, except to such
extent as may be required by law. Nothing herein shall be deemed to
invalidate any collateral assignment executed by an Employee in favor of the
Company pursuant to the terms of a Split Dollar Life Insurance Agreement.
B. If any person who shall be entitled to any benefit under the Plan
shall become bankrupt or shall attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge such benefit under the Plan, then
the payment of any such benefit in the event an Employee or Beneficiary is
entitled to payment shall, in the discretion of the Plan Administrator, cease
and terminate and in that event the Plan Administrator shall hold or apply the
same for the benefit of such person, his or her spouse, children, other
dependents or any of them in such manner and in such proportion as the Plan
Administrator shall determine.
XVI. LIMITATION OF RIGHTS
Membership in the Plan shall not give any Employee any right or claim
except to the extent that such right is specifically fixed under the terms of
the Plan. The adoption of the Plan by the Company shall not be construed to
give any Employee a right to be continued in the employ of the Company or any
of its affiliates or as interfering with the right of the Company or any of
its affiliates to terminate the employment of any Employee at any time.
XVII.AMENDMENT TO OR TERMINATION OF THE PLAN
The Company reserves the right at any time to modify or amend or
terminate the Plan. No such modifications or amendments shall have the effect
of retroactively changing or depriving Employees or Beneficiaries of benefits
already accrued under the Plan.
XVIII. MISCELLANEOUS
A. All payments provided under the Plan shall be paid from the
general assets of the Company and no separate fund shall be established to
secure payment.
B. The Company shall withhold from any benefits payable under the
Plan all federal, state and local income taxes or other taxes required to be
withheld pursuant to applicable law.
C. By maintaining the Plan and providing the Annual Benefits
described herein, the Company makes no agreement, expressed or implied, or
other representation relating to the amount or nature of benefits payable
under any Policy, the ability of any insurer to provide benefits under any
Policy or the federal, state or local tax consequences resulting from
execution of a Split Dollar Life Insurance Agreement.
D. Participation in the Plan shall not be construed as providing any
evidence of an agreement, express or implied, to retain an Employee in the
employ of the Company or any of its affiliates.
E. To the extent not preempted by applicable federal law, the Plan
shall be governed by and construed in accordance with the laws of the State
of Alabama.
F. The captions of the sections and paragraphs of the Plan are for
convenience only and shall not control or affect the meaning or construction
of any of its provisions.
IN WITNESS WHEREOF, the Company has executed this Plan as of the 9th
day of February , 1994.
MORRISON RESTAURANTS INC.
By: /s/ Samuel E. Beall, III
Title: President and Chief Executive Officer
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel & Secretary
MORRISON RESTAURANTS INC.
PERFORMANCE STOCK RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of July,
1993, by and between MORRISON RESTAURANTS INC., a Delaware corporation (the
"Company") and SAMUEL E. BEALL, III (the "Recipient").
Background
A. The Company has adopted the Morrison Restaurants Inc. Stock
Incentive Plan (the "Plan") for the purpose of securing and retaining the
services of officers and key employees of the Company and its affiliates by
promoting and increasing their personal interests in the welfare of the
Company and by providing incentive to those who are primarily responsible for
the operations of the Company and for shaping and carrying out the long-range
plans of the Company and aiding in its continued growth and financial success.
B. The Compensation and Stock Option Committee of the Board of
Directors of the Company (the "Committee") has authorized the grant to
Recipient of performance stock rights under Section 3.7 of the Plan to receive
a specified number of shares of the common stock, par value $.01 per share,
("Common Stock") of the Company subject to the conditions stated herein.
C. The Company and Recipient wish to confirm herein the terms,
conditions, and restrictions of the performance stock rights.
For and in consideration of the premises, the mutual covenants contained
herein, and other good and valuable consideration, the parties hereto agree:
Section 1
Award of Performance Stock Rights
1.1 Award of Performance Stock Rights. Subject to the terms,
restrictions, limitations, and conditions stated herein and in the Plan, the
Company hereby awards to Recipient the conditional right to be paid up to an
aggregate of 50,000 shares of Common Stock at the time or times and subject
to the conditions stated herein (the "Performance Stock").
1.2 Grant of Performance Stock upon Attainment of Award Levels. The
Recipient shall be granted the number of shares of Performance Stock indicated
below if the Average Price indicated below for an Award Level is first
attained after June 1, 1993 during its Corresponding Determination Year:
Number of
Corresponding
Award Level Average Price Shares Issuable
Determination Year
One $34.50 10,000 June 1, 1993 - May 31,1994
Two $39.675 10,000 June 1, 1994 - May 31,1995
Three $45.626 10,000 June 1, 1995 - May 31,1996
Four $52.470 10,000 June 1, 1996 - May 31,1997
Five $60.341 10,000 June 1, 1997 - May 31,1998
No Shares of Performance Stock shall be issuable because an Award Level is
attained in any Determination Year other than the Corresponding Determination
Year for that Award Level, except as provided below:
(a) if an Award Level is first attained after June 1, 1993 in
a Determination Year occurring prior to the Corresponding Determination
Year for that Award Level, the Recipient shall be issued, subject to
Section 1.4 below, those shares of Performance Stock issuable with
respect to attainment of that Award Level; and
(b) if an Award Level is attained in its Corresponding
Determination Year, the Recipient shall be issued those shares of
Performance Stock issuable with respect to attainment of that Award
Level plus those shares of Performance Stock issuable with respect to
attainment of lesser Award Levels, but which have not been previously
issued to the Recipient.
1.3 Grant of Performance Stock upon a Triggering Event. If there is
a Triggering Event and the Triggering Event Price exceeds $30.00, the
Recipient shall be entitled to a grant of a number of shares of Performance
Stock determined pursuant to the following formula: 50,000 multiplied by X,
reduced by Y. In the foregoing formula, "X" is the lesser of (a) the
(Triggering Event Price minus $30) divided by $30.341 or (b) one (1) and "Y"
is the number of shares of Performance Stock which previously became issuable
to the Recipient under Section 1.2. No shares of Performance Stock shall be
issuable with respect to any subsequent Triggering Event occurring after the
occurrence of the first Triggering Event. If the formula in this Section 1.3
produces a negative number, the Recipient shall not be entitled to any grant
of Performance Stock pursuant to this Section 1.3; however, the Recipient
shall not be required to return any shares of Performance Stock previously
issued to him pursuant to Section 1.2 above.
1.4 Forfeiture of Performance Stock Issued upon Attainment of an Award
Level. Shares of Performance Stock issued due to attainment of Award Level
Two, Three, Four or Five are subject to forfeiture if the Award Level is
attained in a Determination Year earlier than the Corresponding Determination
Year for that Award Level, as determined in accordance with Section 1.2 above.
Shares of Performance Stock issued due to attainment of an Award Level in a
Determination Year prior to its Corresponding Determination Year shall be
forfeited in the event of the Recipient's voluntary Termination of Employment,
other than a Termination of Employment due to Constructive Discharge or death,
or a Termination of Employment for Cause prior to the first to occur of the
following dates: (a) the date of attainment of that Award Level again in its
Corresponding Determination Year; or (b) the last day of the Corresponding
Determination Year for that Award Level.
1.5 Issuance of Stock Certificate. If shares of Performance Stock
become issuable to the Recipient due to attainment of an Award Level or a
Triggering Event, a stock certificate will be issued as soon as practicable
following the related Award Date or the Triggering Event, as applicable, to
the Recipient for the appropriate number of shares; provided, however, that
no shares of Performance Stock shall be issued unless and until the grant of
Performance Stock rights evidenced by this Agreement is approved by the
stockholders of the Company.
1.6 Shares of Performance Stock held by Share Custodian. The
Recipient hereby authorizes and directs the Company to deliver to the Share
Custodian a stock certificate issued by the Company and representing any
shares of Performance Stock subject to forfeiture in accordance with Section
1.4 above due to the attainment of an Award Level prior to its Corresponding
Determination Year, as well as any stock certificate issuable to Recipient due
to an event described in Section 3.1 below and any cash dividends paid with
respect to shares held by the Share Custodian. The Share Custodian shall hold
any such stock certificates and any cash dividends until the first to occur
of the events listed below and shall deliver the stock certificates and any
cash dividends to either the Recipient or the Company depending upon which
event occurs first, as indicated below:
(a) if the Award Level is attained again in the Corresponding
Determination Year, any stock certificate representing shares of
Performance Stock issued due to the prior attainment of that Award
Level, stock certificates issued with respect thereto pursuant to
Section 3.1 below and cash dividends paid with respect to shares held
by the Share Custodian, shall be delivered to the Recipient;
(b) upon the attainment of the last day of the Corresponding
Determination Year for an Award Level, any stock certificate
representing shares of Performance Stock issued due to the prior
attainment of that Award Level in an earlier Determination Year, stock
certificates issued with respect thereto pursuant to Section 3.1 below
and cash dividends paid with respect to shares held by the Share
Custodian, shall be delivered to the Recipient;
(c) upon the Recipient's death or voluntary Termination of
Employment due to Constructive Discharge, or upon a Termination of
Employment by the Company other than for Cause, all stock certificates
then held by the Share Custodian, stock certificates issued with respect
thereto pursuant to Section 3.1 below and cash dividends paid with
respect to shares held by the Share Custodian, shall be delivered to the
Recipient; or
(d) upon the Recipient's voluntary Termination of Employment,
other than a Termination of Employment due to Constructive Discharge,
or upon a Termination of Employment for Cause, all stock certificates
then held by the Share Custodian, stock certificates issued with respect
thereto pursuant to Section 3.1 below and cash dividends paid with
respect to shares held by the Share Custodian, shall be delivered to the
Company.
Recipient hereby irrevocably appoints the Share Custodian as the true and
lawful attorney-in-fact of Recipient with the full power and authority to
execute any stock transfer power or other instrument necessary to transfer
shares of Performance Stock and other stock certificates held by the Share
Custodian to the Company in accordance with this Section 1.6 in the name of
Recipient. The Shares Custodian's term of appointment shall expire on June
1, 1998.
1.7 Condition to Issuance or Release of Performance Stock Certificate.
As a condition precedent to the issuance of any stock certificate pursuant to
Section 1.5 hereof or the release of any stock certificate pursuant to Section
1.6 hereof, Recipient shall first pay to the Company an amount sufficient to
satisfy applicable federal, state and local withholding tax requirements.
1.8 Rights as Stockholder. Recipient shall have no rights as a
stockholder with respect to any shares of Performance Stock issuable pursuant
to Section 1.2 or 1.3 hereof until a stock certificate for the shares is
issued in Recipient's name. No adjustments shall be made pursuant to Section
3.1 hereof for dividends paid or declared on or with respect to Common Stock
in cash, securities other than Common Stock, or other property for which the
record date is prior to the date the stock certificate is issued. During the
period that shares of Performance Stock are held by the Share Custodian,
Recipient shall be entitled to all rights attendant to shares of Common Stock
not so held, except as follows: (a) if additional shares of Common Stock
become issuable to Recipient due to an event described in Section 3.1 below,
any stock certificate representing such shares shall be delivered to the Share
Custodian and those shares of Common Stock shall be subject to forfeiture to
the same extent as the shares of Performance Stock to which they relate; and
(b) if any cash dividends are paid with respect to shares of Performance Stock
held by the Share Custodian, those cash dividends shall be delivered to the
Share Custodian who shall, in turn, deliver the cash dividends with the shares
of Performance Stock to which they relate to either the Recipient or the
Company, as determined pursuant to Section 1.6 above.
1.9 Registration of Performance Stock. The Company will use its best
efforts to assure that the shares of Performance Stock will be registered for
issuance to Recipient under the Securities Act of 1933 at the time or times
of issuance.
Section 2
Restrictions on Transfer of Performance Stock Rights and
Shares of Performance Stock
2.1 Non-Transferability of Performance Stock Rights. The Performance
Stock rights shall not be transferable or assignable by the Recipient.
2.2 Non-Transferability of Performance Stock. Recipient shall effect
no Disposition of shares of Performance Stock issued to him pursuant to
Section 1.2 during the applicable Restriction Period; provided, however, that
this provision shall not preclude the following transfers: (a) by Recipient
to a trust of which the Recipient is the grantor, the initial trustee and the
primary income beneficiary; or (b) in the event of the death of the Recipient,
by will or the laws of descent and distribution.
2.3 Legends. Each certificate representing the shares of Performance
Stock issued prior to the end of the applicable Restriction Period for such
shares shall be endorsed with a legend in substantially the following form and
Recipient shall not make any transfer of the shares of Performance Stock
represented by the certificate without first complying with the restrictions
on transfer described in this Agreement:
transfer is restricted
the securities evidenced by this certificate are subject to restrictions on
transfer set forth in a performance stock rights agreement dated ______,
a copy of which is available from the company.
Recipient agrees that the Company may also endorse any other legends
regarding applicable federal or state securities laws.
The Company need not register a transfer of the shares of Performance
Stock, and may also instruct its transfer agent not to register the transfer
of the shares of Performance Stock, unless the conditions referred to in the
foregoing legend are satisfied.
2.4 Removal of Legend and Transfer Restrictions. The restrictions
described in the legend set forth in Section 2.3 hereof and any related stop
transfer instructions may be removed and the Company shall issue a replacement
certificate without that portion of the legend to the Recipient as of the day
following the last day of the Restriction Period applicable to those shares
of Performance Stock represented by the certificate.
Section 3
General Provisions
3.1 Change in Capitalization, Etc. If the number of outstanding
shares of Common Stock shall be increased or decreased as a result of a
subdivision or combination of shares or the payment of a stock dividend in
shares of Common Stock to holders of outstanding shares of Common Stock or any
other increase or decrease in the number of shares of Common Stock outstanding
is effected without receipt of consideration by the Company, an appropriate
adjustment shall be made by the Committee in the number of unissued shares of
Performance Stock such that Recipient's proportionate interest shall be
maintained as before the occurrence of the event. All adjustments made by the
Committee under this Section shall be final, binding and conclusive.
3.2 Governing Laws. This Agreement shall be construed, administered
and enforced according to the laws of the State of Alabama; provided, however,
no shares of Performance Stock shall be issued except, in the reasonable
judgment of the Committee, in compliance with exemptions under applicable
state securities laws of the state in which Recipient resides and any other
applicable securities laws.
3.3 Successors. This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and permitted assigns
of the parties.
3.4 Notice. Except as otherwise specified herein, all notices and
other communications under this Agreement shall be in writing and shall be
deemed to have been given if personally delivered or if sent by registered or
certified United States mail, return receipt requested, postage prepaid,
addressed to the proposed recipient at the last known address of the
recipient. Any party may designate any other address to which notices shall
be sent by giving notice of the address to the other parties in the same
manner as provided herein.
3.5 Severability. In the event that any one or more of the provisions
or portion thereof contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable in any respect, the same shall not
invalidate or otherwise affect any other provisions of this Agreement, and
this Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.
3.6 Entire Agreement. Subject to the terms and conditions of the
Plan, this Agreement expresses the entire understanding and agreement of the
parties with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same instrument.
3.7 Violation. Any Disposition of the Performance Stock rights or the
shares of Performance Stock or any portion thereof not otherwise consistent
with the terms of this Agreement shall be a violation of the terms of this
Agreement and shall be void and without effect.
3.8 Headings. Section headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
3.9 Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.
3.10 No Employment Rights Created. Neither the establishment of the
Plan nor the award of the Performance Stock rights hereunder shall be
construed as giving Recipient the right to continued employment with the
Company.
3.11 Certain Definitions. The capitalized terms in this Agreement have
the meaning ascribed to them below or, where applicable and such terms are not
otherwise defined in this Section, in the Plan:
(a) "Average Price" means the average of the closing sale prices
for a share of Common Stock as reported on the NASDAQ/National Market
System or, if the Common Stock is then listed on a national securities
exchange, as reported by such exchange for twenty-two (22) consecutive
trading days.
(b) "Award Date" means the first business day following the date
shares of Performance Stock become issuable pursuant to Section 1.2
above. There may be more than one potential Award Date in any
Determination Year.
(c) "Award Level" refers to the Average Price identified in the
table set forth in Section 1.2 that must be achieved as of an Award Date
to receive the number of shares set forth in that table. An Award Level
is deemed attained as of its related Award Date.
(d) "Constructive Discharge" means the Recipient's voluntary
termination of employment immediately following a decision by the Board
of Directors of the Company to:
(i) reduce the Recipient's annual base salary, other than
a reduction attributable to a decline in annual base salaries
within the food service industry generally;
(ii) relocate the Recipient without his consent to a
location more than thirty-five (35) miles from the Company's
current home office location; or
(iii)any material reduction in the level of Recipient's
responsibilities, position (including office, title and reporting
relationships) or authority from the level in effect as of the
date of this Agreement.
(e) "Corresponding Determination Year" means the Determination
Year that corresponds with the Award Level identified in the table set
forth in Section 1.2.
(f) "Determination Year" refers to one of five consecutive
twelve-month periods beginning June 1, 1993 and ending May 31, 1998.
(g) "Restriction Period" means, with respect to shares of
Performance Stock issued with respect to a particular Award Level, the
period commencing on the date the shares of Performance Stock are issued
to the Recipient and ending on the earliest to occur of the following:
(i) the date of the Recipient's Termination of Employment other than for
Cause; (ii) the date of a Triggering Event occurring after the issuance
of those shares of Performance Stock; or (iii) the fifth anniversary of
the date the shares of Performance Stock were issued.
(h) "Retirement" means termination of employment on or after the
date Recipient is eligible for normal, early or disability retirement
under the Morrison Restaurants Inc. Retirement Plan, as the same may be
amended from time to time hereafter, or, if that plan is terminated
hereafter, Recipient's eligibility shall be determined pursuant to the
terms of that plan in effect on the date of its termination.
(i) "Share Custodian" means the officer of the Company
designated by the Committee to hold forfeitable shares of Performance
Stock.
(j) "Triggering Event" means any one of the following:
(i) any date on which the Common Stock ceases to be
publicly traded;
(ii) any disposition, in one transaction or a series of
related transactions, of more than twenty-five percent (25%) of
the total assets, valued at cost, of the Company for consideration
substantially less than the book value of the assets sold; or
(iii)within six (6) months after the effective date of any
merger or consolidation of the Company with another entity
occurring on or before May 31, 1998, there is the Recipient's
Termination of Employment (1) by the Company other than for Cause
or (2) by the Recipient under circumstances constituting a
Constructive Discharge.
(k) "Triggering Event Price" means the Average Price determined
over the twenty-two (22) consecutive trading day period ending on the
date immediately preceding the date of the occurrence of a Triggering
Event.
3.12 Survival of Restrictions. The restrictions in Section 2 hereof
shall survive the termination of this Agreement.
3.13 Inconsistency with Plan. The terms of this Agreement shall be
construed in a manner consistent with the terms of the Plan and, to the extent
there is an inconsistency, the terms of the Plan shall govern.
3.14 Termination of Agreement. Except to the extent of issuing shares
of Performance Stock previously earned pursuant to Section 1 above and as
otherwise provided herein, this Agreement shall terminate as of the date
shares of Performance Stock are no longer issuable in accordance with either
Subsection (a) or (b) below:
(a) no shares of Performance Stock shall be issuable with
respect to an Award Date if that Award Date falls on or after the first
to occur of the following dates: (a) the date of the Recipient's
Termination of Employment for any reason; (b) the date of a Triggering
Event; or (c) June 2, 1998; or
(b) no shares of Performance Stock shall be issuable pursuant
to Section 1.3 above (1) if a Triggering Event described in Section
3.11(j)(i) or 3.11(j)(ii) occurs after May 31, 1998 or (2) if a
Triggering Event described in Section 3.11(j)(iii) occurs after November
30, 1998.
3.15 Stockholder Approval. If the stockholders of the Company fail to
approve the grant of the Performance Stock rights evidenced by this Agreement
within six (6) months hereof, the grant of such rights shall be deemed null
and void.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
on the day and year first set forth above.
MORRISON RESTAURANTS INC.
By: /s/ E. E. Bishop
Title: Chairman of the Board
ATTEST:
/s/ Pfilip G. Hunt
Title: Senior Vice President,
General Counsel & Secretary
/s/ Samuel E. Beall, III (SEAL)
SAMUEL E. BEALL, III
May 20, 1994
Mr. Joseph Byrum
4272 Bit & Spur Road
Mobile, Alabama 36608
Via Hand Delivery
Dear Joe:
This confirms the terms of the agreement which you and I have reached
concerning your employment status following numerous discussions over the past
two months or more.
This letter, together with the Offer/Agreement and Waiver of Rights contained
herein, represents a proposed employment and benefits package covering your
status with Morrison Restaurants Inc. (the "Company"). Upon your acceptance,
both of us will acknowledge our agreement with the terms and conditions
specified in the Offer/ Agreement (the "Offer/Agreement") and Waiver of Rights
(the "Waiver") set forth in this letter (the Offer/Agreement and Waiver
collectively referred to herein as the "Agreement").
In consideration of the terms and conditions contained in this Agreement, you
and the Company agree as follows:
OFFER/AGREEMENT
This Offer/Agreement constitutes an offer to you by the Company, its
affiliates and subsidiaries. It is important that you read and understand the
terms of this Offer/Agreement in full and that if you decide to sign it, that
you do so knowingly and voluntarily. To enable you to do that, we suggest
that you consult with an attorney about this Offer/Agreement and your rights
before signing it. You will not, however, waive or give up any rights or
claims you may have against the Company that may arise after the date that you
sign this Offer/Agreement.
The Company's offer that is described in this Offer/Agreement will remain open
and effective for twenty-one (21) days from May 20, 1994, the "Effective Date"
of the Offer/Agreement. You have ample time to elect to accept or reject this
offer within that time period. If you decide to sign the Offer/Agreement and
waive your rights against the Company, you will have seven (7) days following
the signing and return of the signed Offer/ Agreement to change your mind and
revoke the Offer/Agreement. In other words, the Offer/Agreement will not be
in effect until seven (7) days have passed following your signing.
CONSIDERATION
In consideration of the terms and conditions contained in this
Offer/Agreement, you and the Company agree as follows:
A. General Severance Factors
1. You are aware that the Company is trying to locate a purchaser for
the Business and Industry (Education) assets of the Morrison Hospitality
Group ("B&I"). Accordingly, this Offer/Agreement is conditioned on your
positive participation, efforts and role in: (i) a smooth transition to
the purchaser, (ii) continuing to motivate employees of B&I, (iii)
acting as a positive influence and positive force on the B&I team, and
(iv) continuing to generate earnings in accordance with your B&I
strategic and financial plan (all such factors hereinafter collectively
referred to as the "Smooth Transition"). The Offer/Agreement is
voidable by the Company upon your failure to carry out your
responsibilities for the Smooth Transition.
2. You will remain on the Company's payroll and in the event your
status as a management employee of the Company is involuntarily
terminated by the Company at any time within twelve (12) months from the
date of this letter, then the Company will continue to employ you and
to pay your then current base salary from the date of termination of
that status for twelve (12) months, payable bi-weekly, plus a prorated
bonus to the date of the involuntary termination of your status as a
management employee, provided your strategic and financial plan earnings
for B&I have been met through the date of involuntary termination. The
1-year guarantee of base salary and prorated bonus are hereinafter
referred to as the "1-Year Compensation Guarantee". No 1-Year
Compensation Guarantee will be paid if you remain a management employee
of the Company for the twelve (12) months following the date of this
letter. You will not be eligible for any future bonuses other than the
bonus referenced in this Section 2.
3. Following the later of the end of either continuation of your
employment status as a management employee of the Company covering the
twelve (12) months from the date of this letter or the period of the 1-
Year Compensation Guarantee, you will remain employed by the Company to
age 55 (the "Bridge Period"), with an annual salary during the Bridge
Period, payable bi-weekly, being paid to you equal to the annual
retirement payment amount which you would receive based on the
retirement option you will be eligible for at age 55. In consideration
of said salary, you shall provide consulting or other mutually agreed
upon services during the Bridge Period. You will notify us 90 days
before commencement of the Bridge Period of the retirement option that
you will select at age 55, and the retirement option selected will not
be changed. Your retirement plan calculations will be based on the
Executive Supplemental Pension Plan (the "ESP") formula and will be
determined by your current base salary as of the commencement of the
Bridge Period.
4. Except as otherwise provided in this Paragraph 4, as an employee of
the Company during the Bridge Period, you will be entitled to group
medical, life and disability benefits which are made available from time
to time to similarly situated employees. Also, since you will continue
to be an employee to age 55, you will be entitled to any medical
insurance benefits at age 55 which similarly situated employees are then
entitled to who retire or terminate employment at that age.
Effective as of the day immediately prior to the commencement of the
Bridge Period (the "Conversion Date"), your participation in the
Morrison Restaurants Inc. Executive Life Insurance Plan (the "ELIP")
will cease; provided, however, that the terms of the Split Dollar
Agreement, dated as of January 1, 1994, between you and the Company (the
"Split Dollar Agreement"), are hereby modified effective as of the day
immediately following the Conversion Date, as follows: (1)
notwithstanding existing Sections III and and Section IV of the Split
Dollar Agreement, premium payments and bonus payments by the Company
shall continue during the Bridge Period notwithstanding the cessation
of your participation in the ELIP; (2) notwithstanding existing Section
VI of the Split Dollar Agreement, the death benefit payable to your
designated beneficiary shall be four times your annual salary earned
during the Bridge Period, rounded to the next highest $1,000 and reduced
by any death benefit payable under any Company-provided group term life
insurance coverage; and (3) notwithstanding existing Section VII of the
Split Dollar Agreement, the Split Dollar Agreement, as so modified,
shall terminate on the last day of the Bridge Period. As of the day
immediately following the Conversion Date, the provisions of the Split
Dollar Agreement not specifically modified hereby shall be construed by
the parties in a manner consistent with the intent reflected by the
foregoing modifications.
5. Your employee's share of medical insurance premium payments due the
Company will be deducted from your bi-weekly salary.
6. Your Fiscal 1994 bonus will be based on actual.
7. You have the option of either returning to the Company or purchasing
any Company automobile driven by you. If you elect to purchase, you may
do so at the Hospitality Group's net book value as of the date that you
cease management employee status.
8. All of your Stock Options which by the terms of their plan documents
would otherwise expire upon a termination or change of your employment
status with the Company will remain exercisable as you will remain an
employee of the Company through the expiration of the Bridge Period and
may be exercised when such Stock Options become exercisable under the
terms of their plans. See Exhibit A for a listing of your stock
options. Stock Options not exercised by their expiration date under the
terms of their respective plans will automatically terminate. You will
be subject to exercising the Stock Options as an employee of the Company
and will be still fully subject to all the terms and conditions of such
plans which are not in conflict with the exercise privilege extended to
you under this Agreement. You will not be eligible for any stock
options other than those listed on Exhibit A.
9. In return for the consideration paid you pursuant to the terms of
this Offer/Agreement, you will sign a non-competition agreement in which
you will recognize and agree: (i) that you have established significant
contacts and personal relationships dealing with the goodwill of the
Company in the geographical area served by the B&I business being sold
and the Company's health care business, and (ii) that you would develop
numerous new contacts with potential B&I and health care customers and
potential contracts in the future. Therefore, you will agree that for
a period of three (3) years from the Effective Date of this
Offer/Agreement you will not, in the continental United States, compete
with the Company, its successors and assigns, in the health care field.
Additionally, you will also agree as a covenant and condition running
in favor of the Company and any third party purchaser of B&I that for
a period of three (3) years from the Effective Date of this
Offer/Agreement you will not compete with such third party purchaser in
the B&I field.
10. Following termination of your employment status with the Company,
we agree to provide you with information covering your health insurance
entitlements under COBRA and other employee benefits at termination.
You will hear directly from the appropriate Company Benefits/Insurance
Plan Administrator, explaining these matters at that time.
11. All compensation payments to you will be subject to applicable
payroll deductions.
12. The Company acknowledges that you shall be indemnified by the
Company against expenses, judgments, fines and amounts paid in
settlement incurred in connection with threatened, pending or completed
actions, suits or proceedings regarding the services you have rendered
or may render as an employee of the Company, but only to the extent
indemnification would be permitted by the indemnification provisions of
Article XII of the By-Laws of the Company, as the same may be amended
from time to time hereafter.
B. Divestiture Incentive Program
1. In further consideration of your remaining with the Company and
assisting the Company in effecting a closing of a transaction with a
third party to purchase the assets of B&I and your participation, role
and efforts in a Smooth Transition through the closing of the sale, the
Company will pay you a commission as described in the chart set forth
below on a sale by the Company of the B&I assets occurring on or before
September 30, 1994. If the Company's net pre-tax sales price, including
the full effect or charge due to cancellation and cessation of the
grocery retail food service business, is:
At least $75 million Commission of $100,000
but less than $80 million
At least $80 million Commission of $200,000
but less than $85 million
At least $85 million Commission of $300,000
but less than $90 million
At least $90 million Commission of $400,000
but less than $95 million
At least $95 million Commission of $500,000
The "net pre-tax sales price", is defined as the gross amount of the
purchase price of the B&I assets in the purchase contract, less the full
effect or charge due to cancellation and cessation of the grocery retail
food service business, and costs of the sale (including, but not limited
to, legal, accounting, investment brokers, and Company employee
severance packages).
2. Any commissions earned by you on this transaction will be paid by
a setoff by the Company of the last installments of your purchase of the
Morrison-Crothall stock described below.
C. Morrison-Crothall Sale
1. In accordance with, and subject to, the more detailed terms and
conditions of a definitive acquisition agreement between you, the
Company and appropriate representatives of Crothall, the Company, upon
the written approval of the appropriate representatives of Crothall,
will sell you its interest in Morrison-Crothall stock for $400,000 (the
"Crothall Purchase Price"). The Morrison-Crothall stock sale would be
scheduled to close as soon as possible, but in no event no later than
the end of the Company's Fiscal 1994. The Crothall Purchase Price shall
accrue interest at the annual rate of 8%, beginning at the date of
closing of such sale. Payment of the Crothall Purchase Price, and
interest thereon, shall be delayed until a date one year following the
closing date of such sale at which time you shall, 1) pay all interest
accrued during the prior year on the outstanding principal ($32,000),
and 2) beginning at the end of each quarter thereafter until paid in
full, make equal quarterly payments of $50,000 ($200,000 annually), plus
interest thereon as stated above. The Crothall Purchase Price and all
notes and accounts receivables due the Company from Crothall will be
evidenced by a promissory note executed by you. Such promissory note
will be credited with any payments made by Crothall of notes and
accounts receivables outstanding which are applicable to your promissory
note. A definitive agreement will be entered into reflecting this
arrangement, together with such other terms reasonably necessary to
cause the Company to be relieved of any liability including, but not
limited to, liability created by performance or other bonds and letters
of credit given by Morrison for the benefit of Morrison-Crothall, with
respect to its relationship with Morrison-Crothall. If you fail to
timely make any payment due under your promissory note, you will
undertake a cashless exercise of all options for Company stock granted
during your term of employment as they first become exercisable in such
amounts necessary to make such past due payments and, you further agree
that any pre-tax cash resulting from a cashless exercise of those
options will be applied to the past due sums under your promissory note.
In addition, the Crothall Purchase Price and promissory note executed
by you will be secured and guaranteed with 11,147 shares of Company
stock which you and/or your spouse own, evidenced with an appropriate
Stock Pledge/Guaranty & Collateral Assignment. You represent to the
Company that the number of shares set forth above is all Company stock
which you and/or your spouse own and which is not otherwise incumbered
as of the date of this Offer/Agreement.
D. General
1. Aside from the amounts to which you are entitled under the terms of
this Offer/Agreement, you acknowledge that you have received any and all
compensation and remuneration of any kind and character, including, but
not limited to, salary, bonuses, vacation, stock options and severance
pay, which you may be entitled to receive from the Company at any time
now or in the future. Specifically, this Offer/Agreement is in lieu of
any severance pay.
2. There are no other promises, agreements or understandings between
you and the Company, and it is the intent of this Offer/Agreement that
it embody any and all promises, agreements and understandings between
yourself and the Company. No changes or modifications may be made in
the terms stated in this Offer/Agreement unless made in writing and
signed by yourself and an authorized representative of the Company.
This Offer/Agreement will inure to the benefit of, and will be binding
on both parties, and their personal representatives, heirs, successors
and assigns.
3. If you decide to accept the Company's offer under this
Offer/Agreement, please sign within twenty-one (21) days and return the
Agreement and the Waiver to me, the undersigned Company Representative.
By signing this Agreement on behalf of the Company, I am indicating the
Company's intent to make you this offer and to be bound by its offer.
If there are any questions which need clarification, please let me know
immediately in order that we can discuss and resolve them.
4. The Company's offer under this Offer/Agreement will be left open
until June 10, 1994. If you have not executed this Offer/Agreement on
or before the close of business on June 10, 1994, then the Company's
offer is withdrawn.
5. It is understood and agreed that if any provision or part of this
Offer/Agreement is found to be unenforceable, illegal, or inoperable,
such provision or part shall be severed, and all remaining provisions
and parts of this Offer/Agreement shall remain fully valid and
enforceable.
Please let me know if you have any further questions.
Sincerely,
/s/ Samuel E. Beall, III
S. E. Beall, III
President and Chief Executive
Officer
Offer/Settlement acknowledged and accepted:
/s/ Joseph Byrum
Joseph Byrum
Date Signed: May 23, 1994
<PAGE>
WAIVER OF RIGHTS
I, Joseph Byrum, knowingly and voluntarily, agree to waive, settle,
release and discharge Morrison Restaurants Inc. (the "Company") from any and
all claims, demands, damages, actions or causes of action, including any
claims for attorneys' fees which I have against the Company, its subsidiaries,
and affiliates, and the officers, directors, employees and agents of each of
them arising out of or relating to my employment with the Company or the
change in status relating to my employment with the Company under the terms
of the Offer/Agreement executed by myself and containing an Effective Date of
May 20, 1994. I understand this Waiver of Rights includes any claims I may
have arising under any Federal, state or local laws, ordinances or regulations
pertaining to discrimination on the basis of sex, race, color, religion,
creed, national origin, age or handicap status and particularly any rights I
may have pursuant to the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964 and
1991, or relating to my employment with the Company or termination of my
employment with the Company under terms of the Offer/Agreement executed by
myself and containing an Effective Date of May 20, 1994.
I acknowledge and understand that I waive my right to file suit for any
claim I may have under the laws and the statutes named in the paragraph above.
I further waive my right to claim or receive damages as a result of any charge
of discrimination which may be filed by me or anyone acting on my behalf.
I UNDERSTAND, ACKNOWLEDGE AND AGREE TO THE TERMS OF THIS AGREEMENT, THIS
23rd DAY OF May, 1994.
/s/ Joseph Byrum
Joseph Byrum
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made and entered into this 3rd day of
June, 1994 by and among Custom Management Corporation, a Pennsylvania
corporation ("Seller"), and Joe B. Byrum ("Purchaser").
WITNESSETH:
WHEREAS, Seller owns approximately 35% of the outstanding shares of the
common stock, $.01 par value per share, of Morrison-Crothall Support Services,
Inc., a Delaware corporation ("Crothall"); and
WHEREAS, Seller desires to sell such shares to Purchaser and Purchaser
desires to purchase such shares on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth below and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
The following terms used in this Agreement shall have the meaning set
forth below:
Section 1.1The "Act" shall mean the Securities Act of 1933, as amended.
Section 1.2"Amendment to License Agreement" shall mean that certain
Amendment to License Agreement in the form of Exhibit A.
Section 1.3"Amendment to Stockholders Restrictive Transfer Agreement"
shall mean that certain Amendment to Stockholders Restrictive Transfer
Agreement in the form of Exhibit B.
Section 1.4"Amendment to Stockholders Voting Agreement" shall mean that
certain Amendment to Stockholders Voting Agreement in the form of Exhibit C.
Section 1.5"Closing" shall have the meaning set forth in Section 3.1
herein.
Section 1.6"Common Stock" shall mean the outstanding shares of voting
common stock, one cent ($.01) par value, of Crothall.
Section 1.7"Consent" shall mean the consent of the stockholders of
Crothall to the transfer of the Shares to Byrum in the form of Exhibit D.
Section 1.8"Guarantee" shall mean that certain Guarantee in the form
of Exhibit E.
Section 1.9"License Agreement" shall mean that certain License
Agreement dated October 1, 1991 between Morrison and Crothall.
Section 1.10 "Loan Agreement" shall mean that certain Loan and
Security Agreement dated October 1, 1991 between Seller and Crothall.
Section 1.11 "Morrison" shall mean Morrison Restaurants Inc.
(formerly Morrison Incorporated)
Section 1.12 "Note" shall mean the Note in the form attached hereto
as Exhibit F.
Section 1.13 "Option Agreement" shall mean that certain Option
Agreement in the form of Exhibit G.
Section 1.14 "Options" shall mean those certain options granted to
Morrison to purchase 500 shares of common stock of Crothall at a price of $600
per share, which options are exercisable at any time after October 1, 1997.
Section 1.15 "Service and Earnout Agreement" shall mean that
certain Service and Earnout Agreement dated October 1, 1991 between Seller and
Crothall.
Section 1.16 "Shares" shall mean the three thousand nine hundred
and seventeen (3,917) shares of Common Stock owned by Seller.
Section 1.17 "Stock Pledge Agreement" shall mean that certain Stock
Pledge Agreement in the form of Exhibit H.
Section 1.18 "Stockholders Restrictive Transfer Agreement" shall
mean that certain Stockholders Restrictive Transfer Agreement dated October 1,
1991 between Seller, Graeme Crothall, Sunnycrest, Inc., Stephen Barnett,
Christopher Coyne, Edward MacGrath, Gregory Coyne, Lyndon Taylor, John
Gianotti, Michael Bailey, Scott Davenport and Crothall.
Section 1.19 "Stockholder Voting Rights Agreement" shall mean that
certain Stockholder Voting Rights Agreement between Seller, Graeme Crothall,
Sunnycrest, Inc., Stephen Barnett, Christopher Coyne, Edward MacGrath, Gregory
Coyne, Lyndon Taylor, John Gianotti, Michael Bailey, and Scott Davenport.
Section 1.20 "Termination of Service and Earnout Agreement" shall
mean that certain Termination of Service and Earnout Agreement in the form of
Exhibit I.
Section 1.21 "Waiver and Amendment" shall mean that certain Waiver
and Amendment to the Loan Agreement in the form of Exhibit J.
ARTICLE 2
PURCHASE AND SALE OF SHARES
Section 2.1Purchase and Sale of Shares. At the Closing, subject to the
terms and conditions herein set forth, Seller shall sell to Purchaser and
Purchaser shall purchase from Seller the Shares and the Options. Seller shall
transfer all of its right, title and interest in and to the Shares and the
Options to Purchaser free and clear of any lien, security interest, or other
encumbrance of any nature and free of any claim by any person or entity to or
against the Shares or the Options, subject, however, in the case of the
Options, to the terms of the Stockholders Restrictive Transfer Agreement.
Section 2.2Purchase Price. The purchase price for the Shares shall be
Four Hundred Thousand Dollars ($400,000.00).
Section 2.3Payment of Purchase Price. As payment for the Shares,
Purchaser shall execute and deliver the Note at Closing to Seller.
ARTICLE 3
CLOSING
Section 3.1Closing. The Closing shall take place at 10:00 a.m., local
time, on the date hereof, at the offices of Seller in Mobile, Alabama.
Section 3.2Items To Be Delivered by Seller. At the Closing and subject
to the terms and conditions contained herein, Seller shall deliver to
Purchaser the following executed by Seller:
(a) stock certificates evidencing the Shares, together with a
stock power duly endorsed by Seller;
(b) the Waiver and Amendment to the Loan Agreement;
(c) the Amendment to the Stockholders Voting Agreement;
(d) the Amendment to the Stockholders Restrictive Transfer
Agreement; and
(e) the Option Agreement.
All of the above-mentioned documents shall be in form and substance
satisfactory to Purchaser and his counsel.
Section 3.3Items to be Delivered by Purchaser. At the Closing and
subject to the terms and conditions contained herein, Purchaser shall deliver
to Seller the following, executed by Purchaser:
(a) the Note;
(b) the Guarantee;
(c) the Stock Pledge Agreement together with stock certificates
(for the Shares and 11,157 shares of Morrison stock) and stock powers
endorsed in blank;
(d) the Amendment to the Stockholders Voting Agreement; and
(e) the Option Agreement.
All of the above-mentioned documents shall be in form and substance
satisfactory to Seller and its counsel.
Section 3.4Additional Documents. It shall be a condition to Seller's
obligation to close that Seller or Morrison shall have received the following
documents, executed by Crothall:
(a) the Amendment to License Agreement;
(b) the Waiver and Amendment to the Loan Agreement; and
(c) the Termination of the Service and Earnout Agreement;
and the following documents, executed by all other parties thereto:
(a) the Amendment to Stockholders Restrictive Transfer
Agreement;
(b) the Amendment to the Stockholders Voting Agreement; and
(c) the Consent.
Section 3.5Post Closing Deliveries. Purchaser shall cause the Loan
Note to be executed by Crothall and delivered to Seller within _2_ weeks of
the Closing, which shall reflect all accounts receivable, royalties or other
obligations owed by Crothall to Seller under the Loan Agreement as of June 4,
1994.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 4.1Ownership of Shares. Seller is the sole record and
beneficial owner of all of the issued and outstanding Shares, and it has good
and valid title to such Shares free and clear of any lien, security interest
or encumbrance of any nature and free of any claim by any person to or against
such Shares. Seller has the full right, power and authority to sell, assign,
transfer and carry the Shares to Purchaser as provided herein.
Section 4.2Authorization, Validity and Enforceability. This Agreement
has been duly authorized by all necessary corporate action of Seller. This
Agreement constitutes the valid and binding obligation of Seller, enforceable
in accordance with its terms, and the execution, delivery and performance of
this Agreement will not violate or result in default under any provision of
any material commitment, agreement or instrument to which the Seller is a
party or by which the Seller is bound and will not contravene any law, rule
or regulation of any administrative agency or governmental body, or any order,
writ, injunction or decree of any court, administrative agency or governmental
agency applicable to the Seller.
Section 4.3Litigation. There are no proceedings pending or threatened,
and there is no order, writ, judgment or decree affecting the Seller which,
if adversely determined, would have a material adverse effect on the
transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 5.1Validity and Enforceability. This Agreement, constitutes
the valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, and the execution, delivery and performance of this Agreement
will not violate or result in default under any provisions of any material
commitment, agreement or instrument to which the Purchaser is a party or by
which the Purchaser is bound, and will not contravene any law, rule or
regulation of any administrative agency or governmental body or any order,
writ, injunction or decree of any court, administrative agency or governmental
agency applicable to Purchaser.
Section 5.2Litigation. There are no proceedings pending or threatened,
and there is no order, writ, judgment or decree affecting the Purchaser,
which, if adversely determined, would have a material adverse effect on the
transactions contemplated hereby.
Section 5.3Shares for Investment. Purchaser is receiving the Shares
delivered pursuant to this Agreement for investment purposes for his own
account, and not with the view to or in connection with any distribution
thereof.
Section 5.4Registration of Shares. Purchaser understands and agrees
that transfer of the Shares has not been registered under the Act or any other
securities statute or regulation of any state of the United States, or with
any agency regulating the sale of securities of any state, or any other
federal or state authority, nor has any official charged with the
administration of federal or any state securities laws reviewed this Agreement
or passed on or endorsed the merits of the transactions contemplated by this
Agreement. Purchaser understands and agrees that the Shares are being
delivered to Purchaser pursuant to the exemptions contained in the Act and
applicable state law exemptions.
Section 5.5Transfer of Shares. Purchaser understands and agrees that
it may not sell, assign or otherwise transfer any Shares unless those Shares
are registered under the Act and applicable state securities laws, or
exemptions from such registration requirements are available or such
requirements are not applicable. Purchaser also agrees not to transfer any
Shares unless, in the opinion of counsel to Purchaser reasonably acceptable
to Seller, such exemptions from registration are available and the transfer
otherwise complies with all applicable laws.
Section 5.6Investigation. Purchaser has been afforded access to all
business and financial information and records of Crothall, the opportunity
to ask questions of, and receive answers from, the officers and other
employees of Crothall relating to all aspects of Crothall and their business,
and otherwise to obtain from Crothall any and all information necessary to
verify the accuracy of any and all information with respect to Crothall.
Purchaser has relied solely on information obtained by it from such
investigation, and has not relied on information received by it from any other
source (including Seller), in making the investment represented by the
purchase of Shares under this Agreement. Purchaser has not looked to Seller
for or received from Seller any information in making such investment.
Section 5.7Accredited Investor. Purchaser represents and warrants that
he is an "accredited investor", as that term is defined in Rule 501(a) under
the Act and that he has such knowledge and experience in financial matters
making him capable of evaluating the merits and risks of the purchase of
Shares upon the terms of this Agreement.
Section 5.8Market for Shares. Purchaser understands and agrees that
there is no public market for the Shares and that the Shares represent an
illiquid unresolvement that must be held for an indefinite period.
ARTICLE 6
MISCELLANEOUS
Section 6.1Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the sale and delivery of the Shares pursuant
hereto. The foregoing provisions with regard to the survival of the
warranties and representations of the parties in this Agreement is meant only
to establish the period of time within which a claim for breach of such
warranties and representations may be brought, and is not intended to extend
the applicability of such warranties and representations to events or
circumstances which may occur after the Closing date.
Section 6.2Expenses. Each party hereto shall pay its own expenses in
connection with the transactions contemplated hereby.
Section 6.3Notices. All notices, requests, consents, or other
communication hereunder shall be in writing and shall be delivered personally
or by courier or mailed by first class registered or certified mail, postage
prepaid, as follows:
If to Seller: Custom Management Corporation
c/o Morrison Restaurants Inc.
4721 Morrison Drive
Mobile, Alabama 36609
(205) 344-3000
Attention: Pfilip G. Hunt, Esq.
with a required copy to: Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 572-6600
Attention: Thomas R. McNeill
If to Purchaser: Joe B. Byrum
4272 Bit & Spur Road #33
Mobile, Alabama 36608
( )
with a required copy to:
( )
Section 6.4Captions and Section Headings. As used herein, captions and
section headings are for convenience only and are not a part of this Agreement
and shall not be used in construing it.
Section 6.5Entire Agreement. This Agreement and the other documents
delivered pursuant hereto and thereto, or incorporated by reference herein,
contain the entire agreement between the parties hereto concerning the
transactions contemplated herein and supersede all prior agreements or
understandings between the parties hereto relating to the subject matter
hereof.
Section 6.6Additional Documents. The parties hereto will, at any time
after the date hereof, sign, execute and deliver, or cause others so to do,
all such powers of attorney, deeds, assignments, documents and instruments and
do or cause to be done all such other acts and deeds as may be necessary or
proper to carry out the transactions contemplated by this Agreement.
Section 6.7Amendment. This Agreement may be amended, supplemented or
interpreted at any time, but only by a written agreement executed by the
parties hereto.
Section 6.8Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 6.9Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each
party waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.
Section 6.10 Governing Law. This Agreement shall be governed by
the laws of the State of Alabama.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SELLER:
CUSTOM MANAGEMENT CORPORATION
/s/ J. Russell Mothershed
By: J. Russell Mothershed
Its: Senior Vice President Finance
PURCHASER:
/s/ Joe B. Byrum
Joe B. Byrum
22680629
PROMISSORY NOTE
$400,000.00 June 3, 1994
FOR VALUE RECEIVED, the undersigned, Joe B. Byrum ("Maker"), promises
to pay to the order of Custom Management Corporation, a Pennsylvania
corporation (herein, along with each subsequent holder of this Note, referred
to as the "Holder"), the principal sum of FOUR HUNDRED THOUSAND DOLLARS
($400,000.00), with interest on the outstanding principal balance of this Note
from the date hereof until fully paid at a simple interest rate of eight
percent (8%) per annum, as hereinafter provided.
This Note shall be paid as follows:
(a) On the first anniversary of this Note, Maker shall pay to
Holder all interest accrued during the prior year on the outstanding
principal balance of this Note; and
(b) At the end of the first quarter following the first
anniversary of this Note, and at the end of each subsequent quarter,
Maker shall pay to Holder an amount equal to fifty thousand dollars
($50,000.00), plus all interest accrued on the outstanding principal
balance of this Note at such time, until this Note has been paid in
full.
Should any installment of principal or interest not be paid when due,
the Holder shall have the right to declare the unpaid principal of and
interest on this Note to be forthwith due and payable. Any payment of
principal or interest which is not paid when due shall bear interest until
paid at a simple interest rate equal to twelve percent (12%) per annum;
provided, however, that delinquent installments of interest shall not bear
interest if and to the extent prohibited by applicable law.
The principal hereof and interest hereon shall be payable in lawful
money of the United States of America, at the Holder's principal office in
Mobile, Alabama, or at such other place as the Holder hereof may designate in
writing to Maker. The Maker may prepay this Note in full or in part at any
time without notice, penalty, prepayment fee, or payment of unearned interest.
All payments hereunder received from Maker by the Holder shall be applied
first to interest to the extent then accrued and then to principal, in inverse
order of maturity.
This Note has been delivered pursuant to that certain Stock Purchase
Agreement between Maker and Holder of even date herewith and is secured by a
Stock Pledge Agreement of even date herewith executed by Maker in favor of the
Holder and Morrison Restaurants Inc. and granting a security interest in
certain capital stock of Morrison Restaurants Inc., a Delaware corporation,
and of Morrison Crothall Support Services, Inc., a Delaware corporation, owned
by Maker.
All parties liable for the payment of this Note agree to pay the Holder
hereof reasonable attorneys' fees for the services of counsel employed to
collect this Note, whether or not suit be brought, and whether incurred in
connection with collection, trial, appeal, or otherwise, and to indemnify and
hold the Holder harmless against liability for the payment of state
intangible, documentary and recording taxes, and other taxes (including
interest and penalties, if any) which may be determined to be payable with
respect to this transaction.
In no event shall the amount of interest due or payable hereunder exceed
the maximum rate of interest allowed by applicable law, and in the event any
such payment is inadvertently paid by Maker or inadvertently received by the
Holder, then such excess sum shall be credited as a payment of principal,
unless Maker shall notify the Holder, in writing, that Maker elects to have
such excess sum returned to it forthwith. It is the express intent hereof
that Maker not pay and the Holder not receive, directly or indirectly, in any
manner whatsoever, interest in excess of that which may be lawfully paid by
the Maker under applicable law.
The remedies of the Holder as provided herein and in any other documents
governing or securing repayment hereof shall be cumulative and concurrent and
may be pursued singly, successively, or together, at the sole discretion of
the Holder, and may be exercised as often as occasion therefor shall arise.
No act of omission or commission of the Holder, including specifically
any failure to exercise any right, remedy, or recourse, shall be effective
unless set forth in a written document executed by the Holder, and then only
to the extent specifically recited therein. A waiver or release with
reference to one event shall not be construed as continuing, as a bar to, or
as a waiver or release of any subsequent right, remedy, or recourse as to any
subsequent event.
Maker and all sureties, endorsers, and guarantors of this Note hereby
(a) waive demand, presentment of payment, notice of nonpayment, protest,
notice of protest and all other notice, filing of suit, and diligence in
collecting this Note, or in enforcing any of its rights under any guaranties
securing the repayment hereof; (b) agree to any substitution, addition, or
release of any collateral or any party or person primarily or secondarily
liable hereon; (c) agree that the Holder shall not be required first to
institute any suit, or to exhaust his/her, their, or its remedies against
Maker or any other person or party to become liable hereunder, or against any
collateral in order to enforce payment of this Note; (d) consent to any
extension, rearrangement, renewal, or postponement of time of payment of this
Note and to any other indulgence with respect hereto without notice, consent,
or consideration to any of them; and (e) agree that, notwithstanding the
occurrence of any of the foregoing (except with the express written release
by the Holder or any such person), they shall be and remain jointly and
severally, directly and primarily, liable for all sums due under this Note.
Maker and all endorsers or other parties to this Note severally waive,
each for himself/herself and family, to the maximum extent permitted by
applicable law, any and all homestead and exemption rights which any of them
or the family of any of them may have under or by virtue of the Constitution
or laws of the United States of America or of any state as against this Note,
any renewal hereof, or any indebtedness represented hereby.
Whenever used in this Note, the words "Maker" and "Holder" shall be
deemed to include Maker and the Holder named in the opening paragraph of this
Note, and their respective heirs, executors, administrators, legal
representatives, successors, and assigns. It is expressly understood and
agreed that the Holder shall never be construed for any purpose as a partner,
joint venturer, co-principal, or associate of Maker, or of any person or party
claiming by, through, or under Maker in the conduct of their respective
businesses.
Time is of the essence of this Note.
This Note shall be construed and enforced in accordance with the laws
of the State of Alabama.
The pronouns used herein shall include, when appropriate, either gender
and both singular and plural, and the grammatical construction of sentences
shall conform thereto.
All references herein to any document, instrument, or agreement shall
be deemed to refer to such document, instrument, or agreement as the same may
be amended, modified, restated, supplemented, or replaced from time to time.
IN WITNESS WHEREOF, the undersigned Maker has executed this instrument
under seal as of the day and year first above written.
MAKER:
/s/ Joe B. Byrum (SEAL)
Joe B. Byrum
22680627
GUARANTEE
THIS GUARANTEE is entered into this 3rd day of June, 1994, by Joe B.
Byrum (the "Guarantor") in favor of Morrison Restaurants Inc., a Delaware
corporation ("Morrison") and its wholly-owned subsidiary, Custom Management
Corporation, a Pennsylvania corporation ("CMC").
W I T N E S S E T H:
WHEREAS, CMC and the Guarantor have entered into that certain Stock
Purchase Agreement dated the date hereof (the "Agreement") for the sale of
three thousand nine hundred and seventeen (3,917) shares of common stock of
Morrison Crothall Support Services, Inc. ("Crothall");
WHEREAS, as a condition to the Agreement, Crothall executed and
delivered to CMC that certain Indemnity Agreement dated May 18, 1994 in favor
of CMC (the "Indemnity Agreement");
WHEREAS, Crothall and CMC are parties to that certain Loan and Security
Agreement dated October 1, 1991, pursuant to which Crothall currently owes CMC
approximately $2.5 million (the "Loan Agreement"); and
WHEREAS, in connection with the Agreement, the Guarantor has agreed to
guarantee all obligations, financial or otherwise, of Crothall to CMC or
Morrison, however incurred or evidenced, whether absolute or contingent,
direct or indirect, now existing or hereafter arising or due or to become due,
including, but not limited to, Crothall's obligations under the Indemnity
Agreement and the Loan Agreement (hereinafter, all of the foregoing
obligations of Crothall being referred to as the "Obligations");
NOW, THEREFORE, in consideration of the above premises, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned Guarantor does hereby unconditionally guarantee
to CMC and Morrison that Crothall will fully and promptly perform, pay and
discharge all present and future obligations of Crothall to CMC or Morrison
with respect to the Obligations and does further unconditionally guarantee to
CMC and Morrison the prompt payment when due of any and all Obligations. The
obligations of the undersigned with respect to the Obligations shall not be
diminished by any right or power of any third party to assert any claim of
defense as to the invalidity or unenforceability of any such Obligations, and
no such claim or defense shall impair or affect the obligations of the
undersigned hereunder. The undersigned does further agree, without CMC or
Morrison first having to proceed against Crothall or to liquidate any security
therefor, to pay on demand (i) all sums due and to become due CMC or Morrison
from Crothall with respect to the Obligations and (ii) all costs, attorneys'
fees or expenses which may be suffered or incurred by CMC or Morrison by
reason of a default by Crothall or the undersigned, in the payment or
performance of the Obligations or in enforcing the obligations of the
undersigned hereunder.
The undersigned agrees that the liability assumed hereunder is primary,
direct, unconditional and enforceable without prior resort to Crothall, and
it shall not be affected by any forbearance, extension of the time of payment,
settlement, composition, release, waiver or modification, express or implied,
of any of the Obligations hereby guaranteed, made by or entered into by CMC
or Morrison with Crothall or with the undersigned or with any other person,
form or corporation, or by any release, substitution or alteration of, or
failure to obtain or perfect interest in, any security therefor permitted by
CMC or Morrison. It is fully understood by the undersigned that until each
and every one of the covenants and agreements of this Guarantee is fully
performed, the undersigned's undertakings hereunder shall not be released, in
whole or in part, by any action or thing which might, but for this provision
of this Guarantee, be deemed a legal or equitable discharge of a surety or
guarantor, or by reason of any waiver, extension, modification, forbearance
or delay or other act or omission of CMC or Morrison or their failure to
proceed promptly or otherwise, or by reason of any action taken or omitted by
CMC or Morrison, whether or not such action or failure to act varies or
increases the risk of, or affects the rights or remedies of the undersigned,
or by reason of any further dealing among Crothall and CMC or Morrison, and
the undersigned hereby expressly waives and surrenders any defense to the
performance of the undertakings of the undersigned based upon any of the
foregoing acts, omissions, agreements or waivers of any of them; it being the
purpose and the intent of the parties hereto that the covenants, agreements
and all undertakings hereunder are absolute, unconditional and irrevocable
under any and all circumstances.
This Guarantee is intended to be, and it is a continuing Guarantee and
shall continue in force until all principal, interest and other amounts due
in respect of the Obligations have been paid in full and all obligations
hereunder have been performed. This Guarantee shall continue in full force
and effect and shall not be affected by the dissolution, termination, winding
up or other discontinuation of Crothall or other disposition of all or
substantially all of the assets of Crothall, the marshaling of assets and
liabilities of Crothall, or the receivership, bankruptcy, insolvency,
reorganization, arrangement, composition with creditors or readjustment of,
or other similar proceedings affecting, Crothall or any of its assets. The
liability of the undersigned shall be reinstated and revived, and the rights
of CMC and Morrison shall continue, with respect to any amount at any time
paid on account of the indebtedness guaranteed hereby, which shall thereafter
be required to be restored or returned by CMC or Morrison upon the bankruptcy,
insolvency or reorganization of Crothall or otherwise, all as though such
amount had not been paid.
The undersigned expressly waives notice of acceptance hereof and of
presentment, demand, notice of intent to accelerate and of acceleration,
protest as to the Obligations, and the undersigned waives all defenses,
setoffs and counterclaims and waives notice of amendment or modification of
the Obligations. Until the Obligations have been paid or performed in full,
the undersigned expressly waives all rights of subrogation and all rights to
enforce any remedy which CMC or Morrison now has or may hereafter have against
Crothall, and waives any benefit of and any right to participate in any
security now or hereafter held by CMC or Morrison. CMC or Morrison may,
without notice to the undersigned, renew or extend any obligations of
Crothall, may accept partial payments thereon or settle, release by operation
of law or otherwise, compound, compromise, collect or otherwise liquidate any
thereof, and/or security therefor, in any manner, consent to the release or
transfer of such security and bid and purchase at any sale without affecting
or impairing the obligation of the undersigned hereunder.
The liability of the undersigned hereunder shall not be modified in any
manner whatsoever by an extension that may be granted to Crothall by any court
in any proceeding under the Bankruptcy Code set forth at 11 U.S.C. Section 101
et seq. or any amendments thereof and the undersigned expressly waives the
benefit of any such extension.
Payments of all sums of money and the performance of all the covenants
and agreements hereunder shall be payable and due at CMC's office in Mobile,
Alabama.
No delay by CMC or Morrison in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by CMC or
Morrison of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action by the CMC
or Morrison permitted hereunder shall in any way impair or affect this
Guarantee.
It being the express intention of the parties hereto to conform strictly
with the applicable usury laws, it is agreed that nothing contained herein
shall be so construed as to require the payment of interest at a rate in
excess of the maximum allowable by law, and in no event shall the undersigned
be obligated to pay interest exceeding such maximum rate of interest permitted
by law, and all such agreements, conditions, or stipulations, if any, which
may in any event or contingency whatsoever operate to bind, obligate, or
compel the undersigned to pay a rate of interest exceeding the maximum rate
of interest permitted by law shall be without binding force or effect at law
or in equity to the extent only of the excess of interest over such maximum
rate of interest permitted by law. It is the intention of this Guarantee,
that the foregoing sentence shall be given precedence over any other
agreement, condition, or stipulation herein contained which is in conflict
with same.
This Guarantee shall be binding upon the undersigned, and upon his
successors and assigns, and shall inure to the benefit of the transferee,
assignee, or the holder of the Obligations guaranteed herein.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of Alabama. Wherever possible, each provision of this
Guarantee shall be interpreted in such matter as to be effective and valid
under applicable law, but if any provision of this Guarantee shall be held
invalid or unenforceable by any court of competent jurisdiction, such
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating the remainder of such provision or the
remaining provisions of this Guarantee.
The obligations of the undersigned pursuant to this Guarantee shall be
operative and binding until the earlier to occur of (i) such time as the
Obligations shall have been paid or performed in full, or (ii) the undersigned
shall have satisfied all of its obligations under this Guarantee.
IN WITNESS WHEREOF, the undersigned has hereunto executed this Guarantee
as of the date first above written.
GUARANTOR:
/s/ Joe B. Byrum
Joe B. Byrum
Accepted this 3rd
day of June, 1994:
Custom Management Corporation
By: /s/ J. Russell Mothershed
Its: Senior Vice President Finance
Morrison Restaurants Inc.
By: /s/ J. Russell Mothershed
Its: Senior Vice President Finance
22680610
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), given as of this 3rd day
of June, 1994, by JOE B. BYRUM ("Byrum") and GENE H. BYRUM, individual
residents of the State of Alabama (collectively, the "Pledgors") in favor of
MORRISON RESTAURANTS INC. ("Morrison") and CUSTOM MANAGEMENT CORPORATION
("CMC"),
W I T N E S S E T H :
WHEREAS, Byrum has entered into a Stock Purchase Agreement of even date
herewith to purchase Three Thousand Nine Hundred Seventeen (3,917) shares
("Crothall Stock") of Morrison Crothall Support Services, Inc. ("Crothall")
from CMC in consideration of a promissory note of even date herewith in the
principal amount of $400,000 (as the same may be amended, modified, renewed
or extended from time to time, the "Stock Note"); and
WHEREAS, CMC entered into that certain Loan and Security Agreement dated
October 1, 1991 with Crothall, pursuant to which CMC agreed to extend a line
of credit (the "Loan") to Crothall, which lending obligations of CMC were
guaranteed by Morrison; and
WHEREAS, the Loan is or will be evidenced by certain promissory notes
of Crothall in the aggregate principal amount of approximately $2.5 Million
in favor of Morrison (as the same may be amended, modified, renewed, or
extended from time to time, the "Notes"); and
WHEREAS, as a condition to the sale of the Crothall Stock, Byrum
guaranteed the Loan, the Notes and all other obligations of Crothall to
Morrison pursuant to a Guarantee of even date herewith ("Guarantee") and, in
addition, entered into a certain Indemnity Agreement with, among others,
Morrison and Crothall dated May 18, 1994 with respect to certain bonds of
Crothall ("Indemnity Agreement"); and
WHEREAS, Pledgors are owners of certain shares of capital stock of
Morrison described in Exhibit A attached hereto and incorporated herein by
this reference ("Morrison Stock"); and
WHEREAS, as the spouse of Byrum, Gene H. Byrum has a beneficial interest
in the transactions described above and is willing to act as an accommodation
party by pledging her Morrison Stock hereunder; and
WHEREAS, to secure the due and punctual payment and performance of,
among other things, all obligations and covenants of Byrum under the Stock
Purchase Agreement, the Stock Note, the Guarantee and the Indemnity Agreement,
and the other documents now or hereafter executed and delivered in connection
with the foregoing (collectively the "Obligation Documents"), together with
all obligations of Pledgors to Pledgees under any note, any loan agreement,
all contracts of suretyship, guaranty or accommodation, and all other
obligations of Pledgors to Pledgees, however and wherever created, arising,
or evidenced, whether direct or indirect, absolute, contingent, or otherwise,
now or hereafter existing or due or to become due (collectively, the
"Obligations"), Pledgors have agreed to pledge and assign to Pledgees all of
Pledgors' right, title, and interest in and to the Crothall Stock and Morrison
Stock, together with the other collateral hereinafter described (collectively,
the "Stock");
NOW, THEREFORE, in consideration of the premises, the direct benefits
to be realized by Pledgors from the Stock Purchase Agreement, the mutual
covenants hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Pledgors hereby
covenant and agree with Pledgees as follows:
1. Security Interest. Pledgors hereby grant, convey, and pledge to
Pledgees a security interest in and security title to all of their right,
title, and interest in and to the Stock (subject, however, in the case of the
Crothall Stock, to the terms and conditions of that certain Stockholders
Restrictive Transfer Agreement dated October 1, 1991, between CMC, Crothall
and the Stockholders of Crothall), and have delivered to and deposited with
Pledgees herewith, all stock certificates for Stock presently held by
Pledgors, together with stock powers endorsed in blank by Pledgors, as
security for (a) payment and performance of all Obligations, and (b) all
obligations of Pledgors to Pledgees hereunder. Pledgors have on this date
delivered the Stock to and deposited the Stock with Pledgees, together with
stock powers endorsed in blank. Pledgors agree that at any time and from time
to time, at the expense of Pledgors, Pledgors will promptly execute and
deliver all further instruments and documents, and take all further action
that may be necessary, or that Pledgees may reasonably request, in order to
perfect and protect the security interest granted hereby or to enable Pledgees
to exercise and enforce their rights and remedies hereunder with respect to
all or any portion of the Stock.
2. Warranties; Covenants.
(a) Pledgors hereby jointly and severally warrant and represent to
Pledgees (i) that except for the security interest created hereby, Pledgors
own the shares of the Stock free and clear of all liens, charges, and
encumbrances, (ii) that the Stock is duly issued, fully paid, and
non-assessable, (iii) that Pledgors have the unencumbered and unrestricted
right to pledge the Stock, and (iv) that no consent or approval of any
governmental or regulatory authority, or of any securities exchange, which has
not been obtained was or is necessary to the validity of this pledge.
(b) Until the termination of this Agreement pursuant to Section 9
hereof, Pledgors jointly and severally covenant that Pledgors will not (i)
sell, convey or otherwise dispose of any of the Stock or any interest therein,
or (b) incur or permit to be incurred any pledge, lien, charge, or encumbrance
or any security interest whatsoever in or with respect to any of the Stock or
the proceeds thereof, other than the security interest created hereby and such
security interests as to which Pledgees have given their prior consent in
writing.
(c) Until the termination of this Agreement pursuant to Section 9
hereof, Pledgors jointly and severally covenant that Pledgors will (i) warrant
and defend at their own expense Pledgees' right, title and special property
and security interest in and to the Stock against the claims of any person or
entity; and (ii) promptly give notice to Pledgees of any notices received by
Pledgors with respect to the Stock.
3. Additional Shares. In the event that, during the term of this
Agreement:
(a) (i) any stock dividend, stock split, reclassification,
readjustment, or other change is declared or made in the capital
structure of either Morrison or Crothall (hereinafter referred to as an
"Issuer") all new, substituted, and additional shares, or other
securities, issued by reason of any such change with respect to the
Stock and received by Pledgors or to which Pledgors shall be entitled
or (ii) any new additional shares or other securities issued by either
Issuer and received by Pledgors from the exercise of any options for the
same, shall be immediately delivered to Pledgees, together with stock
powers endorsed in blank by Pledgors, and shall constitute Stock to be
held by Pledgees under the terms of this Agreement; and
(b) subscriptions, warrants, or any other rights or options
shall be issued in connection with the Stock, all new stock or other
securities acquired through such subscriptions, warrants, rights, or
options by Pledgors shall be immediately delivered to Pledgees and shall
constitute Stock to be held by Pledgees under the terms of this
Agreement.
4. Default. Upon and after the occurrence of a default by Pledgors
with respect to payment or performance of the Obligations, or a default by
Pledgors under the terms of this Agreement (any of such occurrences being
hereinafter referred to as a "Default"):
(a) Pledgors shall, upon the written request of Pledgees, at
Pledgors' election, either (i) exercise any and all options then
exercisable and then held by Pledgors with respect to the capital stock
of Morrison ("Options") and deliver such stock to Pledgees in accordance
with Section 3 above; or (ii) arrange for the "cashless" exercise of
Options and direct that all pre-tax proceeds from the exercise
("Proceeds") be remitted to Pledgees immediately; provided, however,
that Pledgor shall only be obligated in either case to exercise such
number of Options, the proceeds of which are sufficient to satisfy any
default then outstanding; and, provided further, that any taxes payable
with respect to the exercise of the Options shall be paid by Pledgor and
shall not be satisfied from the Proceeds; and
(b) Pledgees may sell or otherwise dispose of the Stock or any
portion of the Stock at a public or private sale or make other
commercially reasonable disposition of the Stock or any portion thereof
after five (5) days notice to Pledgors. Pledgees may, in the name of
all or any one of them, or in the name of a designee or nominee, buy at
any public sale of the Stock and, if permitted by law, buy at any
private sale thereof. The proceeds of the public or private sale or
other disposition shall be applied to the costs incurred in connection
with the sale, expressly including, without limitation, any costs under
Section 6(a) hereof, and to the other Obligations, in such order as
Pledgees may determine, and any remaining proceeds shall be paid over
to Pledgors or others as by law provided. In the event the proceeds of
the sale or other disposition of the Stock are insufficient to pay such
expenses, interest, principal of the Obligations, and damages, Pledgors
shall remain liable to Pledgees for any such deficiency. All costs and
expenses, including reasonable attorneys' fees and expenses, incurred
by Pledgees in obtaining performance of or in collecting any payments
due under this Agreement shall be deemed part of the Obligations
hereunder.
5. Additional Rights of Secured Party. In addition to their rights
and privileges under this Agreement, Pledgees shall have all the rights,
powers, and privileges of secured parties under the Uniform Commercial Code
of the State of Alabama and other applicable law. All rights of Pledgees
shall be cumulative and not exclusive.
6. Disposition of Stock by Pledgees. If the Stock or any portion
thereof is not registered under the various United States federal or state
securities acts, disposition thereof after Default may be restricted to one
or more private (instead of public) sales in view of the lack of such
registration. Pledgors understand that upon such disposition, Pledgees may
approach only a restricted number of potential purchasers and further
understand that a sale under such circumstances may yield a lower price for
the Stock than if the Stock was registered pursuant to federal and state
securities legislation and sold on the open market. Pledgors, therefore,
agree that:
(a) if Pledgees shall, pursuant to the terms of this Agreement,
sell or cause the Stock or any portion thereof to be sold at a private
sale, Pledgees shall have the right to rely upon the advice and opinion
of any national brokerage or investment firm having recognized expertise
and experience in connection with shares of companies similar to the
Stock (but shall not be obligated to seek such advice and the failure
to do so shall not be considered in determining the commercial
reasonableness of Pledgees' action) as to the best manner in which to
expose the Stock for sale and as to the best price reasonably obtainable
at the private sale thereof; and
(b) that such reliance shall be conclusive evidence that
Pledgees have handled such disposition in a commercially reasonable
manner.
7. Pledgors' Obligations Absolute. The obligations of Pledgors under
this Agreement shall be direct and immediate and not conditional or contingent
upon the pursuit of any remedies against any other person, nor against other
security or liens or encumbrances available to Pledgees or any of their
successors, assigns, or agents. Pledgors hereby waive any right to require
that an action be brought against any other person or entity or to require
that resort be had to any security or to any balance of any deposit account
or credit on the books of Pledgees in favor of any other person or entity
prior to any exercise of rights or remedies hereunder.
8. Voting Rights.
(a) After a Default and for so long as any of the Obligations
remain unpaid, (i) Pledgees may, upon one (1) day's prior written notice
to Pledgors of their intention to do so, exercise all voting rights, and
all other ownership or consensual rights of the Stock, and all rights
of Byrum under that certain Stockholders Voting Agreement among the
stockholders of Crothall dated as of October 1, 1991, as amended the
date hereof ("Voting Agreement") but under no circumstances are Pledgees
obligated by the terms of this Agreement to exercise such rights, and
(ii) Pledgors hereby appoint Morrison and its designees Pledgors' true
and lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Stock in
any manner Morrison, on behalf of Pledgees, deems advisable for or
against all matters submitted or which may be submitted to a vote of
shareholders [and to exercise Byrum's rights under the Voting Agreement
in any manner Morrison, on behalf of Pledgees, deems advisable]. The
power of attorney granted hereby is coupled with an interest and shall
be irrevocable for so long as any of the Obligations remain unpaid.
(b) For so long as Pledgors shall have the right to vote the
Stock, Pledgors covenant and agree that they will not, without the prior
written consent of Morrison, vote or take any consensual action with
respect to the Stock which would constitute a Default under or be
inconsistent with the terms of this Agreement.
9. Termination. Notwithstanding anything to the contrary contained
herein, this Agreement, and the security interest hereunder granted to
Pledgees in the Stock, shall terminate on the date on which all Obligations
of Pledgors to Pledgees under the Obligation Documents and any other agreement
have been fully satisfied. Thereafter, upon written demand from Pledgors,
Pledgees, by their acceptance hereof, agree that they shall promptly release
the Stock by delivery of the Stock to Pledgors, unless and except to the
extent the Stock has been liquidated or otherwise disposed of pursuant to
Section 6 hereof.
10. Security Agreement. This Agreement shall constitute a security
agreement under the Uniform Commercial Code as in effect in the State of
Alabama.
11. General.
(a) Time is of the essence of this Agreement. No waiver by
Pledgees of any power or right hereunder or of any Default by Pledgors
hereunder shall be binding upon Pledgees unless in writing signed by Pledgees.
No failure or delay by Pledgees to exercise any power or right hereunder or
binding waiver of any Default hereunder shall operate as a waiver of any other
or further exercise of such power or any other Default. This Agreement,
together all documents referred to herein, constitute the entire agreement
between Pledgors and Pledgees and may not be modified except by a writing
executed by Pledgees and delivered by Pledgees to Pledgors.
(b) If any paragraph or part thereof shall for any reason be
held or adjudged to be invalid, illegal, or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof so adjudicated invalid,
illegal, or unenforceable shall be deemed separate, distinct, and independent,
and the remainder of this Agreement shall remain in full force and effect and
shall not be affected by such holding or adjudication.
(c) All representations and warranties made and given herein by
Pledgors shall survive the execution and delivery of this Agreement and shall
remain in full force and effect until such time as this Agreement is
terminated as provided in Section 10 hereof.
(d) The rights and obligations of the parties hereunder shall
inure to the benefit of and bind their respective heirs, executors,
administrators, legal representatives, successors, and assigns.
(e) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Alabama.
(f) All notices and demands required or permitted hereunder or
by law shall be in writing or by telegraph and shall be mailed or delivered
to the party to whom notice is intended to be given at such address as is
specified below, or such other address as shall be subsequently designated in
writing by such party to the other party hereto for purposes of notice.
If to Pledgees:
Morrison Restaurants Inc.
Custom Management Corporation
4721 Morrison Drive
Mobile, Alabama 36609
(205) 344-3000
Attn: Pfilip G. Hunt, Esq.
If to Pledgors:
Joe B. Byrum and Gene H. Byrum
4272 Bit & Spur Road #33
Mobile, Alabama 36608
Each such notice or demand shall be deemed effective upon personal
delivery or upon the earlier of (i) receipt or (ii) three (3) days after
deposit in the U.S. mail, first-class postage, prepaid, certified mail, and
addressed as provided above.
(g) All obligations and liabilities of Pledgors hereunder shall
be joint and several.
(h) The pronouns used in this Agreement shall be construed as
masculine, feminine, or neuter as the occasion may require.
(i) Captions are for reference only and in no way limit the
terms of this Agreement.
(j) All references herein to any document, instrument, or
agreement shall be deemed to refer to such document, instrument, or agreement
as the same may be amended, modified, restated, supplemented, or replaced from
time to time.
(k) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, Pledgors have executed this Agreement as of the day
and year first above first above written.
Pledgors:
/s/ Joe B. Byrum (SEAL)
Joe B. Byrum
/s/ Gene H. Byrum (SEAL)
Gene H. Byrum
Accepted and Agreed to:
Morrison Restaurants Inc.
By: /s/ J. Russell Mothershed
Title: Senior Vice President Finance
Custom Management Corporation
By: /s/ J. Russell Mothershed
Title: Senior Vice President Finance
20313083
<PAGE>
<TABLE>
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<CAPTION>
Fiscal Year Ended
June 4, June 5, June 6,
1994 1993 1992
<S> <C> <C> <C>
PRIMARY EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Average common shares outstanding......... 35,973 37,029 36,998
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treaury stock method", at the
average market price)..................... 1,394 1,049 437
Number of shares used in computation of
primary earnings per share.............. 37,367 38,078 37,435
Net Income.............................. $44,684 $37,975 $32,671
Primary earnings per common and
common equivalent share................. $1.20 $1.00 $ .87
</TABLE>
<PAGE>
EXHIBIT 11 (continued)
<TABLE>
<CAPTION>
Fiscal Year Ended
June 4, June 5, June 6,
1994 1993 1992
FULLY DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
<S> <C> <C> <C> <C>
Average common shares outstanding......... 35,973 37,029 36,998
Average additional common shares issuable
on exercise of dilutive stock options
(computed by use of the "treasury stock
method", at the higher of period-end
or average market price)................ 1,415 1,122 801
Number of shares used in computation of
fully diluted earnings per share........ 37,388 38,151 37,799
Net Income.............................. $44,684 $37,975 $32,671
Fully diluted earnings per common and
common equivalent share................. $ 1.20 $ 1.00 $ .86
Weighted average shares and all per share data for prior years have been restated to
give effect to common stock dividends and common stock splits through June 4, 1994.
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The information in the Consolidated Financial Statements and related Notes
found on pages 32 to 48 should be read in conjunction with this section.
1. RESULTS OF OPERATIONS
1.1 1994 Compared to 1993
1.2 1993 Compared to 1992
2. LIQUIDITY AND CAPITAL RESOURCES
2.1 Cash Flow from Operating Activities
2.2 Short-Term Borrowings and Credit Facilities
2.3 Long-Term Debt
2.4 Working Capital
2.5 Capital Expenditures
2.6 Dividends
2.7 Deferred Tax Assets
3. KNOWN EVENTS, UNCERTAINTIES AND TRENDS
3.1 Financial and Stock Repurchase Plans
3.2 New Accounting Standards
3.3 Seasonality of Operations
3.4 Impact of Inflation
3.5 Impact of Health Care Reform
3.6 Management's Outlook
1. RESULTS OF OPERATIONS
Fiscal year 1994 marked the Company's third straight year of record
earnings and sales. This progress was primarily achieved through the
expansion of the Company's Ruby Tuesday Group and the growth and improved
profitability of the Morrison Group. The Company implemented a new
financial strategy in fiscal 1994 that focuses on the maintenance of a
targeted capital structure utilizing prudent amounts of debt to finance the
Company's expansion. This new strategy seeks to maximize the economic
value returned on the capital invested in the Company and hence, maximize
stockholder value. The contribution that each Group made to the Company's
progress in fiscal 1994 is discussed below.
1.1 1994 Compared to 1993
Ruby Tuesday Group
During fiscal 1994, the Company repositioned the former Silver Spoon
Cafe concept into Mozzarella's, an American cafe with an Italian accent.
All data formerly reported under Silver Spoon Cafes is now reported under
the name Mozzarella's.
Sales and earnings increased in the Ruby Tuesday and Mozzarella's
concepts compared to fiscal 1993, while the L&N Seafood Grill concept
experienced sales and earnings declines. Same-store sales for Ruby
Tuesdays and Mozzarella's increased in fiscal 1994, but decreased in the
L&N Seafood Grills. The Group's newest concept, Sweetpea's, recorded sales
consistent with management's expectations during the fiscal year. During
fiscal 1994, 42 Ruby Tuesdays, four Mozzarella's, one L&N Seafood Grill and
three Sweetpea's were opened. There were four Ruby Tuesdays and five L&N
Seafood Grills closed during fiscal 1994.
Operating profit increased 14.5% for the Group due to increased sales
offset by a 0.5% operating margin decrease. The operating margin decrease
was the result of the shortfall in performance of the L&N Seafood Grills
and the development of the new Sweetpea's concept. Excluding the results
of the L&N Seafood Grills, the Group's operating profit increased 25.8%.
The Group's plans call for aggressive expansion of the Ruby Tuesday and
Mozzarella's concepts and limited expansion of the Sweetpea's concept in
fiscal 1995, both in the traditional Eastern U.S. markets and in new
markets in the Western U.S. The Company estimates that over 50 Ruby
Tuesdays and 10 other specialty restaurants will be opened in 1995. In
addition, 30 of the 38 L&N Seafood Grills will be converted to other Ruby
Tuesday Group concepts (Ruby Tuesdays, Mozzarella's, or Sweetpea's)
beginning in fiscal 1995. The remaining eight L&N Seafood Grills will be
sold or closed.
Morrison Group
During fiscal 1994, the Company combined the former Hospitality Group,
which serves the contract dining market, with the Family Dining Group,
which serves the cafeteria market, to create the new Morrison Group. The
contract dining sector of this Group was further broken down based on
market focus into a health care division for hospitals and health care
facilities and a hospitality division for schools, businesses and industry.
All data formerly reported for the two separate Groups, Hospitality and
Family Dining, will be reported under the new Morrison Group.
28
<PAGE>
Sales in the Morrison Group increased 4.6% due to unit expansion in the
contract dining sector and an increase in the number of customers in the
family dining sector as a result of strategic price rollbacks and bundled-
meal promotions. The Group opened 10 new family dining concepts during the
fiscal year, consisting of one small cafeteria and nine food-court quick-
service restaurants, as well as numerous contract dining accounts. The
Group closed nine cafeterias during the fiscal year.
Operating profit increased 22.4% for the Group due to increased sales
and a 0.9% operating margin increase. The margin improvement resulted from
increased customers and food and labor cost controls.
The Company's plans call for continued growth of the Morrison Group
during fiscal 1995 due to the addition of approximately 30 Fresh Cooking
units, with expansion primarily in the Northeast and Mid-Atlantic markets.
The Group's plans also call for accelerated growth in the health-care food-
service market.
Interest Expense (Income)
Net interest expense decreased 83.9% during fiscal 1994 due to the
retirement of the Trust Company Bank note of $22.5 million during fiscal
1993 and increased capitalization of interest charges due to an increase in
the number of new units.
Income Tax Expense
The effective income tax rate decreased to 37.2% in fiscal 1994 from
37.3% in fiscal 1993 due to the tax credit for FICA taxes paid on tips in
excess of the minimum wage commencing January, 1994 and also due to
increased levels of targeted jobs tax credit following the extension of the
program in the Omnibus Budget Reconciliation Act of 1993, offset by a 1%
increase in the corporate income tax rate, which went into effect January
1, 1993, and an increase in the effective state income tax rate.
1.2 1993 Compared to 1992
Results of Operations
The Company achieved record earnings with its second year of over $1
billion in sales. The increased sales and earnings represented continued
progress in the Company's efforts to expand operations, provide greater
value to customers, and control costs. Despite the fact fiscal year 1993
had one less week of operations than fiscal year 1992, all operations
showed improvement in operating profits. The contribution each Group made
to this growth is discussed below.
Ruby Tuesday Group
Sales increased in all three Ruby Tuesday Group concepts compared to
fiscal 1992 due to new unit growth (31 Ruby Tuesdays, two L&N Seafood
Grills and five Mozzarella's). Same-store sales for Ruby Tuesdays and
Mozzarella's increased in fiscal 1993 but decreased in the L&N Seafood
Grills division.
Operating profit increased 14.9% for the Group due to the increased
sales and a 0.1% operating margin increase. The margin improvement
occurred in payroll and related costs due to cost controls that were
implemented during the year.
Morrison Group
Sales in the Morrison Group increased 2.5% during fiscal year 1993 as a
result of growth in continuing and new units in the Group's Contract Dining
Division. This increase was partially offset by sales decreases in the
Group's Family Dining Division due to the selective closing of three
cafeterias and a 52- week fiscal year 1993 versus a 53-week fiscal year
1992. The Group engaged in various marketing strategies in its Family
Dining Division during the year, including menu changes, price rollbacks
and bundled-meal promotions, which led to increased customer counts.
Operating profit for the Morrison Group increased 20.4% to $36.4
million. Operating margin increased to 5.0%, up from 4.3% in the prior
year. The margin increase is attributed to a decrease in bad debt and
general and administrative expenses as a percentage of revenues in the
Group's Contract Dining Division, and payroll and related cost decreases in
the Group's Family Dining Division. The decrease in bad debt is related to
improved credit management, and the general and administrative savings are
related to tighter cost controls. These decreases were partially offset
by an increase in cost of goods sold for the Group's Contract Dining
Division due to the addition of several large accounts which have higher
food costs than the average unit in the prior year, and an increase in
closing expenses associated with anticipated closings during fiscal 1994 in
the Group's Family Dining Division. Operating units are constantly being
evaluated to determine their long-range profitability and value to the
Company.
Interest Expense (Income)
Net interest expense decreased 74.4% in fiscal 1993 due to the early
retirements of the $22.5 million Trust Company Bank note on December 16,
1992, and the $1.0 million Industrial Development Bond Lease on December 1,
1992.
29
<PAGE>
Income Tax Expense
The effective income tax rate increased to 37.3% in 1993 from 36.5% in
1992 due to increases in state income tax rates, decreases in non-taxable
interest generated from the Company's cash investments and a decrease in
targeted jobs tax credits. The targeted jobs tax credit program expired
June 30, 1992, but was renewed retroactively to that date in the Omnibus
Budget Reconciliation Act of 1993, passed in August of 1993.
2. LIQUIDITY AND CAPITAL RESOURCES
2.1 Cash Flow from Operating Activities
In fiscal 1994, net cash provided by operating activities totaled $92.7
million. See the Consolidated Statements of Cash Flows on page 37 for more
information.
2.2 Short-Term Borrowings and Credit Facilities
The Company had lines of credit with various banks totaling $138 million
at June 4, 1994. The Company utilized its lines of credit with various
financial institutions in fiscal 1994 to meet operational cash needs,
including stock repurchases. The Company had unused lines of credit
totalling $120.6 million at June 4, 1994, of which $13.6 million were
committed and $107 million were non-committed. The Company expects to fund
operations and capital expansion from operating cash flows as well as from
these lines of credit in fiscal 1995. See Note 8 of Notes to Consolidated
Financial Statements of this report for a detailed discussion of short-term
borrowings and credit facilities.
2.3 Long-Term Debt
Long-term debt decreased a net $3.6 million from the prior year due to
the first annual installment of the note payable to Life Insurance Company
of Georgia being due currently, and normally scheduled payments made during
the year, offset in part by the addition of a mortgage associated with the
purchase of a retail site. The Company does not anticipate the need for
any additional long-term debt financing in fiscal year 1995.
2.4 Working Capital
Working capital and the current ratio as of June 4, 1994 were $(43.0)
million and 0.6, respectively. The $44.9 million decrease in fiscal 1994
working capital is due to increased cash outlays for capital expenditures
and stock repurchases during the fiscal year.
2.5 Capital Expenditures
Property and equipment expenditures for fiscal 1994 were $90.3 million,
43.4% higher than the prior year. During fiscal year 1994, 50 Ruby Tuesday
Group restaurants were opened compared to 55 budgeted openings and 10
Morrison's Fresh Cooking units were opened. Capital expenditures for
fiscal 1995 are projected to be $116.6 million. Projected openings for
fiscal year 1995 include in excess of 60 Ruby Tuesday Group restaurants and
approximately 30 Fresh Cooking units and family cafeteria-style
restaurants.
2.6 Dividends
Cash dividends paid to stockholders during fiscal 1994 equaled $11.9
million. Management's financial strategy for the coming four years sets a
policy to increase dividends paid to stockholders by five percent annually,
based on the achievement of estimated earnings growth.
2.7 Deferred Tax Assets
The recognition of deferred tax assets depends on the anticipated
existence of taxable income in future periods in amounts sufficient to
realize the assets. A valuation allowance must be used to reduce the
deferred tax asset if such future income is not likely to be generated.
Management believes that future taxable income should be sufficient to
realize all of the Company's deferred tax assets based on the historical
earnings of the Company, and therefore, a valuation allowance has not been
established.
3. KNOWN EVENTS, UNCERTAINTIES AND TRENDS
3.1 Financial and Stock Repurchase Plans
On March 30, 1994, the Board of Directors adopted a new financial
strategy that places more emphasis on debt management and establishes a
target capital structure which will utilize a prudent amount of debt to
minimize the weighted average cost of capital while allowing the Company to
maintain financial flexibility and the equivalent of an investment-grade
(BBB) bond rating. The financial strategy sets a target debt-to-capital
ratio of 60%, including operating leases. The plan also provides for
repurchasing Morrison stock whenever cash flow exceeds funding requirements
while maintaining the target capital structure. Accordingly, the Board
approved the repurchase of up to an additional 2.5 million shares, bringing
the total authorized for repurchase to 4.6 million shares. During fiscal
1994, the Company purchased 1,504,829 shares at a total purchase price of
$37.5 million under its various stock repurchase programs.
30
<PAGE>
3.2 New Accounting Standards
In November, 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112 - "Employers'
Accounting for Postemployment Benefits" (SFAS 112), which must be adopted
in fiscal year 1995. SFAS 112 requires employers to recognize the cost of
benefits provided to former or inactive, but not retired, employees when an
event occurs indicating payment of benefits is probable and the cost can be
reasonably estimated. If the benefits accumulate or vest, the cost must be
recognized over the active service period of the employee.
The majority of the Company's postemployment benefits, including salary
continuation and health care and life insurance for disabled employees, do
not accumulate or vest and are currently recognized when benefits are paid
or funded. The Company does not anticipate the effects of SFAS 112 to be
material.
In May, 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115 (SFAS No. 115), "Accounting for
Certain Investments in Debt and Equity Securities". SFAS 115 revises the
accounting and reporting for all investments in debt securities and for
investments in equity securities that have readily determinable fair
values. The Company is required to adopt SFAS 115 no later than the
beginning of fiscal 1995. Because of the issuance of SFAS 115, the Company
reevaluated its investment policies and, as a result, concluded that upon
the adoption of the statement, all of its equity securities would be
classified as available-for-sale and its only debt security would be
classified as held-to-maturity. Application of the new rules will result
in an estimated increase of $200,000 to stockholders' equity, net of a
$100,000 tax effect, as of June 5, 1994, representing the recognition in
stockholders' equity of the unrealized appreciation that existed at June 4,
1994.
In June, 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 116 (SFAS 116), "Accounting for
Contributions Received and Contributions Made". SFAS 116 requires that
unconditional contributions be recognized as expenses in the period in
which the promise is made rather than when the payment is made. The
Company is required to adopt SFAS 116 no later than fiscal 1995. The
Company does not anticipate the effects of SFAS 116 to be material.
3.3 Seasonality of Operations
The quarterly operating results as well as certain current assets and
liabilities of the Morrison Group are affected by the traditional closings
of educational institutions during the summer months and their subsequent
reopenings at the beginning of September.
3.4 Impact of Inflation
The Company has not experienced a significant overall impact from
inflation. Although the impact of inflation on the cost of food, labor,
real estate and construction can significantly affect the Company's
operations, the Company can reduce this impact through increased menu
prices to the extent competitive pressures will permit.
3.5 Impact of Health Care Reform
The Company is currently monitoring the health care reform proposals
being pursued by Congress. Due to the labor-intensive nature of the
restaurant industry, any significant employer mandate to provide health
care benefits to all employees could have a significant impact on the
Company's results of operations, the amount of which is indeterminable at
this time.
3.6 Management's Outlook
The Company has made many significant advances to position itself for
aggressive, strategic growth. In the Ruby Tuesday Group, the Mozzarella's
concept will be one of the Company's growth vehicles. The concept
specializes in pizzas, pastas, soups, salads and sandwiches, with a $9
average check. Sweetpea's, with classic American food, will serve as a
test vehicle specializing in rotisserie chicken, vegetables, soups and
salads, with an $8 average check. Ruby Tuesday, with burgers, ribs,
fajitas, chicken, soups, salads and sandwiches, will maintain its
aggressive posture. Thirty of the 38 L&N Seafood Grills will be converted
to other Morrison concepts(Ruby Tuesdays, Mozzarella's Cafes or
Sweetpea's). Also, the agreement entered into with Tia's offers the
Company an attractive opportunity to enter the Tex-Mex dining segment.
Management believes that it is positioned to take advantage of growth
opportunities well into the future.
In the Morrison Group, the sale of the education, business and industry
contracts, as discussed in Note 12 of Notes to Consolidated Financial
Statements, will allow the Company to focus on its leadership position in
the health-care segment of the contract business. The Group's Family
Dining Division has begun expansion of its Morrison's Fresh Cooking concept
which specializes in home-meal replacement, highlighting fresh, wholesome
chicken and vegetables served primarily in food-courts but also in free-
standing and strip-center locations. The existing cafeterias have returned
to a position of strong positive sales and earnings.
The sale of the education, business and industry contracts and the
phasing out of the L&N Seafood Grills (see Note 12 of Notes to Consolidated
Financial Statements) are part of the Company's strategy to invest in high-
growth businesses that have or can attain a dominant market position in
their respective categories. Morrison will focus on accelerating the
growth of its proven concepts in the Ruby Tuesday Group (Ruby Tuesday and
Mozzarella's) and in the Morrison Group (Fresh Cooking and Health Care).
Management believes that this realignment will strategically position the
Company to attain its growth and profitability objectives of creating value
for its stockholders, its customers and its employees.
31
<PAGE>
<TABLE>
SUMMARY OF OPERATIONS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
(In thousands except per-share data)
<CAPTION>
Fiscal Year
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 1,213,389 $ 1,099,845 $ 1,038,946 $ 970,530 $ 900,457
============ ============ ============ =========== ==========
Income Before Provision for Income Taxes and
Cumulative Effect of Accounting Changes..... $ 71,157 $ 60,884 $ 51,445 $ 42,453 $ 35,438
Provision for Federal and State Income Taxes.... 26,473 22,725 18,774 15,825 12,486
------------ ------------ ------------ ----------- ----------
Income Before Cumulative Effect of
Accounting Changes............................ 44,684 38,159 32,671 26,628 22,952
Cumulative Effect of Accounting Changes, net:
Postretirement benefits....................... (2,579)
Income taxes.................................. 2,395
------------ ------------ ------------ ----------- ----------
Net Income...................................... $ 44,684 $ 37,975 $ 32,671 $ 26,628 $ 22,952
============ ============ ============ =========== ==========
Earnings Per Common and Common Equivalent Share:
Primary:
Before Cumulative Effect of Accounting Changes. $1.20 $1.01 $0.87 $0.71 $0.59
Cumulative Effect of Accounting Changes, net:
Postretirement benefits...................... (0.07)
Income taxes................................. 0.06
------------ ------------ ----------- ---------- ---------
$1.20 $1.00 $0.87 $0.71 $0.59
============ ============ =========== ========== =========
Earnings Per Common and Common Equivalent Share:
Fully Diluted:
Before Cumulative Effect of Accounting Changes. $1.20 $1.01 $0.86 $0.71 $0.58
Cumulative Effect of Accounting Changes, net:
Postretirement benefits...................... (0.07)
Income taxes................................. 0.06
------------ ------------ ----------- ---------- ---------
$1.20 $1.00 $0.86 $0.71 $0.58
============ ============ =========== ========== =========
Weighted average shares used in earnings per
common and common equivalent share computation:
Primary..................................... 37,367 38,078 37,435 37,310 38,777
Fully Diluted............................... 37,388 38,151 37,799 37,379 39,325
All fiscal years are composed of 52 weeks except 1992 which contains 53 weeks.
Weighted average shares and all per-share data for prior years have been restated to give effect to common stock dividends
and stock splits through June 4, 1994.
Other Financial Data:
Total Assets.................................. $ 408,453 $ 382,620 $ 369,732 $ 331,402 $ 315,775
Long-Term Debt................................ $ 9,526 $ 13,085 $ 35,919 $ 38,005 $ 35,651
Stockholders' Equity.......................... $ 221,136 $ 219,624 $ 203,577 $ 181,241 $ 176,275
Cash Dividends Per Share of Common Stock...... $ 0.33 $ 0.32 $ 0.29 $ 0.29 $ 0.28
Working Capital............................... $ (43,007) $ 1,906 $ 22,852 $ 12,028 $ 10,393
Current Ratio................................. 0.6:1 1.0:1 1.3:1 1.2:1 1.1:1
</TABLE>
32
<PAGE>
<TABLE>
GROUP INFORMATION
(In thousands)
<CAPTION>
Fiscal Year
1994 1993 1992
<S> <C> <C> <C>
Sales:
Ruby Tuesday Group............. $ 459,195 $ 378,643 $ 334,613
Morrison Group................. 754,349 721,153 703,830
Corporate and Other............ (155) 49 503
$1,213,389 $1,099,845 $1,038,946
Operating Profit:
Ruby Tuesday Group............. $ 38,990 $ 34,056 $ 29,646
Morrison Group................. 44,543 36,380 30,208
83,533 70,436 59,854
Corporate expenses.............. (12,325) (9,235) (7,169)
Net interest (expense) income... (51) (317) (1,240)
Income Before Provision for
Income Taxes and Cumulative
Effect of Accounting Changes... 71,157 60,884 51,445
Income taxes.................... 26,473 22,725 18,774
Income Before Cumulative
Effect of Accounting Changes... 44,684 38,159 32,671
Cumulative Effect of
Accounting Changes, net:
Postretirement benefits........ (2,579)
Income taxes................... 2,395
Net Income...................... $ 44,684 $ 37,975 $ 32,671
Operating Profit Margins:
Ruby Tuesday Group............. 8.5% 9.0% 8.9%
Morrison Group................. 5.9% 5.0% 4.3%
Identifiable Total Assets:
Ruby Tuesday Group............. $ 214,737 $ 166,700 $ 135,074
Morrison Group................. 162,100 161,216 157,564
Corporate and Other............ 31,616 54,704 77,094
$ 408,453 $ 382,620 $ 369,732
Gross Expenditures for Property
and Equipment:
Ruby Tuesday Group............. $ 69,252 $ 47,475 $ 28,280
Morrison Group................. 20,150 15,213 9,041
Corporate and Other............ 928 298 438
$ 90,330 $ 62,986 $ 37,759
Depreciation and Amortization
Expense:
Ruby Tuesday Group............. $ 22,645 $ 18,157 $ 15,571
Morrison Group................. 16,346 16,658 17,427
Corporate and Other............ 780 634 662
$ 39,771 $ 35,449 $ 33,660
Beginning with the first quarter of fiscal year 1995, the sales and
operating profits for the Ruby Tuesday Group and the Morrison Group will be
adjusted to exclude the results of the L&N Seafood Grills and B&I, which
will be reported as a separate line in continuing operations.
</TABLE>
33
<PAGE>
<TABLE>
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
(In thousands except per-share data)
<CAPTION>
For the Fiscal Year Ended
June 4, June 5, June 6,
1994 1993 1992
<S> <C> <C> <C>
Revenues:
Net sales and operating revenues................... $1,209,625 $1,098,268 $1,038,662
Other revenues..................................... 3,764 1,577 284
1,213,389 1,099,845 1,038,946
Operating Costs and Expenses:
Cost of merchandise................................ 378,103 352,043 331,549
Payroll and related costs.......................... 439,448 398,077 383,224
Other.............................................. 209,724 191,846 180,397
Selling, general and administrative................ 75,135 61,229 57,431
Depreciation and amortization...................... 39,771 35,449 33,660
Interest expense net of interest income totaling
$1,172 in 1994, $1,822 in 1993, and
$2,405 in 1992................................... 51 317 1,240
1,142,232 1,038,961 987,501
Income Before Provision for Income Taxes and
Cumulative Effect of Accounting Changes............ 71,157 60,884 51,445
Provision for Federal and State Income Taxes......... 26,473 22,725 18,774
Income Before Cumulative Effect of Accounting Changes 44,684 38,159 32,671
Cumulative Effect of Accounting Changes, net:
Postretirement benefits............................ (2,579)
Income taxes....................................... 2,395
Net Income........................................... $ 44,684 $ 37,975 $ 32,671
Primary Earnings Per Common and Common Equivalent
Share:
Before Cumulative Effect of Accounting Changes..... $ 1.20 $ 1.01 $ 0.87
Cumulative Effect of Accounting Changes, net:
Postretirement benefits.......................... (0.07)
Income taxes..................................... 0.06
Primary Earnings Per Common and Common Equivalent
Share................................................ $ 1.20 $ 1.00 $ 0.87
Fully Diluted Earnings Per Common and Common
Equivalent Share:
Before Cumulative Effect of Accounting Changes..... $ 1.20 $ 1.01 $ 0.86
Cumulative Effect of Accounting Changes, net:
Postretirement benefits.......................... (0.07)
Income taxes..................................... 0.06
Fully Diluted Earnings Per Common and Common
Equivalent Share..................................... $ 1.20 $ 1.00 $ 0.86
Weighted average shares used in earnings per common
and common equivalent share computation:
Primary............................................ 37,367 38,078 37,435
Fully Diluted ..................................... 37,388 38,151 37,799
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
34
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
(In thousands)
<CAPTION>
June 4, June 5,
1994 1993
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments................................. $ 5,021 $ 31,372
Receivables:
Trade, less allowance for doubtful accounts
of $2,622 in 1994 and $3,087 in 1993.......................... 28,396 27,704
Other......................................................... 4,663 6,336
Inventories:
Merchandise................................................... 11,523 10,908
China, silver and supplies.................................... 4,873 4,595
Prepaid expenses................................................ 13,327 10,124
Deferred income tax benefits.................................... 11,813 13,482
Total Current Assets.......................................... 79,616 104,521
PROPERTY AND EQUIPMENT - at cost:
Land............................................................ 15,753 12,005
Buildings....................................................... 48,487 38,110
Improvements.................................................... 187,113 161,958
Restaurant equipment............................................ 181,084 158,866
Other equipment................................................. 52,519 46,763
Construction in progress........................................ 22,825 16,870
507,781 434,572
Less accumulated depreciation and amortization.................. 240,124 214,242
267,657 220,330
COSTS IN EXCESS OF NET ASSETS ACQUIRED............................ 22,571 23,081
OTHER ASSETS...................................................... 38,609 34,688
TOTAL ASSETS.................................................. $408,453 $382,620
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade........................................ $ 30,401 $ 33,738
Short-term borrowings........................................... 17,416
Accrued liabilities:
Taxes, other than income taxes................................ 14,571 14,455
Payroll and related costs..................................... 22,725 22,054
Insurance..................................................... 23,225 19,196
Rent and other................................................ 10,180 11,866
Income taxes.................................................... 1,171
Current portion of long-term debt............................... 4,105 135
Total Current Liabilities..................................... 122,623 102,615
LONG-TERM DEBT:
Capital lease obligations....................................... 931 1,018
Notes and mortgages payable..................................... 8,595 12,067
9,526 13,085
DEFERRED INCOME TAXES............................................. 11,073 7,779
OTHER DEFERRED LIABILITIES........................................ 44,095 39,517
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; (authorized: 50,000 shares;
issued: 1994-43,644 shares; 1993-29,097 shares).............. 436 291
Capital in excess of par value.................................. 77,656 75,181
Retained earnings............................................... 248,044 215,226
326,136 290,698
Less cost of treasury stock..................................... 105,000 71,074
221,136 219,624
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................... $408,453 $382,620
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
35
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
(In thousands except per-share data)
<CAPTION>
Capital in Total
Common Stock Issued Treasury Stock Excess of Retained Stockholders'
Shares Amount Shares Amount Par Value Earnings Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 1, 1991........................ 19,399 $194 (2,995) $ (59,576) $73,290 $167,333 $181,241
Net Income................................. 32,671 32,671
3-for-2 Stock Split........................ 9,698 97 (1,460) 24 (76) 45
Shares issued under stock bonus and stock
option plans.............................. 75 1,484 199 1,683
Cash Dividends of $0.29 per common share... (10,879) (10,879)
Purchase of Treasury Stock
including deferred compensation plan...... (70) (1,184) (1,184)
Balance, June 6, 1992........................ 29,097 291 (4,450) (59,252) 73,413 189,125 203,577
Net Income................................. 37,975 37,975
Shares issued under stock bonus and stock
option plans.............................. 241 2,981 1,768 4,749
Cash Dividends of $0.32 per common share... (11,874) (11,874)
Purchase of Treasury Stock
including deferred compensation plan...... (514) (14,803) (14,803)
Balance, June 5, 1993........................ 29,097 291 (4,723) (71,074) 75,181 215,226 219,624
Net Income................................. 44,684 44,684
3-for-2 Stock Split........................ 14,547 145 (2,415) (145) 0
Shares issued under stock bonus and stock
option plans.............................. 484 5,844 2,620 8,464
Cash Dividends of $0.33 per common share... (11,866) (11,866)
Purchase of Treasury Stock
including deferred compensation plan...... (1,681) (39,770) (39,770)
Balance, June 4, 1994........................ 43,644 $ 436 (8,335) $(105,000) $77,656 $248,044 $221,136
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
36
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
(In thousands)
<CAPTION>
For the Fiscal Year Ended
June 4, June 5, June 6,
1994 1993 1992
<S> <C> <C> <C>
Operating Activities:
Net Income....................................... $ 44,684 $ 37,975 $ 32,671
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of change in
accounting principles........................ 184
Depreciation and amortization.................. 39,771 35,449 33,660
Amortization of intangibles.................... 1,043 1,047 1,408
Other, net..................................... 1,702 1,996 778
Deferred income taxes.......................... 4,963 (2,356) (5,299)
Loss on disposition of assets.................. 1,300 1,243 3,784
Changes in operating assets and liabilities:
(Increase)/decrease in receivables........... (1,278) (3,729) 7,983
(Increase) in inventories.................... (893) (1,771) (749)
(Increase) in prepaid and
other assets............................... (1,907) (1,613) (12,909)
Increase in accounts payable, accrued and
other liabilities........................... 4,507 27,158 18,887
(Decrease)/increase in income taxes payable.. (1,171) (2,745) 3,462
Net Cash Provided by Operating Activities... 92,721 92,838 83,676
Investing Activities:
Purchases of property and equipment............. (90,330) (62,986) (37,759)
Purchase of investments......................... (759) (406) (6,475)
Proceeds from disposal of assets................ 1,512 1,150 1,776
Other, net...................................... (4,150) (3,625) (1,735)
Net Cash Used by Investing Activities....... (93,727) (65,867) (44,193)
Financing Activities:
Proceeds from long-term debt.................... 558
Net change in short-term borrowings............. 17,416
Principal payments on long-term debt............ (11) (22,512) (979)
Principal payments on capital leases............ (136) (1,259) (606)
Proceeds from sale of stock,
including treasury stock....................... 8,464 4,749 1,728
Stock repurchases............................... (39,770) (14,803) (1,184)
Dividends paid.................................. (11,866) (11,874) (10,879)
Net Cash Used by Financing Activities....... (25,345) (45,699) (11,920)
(Decrease)/increase in Cash and Short-Term
Investments............................... (26,351) (18,728) 27,563
Cash and short-term investments at the beginning
of the year..................................... 31,372 50,100 22,537
Cash and short-term investments at the end of
the year..................................... $ 5,021 $ 31,372 $ 50,100
Supplemental Disclosures of Cash Flow Information
Cash Paid for:
Interest (net of amount capitalized)............ $ 904 $ 1,946 $ 3,204
Income taxes, net............................... $ 25,298 $ 28,103 $ 23,897
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
June 4, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of Morrison Restaurants Inc. and its
wholly-owned subsidiaries.
Fiscal Year - The Company's fiscal year ends on the first Saturday after
May 30. The fiscal years ended June 4, 1994, June 5, 1993, and June 6,
1992 were comprised of 52, 52, and 53 weeks, respectively.
Inventories - Inventories consist of materials, food supplies, china and
silver and are stated at the lower of cost (first in-first out) or market.
Property and Equipment and Depreciation - Expenditures for replacements
and betterments are capitalized, while maintenance and repairs are expensed
as incurred. The cost of assets sold or retired and the related
accumulated depreciation are removed from the accounts and any gain or loss
is recognized.
Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful lives of the assets or, for
capital lease property, over the term of the lease, if shorter. Annual
rates of depreciation range from 3% to 5% for buildings and from 8% to 34%
for restaurant and other equipment.
Income Taxes - The Company changed its method of accounting for income
taxes in fiscal year 1993 by adoption of Statement of Financial Accounting
Standards No. 109. Deferred income taxes are determined utilizing a
liability approach. This method gives consideration to the future tax
consequences associated with differences between financial accounting and
tax bases of assets and liabilities. Certain prior year balance sheet
amounts have been reclassified to conform to the current year presentation.
Such reclassifications had no impact on working capital or stockholders'
equity. Additional information regarding this statement is presented in
Note 4. For the fiscal year ended June 6, 1992, the Company provided
deferred income taxes to recognize the effect of timing differences between
financial and tax reporting. Tax credits are utilized to reduce income tax
expense in the year such credits are available.
Pre-Opening Expenses - Salaries, personnel training costs and other
expenses of opening new facilities are charged to expense as incurred.
Earnings Per Share - Earnings per share are based on the weighted
average number of shares outstanding during each year and are adjusted for
the assumed conversion of shares issuable upon exercise of options, after
the assumed repurchase of common shares with the related proceeds and after
the adjustment for the stock splits and stock dividends through June 4,
1994. The difference between the primary and fully diluted earnings per
share amounts shows the maximum extent of potential dilution of current
earnings that conversions of shares could create.
Intangible Assets - Excess of costs over the fair value of net assets
acquired of purchased businesses generally is amortized on a straight-line
basis over 40 years. The carrying value of goodwill is reviewed if facts
and circumstances suggest that it may be impaired. At June 4, 1994 and
June 5, 1993, accumulated amortization for costs in excess of net assets
acquired was $6,736,000 and $5,967,000, respectively. Other intangibles
are amortized over their specified lives, varying from five to 20 years.
For the years ending June 4, 1994 and June 5, 1993, accumulated
amortization for other intangibles was $4,394,000 and $4,120,000,
respectively.
Postretirement Benefits - In fiscal year 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions".
The statement requires accrual of estimated cost of retiree benefit
payments during the years that the employees render service. Prior to
1993, the Company expensed these benefits as paid.
2. BUSINESS SEGMENT
The Company operates exclusively in the foodservice industry. During
fiscal 1994, the Company was organized into two, rather than three, operating
groups. The Company's two groups are:
Ruby Tuesday Group - consists of Ruby Tuesdays, Mozzarella's Cafes, Silver
Spoon Cafes, L&N Seafood Grills, and Sweetpea's, America's Good Eats.
Morrison Group - comprised of Morrison's Cafeterias, Sadie's Buffets and
Grills, Morrison's Fresh Cooking, and contract food service accounts. For
fiscal year 1994, contract food services consisted of health care (60%),
education (19%), and business and industry (21%).
Operating Profit is defined as income from operations before unallocated
general and administrative expenses, net interest expense (income) and income
taxes.
Corporate assets consist primarily of cash (including short-term
investments) and certain property, including the administrative headquarters.
Financial data with respect to the Company's Groups is presented on page
33.
3. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In fiscal 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" (SFAS 106). The Company provides
health care benefits to substantially all retired employees and life insurance
benefits to certain retirees. Benefits are funded as medical claims and life
38
<PAGE>
insurance premiums are incurred. Retirees become eligible for retirement
benefits if they meet certain service and minimum age requirements. This
statement requires accrual of these postretirement health care and life
insurance benefits during the years an employee provides services. The total
postretirement benefit costs for fiscal 1994 and fiscal 1993 were $548,000 and
$407,000, respectively. Prior to fiscal 1993, the expense for these benefits
was recognized as paid. As of June 7, 1992, the cumulative effect of adopting
SFAS 106, which is reported separately in the consolidated statement of income
for the fiscal year ended June 5, 1993, resulted in a charge of $2,579,000,
or $0.07 per share, which is net of a tax benefit of $1,594,000.
The actuarial present value of accumulated postretirement benefit
obligations and the amounts recognized in the Company's consolidated balance
sheets at June 4, 1994 and June 5, 1993 are as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
<S> <C> <C>
Retirees 4,355 $3,211
Fully eligible active plan participants 882 713
Other active plan participants 671 588
Accumulated postretirement benefit obligation 5,908 4,512
Unrecognized net loss (1,747) (434)
Accrued postretirement benefit cost $4,161 $4,078
</TABLE>
The postretirement benefit cost for the years ended June 4, 1994 and
June 5, 1993, was as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
<S> <C> <C>
Service Cost $ 38 $ 29
Interest cost 380 378
Amortization of unrecognized net loss 130
Postretirement benefit cost $ 548 $ 407
</TABLE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 0% because the Company's
plan calls for a level future contribution by the employer. Measurement of
the accumulated postretirement benefit obligation was based on an assumed
7.5% discount rate for fiscal 1994 and 9.5% for 1993.
4. INCOME TAXES
Provisions for income taxes were calculated according to the precepts of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109) in fiscal years 1994 and 1993 and according to Accounting Principles
Board Opinion No. 11 in fiscal 1992. The Company adopted SFAS 109
effective June 7, 1992, the first day of fiscal year 1993. SFAS 109
required a change from the deferred to the liability method of computing
deferred income taxes. The cumulative effect of this change in accounting
principle increased fiscal 1993 net income by $2,395,000, or $0.06 per
share, and is reported separately in the consolidated statement of income
for the fiscal year ended June 5, 1993. The impact of the 1% increase in
the top marginal corporate income tax rate from 34% to 35% effective
January 1, 1993 on the provision and deferred tax assets and liabilities of
the Company was immaterial.
The components of income tax expense attributable to operations for the
years ended June 4, 1994, June 5, 1993, and June 6, 1992, are as follows:
<TABLE>
<CAPTION>
(In thousands)
Liability Liability Deferred
Method Method Method
1994 1993 1992
<S> <C> <C> <C>
Current:
Federal.......................... $ 17,587 $ 20,893 $ 18,009
State............................ 3,923 4,369 3,696
21,510 25,262 21,705
Deferred:
Federal.......................... 4,204 (2,089) (2,408)
State............................ 759 (448) (523)
4,963 (2,537) (2,931)
$ 26,473 $ 22,725 $ 18,774
</TABLE>
39
<PAGE>
Deferred tax assets and liabilities at June 4, 1994 and June 5, 1993 are
comprised of the following:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
<S> <C> <C>
Deferred Tax Assets
Unit closing reserve............ $ 2,664 $ 3,520
Escalating rents................ 2,413 1,336
Employee benefits............... 11,076 10,286
Insurance reserves.............. 12,452 11,343
Bad debt reserve................ 1,029 1,178
Other........................... 1,181 1,541
Total deferred tax assets...... 30,815 29,204
Deferred Tax Liabilities
Depreciation.................... 25,494 21,321
Retirement plans................ 2,169 2,092
Prepaid deductions.............. 1,659
Other........................... 753 88
Total deferred tax liabilities. 30,075 23,501
Net deferred tax asset......... $ 740 $ 5,703
</TABLE>
For fiscal year 1992, the deferred income tax liability results from
timing differences in the recognition of income and expense for tax and
financial reporting purposes. A summary of the components of the provision
for deferred income taxes follows:
<TABLE>
<CAPTION>
(In thousands)
1992
<S> <C>
Excess of tax over financial depreciation.......... $ 769
Provision for unit closings........................ (898)
Insurance program ................................. (2,250)
Retirement plans' expense.......................... (183)
Vacation and sick-pay expense...................... (356)
Other timing differences........................... (13)
$ (2,931)
</TABLE>
A reconciliation from the statutory Federal income tax expense to the
reported income tax expense is as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993 1992
<S> <C> <C> <C>
Statutory Federal income tax...... $ 24,905 $ 20,701 $ 17,492
State income taxes net of
Federal income tax benefit........ 3,006 2,532 2,037
Tax credits....................... (2,163) (901) (1,184)
Other, net........................ 725 393 429
$ 26,473 $ 22,725 $ 18,774
</TABLE>
The effective income tax rate was 37.2%, 37.3%, and 36.5% in 1994, 1993,
and 1992, respectively.
40
<PAGE>
5. CASH AND SHORT-TERM INVESTMENTS
The Company's cash management program provides for the investment of
excess cash balances in short-term money market instruments. Short-term
investments at June 4, 1994 and June 5, 1993, of approximately $966,000 and
$25,786,000, respectively, consisted primarily of tax exempt short-term
securities. Short-term investments are stated at cost, which approximates
market. The Company considers cash on hand at restaurants, deposits in
banks, and short-term marketable securities with a maturity of three months
or less when purchased to be cash and short-term investments.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The accompanying table provides disclosure of the estimated fair value
of the Company's financial instruments, presented in accordance with the
requirements of Statement of Financial Accounting Standards No. 107 (SFAS
107) issued by the Financial Accounting Standards Board. The disclosures
include all financial instruments other than specified items such as
leases, subsidiary investments, and pension and benefit obligations. The
disclosures also exclude the effect of taxes and other expenses that would
be incurred in a market transaction.
Cash and short-term investments:
The carrying amount reported in the balance sheet for cash and short-
term investments approximates fair value.
Notes receivable:
The fair value of the Company's notes receivable is based on expected
future cash flows discounted at market interest rates.
Short-term borrowings:
The carrying amount reported in the balance sheet for short-term
borrowings approximates fair value.
Long-term debt:
The fair value of the Company's long-term debt is based on the quoted
market prices for the same or similar issues or on the current rates
offered to the Company for debt of the same remaining maturities.
The carrying amounts and estimated fair values of the Company's
financial instruments at June 4, 1994 and June 5, 1993 are as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Cash and short-term investments.. $ 5,021 $ 5,021 $31,372 $31,372
Notes receivable................. $ 9,507 $ 8,925 $ 3,760 $ 3,474
Short-term borrowings............ $17,416 $17,416 $ -0- $ -0-
Long-term debt................... $12,625 $13,003 $12,078 $13,140
</TABLE>
7. EMPLOYEE BENEFIT PLANS
Salary Deferral Plan - Under the Morrison Restaurants Inc. Salary
Deferral Plan each eligible employee, as defined in the Plan, may elect to
make pre-tax contributions to a trust fund in amounts ranging from 2% to
10% of their annual earnings. Employees contributing a pre-tax
contribution of at least 2% may elect to make after-tax contributions not
in excess of 10% of annual earnings. The Company contribution to the Plan
is based on the employee's pre-tax contribution and years of service.
After three years of service the Company contributes 20% of the employee's
pre-tax contribution, 30% after 10 years of service and 40% after 20 years
of service. Normally, the full amount of each participant's interest in
the trust fund is paid upon retirement or total disability. However, the
Plan allows participants to make early withdrawals of pre-tax and after-tax
contributions, subject to certain restrictions. The Plan may be terminated
by the Company at any time. The Company's contributions to the trust fund
approximated $711,000, $692,000, and $586,000 for 1994, 1993, and 1992,
respectively.
Deferred Compensation Plan - The Company maintains the Morrison
Restaurants Inc. Deferred Compensation Plan for certain selected employees.
The provisions of this non-qualified Plan are similar to those of the
Salary Deferral Plan except for the employees who are eligible to
participate. The Company's contributions under the Plan approximated
$483,000, $502,000, and $413,000 for 1994, 1993, and 1992, respectively.
Assets of the Plan are held by a rabbi trust. Under current accounting
rules, assets of a rabbi trust must be accounted for as if they are assets
of the Company, therefore, all earnings and expenses are recorded in the
Company's financial statements. The net of the rabbi trust's earnings and
losses is recorded as additional liability to the participants and is
considered to be interest expense to the Company. The Company recorded
$566,000, $457,000, and $462,000 interest expense for this Plan in 1994,
1993, and 1992, respectively. Assets of the Plan approximated $13,083,000
and $10,019,000 in 1994 and 1993 and includes $5,517,000 and $3,212,000 of
Morrison Restaurants Inc. Common Stock which is accounted for as treasury
stock.
41
<PAGE>
Retirement Plan - Effective December 31, 1987, the Morrison Restaurants
Inc. Retirement Plan was amended so that no additional benefits will accrue
and no new participants will enter the Plan after that date. Participants
will receive benefits based upon salary and length of service. The Company
contributed $2,622,000 to the Plan in 1992. No contribution was made in
1994 or 1993. The Company recorded income of $95,000 in 1994 and $79,000
in 1993 but recognized net pension expense in 1992 of $141,000.
Executive Supplemental Pension Plan - Under the unfunded Executive
Supplemental Pension Plan, selected employees become eligible to receive
supplemental retirement payments based upon salary and length of service,
reduced by social security benefits and amounts otherwise receivable under
the Retirement Plan. Expenses under the Plan approximated $905,000,
$717,000, and $689,000 for 1994, 1993, and 1992, respectively.
Management Retirement Plan - Under the unfunded Morrison Restaurants
Inc. Management Retirement Plan, individuals actively employed by the
Company as of June 1, 1989, or thereafter, who have 15 years of credited
service and whose average annual compensation for the immediately preceding
three calendar years equalled or exceeded $40,000, become participants.
Participants will receive benefits based upon salary and length of service,
reduced by social security benefits and benefits payable under the
Retirement Plan and Executive Supplemental Pension Plan. Expenses
recognized approximated $492,000, $294,000, and $256,000 in 1994, 1993, and
1992, respectively.
To provide a funding source for the payments of benefits under the
Executive Supplemental Pension Plan and the Management Retirement Pension
Plan, the Company owns whole-life insurance contracts on some of the
participants. The to-date cash value of these policies net of policy loans
is $2,462,000. The Company has established a rabbi trust to hold the
policies and death benefits as they are received.
The following table details the components of pension expense, the
funded status and amounts recognized in the Company's Consolidated
Financial Statements for the Management Retirement Plan, the Executive
Supplemental Pension Plan, and the Retirement Plan.
<TABLE>
<CAPTION>
(In thousands)
Assets Exceed(Less Than) Accumulated Benefits Exceed Assets
Accumulated Benefits Executive Supplemental Pension Plan
Retirement Plan and Management Retirement Plan
June 4, June 5, June 6, June 4, June 5, June 6,
1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Components of pension
expense (income):
Service cost.........................$ 0 $ 0 $ 0 $ 203 $ 195 $ 206
Interest cost........................ 1,395 1,558 1,568 705 616 549
Actual return on plan assets......... (2,076) (1,935) (1,599)
Amortization and deferral............ 586 298 172 489 200 190
$ (95) $ (79) $ 141 $ 1,397 $ 1,011 $ 945
Plan assets at fair value.............$19,832 $19,653 $20,097 $ 0 $ 0 $ 0
Actuarial present value of
projected benefit obligations:
Accumulated benefit obligations:
Vested............................ 19,383 16,281 17,151 5,973 3,640 3,020
Nonvested......................... 1,711 1,225 937
Provision for future salary
increases.......................... 4,332 2,243 2,588
Total projected benefit obligations... 19,383 16,281 17,151 12,016 7,108 6,545
Excess (deficit) of plan assets over
projected benefit obligations........ 449 3,372 2,946 (12,016) (7,108) (6,545)
Unrecognized net loss (gain).......... 2,985 (325) (276) 457 (3,689) (3,824)
Unrecognized prior service cost....... 19 49 80 604 777 949
Unrecognized net transition obligation 2,093 2,355 2,617 3,693 3,990 4,287
Additional minimum liability.......... (980) (366) (190)
Prepaid (accrued) pension cost........$ 5,546 $ 5,451 $ 5,367 $( 8,242) $( 6,396) $( 5,323)
</TABLE>
The Retirement Plan's assets include common stock, fixed income
securities, short-term investments and cash. The discount rate is 7.5% for
all three plans for 1994 and 9.5% for 1993 and 1992. The rate of increase
in compensation levels for the Executive Supplemental Pension Plan and
Management Retirement Plan was 5% in all three years. The expected long-
term rate of return on plan assets for the Retirement Plan is 10% for all
three years.
42
<PAGE>
8. NOTES AND MORTGAGES PAYABLE
Notes and mortgages payable consists of the following:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
<C> <C> <C>
8.88% Senior Promissory Notes
payable to Life Insurance
Company of Georgia in equal
annual principal installments
of $4,000,000, commencing
December 31, 1994 through 1996..... $12,000 $12,000
Other Notes and Mortgages.......... 625 78
12,625 12,078
Less current maturities............... 4,030 11
$ 8,595 $12,067
</TABLE>
Annual maturities of notes and mortgages at June 4, 1994 are as follows:
<TABLE>
<C> <C>
1995.................................... $ 4,030
1996.................................... $ 4,032
1997.................................... $ 4,034
1998.................................... $ 36
1999.................................... $ 39
Subsequent years........................ $ 454
</TABLE>
At June 4, 1994, land and buildings with a book value of approximately
$1,670,000 collateralized the various obligations.
Under various financing agreements, the Company has agreed to certain
restrictions on the incurring of additional indebtedness and to certain
minimum consolidated working capital and net worth requirements. In
addition, the Company has agreed to restrict dividend payments (other than
stock dividends) and purchases of its capital stock to amounts based on
earnings after fiscal year 1990. At June 4, 1994, retained earnings in the
amount of $2,146,000 were available for distribution.
At June 4, 1994, the Company had committed lines of credit amounting to
$31,000,000 and non-committed lines of credit amounting to $107,000,000
with various banks at various interest rates. These lines are subject to
periodic review by each bank and may be canceled by the Company at any
time. The Company utilized its lines of credit to meet operational cash
needs during fiscal 1994. During fiscal 1994, borrowings on these lines of
credit reached a period-end maximum of $17,416,000. There were no short-
term borrowings during fiscal year 1993.
At June 4, 1994, the Company was contingently liable for approximately
$33,912,000 in letters of credit, issued primarily in connection with its
insurance programs.
Interest expense capitalized in connection with financing additions to
property and equipment amounted to approximately $1,049,000 and $646,000
for the years ended June 4, 1994 and June 5, 1993, respectively.
At June 4, 1994 and June 5, 1993, long-term debt amounts of $1,800,000
and $2,100,000, respectively, are considered extinguished in accordance
with Statement of Financial Accounting Standards No. 76 concerning
in-substance defeasance of corporate debt. U. S. Treasury Bills and cash
have been placed in an irrevocable trust to satisfy scheduled payments of
both interest and principal on these defeased obligations.
9. LEASES
Various operations of the Company are conducted in leased premises.
Initial lease terms expire at various dates over the next 23 years and may
provide for escalation of rent during the lease term. Most of these leases
provide for additional contingent rents based upon sales volume and contain
options to renew (at adjusted rentals for some leases). The administrative
headquarters has a lease term ending in 1998 and provides an option to
purchase at a nominal amount at the end of the initial lease term.
Assets recorded under capital leases at June 4, 1994 and June 5, 1993
(included in Property and Equipment in the accompanying consolidated
balance sheets) are as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
<S> <C> <C>
Other equipment....... $ 592 $ 767
Buildings............. 6,042 6,367
6,634 7,134
Less accumulated amortization........ 3,557 3,829
$ 3,077 $ 3,305
</TABLE>
43
<PAGE>
At June 4, 1994, the future minimum lease payments under capital leases
and operating leases for the next five years and in the aggregate are as
follows:
<TABLE>
<CAPTION>
(In thousands)
Capital Operating
Leases Leases
<C> <C> <C>
1995.................................... $ 186 $ 42,265
1996.................................... 185 41,575
1997.................................... 185 40,931
1998.................................... 185 40,058
1999.................................... 185 38,539
Subsequent years........................ 890 243,373
Total minimum
lease payments........................ 1,816 $446,741
Less amount representing interest....... 810
Present value of minimum lease payments
under capital leases (including
current maturities of $75)............ $ 1,006
</TABLE>
Rental expense pursuant to operating leases for the years ended June 4,
1994, June 5, 1993, and June 6, 1992 is summarized as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993 1992
<S> <C> <C> <C>
Minimum rent............ $43,126 $37,505 $31,099
Contingent rent......... 12,662 11,120 12,376
$55,788 $48,625 $43,475
</TABLE>
At June 4, 1994 and June 5, 1993, respectively, $1,520,000 and
$2,005,000 of capital lease obligations are considered extinguished in
accordance with Statement of Financial Accounting Standards No. 76
concerning in-substance defeasance of corporate debt. U. S. Treasury Bills
and cash have been placed in an irrevocable trust to satisfy scheduled
payments of both interest and principal on these capital lease obligations.
10. PREFERRED STOCK
Under its Certificate of Incorporation the Company is authorized to
issue preferred stock with a par value of $0.01 in an amount not to exceed
250,000 shares which may be divided into and issued in designated series,
with dividend rates, rights of conversion, redemption, liquidation prices
and other terms or conditions as determined by the Board of Directors. No
preferred shares have been issued as of June 4, 1994. The Board of
Directors has designated 50,000 of such shares as Series A Junior
Participating Preferred Stock and has issued rights to acquire such shares,
upon certain events, with an exercise price of $75.00 per one one-
thousandth of a share, subject to adjustment. The rights expire on April
9, 1997, and may be redeemed prior to 10 days after the acquisition of 20%
or more of the Company's common stock.
11. CAPITAL STOCK, OPTIONS, AND BONUS PLANS
The Morrison Restaurants Inc. Long-Term Incentive Plan -- Under this
Plan, options and performance units were granted to key employees. The
Plan was effective from September 24, 1984, until May 27, 1989. The
exercise price of stock options granted was not less than the fair market
value of the underlying stock on the date of grant. All options are
currently exercisable and expire 10 years and one day from the date of
grant. At June 4, 1994, the Company had reserved 50,000 shares of common
stock for the Morrison Restaurants Inc. Long-Term Incentive Plan.
The Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified Stock
Option Plan -- This Plan was effective from November 30, 1986 until
November 30, 1992. A Committee appointed by the Board determined the
employees who were eligible to participate in this Plan. Based on a
participant's cash bonus amount receivable under the Company's cash bonus
plans, the Committee determined the number of shares of the Company's
common stock the participant could purchase under this Plan. Each
participant who elected to purchase shares of the Company's common stock
received additional shares of stock equal to 15% of the shares purchased.
The shares purchased (including bonus shares) generally may not be sold,
transferred or pledged for three years after the date on which they were
received by the participant. Each participant who so elected was also
granted an option to purchase shares of common stock in an amount generally
equal to three times the number of bonus shares issued. The price for the
stock and stock options was the fair market value of the common stock on
the date set by the Committee. Stock options generally may not be
exercised until five years have lapsed from the date of grant, and the
options expire 10 years and one day from the date of grant. No stock was
issued under the Plan during 1994. At June 4, 1994, the Company had
reserved 1,192,000 shares of common stock for this Plan.
44
<PAGE>
The Morrison Restaurants Inc. Stock Incentive Plan -- In September 1992,
the shareholders approved The Morrison Restaurants Inc. Stock Incentive
Plan which is an amendment and restatement of The Morrison Restaurants Inc.
1989 Non-Qualified Stock Option Plan. A Committee, appointed by the Board,
administers the Plan on behalf of the Company and has complete discretion
to determine participants and the terms and provisions of Stock Incentives,
subject to the Plan. The Incentive Plan permits the Committee to make
awards of shares of common stock, awards of derivative securities related
to the value of the common stock, and certain cash awards to eligible
persons. These discretionary awards may be made on an individual basis or
pursuant to a program approved by the Committee for the benefit of a group
of eligible persons. The Incentive Plan permits the Committee to make
awards of a variety of stock incentives, including (but not limited to)
dividend equivalent rights, incentive stock options, non-qualified stock
options, performance unit awards, phantom shares, stock appreciation rights
and stock awards. During 1994, 21,000 shares were issued under the Plan.
At June 4, 1994, the Company had reserved a total of 1,304,000 shares of
common stock for this Plan.
The Morrison Restaurants Inc. Stock Incentive and Deferred Compensation
Plan for Directors -- In September 1992, the shareholders approved the
Morrison Restaurants Inc. Stock Incentive and Deferred Compensation Plan
for Directors, which is an amendment and restatement of the Morrison
Restaurants Inc. Deferred Compensation Plan for Directors. The Company
previously had no plan permitting equity-based awards to its non-management
directors. The Directors' Plan permits each non-management director to
purchase options to purchase shares of common stock with all or a portion
of his or her retainer, in 25% increments, other than any portion of the
retainer deferred to his or her deferred compensation account. Any option
issued under the Plan is granted once each year on the date of the annual
meeting of the stockholders. Each option is exercisable in full upon the
earliest of (i) the first anniversary of the date the option was granted,
(ii) the date the optionee ceases to be a director on account of death,
disability or after attaining age 70, or (iii) the date of a change in
control. Each option is exercisable at a price equal to one-half of the
per share closing sale price of the common stock on the last trading day
immediately prior to the date that option is awarded. The number of shares
of common stock subject to each option will be equal to the amount of a
director's retainer used to purchase options divided by the option exercise
price. Once exercisable, each option remains exercisable for 10 years from
the date of grant. In association with this Plan, a one-time restricted
stock award was made, in fiscal 1993, to each of the Company's existing
non-management directors, totaling 16,000 shares. A Committee, appointed by
the Board, administers the Plan on behalf of the Company. At June 4, 1994,
the Company had reserved 207,000 shares of common stock for the Directors'
Plan.
The Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan --
In October 1993, the Board of Directors approved the Morrison Restaurants
Inc. 1993 Non-Executive Stock Incentive Plan. A Committee, appointed by
the Board, administers the Plan on behalf of the Company and has full
authority in its discretion to determine the officers and key employees to
whom Stock Incentives are granted and the terms and provisions of Stock
Incentives, subject to the Plan. During 1994, 90,000 shares were issued
under the Plan. At June 4, 1994, the Company had reserved a total of
1,410000 shares of common stock for this Plan.
The following table summarizes the activity in options under stock
option plans:
<TABLE>
<CAPTION>
Number of Shares Under Option
(Amounts in thousands except per-share data)
1994 1993 1992
<S> <C> <C> <C>
Beginning of year........... 2,386 2,258 1,988
Granted..................... 755 492 453
Exercised................... (313) (267) (69)
Forfeitures................. (111) (97) (114)
End of year................. 2,717 2,386 2,258
Exercisable................. 958 558 368
Outstanding options prices..$5.40-$25.38 $5.40-$16.75 $5.40-$13.97
Exercised options prices....$5.40-$11.36 $5.40-$11.50 $5.40-$13.25
</TABLE>
12. SUBSEQUENT EVENTS
On August 8, 1994, the Company sold certain education, business and
industry (B&I) contracts and assets of the Morrison Group to Gardner
Merchant Food Services, Inc., a wholly owned subsidiary of Gardner Merchant
Ltd., for a cash payment of $100 million. The Company will close the
remaining B&I accounts . The sale of the B&I accounts and the
discontinuance of the remaining accounts is expected to result in a net
pre-tax gain of approximately $35 million. Sales from B&I contracts in 32
states and Washington, D.C., in fiscal year 1994 were $249.9 million, with
operating profits of $7.3 million.
At its June 27, 1994 meeting, the Company's Board of Directors approved
the plan to phase out its L&N Seafood Grills concept by converting 30 of
38 units into Ruby Tuesdays, Mozzarella's Cafes, or Sweetpea's Restaurants,
and by selling or closing the remaining L&N locations. The cost of the
conversions and closings is estimated to approximate $19.7 million and will
be reserved for in the first quarter of fiscal year 1995. Sales for the
L&N concept in fiscal year 1994 were $63.3 million with negligible results.
45
<PAGE>
13. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial results for the years ended June 4, 1994 and June 5,
1993, are summarized below. All quarters are composed of 13 weeks.
Quarterly Earnings Per Share, Market Price Per Share and Cash Dividends on
Common Stock have been restated to reflect common stock dividends and
splits through June 4, 1994.
<TABLE>
<CAPTION>
(In thousands except per-share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
For The Year Ended June 4, 1994:
Revenues........................................... $282,158 $310,360 $309,951 $310,920 $1,213,389
Gross Profit....................................... $ 39,929 $ 47,697 $ 50,321 $ 48,167 $ 186,114
Income Before Income Taxes......................... $ 13,131 $ 19,495 $ 19,874 $ 18,657 $ 71,157
Provision for Federal and State Income Taxes....... 5,022 7,457 7,574 6,420 26,473
Net Income......................................... $ 8,109 $ 12,038 $ 12,300 $ 12,237 $ 44,684
Primary Earnings Per Common and
Common Equivalent Share...............................$ 0.22 $ 0.32 $ 0.33 $ 0.33 $ 1.20
Fully Diluted Earnings Per Common and
Common Equivalent Share...............................$ 0.22 $ 0.32 $ 0.33 $ 0.33 $ 1.20
<CAPTION>
(In thousands except per-share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
For The Year Ended June 5, 1993:
<S> <C> <C> <C> <C> <C>
Revenues........................................... $248,360 $281,626 $283,591 $286,268 $1,099,845
Gross Profit....................................... $ 33,477 $ 40,972 $ 41,824 $ 41,606 $ 157,879
Income Before Income Taxes and Cumulative Effect
of Accounting Changes............................ $ 10,999 $ 16,478 $ 16,979 $ 16,428 $ 60,884
Provision for Federal and State Income Taxes....... 4,021 6,121 6,430 6,153 22,725
Income Before Cumulative Effect of Accounting
Changes.......................................... 6,978 10,357 10,549 10,275 38,159
Cumulative Effect of Accounting Changes, net:
Postretirement benefits.......................... (2,579) (2,579)
Income taxes..................................... 2,395 2,395
Net Income......................................... $ 6,794 $ 10,357 $ 10,549 $ 10,275 $ 37,975
Primary Earnings Per Common and
Common Equivalent Share:
Before Cumulative Effect of Accounting Changes... $ 0.19 $ 0.27 $ 0.28 $ 0.27 $ 1.01
Cumulative Effect of Accounting Changes, net:
Postretirement benefits........................ (0.07) (0.07)
Income taxes................................... 0.06 0.06
Primary Earnings Per Common and
Common Equivalent Share............................ $ 0.18 $ 0.27 $ 0.28 $ 0.27 $ 1.00
Fully Diluted Earnings Per Common and
Common Equivalent Share:
Before Cumulative Effect of Accounting Changes... $ 0.19 $ 0.27 $ 0.28 $ 0.27 $ 1.01
Cumulative Effect of Accounting Changes, net:
Postretirement benefits........................ (0.07) (0.07)
Income taxes................................... 0.06 0.06
Fully Diluted Earnings Per Common and
Common Equivalent Share............................ $ 0.18 $ 0.27 $ 0.28 $ 0.27 $ 1.00
</TABLE>
46
<PAGE>
Beginning October 21, 1993 Morrison Restaurants Inc. common stock was
publicly traded on the New York Stock Exchange under the ticker symbol RI.
Prior to that, it was traded over-the-counter under the NASDAQ-NMS Symbol
MORR. The following table sets forth the reported high and low prices on
the NYSE or the high and low bid prices in the over-the-counter market for
each quarter during fiscal 1994 and 1993. The over-the-counter market
quotations reflect inter-dealer prices without retail mark-ups or mark-
downs, and neither the NYSE nor over-the-counter quotations include
commissions, hence they may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
<C> <C> <C> <C> <C> <C>
1994 market price per share:
High............................................ $22 1/2 $26 1/8 $27 1/2 $27
Low............................................. $19 1/8 $21 1/8 $21 3/4 $22
1993 market price per share:
High............................................ $17 1/4 $19 $20 $21 1/2
Low............................................. $12 1/8 $14 3/4 $15 3/4 $17 1/4
Cash dividends on the common stock of Morrison Restaurants Inc. were
paid during each quarter of fiscal 1994 and 1993, as follows:
1994 cash dividends per share...................... $0.08 $0.08 $0.0833 $0.0833 $0.3266
1993 cash dividends per share...................... $0.08 $0.08 $0.08 $0.08 $0.32
</TABLE>
On June 30, 1994 the Company's Board of Directors declared a quarterly
dividend of $0.0833 per share payable July 29, 1994 to 6,890 shareholders
of record on July 11, 1994.
47
<PAGE>
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Stockholders and Board of Directors
Morrison Restaurants Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Morrison
Restaurants Inc. and Subsidiaries as of June 4, 1994 and June 5, 1993, and
the related consolidated statements of income, stockholders' equity and
cash flows for each of the three fiscal years in the period ended June 4,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Morrison Restaurants Inc. and Subsidiaries at June 4, 1994 and June 5,
1993, and the consolidated results of their operations and their cash flows
for each of the three fiscal years in the period ended June 4, 1994, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young
Birmingham, Alabama
June 23, 1994, except for Note 12 of Notes to Consolidated
Financial Statements as to which the date is August 8, 1994
RESPONSIBILITY FOR FINANCIAL STATEMENTS
Morrison Restaurants Inc. has prepared the accompanying consolidated
financial statements in accordance with generally accepted accounting
principles appropriate in the circumstances. They necessarily include some
amounts that are based on estimates and judgments as to the expected
effects of incomplete events and transactions.
In meeting its responsibility for the reliability of the financial
statements, the Company maintains and relies on a system of internal
controls. This system is designed to provide reasonable, but not absolute,
assurance at appropriate cost that assets are safeguarded and transactions
are recorded properly. It is augmented by written policies and procedures;
an organizational structure which provides for division of responsibilities
where appropriate in the circumstances; training and development of
managers in financial and other functional areas; and evaluation by
independent auditors during their audit of the financial statements.
The Board of Directors of Morrison Restaurants Inc. pursues its
oversight role with respect to the Company's financial statements through
an Audit Committee. This Committee meets periodically during the year with
management personnel and the independent auditors to review the activity of
each, to consider audit results, and to discuss internal accounting
control, auditing, and financial reporting matters. The independent
auditors have full and free access to the Audit Committee at any time
without the presence of management.
/s/ Sandy Beall /s/ J. Russell Mothershed
Sandy Beall J. Russell Mothershed
President and Sr. Vice President,
Chief Executive Officer Finance
48
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
(a) The Registrant has no parent.
(b) The Registrant's subsidiaries and their jurisdictions of each
organization are as follows (100% of voting securities of each subsidiary
owned by the Registrant):
Alabama:
Galaxy Management, Inc.
California:
Manask Food Service, Inc.
Delaware:
Morrison International, Inc.
Ruby Tuesday, Inc.
Pennsylvania:
Custom Management Corporation
John. C. Metz & Associates, Inc.
Custom Management Corporation of Pennsylvania
Morrison Custom Management Corporation of Pennsylvania
New Jersey:
Morrison of New Jersey, Inc.
In addition to the subsidiaries listed above, the Registrant has a minority
ownership in several operating subsidiaries and several wholly-owned and
minority interests in non-operating subsidiaries created solely for the
purpose of holding certain licenses.
Exhibit 23--Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-32697) pertaining to the Morrison
Restaurants Inc. Deferred Compensation Plan, in the Registration
Statement (Form S-8 No. 33-20585) pertaining to the Morrison
Restaurants Inc. Salary Deferral Plan, in the Registration
Statement (Form S-8 No. 2-97120) pertaining to the Morrison
Restaurants Inc. Long-Term Incentive Plan, in the Registration
Statement (Form S-8 No. 33-13593) pertaining to the Morrison
Restaurants Inc. 1987 Stock Bonus and Nonqualified Stock Option
Plan, in the Registration Statement (Form S-8 No. 33-46220)
pertaining to Morrison Restaurants Inc. Compensatory Non-Qualified
Stock Option Arrangements, and in the Registration Statement (Form
S-8 No. 33-50452) pertaining to the Morrison Restaurants Inc. Stock
Incentive and Compensation Plan for Directors, Stock Incentive Plan
and Non-Qualified Management Stock Option Agreements and in their
related Prospectuses of our report dated June 23, 1994, except for
Note 12 of Notes to Consolidated Financial Statements as to which
the date is August 8, 1994, with respect to the consolidated
financial statements and schedules of Morrison Restaurants Inc.
included in the Annual Report (Form 10-K) for the year ended June
4, 1994.
/s/ Ernst & Young
Ernst & Young
Birmingham, Alabama
August 29, 1994
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MORRISON
RESTAURANTS INC. FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDED JUNE 4,
1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-04-1994
<PERIOD-END> JUN-04-1994
<CASH> 5,021
<SECURITIES> 0
<RECEIVABLES> 31,018
<ALLOWANCES> 2,622
<INVENTORY> 16,396
<CURRENT-ASSETS> 79,616
<PP&E> 507,781
<DEPRECIATION> 240,124
<TOTAL-ASSETS> 408,453
<CURRENT-LIABILITIES> 122,623
<BONDS> 9,526
<COMMON> 436
0
0
<OTHER-SE> 220,700
<TOTAL-LIABILITY-AND-EQUITY> 408,453
<SALES> 1,209,625
<TOTAL-REVENUES> 1,213,389
<CGS> 378,103
<TOTAL-COSTS> 1,067,046
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> 71,157
<INCOME-TAX> 26,473
<INCOME-CONTINUING> 44,684
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,684
<EPS-PRIMARY> $1.20
<EPS-DILUTED> $1.20
</TABLE>
