UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 3, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 of incorporation or (I.R.S. Employer identifi-
organization) cation no.)
4721 Morrison Drive
P.O. Box 160266
Mobile, AL 36625
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (334)344-3000
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 .
33,992,307
(Number of shares of $0.01 par value common stock outstanding
as of January 7, 1995)
Exhibit Index appears on page 19.
INDEX
PAGE
NUMBER
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
DECEMBER 3, 1994 AND JUNE 4, 1994.............. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN AND TWENTY-SIX WEEKS ENDED
DECEMBER 3, 1994 AND DECEMBER 4, 1993.......... 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE TWENTY-SIX WEEKS ENDED
DECEMBER 3, 1994 AND DECEMBER 4, 1993.......... 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS..................................... 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS................................. 9-15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS............................. 16
ITEM 2. CHANGES IN SECURITIES......................... NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES............... NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS............................ 16
ITEM 5. OTHER INFORMATION............................. 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............. 17
SIGNATURES................................................. 18
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<CAPTION>
DEC. 3, 1994 JUNE 4, 1994
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments.................. $ 5,060 $ 5,021
Receivables - Accounts and Notes (net)........... 34,701 33,059
Inventories...................................... 13,833 16,396
Prepaid expenses................................. 9,748 13,327
Deferred income tax benefits..................... 22,148 11,813
Total Current Assets........................... 85,490 79,616
PROPERTY AND EQUIPMENT - at cost................... 543,027 507,781
Less accumulated depreciation and amortization... 244,181 240,124
298,846 267,657
OTHER INVESTMENTS.................................. 11,823 10,270
COST IN EXCESS OF NET ASSETS ACQUIRED.............. 15,266 22,571
OTHER ASSETS....................................... 21,542 28,339
TOTAL ASSETS................................. $432,967 $408,453
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and notes payable....................... $ 59,171 $51,922
Other current liabilities........................ 97,351 70,701
Total Current Liabilities.................... 156,522 122,623
LONG-TERM DEBT..................................... 1,465 9,526
OTHER DEFERRED LIABILITIES......................... 58,862 55,168
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value
(authorized: 100,000 shares;
issued: 12/03/94 - 43,644 shares
issued: 06/04/94 - 43,644 shares)............. 436 436
Capital in excess of par value................... 79,916 77,656
Retained earnings................................ 278,795 248,044
359,147 326,136
Less common stock held in treasury - at cost
(9,589 shares @ 12/03/94; 8,335 shares @ 06/04/94) 143,029 105,000
216,118 221,136
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY..... $432,967 $408,453
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
ITEM 1 - FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER-SHARE DATA)
(UNAUDITED)
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
DEC. 3, 1994 DEC. 4, 1993 DEC. 3, 1994 DEC. 4, 1993
<S> <C> <C> <C> <C>
SALES................................. $252,523 $310,360 $493,773 $ 592,518
COST AND EXPENSES:
Cost of merchandise................. 72,014 97,730 142,507 185,747
Payroll and related costs........... 88,118 110,977 171,716 215,180
Other operating costs............... 45,126 53,956 88,425 103,965
Selling, general and administrative. 18,999 18,563 36,728 35,831
Depreciation........................ 9,331 9,658 17,987 19,067
Interest expense net of
interest income................... (501) (19) (351) 102
L&N conversion/closing costs........ - - 19,727 -
Net gain on sale/closure of
B&I accounts...................... - - (46,782)
233,087 290,865 429,957 559,892
INCOME BEFORE PROVISION FOR
INCOME TAXES....................... 19,436 19,495 63,816 32,626
PROVISION FOR FEDERAL AND STATE
INCOME TAXES........................ 7,305 7,457 27,175 12,479
NET INCOME............................ $ 12,131 $ 12,038 $ 36,641 $ 20,147
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary............................. $0.34 $0.32 $1.01 $0.54
Fully Diluted....................... $0.34 $0.32 $1.01 $0.54
CASH DIVIDENDS PER SHARE PAID......... $0.0875 $0.0833 $0.1708 $0.1633
WEIGHTED AVERAGE SHARES USED IN
EARNINGS PER SHARE COMPUTATION:
Primary............................. 36,091 37,521 36,324 37,444
Fully Diluted....................... 36,092 37,521 36,383 37,472
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
ITEM 1 - FINANCIAL STATEMENTS
MORRISON RESTAURANTS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<CAPTION>
FOR THE 26-WEEKS ENDED
DEC. 3, 1994 DEC. 4, 1993
<S> <C> <C>
CASH FROM OPERATIONS........................... $19,510 $48,026
INVESTING ACTIVITIES:
Purchases of property and equipment............ (66,029) (45,288)
Proceeds from sale of B&I contracts and assets. 100,000 0
Other.......................................... (2,192) (1,620)
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES.................................... 31,779 (46,908)
FINANCING ACTIVITIES:
Early retirement of debt....................... (12,000) 0
Net change in short-term borrowings............ 2,584 0
Principal payments on long-term borrowings..... (58) (87)
Stock repurchases.............................. (40,989) (10,148)
Dividends paid................................. (6,008) (5,895)
Other.......................................... 5,221 1,890
NET CASH USED BY FINANCING ACTIVITIES.......... (51,250) (14,240)
INCREASE/(DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS...................... 39 (13,122)
Beginning cash and short-term investments...... 5,021 31,372
Ending cash and short-term investments......... $ 5,060 $18,250
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
</PAGE>
ITEM 1
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. The statements should be read
in conjunction with the notes to the consolidated financial
statements included in Morrison Restaurants Inc.'s annual report
for the fiscal year ended June 4, 1994. The accompanying
unaudited, condensed consolidated financial statements reflect
all adjustments for normal recurring accruals and also includes
the accruals for the phase out of the L&N Seafood Grill concept
and the remaining expenses to be incurred in connection with the
sale/closing of the education, business and industry accounts.
These adjustments are necessary, in the opinion of management,
for a fair presentation of the financial position, the results of
operations and the cash flows for the interim periods presented.
The results of operations for the interim periods reported herein
are not necessarily indicative of results to be expected for the
full year.
NOTE B - NOTES AND MORTGAGES PAYABLE
During the quarter ended September 3, 1994, the Company retired
the $12.0 million 8.8% Senior Promissory Note payable to Life
Insurance Company of Georgia which was due in equal annual
principal installments of $4.0 million, commencing December 31,
1994 through December 31, 1996. The note was paid with funds
received from the sale of the education, business and industry
contracts and assets. As a result, the restrictions on the
incurring of additional indebtedness, minimum consolidated
working capital and net worth requirements, as well as dividend
payments and purchases of its capital stock (which were described
in Note 8 of Notes to Consolidated Financial Statements of the
Company's annual report for fiscal 1994) are no longer in effect.
On September 30, 1994, the Company entered into a five-year
revolving line of credit with various banks which will allow the
Company to borrow a total of $200.0 million over the next five
years under various interest rate options. Commitment fees
ranging from 0.0625% to 0.15% per annum are payable on the unused
portion of the credit facility. The Company is not required to
maintain compensating balances in connection with this agreement.
During the quarter ended December 3, 1994, the Company borrowed
$20.0 million under the terms of the agreement at interest rates
ranging from 5.925% to 5.995% per annum. These loans, which were
due on December 28, 1994, have been classified as current in the
accompanying financial statements. On December 28, 1994, the
Company replaced the notes with notes for an equal amount with
similar terms.
The credit agreement requires the Company, among other things, to
maintain minimum levels of net worth and certain minimum
financial ratios. Under the provisions of the net worth
covenant, stockholders' equity available to pay cash dividends or
purchase treasury stock was $22.8 million at December 3, 1994.
<PAGE>
<TABLE>
ITEM 1
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE C- MORRISON RESTAURANTS INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
% %
SEPT. 3, 1994 SEPT. 4, 1993 Change SEPT. 3, 1994 SEPT. 4, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
SALES:
Ruby Tuesday Group . . . . . . . . . $120,782 $ 95,602 26 $234,022 $186,097 26
Morrison Group . . . . . . . . . . . 131,745 125,730 5 259,711 251,131 3
Corporate and Other . . . . . . . . (4) (112) 40 (150)
. . . . . . . . . . . . . . . . . . 252,523 221,220 14 493,773 437,078 13
L&N* . . . . . . . . . . . . . . . . 0 15,107 0 31,900
B&I**. . . . . . . . . . . . . . . . 0 74,033 0 123,540
$252,523 $310,360 (19) $493,773 $592,518 (17)
OPERATING PROFIT:
Ruby Tuesday Group . . . . . . . . . $ 10,384 $ 8,682 20 $ 21,399 $ 17,895 20
Morrison Group . . . . . . . . . . . 11,497 9,736 18 20,881 17,651 18
21,881 18,418 19 42,280 35,546 19
L&N* . . . . . . . . . . . . . . . . 0 (701) 0 (963)
B&I**. . . . . . . . . . . . . . . . 0 4,564 0 3,724
21,881 22,281 (2) 42,280 38,307 10
Corporate Expenses . . . . . . . . . (2,946) (2,805) 5 (5,870) (5,579) 5
Net Interest Income (Expense) . . . 501 19 351 (102)
L&N Conversion/Closing Costs . . . 0 0 (19,727) 0
Net Gain on Sale/Closure
of B&I Contracts. . . . . . . . . . 0 0 46,782 0
Income Before Income Taxes . . . . . 19,436 19,495 0 63,816 32,626 96
Income Taxes . . . . . . . . . . . . 7,305 7,457 (2) 27,175 12,479 118
Net Income . . . . . . . . . . . . . $ 12,131 $ 12,038 1 $ 36,641 $ 20,147 82
Earnings per Common and
Common Equivalent Share:
Primary. . . . . . . . . . . . . . . $0.34 $0.32 6 $1.01 $0.54 87
Fully Diluted. . . . . . . . . . . . $0.34 $0.32 6 $1.01 $0.54 87
Common and Common Equivalent
Shares:
Primary. . . . . . . . . . . . . . . 36,091 37,521 36,324 37,444
Fully Diluted. . . . . . . . . . . . 36,092 37,521 36,383 37,472
OPERATING PROFIT MARGINS:
Ruby Tuesday Group. . . . . . . . . . 8.6% 9.1% 9.1% 9.6%
Morrison Group. . . . . . . . . . . . 8.7% 7.7% 8.0% 7.0%
* Represents the L&N Seafood Grill units of the Ruby Tuesday Group which are being converted or
closed.
** Represents the education, business and industry (B&I) contracts of the Morrison Group which
were sold or will be closed.
</TABLE>
</PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In March 1994, the Board of Directors of the Company approved
four-year financial and business plans for the Company and a
strategy to invest in high-growth businesses that have or can
obtain a dominant market position in their respective
categories. Pursuant to this strategy, on June 27, 1994, the
Company announced that it had reached a definitive agreement
to sell certain of the education, business and industry (B&I)
contracts and assets and plans to phase out its L&N Seafood
Grill concept by converting certain units to its more
profitable and successful Ruby Tuesday restaurants and
Mozzarella's Cafes and selling or closing the remaining units.
Management believes that while the education, business and
industrial food service division was a growing and important
segment of the Company, the Company was not likely to achieve
dominance in that category. Management also believes that the
Company's growth opportunities for casual dining have been and
continue to be in the under $10 segment of the industry and
thus determined to phase out the higher-priced L&N Seafood
Grill concept and concentrate on expanding the Company's
proven growth vehicles in the casual dining market.
Pursuant to the agreement entered into and announced on June
27, 1994, on August 8, 1994, the Company sold certain
education, business and industry contracts and assets of the
Morrison Group to Gardner Merchant Food Services, Inc., a
wholly owned subsidiary of Gardner Merchant Ltd., for $100.0
million in cash. The Company announced it would close the
remaining accounts and as of January 1, 1995 all of the
accounts which were not sold to Gardner Merchant had been
closed. The sale, net of related expenses and closing costs
of approximately $11.1 million, resulted in a net pre-tax gain
of $46.8 million.
The plan to phase out the L&N concept, as approved by the
Board of Directors on June 27, 1994, provided for the
conversion of 30 of the 38 L&N Seafood Grill units into other
concepts and the sale or closing of the remaining units. As
a result of a default on a licensing agreement with the
Company, three additional L&N Seafood Grill units will likely
revert to the Company and be sold or closed. The Company's
phase out plan presently calls for the conversion of 25 of 41
L&N Seafood Grill units and the closing or sale of 16 units.
Funding for the conversion/closing of the L&N units will be
provided by a combination of remaining proceeds from the sale
of the B&I contracts assets and ongoing operations. The
Company intends to complete the plan to phase out the L&N
concept by the end of fiscal 1995 and as of December 3, 1994,
the Company has closed 27 units, of which 16 units have been
converted.
The Company accrued approximately $19.7 million for costs to
be incurred as a result of the phase out of the L&N concept
consisting primarily of the following: losses on disposal of
fixed assets net of anticipated proceeds and the net cost of
related lease obligations for the units to be closed
(approximately $11.6 million), expected operating losses
during the phase out period (approximately $4.8 million),
severance and continuation pay (approximately $1.1 million),
and other losses on the conversion of units consisting
primarily of the write off of fixed assets, inventory, and
unamortized cost in excess of net assets acquired
(approximately $2.2 million). At December 3, 1994, $4.8
million of expenses related to the phase out of the L&N
concept had been charged against the reserve with $3.1 million
of these charges related to fiscal 1995 L&N operating losses
and the remaining $1.7 million related to write-offs of
inventories, intangibles and other assets, severance pay and
other expenses which were incurred as a result of the phase
out of the L&N concept.
1. FINANCIAL CONDITION
1.1 ASSETS
Total Assets at December 3, 1994 were $433.0 million, a $24.5
million increase from $408.5 million as of the prior fiscal
year end. Cash and Short-Term Investments, $5.1 million at
December 3, 1994, are virtually unchanged from the prior
fiscal year end balance of $5.0 million, but are $33.6 million
below the previous quarter end. The change from first quarter
results from continued use of the proceeds from the sale of
B&I contracts and assets for capital expenditures, repurchases
of stock, and cash payments for costs associated with the B&I
sale and L&N conversions and closings. Accounts and Notes
Receivable increased $1.6 million to $34.7 million from $33.1
million at June 4, 1994. This fluctuation is the net result
of a $7.3 million decrease in trade receivables primarily due
to the sale of the B&I contracts and assets; an increase in
vendor rebates due the Company of $4.6 million; a $5.4 million
increase due to additional loans to Tias, Inc. of $3.3 million
and the reclassification of the entire note receivable
resulting from the Company's execution of a Letter of Intent
to acquire Tias, Inc., which was announced on November 10,
1994; and a decline in various other items of $1.1 million.
Inventories decreased $2.6 million from $16.4 million at June
4, 1994. The decrease was primarily the result of the sale of
the B&I contracts and assets offset by additional inventories
resulting from new unit openings in the Ruby Tuesday Group.
Deferred Tax Benefits have increased $10.3 million to $22.1
million at December 3, 1994 primarily as a result of the
effects of the phase out of the L&N Seafood Grill concept and
the sale of certain B&I contracts and assets and the closure
of the remaining B&I accounts. Property and Equipment
increased $31.1 million from the prior fiscal year ended June
4, 1994. The increase is due to the net result of capital
expenditures of $66.0 million, depreciation expense totaling
$20.5 million, and $14.4 million in retirements ($9.9 million
and $3.2 million of retirements result from the sale of the
B&I contracts and assets and closure of the remaining B&I
accounts, respectively). Capital expenditures consisted
primarily of $52.9 million in the Ruby Tuesday Group and $11.4
million in the Morrison Group. The Company anticipates that
during the remaining quarters of fiscal 1995 capital expansion
will be financed by funds generated by operations and from
borrowings on lines of credit as discussed in Section 1.4
"Short-Term Borrowings". Costs in excess of net assets
acquired decreased $7.3 million to $15.3 million at December
3, 1994 due to a $6.8 million reduction from the sale of the
B&I contracts and assets in the first quarter of fiscal 1995.
Other assets decreased $6.8 million primarily as a result of
the reclassification of the Tias, Inc. long-term notes
receivable to current and a reduction in assets from the sale
of the B&I contracts and assets.
1.2. LIABILITIES
Total Liabilities at December 3, 1994 were $216.8 million, a
$29.5 million increase from $187.3 million as of the end of
the prior fiscal year. Accounts and Notes Payable at December
3, 1994 were $59.2 million, a $7.2 million increase from the
end of the prior year. The increase is primarily due to $20.0
million in borrowings under the Company's credit facility and
a $7.9 million net increase in trade accounts payable offset
by the early retirement of the Life of Georgia note payable
(the current portion of which was $4.0 million at year end),
and repayment of the $17.4 million of short-term borrowings
outstanding at June 4, 1994. The net increase in trade
accounts payable results from a higher level of liabilities
for capital expansion at December 3, 1994 than the previous
year end and the liabilities associated with certain second
quarter stock repurchases, offset by lower accounts payable
for both L&N and B&I. Both the Life of Georgia note payable
and the short-term borrowings were paid with proceeds from the
sale of the B&I contracts and assets. Other current
liabilities increased $26.7 million from $70.7 million at June
4, 1994. The change is the result of a $15.5 million increase
in income taxes payable, primarily the result of taxes due on
the gain on the sale of the B&I contracts and assets, and
establishing accruals for the costs associated with the
conversion/closing of the L&N units and the remaining B&I
related expenses, offset by a decline in operating liabilities
of B&I and L&N. Long-Term Debt decreased $8.1 million to $1.5
million at December 3, 1994 from the end of the prior year as
a result of the early retirement of the Life Insurance Company
of Georgia note payable.
1.3 WORKING CAPITAL
The Company had negative working capital of $71.0 million and
the current ratio was .55 at December 3, 1994, compared to
negative $43.0 million working capital and .65 current ratio
at the end of the prior year. Borrowings under the Company's
revolving line of credit, capital expenditures resulting from
the Company's expansion, and stock purchases under the
Company's stock repurchase program in amounts exceeding the
proceeds from the sale of the B&I contracts and assets caused
the decrease in the Company's working capital.
1.4 SHORT-TERM BORROWING
On September 30, 1994, the Company entered into a five-year
revolving line of credit with various banks which will allow
the Company to borrow a total of $200.0 million over the next
five years under various interest rate options. The Company
intends to borrow against this line during the remainder of
fiscal 1995 to help finance the Company's expansion of
operations.
In addition, at December 3, 1994, the Company had committed
lines of credit amounting to $27.0 million and non-committed
lines of credit amounting to $64.0 million with various banks
at varying interest rates. These lines are subject to
periodic review by each bank and may be canceled by the
Company at any time. During the quarter ended December 3,
1994, borrowings on these lines of credit reached $19.4
million but were repaid with $20.0 million of proceeds with a
weighted average interest rate of 5.9625% per annum from
borrowings against the $200.0 million revolving line of
credit.
1.5 LONG-TERM BORROWING
Long-term borrowing decreased $8.1 million from the prior year
as a result of the early retirement of the Senior Promissory
Note payable to Life Insurance Company of Georgia during the
first quarter. This note was repaid with proceeds from the
sale of the education, business and industry contracts and
assets.
1.6 CASH DIVIDENDS
Cash dividends paid during the second quarter of fiscal year
1995 amounted to $2.9 million. Dividends paid per share were
$0.0875 for the second quarter, an increase of 5.0% from the
prior quarter of $0.0833 per share.
2. RESULTS OF OPERATIONS
2.1 SALES
Total Sales for the quarter ended December 3, 1994 decreased
18.6% from total sales for the same quarter of the prior year.
Total sales for the 26 weeks ended December 3, 1994 decreased
16.7% from total sales for the same period of the prior year.
The decrease for the quarter as compared to the same quarter
in the prior year was the net result of $89.1 million of L&N
and B&I sales included in second quarter of fiscal 1994,
offset by a 26.3% sales increase in the Ruby Tuesday Group and
a 4.8% increase in the Morrison Group. The decrease in sales
for the 26 weeks ended December 3, 1994 as compared to the 26
weeks ended December 4, 1993 was the net result of $155.4
million of L&N and B&I sales included in the fiscal 1994
period, offset by a 25.8% sales increase in the Ruby Tuesday
Group and a 3.4% increase in the Morrison Group. The sales
increases in the Ruby Tuesday Group are primarily the result
of additional units and an increase in same store sales.
Excluding the effects of L&N and B&I discussed above,
consolidated sales increased 14.2% for the quarter and 13.0%
year to date over the comparable prior fiscal year periods.
Excluding L&N units, the Ruby Tuesday Group had a net increase
of 60 units when compared to the same quarter of the prior
year. On December 3, 1994, the Ruby Tuesday Group was
composed of 256 Ruby Tuesday restaurants and 34 Mozzarella's
Cafes.
The sales increase in the Morrison Group, excluding the B&I
accounts, is attributable to larger accounts in the Health
Care Division and increased sales of the Quick Service
Restaurants and Small Cafeterias in the Family Dining
Division. On December 3, 1994 the Health Care Division was
composed of 276 accounts in hospitals, nursing homes and other
health-related facilities, and the Family Dining Division was
composed of 174 units.
2.2 COSTS AND EXPENSES
Total Costs and Expenses for the 13 and 26 weeks ended
December 3, 1994 were $233.1 million and $430.0 million,
respectively. Excluding the effects of L&N and B&I for each
13 and 26 week period, costs and expenses were $233.1 million
and $457.0 million in the current year compared to costs and
expenses of $205.6 million and $407.2 million in the same
periods of the prior fiscal year, an increase of $27.5 million
or 13.4% for the 13 weeks and $49.8 million or 12.2% for 26
weeks ended December 3, 1994 over the comparable periods in
the prior fiscal year.
The following discussion of costs and expenses excludes the
effects of L&N and B&I for both the current and prior 13 and
26 week periods. Cost of merchandise increased $6.2 million
or 9.5% to $72.0 million for the 13 weeks and $12.0 million or
9.2% to $142.5 million for the 26 weeks ended December 3,
1994. These costs have decreased as a percentage of sales
from the comparable period in the prior year period as a
result of improved cost controls in both the Ruby Tuesday and
Morrison Groups. Payroll and related costs increased $10.1
million or 13.0% to $88.1 million for the 13 weeks and $16.1
million or 10.3% to $171.7 million for the 26 weeks ended
December 3, 1994. As a percentage of sales, payroll and
related costs have decreased from 35.3% to 34.9% and from
35.6% to 34.8% for the 13 and 26 weeks ended December 3, 1994.
These declines as a percentage of sales were primarily due to
improved experience for health and workers compensation
claims. Other operating costs increased $5.4 million or 13.6%
to $45.1 million for the 13 week period and $10.7 million or
13.8% to $88.4 million for the 26 weeks ended December 3,
1994. Other operating costs increased due to increased repair
and maintenance costs and various other expenses due to
expanded operations in the Ruby Tuesday Group. Selling,
general and administrative costs increased $4.7 million or
33.3% to $19.0 million for the 13 week period and $9.0 million
or 32.5% to $36.7 million for the 26 weeks ended December 3,
1994. This increase is primarily due to the cost of the
Company's expanded advertising strategy over the prior year.
Costs and expenses when expressed as a percent of sales for
the period ended December 3, 1994, excluding the L&N and B&I
transactions in the current and prior year period, decreased
to 92.3% from 92.9% for the quarter and to 92.6% from 93.2%
for the year to date period. These decreases are largely
attributable to the success of food-cost control programs.
2.3 PRE-TAX PROFIT
The consolidated pre-tax profit decreased $0.1 million for the
quarter and increased $31.2 million for the year to date
period ended December 3, 1994 compared to the same period of
the prior year due to the net effects of the L&N phase out and
the sale of the B&I contracts and assets coupled with the
increased profits resulting from expansion of the Company over
the prior year. The consolidated year to date pre-tax profit
excluding the effects of L&N and B&I discussed above was $36.8
million, an increase of $6.9 million or 23.1% over the same
period of the prior year.
2.4 INCOME TAX EXPENSE
The effective income tax rate for the quarter and year to date
period ended December 3, 1994 was 37.6% and 42.6%,
respectively, as compared to 38.3% and 38.2% for the same
periods of the prior year. Excluding the effects of B&I and
L&N, the effective income tax rate would have been 37.6% and
37.9% for the quarter and year to date, respectively, down
from 38.0% and 38.2% for the second quarter and year to date
periods of the prior year primarily due to increased targeted
job tax credits and a reduction in income tax reserves
following a better than anticipated settlement of an Internal
Revenue Service examination.
2.5 EARNINGS PER SHARE
Earnings per share are based on the weighted average number of
shares outstanding during each quarter 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. The difference between primary and
fully diluted weighted average shares reflects the maximum
extent of potential dilution that conversions of shares could
create.
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
utilizes prudent amounts 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 Company 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 under all of the Company's
stock repurchase plans and programs as of March 30, 1994, to
4.6 million shares. During the 26 weeks ended December 3,
1994, the Company repurchased 1,522,147 shares of the
Company's stock at an average purchase price of $26.93 per
share leaving 2,524,113 shares to be repurchased under all of
the Company's stock repurchase plans and programs. Also, as
of January 7, 1995, subsequent to the quarter ended December
3, 1994, the Company had repurchased an additional 63,699
shares of stock at an average purchase price of $24.76 per
share.
3.2 ANNOUNCED INTENT TO ACQUIRE TIAS, INC.
On November 10, 1994, the Company announced the execution of
a Letter of Intent with Tias, Inc., a chain of Tex-
Mex/Southwes-tern restaurants based in Dallas, Texas regarding
a possible acquisition. The general terms called for a
purchase price of approximately $9.0 million in Morrison
common stock, the assumption of approximately $14.0 million of
liabilities and the registration of the Morrison stock to be
issued in the transaction for resale by the Tias, Inc. shareholders.
Tias, Inc. operates 12 restaurants in Dallas and Little Rock,
Arkansas with annualized sales volume of approximately $24.0
million. The transaction is expected to close in the third
quarter of fiscal 1995.
PART II - OTHER INFORMATION
ITEM 1
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 material
adverse effect on the Registrant's operations or consolidated
financial position.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held on September 28, 1994,
the stockholders of the Company elected Class III Directors to
serve a three-year term on the Board and approved an amendment to
the Certificate of Incorporation to increase the authorized
Common Stock, the Amended and Restated Stock Incentive and
Deferred Compensation Plan for Directors, and the Incentive Bonus
Plan for the Chief Executive Officer. The results of the voting
were as follows:
<TABLE>
PROPOSAL 1
<CAPTION>
Authority
Director Nominees For Withheld
<S> <C> <C>
Claire L. Arnold 27,922,371 349,684
Samuel E. Beall, III 27,891,302 380,753
Dr. Donald Ratajczak 27,924,602 347,453
</TABLE>
<TABLE>
<CAPTION>
For Against Abstained Non-Votes
<S> <C> <C> <C> <C>
PROPOSAL 2
Increase of Authorized
Common Stock. 25,456,164 2,498,345 317,546 7,034,041
PROPOSAL 3
Amended and Restated Stock
Incentive and Deferred
Compensation Plan for
Directors. 25,975,149 1,941,182 355,724 7,034,041
PROPOSAL 4
Incentive Bonus Plan
for Chief Executive
Officer. 25,569,384 2,341,568 361,103 7,034,041
</TABLE>
ITEM 5
OTHER INFORMATION
At their regular quarterly meeting on January 4, 1995, the Board
of Directors announced the following items:
(a) A regular cash dividend of eight and three-fourth cents per
share, payable at the close of business on January 31, 1995
to shareholders of record as of January 17, 1995.
(b) As part of an established transition process, the Directors
elected Samuel E. (Sandy) Beall, III, the Company's
President and Chief Executive Officer, as Chairman of the
Board, effective May 5, 1995. E. Eugene Bishop, Morrison's
current Chairman, will retire from that position on May 5
when he reaches age 65.
Beall founded Ruby Tuesday Restaurants in 1972. The chain
was merged with Morrison in 1982, and he was named Executive
Vice President of Morrison in 1985. In 1986 he became
President and Chief Operating Officer and in 1992 was named
President and Chief Executive Officer.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are filed as part of this report:
Exhibit
No.
10(j) Credit Agreement dated as of September 30, 1994 among
Morrison Restaurants Inc., Trust Company Bank as Agent
and Administrative Agent and the cap lender named on
the signature pages thereto, together with forms of cap
revolving cap credit cap note, Money Market Note, and
Subsidiary Guaranty Cap Agreement.
11 Computation of Primary and Fully Diluted Earnings Per
Share
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the
quarter ended December 3, 1994
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
01/16/95 /s/ J. RUSSELL MOTHERSHED
DATE J. RUSSELL MOTHERSHED
Senior Vice President, Finance
(Senior Vice President and
Principal Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description
10(j) Credit Agreement dated as of September 30, 1994 among Morrison
Restaurants Inc., Trust Company Bank as Agent and Administrative
Agent and the cap lender named on the signature pages thereto,
together with forms of cap revolving cap credit cap note, Money
Market Note, and Subsidiary Guaranty Cap Agreement.
11 Computation of Primary and Fully Diluted Earnings Per Share
27 Financial Data Schedule
Exhibit 10(j)
=================================================================
CREDIT AGREEMENT
dated as of September 30, 1994
among
MORRISON RESTAURANTS INC.,
THE LENDERS LISTED HEREIN,
TRUST COMPANY BANK,
as Agent,
and
TRUST COMPANY BANK,
as Administrative Agent
=================================================================
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions
Section 1.02. Accounting Terms and Determination
Section 1.03. Other Definitional Terms
Section 1.04. Exhibits and Schedules
ARTICLE II. REVOLVING LOANS AND MONEY MARKET LOANS
Section 2.01. Commitment; Use of Proceeds
Section 2.02. Notes; Repayment of Principal
Section 2.03. Voluntary Reduction of Commitments
Section 2.04. Conversions of Tranche B Commitments
Section 2.05. Money Market Loans
ARTICLE III. GENERAL LOAN TERMS
Section 3.01. Funding Notices
Section 3.02. Disbursement of Funds
Section 3.03. Interest
Section 3.04 Interest Periods
Section 3.05 Fees
Section 3.06 Voluntary Prepayments of Borrowings
Section 3.07 Payments, Etc.
Section 3.08 Interest Rate Not Ascertainable, etc.
Section 3.09 Illegality
Section 3.10 Increased Costs
Section 3.11 Lending Offices
Section 3.12 Funding Losses
Section 3.13 Assumptions Concerning Funding of Euro-
dollar Advances
Section 3.14 Apportionment of Payments; Deemed
Utilization of Tranche A Commitments
by Money Market Loans
Section 3.15 Sharing of Payments, Etc.
Section 3.16 Capital Adequacy
ARTICLE IV. CONDITIONS TO BORROWINGS
Section 4.01. Conditions Precedent to Initial Loans
Section 4.02. Conditions to Each Loan
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Section 5.01. Corporate Existence; Compliance
with Law
Section 5.02. Corporate Power; Authorization
Section 5.03 Enforceable Obligations
Section 5.04 No Legal Bar
Section 5.05 No Material Litigation
Section 5.06 Investment Company Act, Etc.
Section 5.07 Margin Regulations
Section 5.08 Compliance with Environmental Laws
Section 5.09 Insurance
Section 5.10 No Default
Section 5.11 No Burdensome Restrictions
Section 5.12 Taxes
Section 5.13 Subsidiaries
Section 5.14 Financial Statements
Section 5.15 ERISA
Section 5.16 Patents, Trademarks, Licenses, Etc.
Section 5.17 Ownership of Property
Section 5.18 Indebtedness
Section 5.19 Financial Condition
Section 5.20 Labor Matters
Section 5.21 Payment or Dividend Restrictions
Section 5.22 Disclosure
ARTICLE VI. AFFIRMATIVE COVENANTS
Section 6.01. Corporate Existence, Etc.
Section 6.02. Compliance with Laws, Etc.
Section 6.03. Payment of Taxes and Claims, Etc.
Section 6.04. Keeping of Books
Section 6.05. Visitation, Inspection, Etc.
Section 6.06. Insurance; Maintenance of Properties
Section 6.07. Reporting Covenants
Section 6.08. Financial Covenants
Section 6.09. Notices Under Certain Other Indebtedness
Section 6.10. Additional Credit Parties and Collateral
ARTICLE VII. NEGATIVE COVENANTS
Section 7.01. Indebtedness
Section 7.02. Liens
Section 7.03. Mergers, Sales, Etc.
Section 7.04. Investments, Loans, Etc.
Section 7.05 Letters of Credit
Section 7.06. Sale and Leaseback Transactions
Section 7.07. Transactions with Affiliates
Section 7.08. Changes in Business
Section 7.09. ERISA
Section 7.10. Limitation on Payment Restrictions
Affecting Consolidated Companies
Section 7.11. Actions Under Certain Documents
Section 7.12. Changes in Fiscal Year
Section 7.13. Issuance of Stock by Subsidiaries
ARTICLE VIII. EVENTS OF DEFAULT
Section 8.01. Payments
Section 8.02. Covenants Without Notice
Section 8.03. Other Covenants
Section 8.04. Representations
Section 8.05. Non-Payments of Other Indebtedness
Section 8.06. Defaults Under Other Agreements;
Change in Control Provisions
Section 8.07. Bankruptcy
Section 8.08. ERISA
Section 8.09. Judgments.
Section 8.10. Ownership of Credit Parties
Section 8.11. Change in Control of Borrower
Section 8.12. Default Under Other Credit Documents
ARTICLE IX. THE AGENT AND THE ADMINISTRATIVE AGENT
Section 9.01. Appointment of Agent and the
Administrative Agent
Section 9.02. Authorization of Agent with Respect
to the Security Documents
Section 9.03. Nature of Duties of Agent
Section 9.04. Lack of Reliance on the Agent
Section 9.05. Certain Rights of the Agent
Section 9.06. Reliance by Agent
Section 9.07. Indemnification of Agent
Section 9.08. The Agent in its Individual
Capacity
Section 9.09. Holders of Notes
Section 9.10. Successor Agent
Section 9.11 Replacement of Administrative Agent
with the Borrower
ARTICLE X. MISCELLANEOUS
Section 10.01. Notices
Section 10.02. Amendments, Etc.
Section 10.03. No Waiver; Remedies Cumulative
Section 10.04. Payment of Expenses, Etc.
Section 10.05. Right of Setoff
Section 10.06. Benefit of Agreement
Section 10.07. Governing Law; Submission to
Jurisdiction
Section 10.08. Independent Nature of Lenders' Rights
Section 10.09. Counterparts
Section 10.10. Effectiveness; Survival
Section 10.11. Severability
Section 10.12. Independence of Covenants
Section 10.13. Change in Accounting Principles,
Fiscal Year or Tax Laws
Section 10.14. Headings Descriptive; Entire Agreement
SCHEDULES
Schedule 5.01 Organization and Ownership of
Subsidiaries
Schedule 5.05 Certain Pending and Threatened
Litigation
Schedule 5.08(a) Environmental Compliance
Schedule 5.08(b) Environmental Notices
Schedule 5.08(c) Environmental Permits
Schedule 5.10 No Defaults
Schedule 5.11 Burdensome Restrictions
Schedule 5.12 Tax Filings and Payments
Schedule 5.13 Material Subsidiaries
Schedule 5.15 Employee Benefit Matters
Schedule 5.16 Patent, Trademark, License, and
Other Intellectual Property
Matters
Schedule 5.17 Ownership of Properties
Schedule 5.20 Labor and Employment Matters
Schedule 5.21 Dividend Restrictions
Schedule 5.22 Disclosure
Schedule 6.08 Financial Covenant Calculations
Second Quarter 1994
Schedule 7.01 Existing Indebtedness
Schedule 7.02 Existing Liens
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Money Market Note
Exhibit C - Form of Guaranty Agreement
Exhibit D - Form of Money Market Bid Request
Exhibit E - Form of Invitation to Bid
Exhibit F - Form of Money Market Bid
Exhibit G - Form of Money Market Bid Accept/Reject
Letter
Exhibit H - Form of Closing Certificate
Exhibit I-1 - Form of Opinion of Corporate Counsel
Exhibit I-2 - Form of Opinion of Powell, Goldstein,
Frazer & Murphy
Exhibit I-3 - Form of Opinion of Hourigan, Kluger,
Spohrer & Quinn, P.C.
Exhibit J - Form of Assignment and Acceptance
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT made and entered into as of
September 30, 1994, by and among MORRISON RESTAURANTS INC., a
Delaware corporation (the "Borrower"), TRUST COMPANY BANK, a
banking corporation organized under the laws of the State of
Georgia ("TCB"), the other banks and lending institutions listed
on the signature pages hereof, and any assignees of TCB or such
other banks and lending institutions which become "Lenders" as
provided herein (TCB, and such other banks, lending institutions,
and assignees referred to collectively herein as the "Lenders"),
TRUST COMPANY BANK, in its capacity as agent for the Lenders and
each successor agent for such Lenders as may be appointed from
time to time pursuant to Article IX hereof (the "Agent") and
TRUST COMPANY BANK, in its capacity as administrative agent for
the Lenders and each successor administrative agent for such
Lenders as may be appointed from time to time pursuant to Article
IX hereof (the "Administrative Agent");
W I T N E S S E T H:
WHEREAS, at the request of the Borrower, the Lenders
have agreed to provide certain credit facilities to the Borrower
on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, Borrower, the Lenders, the
Agent and the Administrative Agent agree, upon the terms and
subject to the conditions set forth herein as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. In addition to the other
terms defined herein, the following terms used herein shall have
the meanings herein specified (to be equally applicable to both
the singular and plural forms of the terms defined):
"Adjusted LIBO Rate" shall mean, with respect to each
Interest Period for a Eurodollar Advance, the rate obtained by
dividing (A) LIBOR for such Interest Period by (B) a percentage
equal to 1 minus, as long as any Lender is a member bank of the
Federal Reserve System, the then stated maximum rate (stated as a
decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined
in Regulation D (or against any successor category of liabilities
as defined in Regulation D).
"Administrative Agent" shall mean TCB, a Georgia
banking corporation, and any successor administrative agent
appointed pursuant to Section 9.10 hereof or, at the election of
the Borrower exercised in accordance with Section 9.11 hereof,
the Borrower.
"Advance" shall mean any principal amount advanced and
remaining outstanding at any time as (i) the Revolving Loans,
which Advance shall be made or outstanding as a Base Rate Advance
or Eurodollar Advance, as the case may be, or (ii) a Money Market
Loan, which Advance shall be made or outstanding as a Money
Market Rate Advance.
"Affiliate" of any Person means any other Person di-
rectly or indirectly controlling, controlled by, or under common
control with, such Person, whether through the ownership of
voting securities, by contract or otherwise. For purposes of
this definition, "control" (including with correlative meanings,
the terms "controlling", "controlled by", and "under common
control with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person.
"Agent" shall mean TCB, a Georgia banking corporation,
and any successor agent appointed pursuant to Section 9.10
hereto.
"Agreement" shall mean this Credit Agreement, as
hereafter amended, restated, supplemented or otherwise modified
from time to time.
"Assignment and Acceptance" shall mean an assignment
and acceptance entered into by a Lender and an Eligible Assignee
in accordance with the terms of this Agreement and substantially
in the form of Exhibit J.
"Bankruptcy Code" shall mean The Bankruptcy Code of
1978, as amended and in effect from time to time (11 U.S.C. Section
101 et seq.).
"Base Rate" shall mean (with any change in the Base
Rate to be effective as of the date of change of either of the
following rates) the higher of (i) the rate which the Agent
publicly announces from time to time as its prime lending rate,
as in effect from time to time, and (ii) the Federal Funds Rate,
as in effect from time to time, plus one-half of one percent
(0.50%) per annum. The Agent's prime lending rate is a reference
rate and does not necessarily represent the lowest or best rate
actually charged to customers; the Agent may make commercial
loans or other loans at rates of interest at, above or below the
Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or out-
standing as a Revolving Loan, bearing interest based on the Base
Rate.
"Base Rate Borrowing" shall mean a Borrowing made up of
Base Rate Advances.
"Borrower" shall mean Morrison Restaurants Inc., a
Delaware corporation, its successors and permitted assigns.
"Borrowing" shall mean the incurrence by Borrower under
any Facility of Advances of one Type concurrently having the same
Interest Period or the continuation or conversion of an existing
Borrowing or Borrowings in whole or in part.
"Business Day" shall mean any day excluding Saturday,
Sunday and any other day on which banks are required or
authorized to close in Atlanta, Georgia and, if the applicable
Business Day relates to Eurodollar Advances, any day on which
trading is not carried on by and between banks in deposits of the
applicable currency in the applicable interbank Eurocurrency
market.
"Capital Lease" shall mean, as applied to any Person,
any lease of any property (whether real, personal or mixed) by
such Person as lessee which would, in accordance with GAAP, be
required to be classified and accounted for as a capital lease on
a balance sheet of such Person, other than, in the case of Bor-
rower or any of its Subsidiaries, any such lease under which Bor-
rower or a wholly-owned Subsidiary of Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to
any Capital Lease, the amount of the obligation of the lessee
thereunder which would, in accordance with GAAP, appear on a bal-
ance sheet of such lessee in respect of such Capital Lease.
"Change in Control Provision" shall mean any term or
provision contained in any indenture, debenture, note, or other
agreement or document evidencing or governing Indebtedness of
Borrower evidencing debt or a commitment to extend loans in
excess of $2,000,000 which requires, or permits the holder(s) of
such Indebtedness of Borrower to require that such Indebtedness
of Borrower be redeemed, repurchased, defeased, prepaid or
repaid, either in whole or in part, or the maturity of such
Indebtedness of Borrower to be accelerated in any respect, as a
result of a change in ownership of the capital stock of Borrower
or voting rights with respect thereto.
"Closing Date" shall mean September 30, 1994 or such
later date on which the conditions to the initial Loans set forth
in Section 4.01 and 4.02 are satisfied.
"Commitment" shall mean, for any Lender at any time,
the sum of its Tranche A Commitment and its Tranche B Commitment.
"Consolidated Companies" shall mean, collectively, Bor-
rower and all of its Subsidiaries.
"Consolidated Funded Debt" shall mean, as of any date
of determination, the Funded Debt of the Consolidated Companies.
"Consolidated Interest Expense" shall mean, for any
period, total interest expense of the Consolidated Companies
(including without limitation, interest expense attributable to
Capital Leases, all capitalized interest, all commissions,
discounts and other fees and charges owed with respect to bankers
acceptance financing, net costs (i.e., costs minus benefits) un-
der Interest Rate Contracts, and total interest expense (whether
shown as interest expense or as loss and expenses on sales of
receivables) under a receivables purchase facility) determined on
a consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, with
reference to any period, the net income (or deficit) of the
Consolidated Companies for such period (taken as a cumulative
whole), after deducting all operating expenses, provisions for
all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in
accordance with GAAP on a consolidated basis, after eliminating
all intercompany transactions and after deducting portions of
income properly attributable to minority interests, if any, in
the stock and surplus of the Subsidiaries of the Borrower.
"Consolidated Net Worth" shall mean the shareholders'
equity of the Borrower calculated in accordance with GAAP, less
treasury stock.
"Contractual Obligation" of any Person shall mean any
provision of any security issued by such Person or of any agree-
ment, instrument or undertaking under which such Person is obli-
gated or by which it or any of the property owned by it is bound.
"Credit Documents" shall mean, collectively, this
Agreement, the Notes, the Guaranty Agreement and all other
instruments, documents, certificates, agreements and writings
executed in connection herewith.
"Credit Parties" shall mean, collectively, each of the
Borrower and the Guarantors.
"Default" shall mean any condition or event which, with
notice or lapse of time or both, would constitute an Event of De-
fault.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean
lawful money of the United States of America.
"EBITR" shall mean for any period, the Consolidated Net
Income (Loss) of the Consolidated Companies, plus, to the extent
deducted therefrom in determining Consolidated Net Income (Loss),
the sum of (i) Consolidated Interest Expense, (ii) provision for
income taxes (whether paid or deferred) and (iii) Rental
Obligations for such period, and without giving effect to any
extraordinary gains or losses, any other non-cash charges or
gains or losses from sales of assets other than inventory sold in
the ordinary course of business.
"Eligible Assignee" shall mean (i) a commercial bank
organized under the laws of the United States or any state
thereof having total assets in excess of $1,000,000,000.00 or any
commercial finance or asset-based lending Affiliate of any such
commercial bank and (ii) any Lender.
"Environmental Laws" shall mean all federal, state, lo-
cal and foreign statutes and codes or regulations, rules or ordi-
nances issued, promulgated, or approved thereunder, now or
hereafter in effect (including, without limitation, those with
respect to asbestos or asbestos containing material or exposure
to asbestos or asbestos containing material), relating to
pollution or protection of the environment and relating to public
health and safety, relating to (i) emissions, discharges,
releases or threatened releases of pollutants, contaminants,
chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof,
any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law into the environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), or (ii) the
manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of any
Hazardous Substance, petroleum including crude oil or any
fraction thereof, any petroleum product or other waste, chemicals
or substances regulated by any Environmental Law, and (iii)
underground storage tanks and related piping, and emissions,
discharges and releases or threatened releases therefrom, such
Environmental Laws to include, without limitation (a) the Clean
Air Act (42 U.S.C. Section 7401 et seq.), (b) the Clean Water Act (33
U.S.C. Section 1251 et seq.), (c) the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), (d) the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), (e) the Comprehensive
Environmental Response Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act (42 U.S.C.
Section 9601 et seq.), and (f) all applicable national and local laws
or regulations with respect to environmental control.
"ERISA" shall mean the Employee Retirement Income Secu-
rity Act of 1974, as amended and in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Per-
son, each trade or business (whether or not incorporated) which
is a member of a group of which that Person is a member and which
is under common control within the meaning of the regulations
promulgated under Section 414 of the Tax Code.
"Eurodollar Advance" shall mean an Advance made or out-
standing as a Revolving Loan, bearing interest based on the Ad-
justed LIBO Rate.
"Eurodollar Borrowing" shall mean a Borrowing made up
of Eurodollar Advances.
"Event of Default" shall have the meaning provided in
Article VIII.
"Executive Officer" shall mean with respect to any Per-
son, the President, Vice Presidents, Chief Financial Officer,
Treasurer, Secretary and any Person holding comparable offices or
duties.
"Facility" or "Facilities" shall mean the Commitments
or the Money Market Loan option, as the context may indicate.
"Federal Funds Rate" shall mean for any period, a fluc-
tuating interest rate per annum equal for each day during such
period to the weighted average of the rates on overnight Federal
funds transactions with member banks of the Federal Reserve
System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of Atlanta,
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds
brokers of recognized standing selected by the Agent.
"Fixed Charge Coverage Ratio" shall mean, for any
period, the ratio of (i) EBITR to (ii) Fixed Charges for such
period.
"Fixed Charges" shall mean, with reference to any pe-
riod, determined in accordance with GAAP on a consolidated basis,
the sum of the following for the Consolidated Companies, after
eliminating all intercompany items:
(a) Consolidated Interest Expense for such period; and
(b) all Rental Obligations payable as lessee under any
operating lease properly charged or chargeable to
income during such period in accordance with GAAP;
provided that any interest charges or rentals paid or accrued by
any Person acquired by the Borrower or any of its Subsidiaries
during such period, through purchase, merger, consolidation or
otherwise, shall be included in "Fixed Charges" only to the
extent that the earnings of such Person are taken into account in
determining EBITR for such period.
"Funded Debt" shall mean, as applied to any Person, all
Indebtedness of such Person which by its terms or by the terms of
any instrument or agreement relating thereto matures, or which is
otherwise payable or unpaid, one year or more from, or is
directly or indirectly renewable or extendable at the option of
the debtor to a date one year or more (including an option of the
debtor under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of one year
or more) from, the date of the creation thereof, provided that
Funded Debt shall include, as at any date of determination, any
portion of such Indebtedness outstanding on such date which
matures on demand or within one year from such date (whether by
sinking fund, other required prepayment, or final payment at
maturity) and shall also include all Indebtedness of such Person
for borrowed money under a line of credit, guidance line,
revolving credit, letter of credit reimbursement agreement or
similar arrangement for borrowed money, including, without
limitation, all unpaid drawings under letters of credit,
regardless of the maturity date thereof. In addition, there
shall also be included in Funded Debt the present value of all
minimum lease commitments to make payments with respect to
operating leases of such Person, determined based upon a discount
rate of 10% in accordance with discounted present value
analytical methodology.
"GAAP" shall mean generally accepted accounting prin-
ciples set forth in the opinions and pronouncements of the Ac-
counting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or, if no such statements
are promulgated, then such other statements by such other entity
as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the
date of determination.
"Guarantors" shall mean, collectively, (i) Ruby
Tuesday, Inc., a Delaware corporation, (ii) Custom Management
Corporation, a Pennsylvania corporation, and (iii) all other
Material Subsidiaries of the Borrower, and their respective
successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, con-
tingent or otherwise (other than letters of credit), of a Person
with respect to any Indebtedness or other obligation or liability
of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse
by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including contractual obligations
(contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any
agreement to provide funds for the payment or discharge thereof
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets,
level of income, or other financial condition, or to make any
payment other than for value received. The amount of any
Guaranty shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which
guaranty is made or, if not so stated or determinable, the
maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Guaranty Agreement" shall mean the Guaranty Agreement
executed by each of the Material Subsidiaries of the Borrower in
favor of the Lenders and the Agent, substantially in the form of
Exhibit C as the same may be amended, restated or supplemented
from time to time.
"Hazardous Substances" shall have the meaning assigned
to that term in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Acts of 1986.
"Indebtedness" of any Person shall mean, without dupli-
cation (i) all obligations of such Person which in accordance
with GAAP would be shown on the balance sheet of such Person as a
liability (including, without limitation, obligations for
borrowed money and for the deferred purchase price of property or
services, and obligations evidenced by bonds, debentures, notes
or other similar instruments); (ii) all Capital Lease
Obligations; (iii) all Guaranties of such Person;
(iv) Indebtedness of others secured by any Lien upon property
owned by such Person, whether or not assumed; and (v) obligations
or other liabilities under currency contracts, Interest Rate
Contracts, or similar agreements or combinations thereof.
Notwithstanding the foregoing, in determining the Indebtedness of
any Person, there shall be included all obligations of such
Person of the character referred to in clauses (i) through (v)
above deemed to be extinguished under GAAP but for which such
Person remains legally liable except to the extent that such
obligations (x) have been defeased in accordance with the terms
of the applicable instruments governing such obligations and
(y) the accounts or other assets dedicated to such defeasance are
not included as assets on the balance sheet of such Person.
"Interest Period" shall mean (i) as to any Eurodollar
Advances, the interest period selected by the Borrower pursuant
to Section 3.04(a) hereof, and (ii) as to any Money Market Rate
Advances, the interest period requested by the Borrower and
agreed to by the participating Lenders pursuant to Section
3.04(b) hereof.
"Interest Rate Contract" shall mean all interest rate
swap agreements, interest rate cap agreements, interest rate col-
lar agreements, interest rate insurance and other agreements and
arrangements designed to provide protection against fluctuations
in interest rates, in each case as the same may be from time to
time amended, restated, renewed, supplemented or otherwise modi-
fied.
"Investment" shall mean, when used with respect to any
Person, any direct or indirect advance, loan or other extension
of credit (other than the creation of receivables in the ordinary
course of business) or capital contribution by such Person (by
means of transfers of property to others or payments for property
or services for the account or use of others, or otherwise) to
any Person, or any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in,
capital stock, partnership interests, bonds, notes, debentures or
other securities issued by any other Person.
"Lender" or "Lenders" shall mean TCB, the other banks
and lending institutions listed on the signature pages hereof,
and each assignee thereof, if any, pursuant to Section 10.06(c).
"Lending Office" shall mean for each Lender, the office
such Lender may designate in writing from time to time to
Borrower and the Agent with respect to each Type of Loan.
"LIBOR" shall mean, for any Interest Period, with re-
spect to Eurodollar Advances the offered rate for deposits in
U.S. Dollars, for a period comparable to the Interest Period and
in an amount comparable to the Agent's portion of such Advances,
appearing on the Reuters Screen LIBO Page as of 11:00 A.M.
(London, England time) on the day that is two London Business
Days prior to the first day of the Interest Period. If two or
more of such rates appear on the Reuters Screen LIBO Page, the
rate for that Interest Period shall be the arithmetic mean of
such rates. If the foregoing rate is unavailable from the
Reuters Screen for any reason, then such rate shall be determined
by the Agent from Telerate Page 3750 or, if such rate is also
unavailable on such service, then on any other interest rate
reporting service of recognized standing designated in writing by
the Agent to Borrower and the other Lenders; in any such case
rounded, if necessary, to the next higher 1/16 of 1.0%, if the
rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security inter-
est, lien, charge, hypothecation, assignment, deposit
arrangement, title retention, preferential property right, trust
or other arrangement having the practical effect of the foregoing
and shall include the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title
retention agreement.
"Loans" shall mean, collectively, the Revolving Loans
and the Money Market Loans.
"Mandatory Conversion Dates" shall have the meaning set
forth in Section 2.04(b).
"Margin Regulations" shall mean Regulation G,
Regulation T, Regulation U and Regulation X of the Board of
Governors of the Federal Reserve System, as the same may be in
effect from time to time.
"Material Subsidiary" shall mean (i) each Credit Party
other than the Borrower, and (ii) each other Subsidiary of the
Borrower, now existing or hereafter established or acquired, that
at any time prior to the Maturity Date, has or acquires total
assets in excess of $5,000,000, or that accounted for or produced
more than 5% of the Consolidated Net Income (Loss) of the
Borrower on a consolidated basis during any of the three most
recently completed fiscal years of the Borrower, or that is
otherwise material to the operations or business of the Borrower
or another Material Subsidiary.
"Materially Adverse Effect" shall mean any materially
adverse change in (i) the business, results of operations, finan-
cial condition, assets or prospects of the Consolidated
Companies, taken as a whole, (ii) the ability of Borrower to
perform its obligations under this Agreement, or (iii) the
ability of the other Credit Parties (taken as a whole) to perform
their respective obligations under the Credit Documents.
"Maturity Date" shall mean the earlier of (i) September
30, 1999, and (ii) the date on which all amounts outstanding
under this Agreement have been declared or have automatically be-
come due and payable pursuant to the provisions of Article VIII.
"Moody's" shall mean Moody's Investors Service, Inc.
"Money Market Bid" shall mean an offer by a Lender to
make a Money Market Loan pursuant to Section 2.05
"Money Market Bid Accept/Reject Letter" shall mean a
notification made by the Borrower pursuant to Section 2.05 sub-
stantially in the form of Exhibit G.
"Money Market Bid Request" shall mean a request made
pursuant to Section 2.05 substantially in the form of Exhibit D.
"Money Market Loan" shall mean a Loan made up of Ad-
vances by all of those Lenders whose Money Market Bids have been
accepted by the Borrower pursuant to the same Money Market Bid
Request under the bidding procedure described in Section 2.05 for
the same Interest Period and interest rate (with the
understanding that two Money Market Loans may be made pursuant to
a single Money Market Bid Request).
"Money Market Note" shall mean a promissory note of the
Borrower payable to the order of any Lender, in substantially the
form of Exhibit B hereto, evidencing the maximum aggregate prin-
cipal indebtedness of the Borrower to such Lender with respect to
outstanding Money Market Rate Advances made by such Lender pursu-
ant to this Agreement, either as originally executed or as it may
be from time to time supplemented, modified, amended, renewed or
extended.
"Money Market Rate" shall mean, as to any Money Market
Bid made by a Lender pursuant to Section 2.05, the fixed rate of
interest per annum offered by the Lender making the Money Market
Bid for the relevant Interest Period.
"Money Market Rate Advance" shall mean an Advance made
by a Lender to the Borrower pursuant to the bidding procedure de-
scribed in Section 2.05.
"Multiemployer Plan" shall have the meaning set forth
in Section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, with respect to any equity
offering or issuance of Subordinated Debt, (i) all cash received
with respect thereto, whether by way of deferred payment pursuant
to a promissory note, a receivable or otherwise (and interest
paid thereon), plus (ii) the higher of the book value or the fair
market value of any assets (including any stock) received with
respect thereto, in each case, net of reasonable and customary
sale expenses, fees and commissions incurred and taxes paid or
expected to be payable within the next twelve months in
connection therewith.
"Notes" shall mean, collectively, the Revolving Credit
Notes and the Money Market Notes.
"Notice of Borrowing" shall have the meaning provided
in Section 3.01(a)(i).
"Notice of Conversion/Continuation" shall have the
meaning provided in Section 3.01(b)(i).
"Obligations" shall mean all amounts owing to the
Agent, the Administrative Agent or any Lender pursuant to the
terms of this Agreement or any other Credit Document, including,
without limitation, all Loans (including all principal and
interest payments due thereunder), fees, expenses,
indemnification and reimbursement payments, indebtedness,
liabilities, and obligations of the Credit Parties, direct or
indirect, absolute or contingent, liquidated or unliquidated, now
existing or hereafter arising, together with all renewals,
extensions, modifications or refinancings thereof.
"Payment Office" shall mean with respect to payments of
principal, interest, fees or other amounts relating to the
Revolving Loans, the Money Market Loans, and all other
Obligations, the office specified as the "Payment Office" for the
Agent on the signature page of the Agent, or such other location
as to which the Agent shall have given written notice to the
Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corpora-
tion, or any successor thereto.
"Permitted Liens" shall mean those Liens expressly per-
mitted by Section 7.02.
"Person" shall mean any individual, partnership, firm,
corporation, association, joint venture, trust or other entity,
or any government or political subdivision or agency, department
or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as de-
fined in Section 3(3) of ERISA), including, but not limited to,
any defined benefit pension plan, profit sharing plan, money pur-
chase pension plan, savings or thrift plan, stock bonus plan, em-
ployee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (in-
cluding post-retirement medical), hospitalization, accident,
sickness, disability, or life insurance benefits.
"Pro Rata Share" shall mean, with respect to each of
the Commitments of each Lender, each Revolving Loan to be made
by, and each payment (including, without limitation, any payment
of principal, interest or fees) to be made to each Lender with
respect to the Revolving Loans, the percentage designated as such
Lender's Pro Rata Share of such Commitments, such Loans or such
payments, as applicable, set forth under the name of such Lender
on the respective signature page for such Lender, in each case as
such Pro Rata Share may change from time to time as a result of
assignments or amendments made pursuant to this Agreement, and
shall mean, with respect to each of the Money Market Loans
(including, without limitation, any payment of principal,
interest or fees), the percentage of each of the Lenders
participating in such Loan determined by dividing the amount of
such Lender's Money Market Advance relating thereto by the total
amount of such Money Market Loan.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be in
effect from time to time.
"Rental Obligations" shall mean, with reference to any
period, the aggregate amount of all rental obligations for which
the Consolidated Companies are directly or indirectly liable (as
lessee or as guarantor or other surety but without duplication)
under all leases in effect at any time during such period (other
than operating leases for motor vehicles, computers, and office
equipment used in the ordinary course of business of the
Consolidated Companies), including all such amounts for which any
Person was liable during the period immediately prior to the date
such Person became a Subsidiary of the Borrower or was merged
into or consolidated with the Borrower or a Subsidiary of the
Borrower, as determined in accordance with GAAP.
"Required Lenders" shall mean at any time, the Lenders
holding at least 66 2/3% of the amount of committed funds under
the Commitments, whether or not advanced or, following the
termination of all of the Commitments, the Lenders holding at
least 66 2/3% of the aggregate outstanding Advances at such time.
"Requirement of Law" for any person shall mean the ar-
ticles or certificate of incorporation and bylaws or other orga-
nizational or governing documents of such Person, and any law,
treaty, rule or regulation, or determination of an arbitrator or
a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Reuters Screen" shall mean, when used in connection
with any designated page and LIBOR, the display page so
designated on the Reuter Monitor Money Rates Service (or such
other page as may replace that page on that service for the
purpose of displaying rates comparable to LIBOR).
"Revolving Credit Notes" shall mean, collectively, the
promissory notes evidencing the Revolving Loans in the form at-
tached hereto as Exhibit A, either as originally executed or as
hereafter amended, modified or supplemented.
"Revolving Loans" shall mean, collectively, the revolv-
ing loans made to the Borrower by the Lenders pursuant to Section
2.01.
"Security Documents" shall mean, collectively, the
Guaranty Agreement and each other guaranty agreement, mortgage,
deed of trust, security agreement, pledge agreement, or other
security or collateral document guaranteeing or securing the
Obligations, now or hereafter executed, as the same may be
amended, restated, supplemented or otherwise modified from time
to time.
"Subordinated Debt" shall mean all Indebtedness of Bor-
rower subordinated to all obligations of Borrower or any other
Credit Party arising under this Agreement, the Notes, and the
Guaranty Agreement, created, incurred or assumed on terms and
conditions satisfactory in all respects to the Agent and the Re-
quired Lenders, including without limitation, with respect to in-
terest rates, payment terms, maturities, amortization schedules,
covenants, defaults, remedies, and subordination provisions, as
evidenced by the written approval of the Agent and Required Lend-
ers.
"Subsidiary" shall mean, with respect to any Person,
any corporation or other entity (including, without limitation,
partnerships, joint ventures, and associations) regardless of its
jurisdiction of organization or formation, at least a majority of
the total combined voting power of all classes of voting stock or
other ownership interests of which shall, at the time as of which
any determination is being made, be owned by such Person, either
directly or indirectly through one or more other Subsidiaries.
"Tax Code" shall mean the Internal Revenue Code of
1986, as amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions, withholdings or
other charges of whatever nature, including without limitation,
income, receipts, excise, property, sales, transfer, license,
payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States, or any state,
local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and
all interest, penalties, additions to tax and similar liabilities
with respect thereto.
"Telerate" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the
Dow Jones Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying rates
comparable to LIBOR).
"Total Capitalization" shall mean, as of any date of
determination, the sum of (i) Consolidated Funded Debt, plus
(ii) Consolidated Net Worth.
"Tranche A Commitment" shall mean, at any time for any
Lender, the amount of such commitment set forth below such
Lender's name on the signature pages hereof, as the same may be
increased or decreased from time to time as a result of any
reduction thereof pursuant to Section 2.03, any conversion of
Tranche B Commitments pursuant to Section 2.04, any assignment
thereof pursuant to Section 10.06, or any amendment thereof
pursuant to Section 10.02, and as further limited by the deemed
utilization of the Tranche A Commitment by Money Market Loans as
set forth in Section 3.14.
"Tranche A Commitment Fee" shall have the meaning
ascribed to it in Section 3.05(a).
"Tranche B Commitment" shall mean, at any time for any
Lender, the amount of such commitment set forth below such
Lender's name on the signature pages hereof, as the same may be
increased or decreased from time to time as a result of any
reduction thereof pursuant to Section 2.03, any conversion
thereof pursuant to Section 2.04, any assignment thereof pursuant
to Section 10.06, or any amendment thereof pursuant to Section
10.02.
"Tranche B Commitment Fee" shall have the meaning
ascribed to it in Section 3.05(b).
"Type" of Borrowing shall mean a Borrowing consisting
of Base Rate Advances, Eurodollar Advances or Money Market Rate
Advances.
"Voting Stock" shall mean securities of any class or
classes, the holders of which are entitled to elect all of the
corporate directors (or Persons performing similar functions).
Section 1.02. Accounting Terms and Determination. Un-
less otherwise defined or specified herein, all accounting terms
shall be construed herein, all accounting determinations
hereunder shall be made, all financial statements required to be
delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with, GAAP.
Section 1.03. Other Definitional Terms. The words
"hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.04. Exhibits and Schedules. All Exhibits
and Schedules attached hereto are by reference made a part
hereof.
ARTICLE II.
REVOLVING LOANS AND MONEY MARKET LOANS
Section 2.01. Commitments; Use of Proceeds.
(a) Tranche A Commitments. Subject to and upon the
terms and conditions herein set forth, each Lender severally es-
tablishes in favor of the Borrower, from on and after the Closing
Date, but prior to the Maturity Date, its Tranche A Commitment.
The Lenders, subject to and upon the terms and conditions set
forth herein, from time to time, agree to make to the Borrower
Revolving Loans in an aggregate principal amount outstanding at
any time not to exceed such Lender's Tranche A Commitment.
Borrower shall be entitled to repay and reborrow Revolving Loans
in accordance with the provisions hereof. In addition to Revolv-
ing Loans, the Borrower may request, from on and after the
Closing Date but prior to the Maturity Date, that the Lenders
extend to the Borrower Money Market Loans subject to and upon the
terms and conditions herein set forth. Notwithstanding any
provision of this Agreement to the contrary, (i) the aggregate
outstanding principal amount of the Loans (including the Money
Market Loans) of the Lenders shall not exceed the aggregate
Tranche A Commitments, (ii) the aggregate principal amount of all
Base Rate Advances and Eurodollar Advances of each Lender shall
not at any time exceed the Tranche A Commitment of such Lender,
(iii) no Lender shall be obligated hereunder to extend Money
Market Rate Advances or to make quotes for such Advances, (iv) a
Lender may elect, in its discretion, to extend Money Market Rate
Advances which, either alone or together with the other
outstanding Advances of such Lender, would exceed the Tranche A
Commitment of such Lender, and (v) Money Market Loans shall be
allocated amongst the Tranche A Commitments of the Lenders as set
forth in Section 3.14 for purposes of determining the available
Tranche A Commitments.
(b) Tranche B Commitments. Subject to and upon the
terms and conditions herein set forth, each Lender severally es-
tablishes in favor of the Borrower, from the Closing Date until
the Maturity Date, its Tranche B Commitment. The Tranche B
Commitments are subject to conversion to Tranche A Commitments as
set forth in Section 2.04. The Borrower shall not be permitted
to request any Borrowing pursuant to the Tranche B Commitment of
any Lender.
(c) Amount and Terms of Loans. Each Revolving Loan
shall, at the option of Borrower, be made or continued as, or
converted into, part of one or more Borrowings that shall consist
entirely of Base Rate Advances or Eurodollar Advances. Each
Money Market Loan shall consist of Money Market Advances made by
one or more of the Lenders in accordance with the procedure
described in Section 2.05. Each Eurodollar Borrowing and each
Money Market Loan shall be in a principal amount of not less than
$5,000,000 or a greater integral multiple of $1,000,000, and each
Base Rate Borrowing shall be in a principal amount of not less
than $1,000,000 or a greater integral multiple of $100,000. At
no time shall the aggregate number of Eurodollar Borrowings and
Money Market Loans outstanding under this Agreement exceed six.
(d) Use of Proceeds. The proceeds of Revolving Loans
and the Money Market Loans shall be used solely to finance the
repurchase of the stock of the Borrower, to acquire and construct
additional restaurants, to make other acquisitions permitted by
the terms of this Agreement, to fund working capital needs of the
Borrower and for other general corporate purposes of the Bor-
rower.
Section 2.02. Notes; Repayment of Principal.
(a) The Borrower's obligations to pay the principal
of, and interest on, the Revolving Loans to each Lender shall be
evidenced by the records of the Agent and such Lender and by the
Revolving Credit Note payable to such Lender (or the assignor of
such Lender) in the amount of such Lender's Commitments completed
in conformity with this Agreement.
(b) The Borrower's obligations to pay the principal
of, and interest on, the Money Market Loans to each Lender shall
be evidenced by the records of the Agent and such Lender and by
the Money Market Note payable to such Lender (or the assignor of
such Lender) completed in conformity with this Agreement.
(c) All outstanding Borrowings outstanding under the
Notes shall be due and payable in full on the Maturity Date.
Section 2.03. Voluntary Reduction of Commitments.
Upon at least three (3) Business Days' prior telephonic notice
(promptly confirmed in writing) to the Administrative Agent (in
the event that the Borrower assumes the duties of the
Administrative Agent pursuant to Section 9.11 hereof, to each
Lender), Borrower shall have the right, without premium or
penalty, to terminate the unutilized Commitments, in part or in
whole, provided that (i) any such termination shall apply to
proportionately and permanently reduce the Commitments of each of
the Lenders, (ii) any partial termination pursuant to this
Section 2.03 shall be in an amount of at least $5,000,000 and
integral multiples of $1,000,000 and (iii) any such termination
shall first be applied to reduce the Tranche B Commitments in
full prior to any reduction of the Tranche A Commitments.
Section 2.04. Conversions of Tranche B Commitments.
(a) Voluntary Conversions. Upon at least ten (10)
Business Days' prior telephonic notice (promptly confirmed in
writing) to the Administrative Agent and each Lender, Borrower
shall have the right, without payment, premium or penalty, to
designate the Tranche B Commitments, in part or in whole, to be
Tranche A Commitments, provided that (i) any such designation
shall apply to proportionately and permanently convert the
Tranche B Commitments of each of the Lenders into Tranche A
Commitments, (ii) any partial conversion pursuant to this Section
2.04 shall be in an amount of at least $10,000,000 and integral
multiples of $1,000,000, and (iii) no such conversion shall be
requested or permitted if a Default or Event of Default has
occurred and is continuing hereunder.
(b) Mandatory Conversions. In addition to the volun-
tary conversions of the Tranche B Commitments permitted pursuant
to the foregoing subsection (a), an amount of the Tranche B Com-
mitments shall automatically be converted into Tranche A
Commitments, proportionately and permanently, on each of the
first, second and third anniversaries of the Closing Date (the
"Mandatory Conversion Dates") such that the remaining Tranche B
Commitments shall be equal to, or, in the event of prior
voluntary conversions in an amount greater than (ii) below, less
than (i) the sum of all Tranche B Commitments on the Closing Date
less (ii) the product of $50,000,000 multiplied by the number of
Mandatory Conversion Dates which have occurred on or prior to
such date, provided, that, no such conversion shall occur in the
event that a Default or an Event of Default has occurred and is
continuing hereunder but such conversion shall automatically
occur in the event such Default or Event of Default is cured or
waived in accordance with the terms hereof.
Section 2.05 Money Market Loans. (a) In order to re-
quest Money Market Bids, the Borrower shall telecopy to the
Administrative Agent a duly completed Money Market Bid Request in
the form of Exhibit D attached hereto (which may request not more
than two Money Market Bids), to be received by the Administrative
Agent not later than 10:00 a.m. (Atlanta, Georgia) time, one (1)
Business Day prior to the proposed Money Market Rate Loan or
Loans. A Money Market Bid Request that does not conform
substantially to the format of Exhibit D may be rejected in the
Administrative Agent's sole discretion, and the Administrative
Agent shall notify the Borrower of such rejection by telecopy not
later than 12:00 noon (Atlanta, Georgia time) on the date of
receipt. Such request shall in each case refer to this Agreement
and specify (i) the date of such Borrowing or Borrowings (which
shall be a Business Day) and (ii) the aggregate principal amount
thereof which shall be in a minimum principal amount of
$5,000,000 and in an integral multiple of $1,000,000, and (iii)
the Interest Period with respect thereto. Promptly after its
receipt of a Money Market Bid Request that is not rejected as
aforesaid, the Administrative Agent shall invite by telecopy
(substantially in the form set forth in Exhibit E attached
hereto) the Lenders to bid, on the terms and conditions of this
Agreement, to make Money Market Rate Advances pursuant to the
Money Market Bid Request. Notwithstanding the foregoing, in the
event that the Borrower assumes the obligations of the
Administrative Agent pursuant to Section 9.11 hereof, the
Borrower shall deliver the Money Market Bid Request to each
Lender by the time noted above and each Lender shall have the
right to reject a non-conforming bid in accordance with the
foregoing.
(b) Each Lender may, in its sole discretion, make one
or more Money Market Bids (but not more than two) to the Borrower
responsive to a Money Market Bid Request. Each Money Market Bid
by a Lender must be received by the Administrative Agent via
telecopy, substantially in the form of Exhibit F attached hereto,
not later than 10:30 a.m. (Atlanta, Georgia time) on the Business
Day of the proposed Money Market Loan. Multiple bids (not to ex-
ceed two per Lender) will be accepted by the Administrative
Agent. Money Market Bids that do not conform substantially to
the format of Exhibit F may be rejected by the Administrative
Agent acting in consultation with the Borrower, and the
Administrative Agent shall notify the Lender making such noncon-
forming bid of such rejection as soon as practicable. Each Money
Market Bid shall refer to this Agreement and specify (i) the
principal amount (which shall be in a minimum principal amount of
$1,000,000 and in an integral multiple of $500,000 and which may
equal the entire principal amount of the Money Market Loan
requested by the Borrower) of the Money Market Rate Advance or
Advances that the Lender is willing to make to the Borrower, (ii)
the Money Market Rate or Rates at which the Lender is prepared to
make the Money Market Rate Advance or Advances, and (iii) the
Interest Period and the last day thereof. If any Lender shall
elect not to make a Money Market Bid, such Lender shall so notify
the Administrative Agent via telecopy by the time specified above
for submitting a Money Market Bid; provided, however, that
failure by any Lender to give such notice shall not cause such
Lender to be obligated to make any Money Market Rate Advance as
part of such Money Market Loan. A Money Market Bid submitted by
a Lender pursuant to this paragraph (b) shall be irrevocable
(absent manifest error).
(c) The Administrative Agent shall promptly notify the
Borrower by telecopy of all the Money Market Bids made, the Money
Market Rate and the principal amount of each Money Market Rate
Advance in respect of which a Money Market Bid was made and the
identity of the Lender that made each bid. The Administrative
Agent shall send a copy of all Money Market Bids to the Borrower
for its records as soon as practicable after completion of the
bidding process set forth in this Section 2.05.
(d) The Borrower may, in its sole and absolute discre-
tion, subject only to the provisions of this paragraph (d),
accept or reject any Money Market Bid referred to in paragraph
(c) above. The Borrower shall notify the Administrative Agent
(or if the Borrower has assumed the role of Administrative Agent,
each Lender) by telephone, confirmed by telecopy in the form of a
Money Market Bid Accept/Reject Letter, whether and to what extent
it has decided to accept or reject any of or all the bids
referred to in paragraph (c) above not later than 12:30 p.m.
(Atlanta, Georgia time) on the Business Day of the proposed Money
Market Loan; provided, however, that (i) the failure by the
Borrower to give such notice shall be deemed to be a rejection of
all the bids referred to in paragraph (c) above, (ii) the
Borrower shall not accept a bid made at a particular Money Market
Rate if the Borrower has decided to reject a bid made at a lower
Money Market Rate except for the sole purpose of minimizing the
aggregate Tranche A Commitment Fees payable to the Lenders
hereunder (i.e., the Borrower, in analyzing the bids, may take
into account the total commitment fees which may be payable to a
Lender submitting a higher Money Market Bid in determining the
"all-in" rate to the Borrower of the various Money Market Bids),
(iii) the aggregate amount of the Money Market Bids accepted by
the Borrower shall not exceed the principal amount specified in
the Money Market Bid Request, (iv) if the Borrower shall accept a
bid or bids made at a particular Money Market Rate but the amount
of such bid or bids shall cause the total amount of bids to be
accepted by the Borrower to exceed the amount specified in the
Money Market Bid Request, then the Borrower shall accept a
portion of such bid or bids in an amount equal to the amount
specified in the Money Market Bid Request less the amount of all
other Money Market Bids accepted with respect to such Money
Market Bid Request, which acceptance, in the case of multiple
bids at the same Money Market Rate, shall be made pro rata in
accordance with the amount of each such bid at such Money Market
Rate, and (v) except pursuant to clause (iv) above, no bid shall
be accepted for a Money Market Loan unless such Money Market Loan
is in a minimum principal amount of $5,000,000 and an integral
multiple of $1,000,000; provided further, however, that if a
Money Market Loan must be in an amount less than $5,000,000
because of the provisions of clause (iv) above, such Money Market
Loan may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Money
Market Rate pursuant to clause (iv) the amounts shall be rounded
to integral multiples of $1,000,000 in a manner which shall be in
the discretion of the Borrower. A notice given by the Borrower
pursuant to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify
each bidding Lender whether or not its Money Market Bid has been
accepted (and if so, in what amount and at what Money Market
Rate) by telecopy sent by the Administrative Agent, and each
successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Money Market Loan
in respect of which its bid has been accepted.
(f) A Money Market Bid Request shall not be made
within five (5) Business Days after the date of any previous
Money Market Bid Request.
(g) If the Administrative Agent shall elect to submit
a Money Market Bid in its capacity as a Lender, it shall submit
such bid directly to the Borrower one half of an hour earlier
than the earliest time at which the other Lenders are required to
submit their bids to the Administrative Agent pursuant to
paragraph (b) above.
(h) Each Lender participating in any Money Market Loan
shall make its Money Market Rate Advance available to the Agent
on the date specified in the Bid Request at the time and in the
manner and subject to the provisions specified in Section 3.02.
ARTICLE III.
GENERAL LOAN TERMS
Section 3.01. Funding Notices.
(a) (i) Whenever Borrower desires to make a Borrowing
with respect to the Tranche A Commitments (other than one result-
ing from a conversion or continuation pursuant to Section
3.01(b)), it shall give the Administrative Agent prior written
notice (or telephonic notice promptly confirmed in writing) of
such Borrowing (a "Notice of Borrowing"), such Notice of
Borrowing to be given prior to 11:00 A.M. (local time for the
Agent) at the Payment Office of the Administrative Agent (x) one
Business Day prior to the requested date of such Borrowing in the
case of Base Rate Advances, and (y) three Business Days prior to
the requested date of such Borrowing in the case of Eurodollar
Advances. Notices received after 11:00 A.M. shall be deemed re-
ceived on the next Business Day. Each Notice of Borrowing shall
be irrevocable and shall specify the aggregate principal amount
of the Borrowing, the date of Borrowing (which shall be a
Business Day), and whether the Borrowing is to consist of Base
Rate Advances or Eurodollar Advances and (in the case of
Eurodollar Advances) the Interest Period to be applicable
thereto.
(ii) Whenever Borrower desires to obtain a Money
Market Bid, it shall notify the Administrative Agent in
accordance with the procedure set forth in Section 2.05 hereof.
(b) (i) Whenever Borrower desires to convert all or a
portion of an outstanding Borrowing under the Tranche A
Commitments consisting of Base Rate Advances into a Borrowing
consisting of Eurodollar Advances, or to continue outstanding a
Borrowing consisting of Eurodollar Advances for a new Interest
Period, it shall give the Administrative Agent at least three
Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing to be
converted into or continued as Eurodollar Advances. Such notice
(a "Notice of Conversion/Continuation") shall be given prior to
11:00 A.M. (local time for the Agent) on the date specified at
the Payment Office of the Administrative Agent. Each such Notice
of Conversion/Continuation shall be irrevocable and shall specify
the aggregate principal amount of the Advances to be converted or
continued, the date of such conversion or continuation and the
Interest Period to be applicable thereto. If, upon the ex-
piration of any Interest Period in respect of any Borrowing con-
sisting of Eurodollar Advances, Borrower shall have failed to de-
liver the Notice of Conversion/Continuation, Borrower shall be
deemed to have elected to convert or continue such Borrowing to a
Borrowing consisting of Base Rate Advances. So long as any
Executive Officer of Borrower has knowledge that any Default or
Event of Default shall have occurred and be continuing, no
Borrowing may be converted into or continued as (upon expiration
of the current Interest Period) Eurodollar Advances unless the
Agent and each of the Lenders shall have otherwise consented in
writing. No conversion of any Borrowing of Eurodollar Advances
shall be permitted except on the last day of the Interest Period
in respect thereof.
(ii) Upon the expiration of the applicable Interest
Period with respect to any Money Market Loan, the Borrower shall
repay such Money Market Loan to the Agent for the ratable benefit
of the Lenders participating in such Money Market Loan.
(c) Without in any way limiting Borrower's obligation
to confirm in writing any telephonic notice, the Agent and the
Administrative Agent may act without liability upon the basis of
telephonic notice believed by the Agent or the Administrative
Agent in good faith to be from Borrower prior to receipt of
written confirmation. In each such case, Borrower hereby waives
the right to dispute the Agent's or the Administrative Agent's
record of the terms of such telephonic notice.
(d) The Agent and the Administrative Agent shall
promptly give each Lender notice by telephone (confirmed in
writing) or by telex, telecopy or facsimile transmission of the
matters covered by the notices given to the Agent and the
Administrative Agent pursuant to this Section 3.01 with respect
to the Tranche A Commitments. At such time as the Borrower may
assume the duties of the Administrative Agent pursuant to Section
9.11 hereof, the Borrower shall give the Agent and each Lender
immediate notice by telephone (confirmed in writing) of the
matters covered by notices to the Administrative Agent hereunder
and all references to the "Payment Office" of the Administrative
Agent shall be deemed to mean the Lending Office of each Lender.
Section 3.02. Disbursement of Funds.
(a) No later than 12:00 noon (local time for the
Agent) on the date of each Borrowing pursuant to the Tranche A
Commitments (other than one resulting from a conversion or
continuation pursuant to Section 3.01(b)(i)), each Lender will
make available its Pro Rata Share of the amount of such Borrowing
in immediately available funds at the Payment Office of the
Agent. The Agent will make available to Borrower the aggregate
of the amounts (if any) so made available by the Lenders to the
Agent in a timely manner by crediting such amounts to Borrower's
demand deposit account maintained with the Agent or at Borrower's
option, by effecting a wire transfer of such amounts to
Borrower's account specified by the Borrower, by the close of
business on such Business Day. In the event that the Lenders do
not make such amounts available to the Agent by the time
prescribed above, but such amount is received later that day,
such amount may be credited to Borrower in the manner described
in the preceding sentence on the next Business Day (with interest
on such amount to begin accruing hereunder on such next Business
Day).
(b) No later than 2:30 p.m. (local time for the Agent)
on the date of each Money Market Loan, each Lender participating
in such Money Market Loan will make available its pro rata share
of the amount of such Money Market Loan in immediately available
funds at the Payment Office of the Agent. The Agent will make
available to Borrower the aggregate of the amounts (if any) so
made available by the Lenders to the Agent in a timely manner by
crediting such amount to Borrower's demand deposit account
maintained with the Agent or at the Borrower's option by
effecting a wire transfer of such amounts to Borrower's account
specified by the Borrower by the close of business on such
business day. In the event that Lenders do not make such amounts
available to the Agent by the time prescribed above but such
amount is received later that day, such amount may be credited to
the Borrower in the manner described in the preceding sentence on
the next business day (with interest on such amount to begin
accruing hereunder on such next business day).
(c) Unless the Agent shall have been notified by any
Lender prior to the date of a Borrowing that such Lender does not
intend to make available to the Agent such Lender's portion of
the Borrowing to be made on such date, the Agent may assume that
such Lender has made such amount available to the Agent on such
date and the Agent may make available to Borrower a corresponding
amount. If such corresponding amount is not in fact made avail-
able to the Agent by such Lender on the date of Borrowing, the
Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest at the Federal
Funds Rate. If such Lender does not pay such corresponding
amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify Borrower, and Borrower shall immediately
pay such corresponding amount to the Agent together with interest
at the rate specified for the Borrowing which includes such
amount paid and any amounts due under Section 3.12 hereof.
Nothing in this subsection shall be deemed to relieve any Lender
from its obligation to fund its Commitments or its Money Market
Advances hereunder or to prejudice any rights which Borrower may
have against any Lender as a result of any default by such Lender
hereunder.
(d) All Borrowings under the Tranche A Commitments
shall be loaned by the Lenders on the basis of their Pro Rata
Share of the Tranche A Commitments. No Lender shall be respon-
sible for any default by any other Lender in its obligations
hereunder, and each Lender shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of
any other Lender to fund its Commitment or its Money Market
Advances hereunder.
Section 3.03. Interest.
(a) Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Revolving Loans from the respec-
tive dates such principal amounts were advanced to maturity
(whether by acceleration, notice of prepayment or otherwise) at
rates per annum equal to the applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in ef-
fect from time to time; and
(ii) For Eurodollar Advances--The relevant
Adjusted LIBO Rate plus three eighths of one percent
(.375%) per annum.
(b) Borrower agrees to pay interest in respect of all
unpaid principal amounts of the Money Market Loans made to Bor-
rower from the respective dates such principal amounts were ad-
vanced to maturity (whether by acceleration, notice of prepayment
or otherwise) at the Money Market Rate agreed to by the Borrower
and the Lender(s) participating therein for each such Money
Market Loan.
(c) Overdue principal and, to the extent not
prohibited by applicable law, overdue interest, in respect of the
Revolving Loans and Money Market Loans, and all other overdue
amounts owing hereunder, shall bear interest from each date that
such amounts are overdue:
(i) in the case of overdue principal and interest
with respect to all Loans outstanding as Eurodollar Ad-
vances and all Money Market Loans, at the greater of
(A) the rate otherwise applicable for the then current
Interest Period plus an additional two percent (2.0%)
per annum or (B) the rate in effect for Base Rate
Advances plus an additional two percent (2.0%) per
annum; and
(ii) in the case of overdue principal and interest
with respect to all other Loans outstanding as Base
Rate Advances and all other Obligations hereunder
(other than Loans), at a rate equal to the applicable
Base Rate plus an additional two percent (2.0%) per
annum.
(d) Interest on each Loan shall accrue from and
including the date of such Loan to but excluding the date of any
repayment thereof; provided that, if a Loan is repaid on the same
day made, one day's interest shall be paid on such Loan.
Interest on all outstanding Base Rate Advances shall be payable
quarterly in arrears on the last day of each calendar quarter,
commencing on December 31, 1994. Interest on all outstanding
Eurodollar Advances and Money Market Advances shall be payable on
the last day of each Interest Period applicable thereto, and, in
the case of Eurodollar Advances and Money Market Advances having
an Interest Period in excess of three months, on each three month
anniversary of the initial date of such Interest Period.
Interest on all Loans shall be payable on any conversion of any
Advances comprising such Loans into Advances of another Type,
prepayment (on the amount prepaid), at maturity (whether by
acceleration, notice of prepayment or otherwise) and, after
maturity, on demand.
(e) The Agent, upon determining the Adjusted LIBO Rate
for any Interest Period, shall promptly notify by telephone (con-
firmed in writing) or in writing Borrower and the other Lenders.
Any such determination shall, absent manifest error, be final,
conclusive and binding for all purposes.
Section 3.04. Interest Periods.
(a) In connection with the making or continuation of,
or conversion into, each Borrowing of Eurodollar Advances, Bor-
rower shall select an Interest Period to be applicable to such
Eurodollar Advances, which Interest Period shall be either a 1,
2, 3 or 6 month period.
(b) In connection with the making or continuation of
each Money Market Loan, Borrower shall request an Interest Period
to be applicable to such Money Market Loan for a period equal to
a minimum of seven (7) days and a maximum of one hundred eighty
(180) days which request may be accepted by any Lender or Lenders
as provided herein.
(c) Notwithstanding paragraphs (a) and (b) of this
Section 3.04:
(i) The initial Interest Period for any Borrowing
of Eurodollar Advances shall commence on the date of
such Borrowing (including the date of any conversion
from a Borrowing consisting of Base Rate Advances) and
each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which the
next preceding Interest Period expires;
(ii) If any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest Pe-
riod shall expire on the next succeeding Business Day,
provided that if any Interest Period in respect of
Eurodollar Advances would otherwise expire on a day
that is not a Business Day but is a day of the month
after which no further Business Day occurs in such
month, such Interest Period shall expire on the next
preceding Business Day;
(iii) Any Interest Period in respect of Eurodollar
Advances which begins on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period shall, subject to part
(iv) below, expire on the last Business Day of such
calendar month; and
(iv) No Interest Period with respect to the Loans
shall extend beyond the Maturity Date.
Section 3.05. Fees.
(a) Tranche A Commitment Fee. Borrower shall pay to
the Agent, for the ratable benefit of each Lender, a commitment
fee (the "Tranche A Commitment Fee") for the period commencing on
the Closing Date to and including the Maturity Date, payable
quarterly in arrears on the last day of each calendar quarter,
commencing on December 31, 1994, and on the Maturity Date, equal
to fifteen basis points (.15%) per annum multiplied by the
average daily unused portion of the Tranche A Commitment of each
Lender. For the purposes of computing the Tranche A Commitment
Fee, in addition to utilization by Revolving Loans, the Tranche A
Commitment of each Lender shall be deemed to be utilized by the
amount of Money Market Rate Advances extended by such Lender but
in no event shall the computation of any other Lender's Tranche A
Commitment Fee be affected by the Money Market Advances extended
by such Lender.
(b) Tranche B Commitment Fee. The Borrower shall pay
to the Agent, for the ratable benefit of each Lender, a
commitment fee (the "Tranche B Commitment Fee") for the period
commencing on the Closing Date to and including the Maturity
Date, payable quarterly in arrears on the last day of each
calendar quarter, commencing on December 31, 1994, and on the
Maturity Date, equal to six and one quarter basis points (.0625%)
per annum multiplied by the average daily Tranche B Commitment of
each Lender.
(c) Administrative Fees. The Borrower shall pay to the
Agent and the Administrative Agent an administrative fee in the
amount and on the dates previously agreed in writing by Borrower
with the Agent and the Administrative Agent.
Section 3.06. Voluntary Prepayments of Borrowings.
(a) Borrower may, at its option, prepay Borrowings
consisting of Base Rate Advances at any time in whole, or from
time to time in part, in amounts aggregating $1,000,000 or any
greater integral multiple of $100,000, by paying the principal
amount to be prepaid together with interest accrued and unpaid
thereon to the date of prepayment. Borrowings consisting of
Eurodollar Advances or Money Market Advances may be prepaid, at
Borrower's option, in whole, or from time to time in part, in
amounts aggregating $5,000,000 or any greater integral multiple
of $1,000,000, by paying the principal amount to be prepaid,
together with interest accrued and unpaid thereon to the date of
prepayment, and all compensation payments pursuant to Section
3.12 if such prepayment is made on a date other than the last day
of an Interest Period applicable thereto. Each such optional
prepayment shall be applied in accordance with Section 3.06(c)
below.
(b) Borrower shall give written notice (or telephonic
notice confirmed in writing) to the Administrative Agent of any
intended prepayment of the Revolving Loans (i) not less than one
Business Day prior to any prepayment of Base Rate Advances and
(ii) not less than three Business Days prior to any prepayment of
Eurodollar Advances. Borrower shall give written notice (or
telephonic notice confirmed in writing) to the Administrative
Agent of any intended prepayment of the Money Market Loans not
less than one (1) Business Day prior to such prepayment of Money
Market Rate Advances. Such notice, once given, shall be
irrevocable. Upon receipt of such notice of prepayment pursuant
to the first sentence of this paragraph (b), the Administrative
Agent shall promptly notify each Lender of the contents of such
notice and of such Lender's Pro Rata Share of such prepayment.
Upon receipt of any notice of prepayment pursuant to the second
sentence of this paragraph (b), the Administrative Agent shall
promptly notify each Lender participating in such Money Market
Loan of the contents of such notice and of such Lender's Pro Rata
Share of such prepayment.
(c) Borrower, when providing notice of prepayment pur-
suant to Section 3.06(b), may designate the Types of Advances and
the specific Borrowing or Borrowings which are to be prepaid,
provided that (i) if any prepayment of Eurodollar Advances made
pursuant to a single Borrowing of the Revolving Loans shall
reduce the outstanding Advances made pursuant to such Borrowing
to an amount less than $5,000,000, such Borrowing shall
immediately be converted into Base Rate Advances; and (ii) each
prepayment made pursuant to a single Borrowing shall be applied
pro rata among the Advances comprising such Borrowing. In the
absence of a designation by Borrower, the Agent shall, subject to
the foregoing, make such designation in its discretion but using
reasonable efforts to avoid funding losses to the Lenders
pursuant to Section 3.12. All voluntary prepayments shall be
applied to the payment of interest before application to
principal.
Section 3.07. Payments, etc.
(a) Except as otherwise specifically provided herein,
all payments under this Agreement and the other Credit Documents
shall be made without defense, set-off or counterclaim to the
Agent not later than 11:00 A.M. (local time for the Agent) on the
date when due and shall be made in Dollars in immediately avail-
able funds at its Payment Office.
(b) (i) All such payments shall be made free and
clear of and without deduction or withholding for any Taxes in
respect of this Agreement, the Notes or other Credit Documents,
or any payments of principal, interest, fees or other amounts
payable hereunder or thereunder (but excluding, except as
provided in paragraph (iii) hereof, any Taxes imposed on the
overall net income of the Lenders pursuant to the laws of the
jurisdiction in which the principal executive office or
appropriate Lending Office of such Lender is located). If any
Taxes are so levied or imposed, Borrower agrees (A) to pay the
full amount of such Taxes, and such additional amounts as may be
necessary so that every net payment of all amounts due hereunder
and under the Notes and other Credit Documents, after withholding
or deduction for or on account of any such Taxes (including
additional sums payable under this Section 3.07), will not be
less than the full amount provided for herein had no such
deduction or withholding been required, (B) to make such
withholding or deduction and (C) to pay the full amount deducted
to the relevant authority in accordance with applicable law.
Borrower will furnish to the Agent and each Lender, within 30
days after the date the payment of any Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by Borrower. Borrower will indemnify and hold harmless
the Administrative Agent, the Agent and each Lender and reimburse
the Administrative Agent, the Agent and each Lender upon written
request for the amount of any Taxes so levied or imposed and paid
by the Administrative Agent, the Agent or Lender and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were
correctly or illegally asserted. A certificate as to the amount
of such payment by such Lender, the Administrative Agent or the
Agent, absent manifest error, shall be final, conclusive and
binding for all purposes provided that the Administrative Agent,
the Agent and each Lender shall use reasonable efforts to furnish
Borrower notice of the imposition of any Taxes as soon as
practicable thereafter; provided, however, that no delay or
failure to furnish such notice shall in any event release or
discharge Borrower from its obligations to the Administrative
Agent, the Agent or such Lender pursuant to Section 3.07(b) or
otherwise result in any liability of the Administrative Agent,
the Agent or such Lender; provided that such notice is provided
to the Borrower within forty-five (45) days of such Lender
obtaining knowledge of the application of such Taxes to payments
under this Agreement.
(ii) Each Lender that is organized under the laws of
any jurisdiction other than the United States of America or any
State thereof (including the District of Columbia) agrees to fur-
nish to Borrower, the Administrative Agent and the Agent, prior
to the time it becomes a Lender hereunder, two copies of either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 or any successor forms thereto (wherein such
Lender claims entitlement to complete exemption from or reduced
rate of U.S. Federal withholding tax on interest paid by Borrower
hereunder) and to provide to Borrower, the Administrative Agent
and the Agent a new Form 4224 or Form 1001 or any successor forms
thereto if any previously delivered form is found to be
incomplete or incorrect in any material respect or upon the obso-
lescence of any previously delivered form; provided, however,
that no Lender shall be required to furnish a form under this
paragraph (ii) after the date that it becomes a Lender hereunder
if it is not entitled to claim an exemption from or a reduced
rate of withholding under applicable law.
(iii) Borrower shall also reimburse each Lender, upon
written request, for any Taxes imposed (including, without
limitation, Taxes imposed on the overall net income of such
Lender or its applicable Lending Office pursuant to the laws of
the jurisdiction in which the principal executive office or the
applicable Lending Office of such Lender is located) as such
Lender shall determine are payable by such Lender in respect of
amounts paid by or on behalf of Borrower to or on behalf of such
Lender pursuant to paragraph (i) hereof.
(c) Subject to Section 3.04(ii), whenever any payment
to be made hereunder or under any Note shall be stated to be due
on a day which is not a Business Day, the due date thereof shall
be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon shall be payable at
the applicable rate during such extension.
(d) All computations of interest and fees shall be
made on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are
payable (to the extent computed on the basis of days elapsed).
Interest on Base Rate Advances shall be calculated based on the
Base Rate from and including the date of such Loan to but
excluding the date of the repayment or conversion thereof.
Interest on Eurodollar Advances and Money Market Rate Advances
shall be calculated as to each Interest Period from and including
the first day thereof to but excluding the last day thereof.
Each determination by the Administrative Agent or the Agent of an
interest rate or fee hereunder shall be made in good faith and,
except for manifest error, shall be final, conclusive and binding
for all purposes; provided that, in the event that the Borrower
assumes the duties of the Administrative Agent hereunder, the
determinations of the Lenders rather than the Administrative
Agent with respect to the foregoing shall, if determined in good
faith and without manifest error, shall be final, conclusive and
binding for all purposes.
(e) Payment by the Borrower to the Agent in accordance
with the terms of this Agreement shall, as to the Borrower, con-
stitute payment to the Lenders under this Agreement.
Section 3.08. Interest Rate Not Ascertainable, etc.
In the event that the Agent shall have determined (which
determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties)
that on any date for determining the Adjusted LIBO Rate for any
Interest Period, by reason of any changes arising after the date
of this Agreement affecting the London interbank market, or the
Agent's position in such market, adequate and fair means do not
exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Adjusted LIBO Rate, then, and
in any such event, the Agent shall forthwith give notice (by
telephone confirmed in writing) to Borrower and to the Lenders,
of such determination and a summary of the basis for such
determination. Until the Agent notifies Borrower that the
circumstances giving rise to the suspension described herein no
longer exist, the obligations of the Lenders to make or permit
portions of the Revolving Loans to remain outstanding past the
last day of the then current Interest Periods as Eurodollar
Advances shall be suspended, and such affected Advances shall
bear the same interest as Base Rate Advances.
Section 3.09. Illegality.
(a) In the event that any Lender shall have determined
(which determination shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all
parties) at any time that the making or continuance of any
Eurodollar Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule,
regulation, guideline or order (whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful), then, in any such event, the Lender shall give prompt
notice (by telephone confirmed in writing) to Borrower and to the
Agent of such determination and a summary of the basis for such
determination (which notice the Agent shall promptly transmit to
the other Lenders).
(b) Upon the giving of the notice to Borrower referred
to in subsection (a) above, (i) Borrower's right to request and
such Lender's obligation to make Eurodollar Advances shall be im-
mediately suspended, and such Lender shall make an Advance as
part of the requested Borrowing of Eurodollar Advances as a Base
Rate Advance, which Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing, and (ii) if the
affected Eurodollar Advance or Advances are then outstanding,
Borrower shall immediately, or if permitted by applicable law, no
later than the date permitted thereby, upon at least one Business
Day's written notice to the Agent and the affected Lender,
convert each such Advance into a Base Rate Advance or Advances,
provided that if more than one Lender is affected at any time,
then all affected Lenders must be treated the same pursuant to
this Section 3.09(b).
Section 3.10. Increased Costs.
(a) If, by reason of (x) after the date hereof, the
introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation, or (y) the
compliance with any guideline or request from any central bank or
other governmental authority or quasi-governmental authority
exercising control over banks or financial institutions generally
made after the date hereof (whether or not having the force of
law):
(i) any Lender (or its applicable Lending Office)
shall be subject to any tax, duty or other charge with
respect to its Eurodollar Advances or its obligation to
make Eurodollar Advances or the basis of taxation of
payments to any Lender of the principal of or interest
on its Eurodollar Advances or its obligation to make
Eurodollar Advances shall have changed (except for
changes in the tax on the overall net income of such
Lender or its applicable Lending Office imposed by the
jurisdiction in which such Lender's principal executive
office or applicable Lending Office is located); or
(ii) any reserve (including, without limitation,
any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of,
or credit extended by, any Lender's applicable Lending
Office shall be imposed or deemed applicable or any
other condition affecting its Eurodollar Advances or
its obligation to make Eurodollar Advances shall be
imposed on any Lender or its applicable Lending Office
or the London interbank market;
and as a result thereof there shall be any increase in the cost
to such Lender of agreeing to make or making, funding or
maintaining Eurodollar Advances (except to the extent already
included in the determination of the applicable Adjusted LIBO
Rate for Eurodollar Advances) or its obligation to make
Eurodollar Advances, or there shall be a reduction in the amount
received or receivable by such Lender or its applicable Lending
Office, then Borrower shall from time to time (subject, in the
case of certain Taxes, to the applicable provisions of Section
3.07(b)), upon written notice from and demand by such Lender on
Borrower (with a copy of such notice and demand to the Agent),
pay to the Agent for the account of such Lender within five
Business Days after the date of such notice and demand,
additional amounts sufficient to indemnify such Lender against
such increased cost. A certificate as to the amount of such
increased cost, submitted to Borrower and the Agent by such
Lender in good faith and accompanied by a statement prepared by
such Lender describing in reasonable detail the basis for and
calculation of such increased cost, shall, except for manifest
error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise the Agent that at any
time, because of the circumstances described in clauses (x) or
(y) in Section 3.10(a) or any other circumstances beyond such
Lender's reasonable control arising after the date of this
Agreement affecting such Lender or the London interbank market or
such Lender's position in such market, the Adjusted LIBO Rate as
determined by the Agent will not adequately and fairly reflect
the cost to such Lender of funding its Eurodollar Advances, then,
and in any such event:
(i) the Agent shall forthwith give notice (by
telephone confirmed in writing) to Borrower and to the other
Lenders of such advice;
(ii) Borrower's right to request and such Lender's
obligation to make or permit portions of the Loans to remain
outstanding past the last day of the then current Interest
Periods as Eurodollar Advances shall be immediately
suspended; and
(iii) such Lender shall make a Loan as part of the re-
quested Borrowing of Eurodollar Advances as a Base Rate Ad-
vance, which such Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing.
Section 3.11. Lending Offices.
(a) Each Lender agrees that, if requested by Borrower,
it will use reasonable efforts (subject to overall policy consid-
erations of such Lender) to designate an alternate Lending Office
with respect to any of its Eurodollar Advances affected by the
matters or circumstances described in Sections 3.07(b), 3.08,
3.09 or 3.10 to reduce the liability of Borrower or avoid the
results provided thereunder, so long as such designation is not
disadvantageous to such Lender as reasonably determined by such
Lender, which determination shall be conclusive and binding on
all parties hereto. Nothing in this Section 3.11 shall affect or
postpone any of the obligations of Borrower or any right of any
Lender provided hereunder.
(b) If any Lender that is organized under the laws of
any jurisdiction other than the United States of America or any
State thereof (including the District of Columbia) issues a
public announcement with respect to the closing of its lending
offices in the United States such that any withholdings or
deductions and additional payments with respect to Taxes may be
required to be made by Borrower thereafter pursuant to Section
3.07(b), such Lender shall use reasonable efforts to furnish
Borrower notice thereof as soon as practicable thereafter;
provided, however, that no delay or failure to furnish such
notice shall in any event release or discharge Borrower from its
obligations to such Lender pursuant to Section 3.07(b) or
otherwise result in any liability of such Lender; provided that
such notice is provided to the Borrower within forty-five (45)
days of such Lender obtaining knowledge of the application of
such Taxes to payments under this Agreement.
Section 3.12. Funding Losses. Borrower shall compen-
sate each Lender, upon its written request to Borrower (which re-
quest shall set forth the basis for requesting such amounts in
reasonable detail and which request shall be made in good faith
and, absent manifest error, shall be final, conclusive and
binding upon all of the parties hereto), for all losses, expenses
and liabilities (including, without limitation, any interest paid
by such Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Advances or Money Market Rate Advances, in
either case to the extent not recovered by such Lender in
connection with the re-employment of such funds and including
loss of anticipated profits), which the Lender may sustain: (i)
if for any reason (other than a default by such Lender) a
borrowing of, or conversion to or continuation of, Eurodollar
Advances to Borrower or a borrowing of Money Market Rate Advances
does not occur on the date specified therefor in a Notice of
Borrowing, a Notice of Conversion/Continuation or a Money Market
Bid Acceptance (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to
Section 3.09(b)) of any Eurodollar Advances or Money Market
Advances to Borrower occurs on a date which is not the last day
of an Interest Period applicable thereto, or (iii), if, for any
reason, Borrower defaults in its obligation to repay its
Eurodollar Advances or Money Market Rate Advances when required
by the terms of this Agreement.
Section 3.13. Assumptions Concerning Funding of Euro-
dollar Advances. Calculation of all amounts payable to a Lender
under this Article III shall be made as though that Lender had
actually funded its relevant Eurodollar Advances through the pur-
chase of deposits in the relevant market bearing interest at the
rate applicable to such Eurodollar Advances in an amount equal to
the amount of the Eurodollar Advances and having a maturity
comparable to the relevant Interest Period and through the
transfer of such Eurodollar Advances from an offshore office of
that Lender to a domestic office of that Lender in the United
States of America; provided, however, that each Lender may fund
each of its Eurodollar Advances in any manner it sees fit and the
foregoing assumption shall be used only for calculation of
amounts payable under this Article III.
Section 3.14. Apportionment of Payments; Deemed Utili-
zation of Tranche A Commitments by Money Market Loans. Aggregate
principal and interest payments in respect of Revolving Loans and
commitment fees shall be apportioned among all outstanding
Commitments and Revolving Loans to which such payments relate,
proportionately to the Lenders' respective Pro Rata Share of such
Commitments and outstanding Revolving Loans. Each payment of
principal of any Money Market Loan shall be allocated pro rata
among the Lenders participating in such Loan in accordance with
the respective principal amounts of their outstanding Money
Market Rate Advances comprising such Money Market Loan. Each
payment of interest on any Money Market Loan shall be allocated
pro rata among the Lenders participating in such Money Market
Loan in accordance with the respective amounts of accrued and
unpaid interest on their outstanding Money Market Rate Advances
comprising such Money Market Loan. For purposes of determining
the available Tranche A Commitments of the Lenders at any time
(but not for purposes of calculating the commitment fees payable
to each Lender), each outstanding Money Market Loan shall be
deemed to have utilized the Tranche A Commitments of the Lenders
(including those Lenders which shall not have made Advances as
part of such Money Market Loan) pro rata in accordance with each
Lender's Pro Rata Share of the Tranche A Commitments. The Agent
shall promptly distribute to each Lender at its payment office
set forth beside its name on the appropriate signature page
hereof or such other address as any Lender may request its share
of all such payments received by the Agent.
Section 3.15. Sharing of Payments, Etc. If any Lender
shall obtain any payment or reduction (including, without limita-
tion, any amounts received as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code) of the
Obligations (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its Pro Rata
Share of payments or reductions on account of such obligations
obtained by all the Lenders (other than payments of principal,
interest and fees with respect to the Money Market Loans which
are payable solely to the Lenders participating therein), such
Lender shall forthwith (i) notify each of the other Lenders and
Agent of such receipt, and (ii) purchase from the other Lenders
such participations in the affected obligations as shall be
necessary to cause such purchasing Lender to share the excess
payment or reduction, net of costs incurred in connection
therewith, ratably with each of them, provided that if all or any
portion of such excess payment or reduction is thereafter
recovered from such purchasing Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery or such additional costs,
but without interest unless the Lender obligated to return such
funds is required to pay interest on such funds. Borrower agrees
that any Lender so purchasing a participation from another Lender
pursuant to this Section 3.15 may, to the fullest extent
permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully
as if such Lender were the direct creditor of Borrower in the
amount of such participation.
Section 3.16. Capital Adequacy. Without limiting any
other provision of this Agreement, in the event that any Lender
shall have determined that any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy not currently in effect or fully
applicable as of the Closing Date, or any change therein or in
the interpretation or application thereof, or compliance by such
Lender with any request or directive regarding capital adequacy
not currently in effect or fully applicable as of the Closing
Date (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) from a central
bank or governmental authority or body having jurisdiction, does
or shall have the effect of reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder to
a level below that which such Lender could have achieved but for
such law, treaty, rule, regulation, guideline or order, or such
change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then within ten (10) Business Days
after written notice and demand by such Lender (with copies
thereof to the Agent), Borrower shall from time to time pay to
such Lender additional amounts sufficient to compensate such
Lender for such reduction (but, in the case of outstanding Base
Rate Advances, without duplication of any amounts already
recovered by such Lender by reason of an adjustment in the
applicable Base Rate). Each certificate as to the amount payable
under this Section 3.16 (which certificate shall set forth the
basis for requesting such amounts in reasonable detail),
submitted to Borrower by any Lender in good faith, shall, absent
manifest error, be final, conclusive and binding for all
purposes.
ARTICLE IV.
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Bor-
rower hereunder is subject to the satisfaction of the following
conditions:
Section 4.01. Conditions Precedent to Initial Loans.
At the time of the making of the initial Loans hereunder on the
Closing Date, all obligations of Borrower hereunder incurred
prior to the initial Loans (including, without limitation,
Borrower's obligations to reimburse fees and expenses payable to
the Administrative Agent and the Agent as previously agreed with
Borrower), shall have been paid in full, and the Agent shall have
received the following, in form and substance reasonably
satisfactory in all respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Credit Notes evidenc-
ing the Commitments and the duly executed Money Market
Notes;
(c) the Guaranty Agreement executed by each Material
Subsidiary of the Borrower;
(d) certificates of the Secretary or Assistant Secre-
tary of each of the Credit Parties attaching and certifying
copies of the resolutions of the boards of directors of the
Credit Parties, authorizing as applicable the execution, de-
livery and performance of the Credit Documents;
(e) certificates of the Secretary or an Assistant Sec-
retary of each of the Credit Parties certifying (i) the
name, title and true signature of each officer of such
entities executing the Credit Documents, and (ii) the bylaws
of such entities;
(f) certified copies of the certificate or articles of
incorporation of each Credit Party certified by the
Secretary of State and by the Secretary or Assistant
Secretary of such Credit Party, together with certificates
of good standing or existence, as may be available from the
Secretary of State of the jurisdiction of incorporation or
organization of such Credit Party and each other
jurisdiction where such Credit Party's ownership of property
or the conduct of its business require it to be qualified,
except where a failure to be so qualified would not have a
Materially Adverse Effect;
(g) certificate of Borrower in substantially the form
of Exhibit H attached hereto and appropriately completed;
(h) acknowledgments from Prentice Hall Corporation as
to its appointment as agent for service of process for the
various Credit Parties;
(i) the favorable opinion of (a) Pfilip G. Hunt, Es-
quire, general counsel to the Credit Parties as to certain
corporate matters, (b) Powell, Goldstein, Frazer & Murphy,
counsel to the Credit Parties as to certain other matters,
and (c) Hourigan, Kluger, Spohrer & Quinn, P.C., special
Pennsylvania counsel to the Credit Parties in the form of
Exhibits I-1, I-2 and I-3, respectively, in each case
addressed to the Agent and each of the Lenders.
(j) copies of all documents and instruments, including
all consents, authorizations and filings, required or advis-
able under any Requirement of Law or by any material
Contractual Obligation of the Credit Parties, in connection
with the execution, delivery, performance, validity and
enforceability of the Credit Documents and the other
documents to be executed and delivered hereunder, and such
consents, authorizations, filings and orders shall be in
full force and effect and all applicable waiting periods
shall have expired;
(k) certificates, reports and other information as the
Agent may reasonably request from any Consolidated Company
in order to satisfy the Lenders as to the absence of any
material liabilities or obligations arising from matters
relating to employees of the Consolidated Companies,
including employee relations, collective bargaining
agreements, Plans and other compensation and employee
benefit plans;
(l) certificates, reports and other information as the
Agent may reasonably request from any Consolidated Company
in order to satisfy the Lenders as to the absence of any
material liabilities or obligations arising from litigation
(including without limitation, products liability and patent
infringement claims) pending or threatened against the Con-
solidated Companies; and
(m) evidence assuring the Agent and the Lenders that
all corporate proceedings and all other legal matters in
connection with the authorization, legality, validity and
enforceability of the Credit Documents are in form and sub-
stance satisfactory to the Lenders.
Section 4.02. Conditions to Each Loan. At the time of
the making of each Loan (but not including the continuation or
conversion of any Revolving Loan in the same principal amount),
including the initial Loans hereunder, (before as well as after
giving effect to such Loans and to the proposed use of the
proceeds thereof), the following conditions shall have been
satisfied or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Borrower
contained herein shall be true and correct in all material
respects with the same effect as though such representations
and warranties had been made on and as of the date of such
Loans;
(c) the Loans to be made and the use of proceeds
thereof shall not contravene, violate or conflict with, or
involve the Administrative Agent, the Agent or any Lender in
a violation of, any law, rule, injunction, or regulation, or
determination of any court of law or other governmental
authority applicable to Borrower; and
(d) the Agent shall have received such other documents
or legal opinions as the Agent or any Lender may reasonably
request, all in form and substance reasonably satisfactory
to the Agent.
Each request for a Borrowing or a Money Market Bid and
the acceptance by Borrower of the proceeds thereof shall consti-
tute a representation and warranty by Borrower, as of the date of
the Loans comprising such Borrowing, that the applicable condi-
tions specified in Sections 4.01 and 4.02 have been satisfied.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower (as to itself and all other Consolidated
Companies) represents and warrants as follows:
Section 5.01. Corporate Existence; Compliance with
Law. Each of the Consolidated Companies is a corporation duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation, and each of the Credit
Parties has the corporate power and authority and the legal right
to own and operate its property and to conduct its business.
Each of the Consolidated Companies (i) has the corporate power
and authority and the legal right to own and operate its property
and to conduct its business, (ii) is duly qualified as a foreign
corporation and in good standing under the laws of each
jurisdiction where its ownership of property or the conduct of
its business requires such qualification, and (iii) is in
compliance with all Requirements of Law, where (a) the failure to
have such power, authority and legal right as set forth in clause
(i), (b) the failure to be so qualified or in good standing as
set forth in clause (ii), or (c) the failure to comply with
Requirements of Law as set forth in clause (iii), would
reasonably be expected, in the aggregate, to have a Materially
Adverse Effect. The jurisdiction of incorporation or
organization, and the ownership of all issued and outstanding
capital stock, for each Subsidiary as of the date of this
Agreement is accurately described on Schedule 5.01.
Section 5.02. Corporate Power; Authorization. Each of
the Credit Parties has the corporate power and authority to make,
deliver and perform the Credit Documents to which it is a party
and has taken all necessary corporate action to authorize the ex-
ecution, delivery and performance of such Credit Documents. No
consent or authorization of, or filing with, any Person (includ-
ing, without limitation, any governmental authority), is required
in connection with the execution, delivery or performance by any
Credit Party, or the validity or enforceability against any
Credit Party, of the Credit Documents, other than such consents,
authorizations or filings which have been made or obtained.
Section 5.03. Enforceable Obligations. This Agreement
has been duly executed and delivered, and each other Credit Docu-
ment will be duly executed and delivered, by the respective
Credit Parties, and this Agreement constitutes, and each other
Credit Document when executed and delivered will constitute,
legal, valid and binding obligations of the Credit Parties,
respectively, enforceable against the Credit Parties in
accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
Section 5.04. No Legal Bar. The execution, delivery
and performance by the Credit Parties of the Credit Documents
will not violate any Requirement of Law or cause a breach or
default under any of their respective material Contractual
Obligations.
Section 5.05. No Material Litigation. Except as set
forth on Schedule 5.05 or in any notice furnished to the Lenders
pursuant to Section 6.07(e) at or prior to the respective times
the representations and warranties set forth in this Section 5.05
are made or deemed to be made hereunder, no litigation,
investigations or proceedings of or before any courts, tribunals,
arbitrators or governmental authorities are pending or, to the
knowledge of Borrower, threatened by or against any of the
Consolidated Companies, or against any of their respective
properties or revenues, existing or future (a) with respect to
any Credit Document, or any of the transactions contemplated
hereby or thereby, or (b) seeking money damages in excess of
$5,000,000, either singly or in the aggregate or which, if
adversely determined, would otherwise reasonably be expected to
have a Materially Adverse Effect.
Section 5.06. Investment Company Act, Etc. None of
the Credit Parties is an "investment company" or a company "con-
trolled" by an "investment company" (as each of the quoted terms
is defined or used in the Investment Company Act of 1940, as
amended). None of the Credit Parties is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed,
guarantee such indebtedness, or pledge its assets to secure such
indebtedness, as contemplated hereby or by any other Credit Docu-
ment.
Section 5.07. Margin Regulations. No part of the pro-
ceeds of any of the Loans will be used for any purpose which vio-
lates, or which would be inconsistent or not in compliance with,
the provisions of the applicable Margin Regulations.
Section 5.08. Compliance With Environmental Laws.
(a) The Consolidated Companies have received no
notices of claims or potential liability under, and are in
compliance with, all applicable Environmental Laws, where such
claims and liabilities under, and failures to comply with, such
statutes, regulations, rules, ordinances, laws or licenses, would
reasonably be expected to result in penalties, fines, claims or
other liabilities to the Consolidated Companies in amounts in
excess of $500,000, either individually or in the aggregate
(including any such penalties, fines, claims, or liabilities
relating to the matters set forth on Schedule 5.08(a)), except as
set forth on Schedule 5.08(a) or in any notice furnished to the
Lenders pursuant to Section 6.07(f) at or prior to the respective
times the representations and warranties set forth in this
Section 5.08(a) are made or deemed to be made hereunder.
(b) Except as set forth on Schedule 5.08(b) or in any
notice furnished to the Lenders pursuant to Section 6.07(f) at or
prior to the respective times the representations and warranties
set forth in this Section 5.08(b) are made or deemed to be made
hereunder, none of the Consolidated Companies has received any
notice of violation, or notice of any action, either judicial or
administrative, from any governmental authority (whether United
States or foreign) relating to the actual or alleged violation of
any Environmental Law, including, without limitation, any notice
of any actual or alleged spill, leak, or other release of any
Hazardous Substance, waste or hazardous waste by any Consolidated
Company or its employees or agents, or as to the existence of any
contamination on any properties owned by any Consolidated
Company, where any such violation, spill, leak, release or
contamination would reasonably be expected to result in
penalties, fines, claims or other liabilities to the Consolidated
Companies in amounts in excess of $500,000, either individually
or in the aggregate.
(c) Except as set forth on Schedule 5.08(c), the Con-
solidated Companies have obtained all necessary governmental per-
mits, licenses and approvals which are material to the operations
conducted on their respective properties, including without limi-
tation, all required material permits, licenses and approvals for
(i) the emission of air pollutants or contaminants, (ii) the
treatment or pretreatment and discharge of waste water or storm
water, (iii) the treatment, storage, disposal or generation of
hazardous wastes, (iv) the withdrawal and usage of ground water
or surface water, and (v) the disposal of solid wastes.
Section 5.09. Insurance. The Consolidated Companies
currently maintain insurance with respect to their respective
properties and businesses, with financially sound and reputable
insurers, having coverages against losses or damages of the kinds
customarily insured against by reputable companies in the same or
similar businesses, such insurance being in amounts no less than
those amounts which are customary for such companies under
similar circumstances. The Consolidated Companies have paid all
material amounts of insurance premiums now due and owing with
respect to such insurance policies and coverages, and such
policies and coverages are in full force and effect.
Section 5.10. No Default. Except as set forth on
Schedule 5.10, none of the Consolidated Companies is in default
under or with respect to any Contractual Obligation in any
respect which default or defaults would be reasonably expected in
the aggregate to have a Materially Adverse Effect.
Section 5.11. No Burdensome Restrictions. Except as
set forth on Schedule 5.11 or in any notice furnished to the
Lenders pursuant to Section 6.07(k) at or prior to the respective
times the representations and warranties set forth in this
Section 5.11 are made or deemed to be made hereunder, none of the
Consolidated Companies is a party to or bound by any Contractual
Obligation or Requirement of Law which has had or would
reasonably be expected to have a Materially Adverse Effect.
Section 5.12. Taxes. Except as set forth on Schedule
5.12, each of the Consolidated Companies have filed or caused to
be filed all declarations, reports and tax returns which are re-
quired to have been filed, and has paid all taxes, custom duties,
levies, charges and similar contributions ("taxes" in this
Section 5.12) shown to be due and payable on said returns or on
any assessments made against it or its properties, and all other
taxes, fees or other charges imposed on it or any of its
properties by any governmental authority (other than those the
amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided in its
books); and no tax liens have been filed and, to the knowledge of
Borrower, no claims are being asserted with respect to any such
taxes, fees or other charges.
Section 5.13. Subsidiaries. Except as disclosed on
Schedule 5.01, on the date of this Agreement, Borrower has no
Subsidiaries and neither Borrower nor any Subsidiary is a joint
venture partner or general partner in any partnership. Except as
disclosed on Schedule 5.13 or in any notice furnished to the
Lenders pursuant to Section 6.07(l) at or prior to the respective
times the representations and warranties set forth in this
Section 5.13 are made or deemed to be made hereunder, Borrower
has no Material Subsidiaries.
Section 5.14. Financial Statements. Borrower has
furnished to the Agent and the Lenders the audited consolidated
balance sheet as of June 4, 1994, June 5, 1993 and June 6, 1992
of Borrower and the related consolidated statements of income,
shareholders' equity and cash flows for the fiscal year then
ended, including in each case the related schedules and notes,
setting forth in each case in comparative form the figures for
the corresponding quarter of Borrower's previous fiscal year.
The foregoing financial statements fairly present in all material
respects the consolidated financial condition of Borrower as at
the dates thereof and results of operations for such periods in
conformity with GAAP consistently applied. Except as set forth
on Schedule 5.14, the Consolidated Companies taken as a whole do
not have any material contingent obligations, contingent
liabilities, or material liabilities for known taxes, long-term
leases or unusual forward or long-term commitments not reflected
in the foregoing financial statements or the notes thereto.
Since June 4, 1994, there have been no changes with respect to
the Consolidated Companies which has had or would reasonably be
expected to have a Materially Adverse Effect.
Section 5.15. ERISA. Except as disclosed on Sched-
ule 5.15 or in any notice to the Lenders furnished pursuant to
Section 6.07(g) at or prior to the respective times the
representations and warranties set forth in this Section 5.15 are
made or deemed to be made hereunder:
(1) Identification of Plans. None of the
Consolidated Companies nor any of their respective ERISA
Affiliates maintains or contributes to, or has during the past
seven years maintained or contributed to, any Plan that is
subject to Title IV of ERISA;
(2) Compliance. Each Plan maintained by the Consoli-
dated Companies have at all times been maintained, by their terms
and in operation, in compliance with all applicable laws, and the
Consolidated Companies are subject to no tax or penalty with re-
spect to any Plan of such Consolidated Company or any ERISA Af-
filiate thereof, including without limitation, any tax or penalty
under Title I or Title IV of ERISA or under Chapter 43 of the Tax
Code, or any tax or penalty resulting from a loss of deduction
under Sections 162, 404, or 419 of the Tax Code, where the
failure to comply with such laws, and such taxes and penalties,
together with all other liabilities referred to in this Section
5.15 (taken as a whole), would in the aggregate have a Materially
Adverse Effect;
(3) Liabilities. The Consolidated Companies are sub-
ject to no liabilities (including withdrawal liabilities) with
respect to any Plans of such Consolidated Companies or any of
their ERISA Affiliates, including without limitation, any li-
abilities arising from Titles I or IV of ERISA, other than
obligations to fund benefits under an ongoing Plan and to pay
current contributions, expenses and premiums with respect to such
Plans, where such liabilities, together with all other
liabilities referred to in this Section 5.15 (taken as a whole),
would in the aggregate have a Materially Adverse Effect;
(4) Funding. The Consolidated Companies and, with re-
spect to any Plan which is subject to Title IV of ERISA, each of
their respective ERISA Affiliates, have made full and timely pay-
ment of all amounts (A) required to be contributed under the
terms of each Plan and applicable law, and (B) required to be
paid as expenses (including PBGC or other premiums) of each Plan,
where the failure to pay such amounts (when taken as a whole,
including any penalties attributable to such amounts) would have
a Materially Adverse Effect. No Plan subject to Title IV of
ERISA (other than a Multiemployer Plan) has an "amount of
unfunded benefit liabilities" (as defined in Section 4001(a)(18)
of ERISA), determined as if such Plan terminated on any date on
which this representation and warranty is deemed made, in any
amount which, together with all other liabilities referred to in
this Section 5.15 (taken as a whole), would have a Materially
Adverse Effect if such amount were then due and payable. None of
the Consolidated Companies would be subject to withdrawal
liability with respect to any Multiemployer Plan, determined as
if the event resulting in such withdrawal liability occurred on
any date on which this representation is made or deemed to be
made based on the most recent actuarial valuation data made
available to employers participating in the Multiemployer Plan,
in any amount which, together with all other liabilities referred
to in this Section 5.15 (taken as a whole), would have a
Materially Adverse Effect if such amounts were then due and
payable. The Consolidated Companies are subject to no
liabilities with respect to post-retirement medical benefits in
any amounts which, together with all other liabilities referred
to in this Section 5.15 (taken as a whole), would have a
Materially Adverse Effect if such amounts were then due and
payable.
Section 5.16. Patents, Trademarks, Licenses, Etc. Ex-
cept as set forth on Schedule 5.16, (i) the Consolidated
Companies have obtained and hold in full force and effect all
material patents, trademarks, service marks, trade names,
copyrights, licenses and other such rights, free from material
burdensome restrictions, which are necessary for the operation of
their respective businesses as presently conducted, and (ii) to
the best of Borrower's knowledge, no product, process, method,
service or other item presently sold by or employed by any
Consolidated Company in connection with such business infringes
any patents, trademark, service mark, trade name, copyright,
license or other right owned by any other person and there is not
presently pending, or to the knowledge of Borrower, threatened,
any claim or litigation against or affecting any Consolidated
Company contesting such Person's right to sell or use any such
product, process, method, substance or other item where the
result of such failure to obtain and hold such benefits or such
infringement would have a Materially Adverse Effect.
Section 5.17. Ownership of Property. Except as set
forth on Schedule 5.17, each Consolidated Company has good and
marketable fee simple title to or a valid leasehold interest in
all of its real property and good title to, or a valid leasehold
interest in, all of its other property, as such properties are
reflected in the consolidated balance sheet of the Consolidated
Companies as of June 4, 1994 referred to in Section 5.14, other
than properties disposed of in the ordinary course of business
since such date or as otherwise permitted by the terms of this
Agreement, subject to no Lien or title defect of any kind, except
Permitted Liens. The Consolidated Companies enjoy peaceful and
undisturbed possession under all of their respective material
leases.
Section 5.18. Indebtedness. As of the Closing Date,
except for the Indebtedness set forth on Schedule 7.01, none of
the Consolidated Companies is an obligor in respect of any
Indebtedness for borrowed money, or any commitment to create or
incur any Indebtedness for borrowed money, in an amount not less
than $1,000,000 in any single case, and such Indebtedness and
commitments for amounts less than $1,000,000 do not exceed
$5,000,000 in the aggregate for all such Indebtedness and
commitments of the Consolidated Companies.
Section 5.19. Financial Condition. On the Closing
Date, and on the date of each Loan hereunder and after giving ef-
fect to the transactions contemplated by this Agreement and the
other Credit Documents, including without limitation, the use of
the proceeds of the Revolving Loans and the Money Market Loans as
provided in Section 2.01 (i) the assets of each Credit Party at
fair valuation and based on their present fair saleable value
(including, without limitation, the fair and realistic value of
any contribution or subrogation rights in respect of any Guaranty
Agreement given by such Credit Party will exceed such Credit
Party's debts, including contingent liabilities (as such li-
abilities may be limited under the express terms of any Guaranty
Agreement of such Credit Party), (ii) the remaining capital of
such Credit Party will not be unreasonably small to conduct the
Credit Party's business, and (iii) such Credit Party will not
have incurred debts, or have intended to incur debts, beyond the
Credit Party's ability to pay such debts as they mature. For
purposes of this Section 5.19, "debt" means any liability on a
claim, and "claim" means (a) the right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (b) the right to an
equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
Section 5.20. Labor Matters. Except as set forth in
Schedule 5.20 or in any notice furnished to the Lenders pursuant
to Section 6.07(k) at or prior to the respective times the repre-
sentations and warranties set forth in this Section 5.20 are made
or deemed to be made hereunder, the Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work stop-
pages due to labor disagreements which have had, or would reason-
ably be expected to have, a Materially Adverse Effect, and, to
the best knowledge of Borrower, there are no such strikes,
disputes, slow downs or work stoppages threatened against any
Consolidated Company. The hours worked and payment made to
employees of the Consolidated Companies have not been in
violation in any material respect of the Fair Labor Standards Act
or any other applicable law dealing with such matters. All
payments due from the Consolidated Companies, or for which any
claim may be made against the Consolidated Companies, on account
of wages and employee health and welfare insurance and other
benefits have been paid or accrued as liabilities on the books of
the Consolidated Companies where the failure to pay or accrue
such liabilities would reasonably be expected to have a
Materially Adverse Effect.
Section 5.21. Payment or Dividend Restrictions.
Except as described on Schedule 5.21, none of the Consolidated
Companies is party to or subject to any agreement or
understanding restricting or limiting the payment of any
dividends or other distributions by any such Consolidated
Company.
Section 5.22. Disclosure. No representation or war-
ranty contained in this Agreement (including the Schedules at-
tached hereto) or in any other document furnished from time to
time pursuant to the terms of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make the statements
herein or therein not misleading in any material respect as of
the date made or deemed to be made. Except as may be set forth
herein (including the Schedules attached hereto), there is no
fact known to Borrower which has had, or is reasonably expected
to have, a Materially Adverse Effect.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Commitment remains in effect hereunder
or any Note shall remain unpaid, Borrower will:
Section 6.01. Corporate Existence, Etc. Preserve and
maintain, and cause each of its Material Subsidiaries to preserve
and maintain, its corporate existence, its material rights, fran-
chises, and licenses, and its material patents and copyrights
(for the scheduled duration thereof), trademarks, trade names,
and service marks, necessary or desirable in the normal conduct
of its business, and its qualification to do business as a
foreign corporation in all jurisdictions where it conducts
business or other activities making such qualification necessary,
where the failure to be so qualified would reasonably be expected
to have a Materially Adverse Effect.
Section 6.02. Compliance with Laws, Etc. Comply, and
cause each of its Subsidiaries to comply with all Requirements of
Law (including, without limitation, the Environmental Laws
subject to the exception set forth in Section 5.08 where the
penalties, claims, fines, and other liabilities resulting from
noncompliance with such Environmental Laws do not involve amounts
in excess of $2,500,000 in the aggregate) and Contractual
Obligations applicable to or binding on any of them where the
failure to comply with such Requirements of Law and Contractual
Obligations would reasonably be expected to have a Materially
Adverse Effect.
Section 6.03. Payment of Taxes and Claims, Etc. Pay,
and cause each of its Subsidiaries to pay, (i) all taxes, assess-
ments and governmental charges imposed upon it or upon its prop-
erty, and (ii) all claims (including, without limitation, claims
for labor, materials, supplies or services) which might, if un-
paid, become a Lien upon its property, unless, in each case, the
validity or amount thereof is being contested in good faith by
appropriate proceedings and adequate reserves are maintained with
respect thereto.
Section 6.04. Keeping of Books. Keep, and cause each
of its Subsidiaries to keep, proper books of record and account,
containing complete and accurate entries of all their respective
financial and business transactions.
Section 6.05. Visitation, Inspection, Etc. Permit,
and cause each of its Subsidiaries to permit, any representative
of the Agent or any Lender to visit and inspect any of its
property, to examine its books and records and to make copies and
take extracts therefrom, and to discuss its affairs, finances and
accounts with its officers, all at such reasonable times and as
often as the Agent or such Lender may reasonably request.
Section 6.06. Insurance; Maintenance of Properties.
(a) Maintain or cause to be maintained with
financially sound and reputable insurers, insurance with respect
to its properties and business, and the properties and business
of its Subsidiaries, against loss or damage of the kinds
customarily insured against by reputable companies in the same or
similar businesses, such insurance to be of such types and in
such amounts as is customary for such companies under similar
circumstances; provided, however, that in any event Borrower
shall use its best efforts to maintain, or cause to be
maintained, insurance in amounts and with coverages not
materially less favorable to any Consolidated Company as in
effect on the date of this Agreement.
(b) Cause, and cause each of the Consolidated
Companies to cause, all properties used or useful in the conduct
of its business to be maintained and kept in good condition,
repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs,
renewals, replacements, settlements and improvements thereof, all
as in the judgment of Borrower may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 6.07. Reporting Covenants. Furnish to each
Lender:
(a) Annual Financial Statements. As soon as available
and in any event within 90 days after the end of each fiscal
year of Borrower, balance sheets of the Consolidated Compa-
nies as at the end of such year, presented on a consolidated
and consolidating basis, and the related statements of in-
come, shareholders' equity, and cash flows of the Consoli-
dated Companies for such fiscal year, presented on a
consolidated and consolidating basis, setting forth in each
case in comparative form the figures for the previous fiscal
year, all in reasonable detail and accompanied by a report
thereon of Ernst & Young or other independent public ac-
countants of comparable recognized national standing, which
such report shall be unqualified as to going concern and
scope of audit and shall state that such financial
statements present fairly in all material respects the
financial condition as at the end of such fiscal year on a
consolidated basis, and the results of operations and
statements of cash flows of the Consolidated Companies for
such fiscal year in accordance with GAAP and that the exami-
nation by such accountants in connection with such consoli-
dated financial statements has been made in accordance with
generally accepted auditing standards;
(b) Quarterly Financial Statements. As soon as avail-
able and in any event within 45 days after the end of each
fiscal quarter of Borrower (other than the fourth fiscal
quarter), balance sheets of the Consolidated Companies as at
the end of such quarter presented on a consolidated basis
and the related statements of income, shareholders' equity,
and cash flows of the Consolidated Companies for such fiscal
quarter and for the portion of Borrower's fiscal year ended
at the end of such quarter, presented on a consolidated
basis setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding
portion of Borrower's previous fiscal year, all in
reasonable detail and certified by the chief financial
officer or principal accounting officer of Borrower that
such financial statements fairly present in all material
respects the financial condition of the Consolidated
Companies as at the end of such fiscal quarter on a
consolidated basis, and the results of operations and
statements of cash flows of the Consolidated Companies for
such fiscal quarter and such portion of Borrower's fiscal
year, in accordance with GAAP consistently applied (subject
to normal year-end audit adjustments and the absence of
certain footnotes);
(c) No Default/Compliance Certificate. Together with
the financial statements required pursuant to subsections
(a) and (b) above, a certificate of the treasurer or chief
financial officer of Borrower (i) to the effect that, based
upon a review of the activities of the Consolidated
Companies and such financial statements during the period
covered thereby, there exists no Event of Default and no
Default under this Agreement, or if there exists an Event of
Default or a Default hereunder, specifying the nature
thereof and the proposed response thereto, and (ii)
demonstrating in reasonable detail compliance as at the end
of such fiscal year or such fiscal quarter with Section 6.08
and Sections 7.01 through 7.05;
(d) Notice of Default. Promptly after any Executive
Officer of Borrower has notice or knowledge of the
occurrence of an Event of Default or a Default, a cer-
tificate of the chief financial officer or principal
accounting officer of Borrower specifying the nature thereof
and the proposed response thereto;
(e) Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of or any material
adverse development in any material action, suit or
proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any
governmental or administrative body, agency or official,
against any Consolidated Company, or any material property
of any thereof seeking money damages in excess of $5,000,000
or which, if adversely determined, would otherwise
reasonably be expected to have a Materially Adverse Effect,
or (ii) actual knowledge thereof, notice of the threat of
any such action, suit, proceeding, investigation or
arbitration;
(f) Environmental Notices. Promptly after receipt
thereof, notice of any actual or alleged violation, or
notice of any action, claim or request for information,
either judicial or administrative, from any governmental
authority relating to any actual or alleged claim, notice of
potential responsibility under or violation of any
Environmental Law, or any actual or alleged spill, leak,
disposal or other release of any waste, petroleum product,
or hazardous waste or Hazardous Substance by any Consoli-
dated Company which could result in penalties, fines, claims
or other liabilities to any Consolidated Company in amounts
in excess of $500,000;
(g) ERISA. (i) Promptly after the occurrence thereof
with respect to any Plan of any Consolidated Company or any
ERISA Affiliate thereof, or any trust established
thereunder, notice of (A) a "reportable event" described in
Section 4043 of ERISA and the regulations issued from time
to time thereunder (other than a "reportable event" not
subject to the provisions for 30-day notice to the PBGC
under such regulations), or (B) any other event which could
subject any Consolidated Company to any tax, penalty or li-
ability under Title I or Title IV of ERISA or Chapter 43 of
the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Tax Code,
where any such taxes, penalties or liabilities exceed or
could exceed $500,000 in the aggregate;
(ii) Promptly after such notice must be provided
to the PBGC, or to a Plan participant, beneficiary or
alternative payee, any notice required under Section 101(d),
302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) of ERISA
or under Section 401(a)(29) or 412 of the Tax Code with re-
spect to any Plan of any Consolidated Company or any ERISA
Affiliate thereof;
(iii) Promptly after receipt, any notice received
by any Consolidated Company or any ERISA Affiliate thereof
concerning the intent of the PBGC or any other governmental
authority to terminate a Plan of such Company or ERISA
Affiliate thereof which is subject to Title IV of ERISA, to
impose any liability on such Company or ERISA Affiliate
under Title IV of ERISA or Chapter 43 of the Tax Code;
(iv) Upon the request of the Agent, promptly upon
the filing thereof with the Internal Revenue Service ("IRS")
or the Department of Labor ("DOL"), a copy of IRS Form 5500
or annual report for each Plan of any Consolidated Company
or ERISA Affiliate thereof which is subject to Title IV of
ERISA;
(v) Upon the request of the Agent, (A) true and
complete copies of any and all documents, government reports
and IRS determination or opinion letters or rulings for any
Plan of any Consolidated Company from the IRS, PBGC or DOL,
(B) any reports filed with the IRS, PBGC or DOL with respect
to a Plan of the Consolidated Companies or any ERISA Affili-
ate thereof, or (C) a current statement of withdrawal li-
ability for each Multiemployer Plan of any Consolidated Com-
pany or any ERISA Affiliate thereof;
(h) Liens. Promptly upon any Consolidated Company be-
coming aware thereof, notice of the filing of any federal
statutory Lien, tax or other state or local government Lien
or any other Lien affecting their respective properties,
other than Permitted Liens;
(i) Public Filings, Etc. Promptly upon the filing
thereof or otherwise becoming available, copies of all
financial statements, annual, quarterly and special reports,
proxy statements and notices sent or made available
generally by Borrower to its public security holders, of all
regular and periodic reports and all registration statements
and prospectuses, if any, filed by any of them with any
securities exchange, and of all press releases and other
statements made available generally to the public containing
material developments in the business or financial condition
of Borrower and the other Consolidated Companies;
(j) Accountants' Reports. Promptly upon receipt
thereof, copies of all financial statements of, and all re-
ports submitted by, independent public accountants to Bor-
rower in connection with each annual, interim, or special
audit of Borrower's financial statements, including without
limitation, the comment letter submitted by such accountants
to management in connection with their annual audit;
(k) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the existence or
occurrence of (i) any Contractual Obligation or Requirement
of Law described in Section 5.11, (ii) failure of any Con-
solidated Company to hold in full force and effect those ma-
terial trademarks, service marks, patents, trade names,
copyrights, licenses and similar rights necessary in the
normal conduct of its business, and (iii) any strike, labor
dispute, slow down or work stoppage as described in Section
5.20;
(l) New Material Subsidiaries. Within 30 days after
the formation or acquisition of any Material Subsidiary, or
any other event resulting in the creation of a new Material
Subsidiary, notice of the formation or acquisition of such
Material Subsidiary or such occurrence, including a descrip-
tion of the assets of such entity, the activities in which
it will be engaged, and such other information as the Agent
and any of the Lenders may request;
(m) Intercompany Asset Transfers. Promptly upon the
occurrence thereof, notice of the transfer of any assets
from any Credit Party to any other Consolidated Company that
is not a Credit Party (in any transaction or series of
related transactions), excluding sales or other transfers of
assets in the ordinary course of business, where either the
book value or the fair market value of such assets is
greater than $5,000,000; and
(n) Other Information. With reasonable promptness,
such other information about the Consolidated Companies as
the Agent or any Lender may reasonably request from time to
time.
Section 6.08. Financial Covenants.
(a) Fixed Charge Coverage. Maintain a Fixed Charge
Coverage Ratio equal to or greater than 2.0:1.0, measured as of
the last day of each fiscal quarter for the immediately preceding
four quarters ending on such date.
(b) Consolidated Funded Debt to Total Capitalization.
Maintain at all times a ratio of Consolidated Funded Debt to
Total Capitalization equal to or less than 0.7:1.0.
(c) Consolidated Net Worth. Maintain at all times
Consolidated Net Worth in an amount not less than the sum of
(i) $175,000,000.00, plus (ii) the greater of (x) $0, and (y)
fifty percent (50%) of the Consolidated Net Income (Loss) earned
by Borrower during the period commencing on June 5, 1994 and
ending on the last day of the fiscal quarter of the Borrower
immediately preceding the date of any calculation hereof (with
such period calculated as a single accounting period and taking
into account 100% of all losses during such period), plus
(iii) an amount equal to 100% of the Net Proceeds of all
issuances of stock, warrants, Subordinated Debt, or other equity
of the Borrower issued following the date hereof.
(d) Year End Calculations. Schedule 6.08 sets forth
the calculation of the financial covenant amounts, ratios, and
percentages required by paragraphs (a) through (c) of this
Section 6.08 calculated as of June 4, 1994.
Section 6.09. Notices Under Certain Other
Indebtedness. Immediately upon its receipt thereof, Borrower
shall furnish the Agent a copy of any notice received by it or
any other Consolidated Company from the holder(s) of Indebtedness
referred to in Section 7.01(b), (c), (f), (g) or (i) (or from any
trustee, agent, attorney, or other party acting on behalf of such
holder(s)) in an amount which, in the aggregate, exceeds
$2,500,000, where such notice states or claims (i) the existence
or occurrence of any default or event of default with respect to
such Indebtedness under the terms of any indenture, loan or
credit agreement, debenture, note, or other document evidencing
or governing such Indebtedness, or (ii) the existence or
occurrence of any event or condition which requires or permits
holder(s) of any Indebtedness to exercise rights under any Change
in Control Provision.
Section 6.10. Additional Credit Parties and
Collateral. Promptly after (i) the formation or acquisition of
any Material Subsidiary not listed on Schedule 5.13, (ii) the
transfer of assets to any Consolidated Company if notice thereof
is required to be given pursuant to Section 6.07(m) and as a
result thereof the recipient of such assets becomes a Material
Subsidiary, or (iii) the occurrence of any other event creating a
new Material Subsidiary, Borrower shall execute and deliver, and
cause to be executed and delivered a Guaranty Agreement from each
such Material Subsidiary, together with related corporate
authorization documents, organizational documents, secretary's
certificates and opinions, all in form and substance satisfactory
to the Agent and the Required Lenders.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Commitment remains in effect hereunder
or any Note shall remain unpaid, Borrower will not and will not
permit any Subsidiary to:
Section 7.01. Indebtedness. Create, incur, assume,
guarantee, suffer to exist or otherwise become liable on or with
respect to, directly or indirectly, any Indebtedness, other than:
(a) Indebtedness of the Borrower under this Agreement
and of the Material Subsidiaries of Borrower pursuant to the
Guaranty Agreement;
(b) Indebtedness outstanding or incurred on the
Closing Date and described on Schedule 7.01;
(c) purchase money Indebtedness to the extent secured
by a Lien permitted by Section 7.02(b);
(d) unsecured current liabilities (other than li-
abilities for borrowed money or liabilities evidenced by
promissory notes, bonds or similar instruments) incurred in
the ordinary course of business and either (i) not more than
30 days past due, or (ii) being disputed in good faith by
appropriate proceedings with reserves for such disputed li-
ability maintained in conformity with GAAP;
(e) Indebtedness of Borrower or any of its
Subsidiaries under Interest Rate Contracts;
(f) Subordinated Debt of the Borrower (but not
Subsidiaries of the Borrower);
(g) Guarantees of advances to officers and employees
in the ordinary course of business, or Guarantees otherwise
disclosed to and approved in writing by the Agent and the
Required Lenders;
(h) Endorsements of instruments for deposit or collec-
tion in the ordinary course of business; and
(i) Other unsecured Indebtedness of the Borrower (but
not Subsidiaries of the Borrower) (other than Guarantees)
which does not result in a Default or an Event of Default
pursuant hereto.
Section 7.02. Liens. Create, incur, assume or suffer
to exist any Lien on any of its property now owned or hereafter
acquired to secure any Indebtedness other than:
(a) Liens existing on the Closing Date and disclosed
on Schedule 7.02;
(b) any Lien on any property and proceeds thereof
securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the acquisition cost of such
property and any refinancing thereof, provided that such
Lien does not extend to any other property (other than the
proceeds of such property);
(c) Liens for taxes not yet due, and Liens for taxes
or Liens imposed by ERISA which are being contested in good
faith by appropriate proceedings and with respect to which
adequate reserves are being maintained in accordance with
GAAP;
(d) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
Liens imposed by law and created in the ordinary course of
business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in
accordance with GAAP;
(e) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security,
or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for
the payment of borrowed money);
(f) zoning, easements and restrictions on the use of
real property which do not materially impair the use of such
property;
(g) rights in property reserved or vested in any gov-
ernmental authority which do not materially impair the use
of such property; and
(h) any Lien existing on property of a Person im-
mediately prior to its being consolidated with or merged
into the Borrower or into any Consolidated Company, or any
Lien existing on any property acquired by any Consolidated
Company at the time such property is so acquired (whether or
not the Indebtedness secured thereby shall have been
assumed), provided that (x) no such Lien shall have been
created or assumed in contemplation of consolidation or
merger or such Person's becoming a Consolidated Company or
such acquisition of property and (y) each such Lien shall at
all times be confined solely to the item or items of
property so acquired and, if required by the terms of the
instruments originally creating such Lien, other property
which is an improvement to or is acquired for specific use
in connection with such acquired property;
provided that, the aggregate amount of Indebtedness secured by
Liens permitted pursuant to this Section 7.02 shall at no time
exceed 15% of the Consolidated Net Worth of the Borrower
calculated as of the last day of the most recently ended fiscal
quarter of the Borrower.
Section 7.03. Mergers, Sales, Etc. (a) Merge or con-
solidate with any other Person, except that this Section 7.03
shall not apply to (i) any merger or consolidation of Borrower
with any other Person provided that the Borrower is the surviving
corporation after such merger or consolidation, (ii) any merger
or consolidation of any of the Borrower's Subsidiaries with any
other Person provided that any such Subsidiary shall be the
surviving corporation after such merger or consolidation or (iii)
any merger between Subsidiaries of Borrower, and (b) sell, lease,
transfer or otherwise dispose of its accounts, property or other
assets (including capital stock of any Subsidiary of Borrower),
except that this Section 7.03 shall not apply to (i) any sale,
lease, transfer or other disposition of assets of any Subsidiary
of the Borrower to the Borrower or any of its Material
Subsidiaries, (ii) sales of inventory in the ordinary course of
business of the Borrower and its Subsidiaries, (iii) disposition
of equipment or inventory determined in good faith to be obsolete
or unusable by the Borrower or its Subsidiaries, (iv) transfers
by Borrower to its wholly-owned Subsidiary, Ruby Tuesday, Inc. of
assets with an aggregate book value, when aggregated with all
other such sales since the Closing Date not exceeding 60% of the
aggregate book value of all of the Borrower's assets on the date
of such transfer, and (v) any other sale of the Borrower's assets
during the term of this Agreement with an aggregate book value,
when aggregated with all other such sales since the Closing Date,
not exceeding 7.5% of the aggregate book value of all of the
Borrower's assets on the date of such transfer; provided, how-
ever, that no transaction pursuant to clause (a), clause (b)(i),
clause (b)(iv) or (b)(v) above shall be permitted if any Default
or Event of Default exists at the time of such transaction or
would exist as a result of such transaction.
Section 7.04. Investments, Loans, Etc. Make, permit
or hold any Investments in any Person, or otherwise acquire or
hold any Subsidiaries, other than:
(a) Investments in Subsidiaries of Borrower existing
as of the Closing Date;
(b) Investments in the stock or other assets of any
other Person that is engaged in a business permitted by Sec-
tion 7.08 hereof that, as a result of such Investment, be-
comes a Subsidiary of Borrower; provided, however, that the
aggregate amount of Investments made pursuant to this
subsection (b) shall not exceed, during the term of this
Agreement, a total value of twenty-five percent (25%) of the
Consolidated Net Worth of the Borrower as calculated on the
last day of the most recently ended fiscal quarter of the
Borrower;
(c) marketable direct obligations of the United States
or any agency thereof, or obligations guaranteed by the
United States or any agency thereof, in each case supported
by the full faith and credit of the United States and matur-
ing within one year from the date of creation thereof;
(d) Investments received in settlement of Indebtedness
created in the ordinary course of business;
(e) marketable direct obligations issued by any state
of the United States of America or any political subdivision
of any such state or any public instrumentality thereof, the
interest from which is exempt from Federal income taxes, ma-
turing within one year from the date of acquisition thereof
and either having as at any date of determination the one of
the two highest ratings obtainable from either Standard &
Poor's or Moody's;
(f) unsecured commercial paper, the interest from
which is exempt from Federal income taxes, maturing no more
than 270 days from the date of creation and having as at any
date of determination either the highest rating obtainable
from either Standard & Poor's or Moody's;
(g) commercial paper issued by corporations, each of
which has a consolidated net worth of not less than
$500,000,000, and conducts a substantial portion of its
business in the United States of America, maturing no more
than 365 days from the date of acquisition thereof and
having as at any date of determination the highest rating
obtainable from either Standard & Poor's or Moody's;
(h) money market or similar depository accounts, cer-
tificates of deposit or bankers acceptances, in each case
redeemable upon demand or maturing within one year from the
date of acquisition thereof, issued by commercial banks in-
corporated under the laws of the United States of America or
any state thereof or the District of Columbia, provided (x)
each such bank has at any date of determination combined
capital and surplus of not less than $1,000,000,000 and a
rating of its long-term debt of at least A by Standard &
Poor's or at least A by Moody's or a long-term deposit
rating of at least A issued by Standard & Poor's or at least
A issued by Moody's, (y) the aggregate amount of all such
certificates of deposit issued by such bank are fully
insured at all times by the Federal Deposit Insurance
Company;
(i) loans to TIA's, Inc. in an aggregate principal
amount outstanding not to exceed $8,000,000; and
(j) Investments in minority-owned businesses in an
aggregate amount not to exceed $8,000,000 at any time
outstanding;
provided however, notwithstanding the foregoing, the Borrower and
any Subsidiary may continue to own any Investment which (A) com-
plied with the provisions of clauses (f), (g) or (h) at the time
such Investment was made and (B) at any date of determination
does not so comply solely because (x) such Investment no longer
has the rating required from Standard & Poor's or Moody's or (y)
the bank having the money market or depository account or issuing
the certificate of deposit or bankers acceptance ceases to have
the required level of capital and surplus or to have a rating of
its long-term debt of at least A by Standard & Poor's or at least
A by Moody's or to have a long-term deposit rating of at least A
by Standard & Poor's or at least A by Moody's, if, and for so
long as, in the good faith judgment of the relevant Executive
Officer, no loss of the principal amount of such Investment would
occur as the result of the Borrower or such Subsidiary continuing
to own such Investment to maturity. Nothing contained in the
foregoing proviso shall be deemed to be applicable to any new or
renewed Investment at the time such Investment is made or
renewed.
Section 7.05 Letters of Credit. Create, incur, issue,
assume, guarantee, suffer to exist or otherwise become liable on
or with respect to, directly or indirectly, letters of credit
where the maximum amount available to be drawn under all such
letters of credit would exceed, at any one time outstanding,
$75,000,000 in the aggregate.
Section 7.06. Sale and Leaseback Transactions. Sell
or transfer any property, real or personal, whether now owned or
hereafter acquired, and thereafter rent or lease such property or
other property which any Consolidated Company intends to use for
substantially the same purpose or purposes as the property being
sold or transferred; provided that, the Consolidated Companies
shall be permitted to sell or transfer property and rent or lease
such property or other property back so long as the aggregate
market value of such property sold or transferred during the term
of this Agreement does not exceed $5,000,000.
Section 7.07. Transactions with Affiliates.
(a) Enter into any transaction or series of related
transactions which in the aggregate would be material, whether or
not in the ordinary course of business, with any Affiliate of any
Consolidated Company (but excluding any Affiliate which is also a
wholly-owned Subsidiary of Borrower and any compensation arrange-
ment with an officer or director of the Borrower or any other
Consolidated Company entered into in the ordinary course of busi-
ness), other than on terms and conditions substantially as favor-
able to such Consolidated Company as would be obtained by such
Consolidated Company at the time in a comparable arm's-length
transaction with a Person other than an Affiliate.
(b) Convey or transfer to any other Person (including
any other Consolidated Company) any real property, buildings, or
fixtures used in the manufacturing or production operations of
any Consolidated Company, or convey or transfer to any other
Consolidated Company any other assets (excluding conveyances or
transfers in the ordinary course of business) if at the time of
such conveyance or transfer any Default or Event of Default
exists or would exist as a result of such conveyance or transfer.
Section 7.08. Changes in Business. Enter into or en-
gage in any business which is substantially different from the
business engaged in by the Borrower and its Subsidiaries on the
Closing Date.
Section 7.09. ERISA. Take or fail to take any action
with respect to any Plan of any Consolidated Company or, with re-
spect to its ERISA Affiliates, any Plans which are subject to
Title IV of ERISA or to continuation health care requirements for
group health plans under the Tax Code, including without limita-
tion (i) establishing any such Plan, (ii) amending any such Plan
(except where required to comply with applicable law), (iii) ter-
minating or withdrawing from any such Plan, or (iv) incurring an
amount of unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA, or any withdrawal liability under Title IV
of ERISA with respect to any such Plan, which together with any
other action or omission referred to in this Section 7.09 (taken
as a whole) would have a Materially Adverse Effect, without first
obtaining the written approval of the Required Lenders.
Section 7.10. Limitation on Payment Restrictions Af-
fecting Consolidated Companies. Create or otherwise cause or
suffer to exist or become effective, any consensual encumbrance
or restriction on the ability of any Consolidated Company to (i)
pay dividends or make any other distributions on any stock of a
Subsidiary of the Borrower, or (ii) pay any intercompany debt
owed to Borrower or any other Consolidated Company, or (iii)
transfer any of its property or assets to Borrower or any other
Consolidated Company, except any consensual encumbrance or
restriction existing as of the Closing Date.
Section 7.11. Actions Under Certain Documents.
Without the prior written consent of the Required Lenders (i)
modify, amend, cancel or rescind any agreements or documents
evidencing or governing Subordinated Debt or intercompany debt,
(ii) make any payment with respect to Subordinated Debt, except
that current interest accrued on such Subordinated Debt as of the
date of this Agreement and all interest subsequently accruing
thereon (whether or not paid currently) may be paid unless a
Default or Event of Default has occurred and is continuing, or
(iii) voluntarily prepay any portion of intercompany debt.
Section 7.12. Changes in Fiscal Year. Change the cal-
culation of the fiscal year of the Borrower.
Section 7.13. Issuance of Stock by Subsidiaries.
Permit any Subsidiary (either directly or indirectly by the
issuance of rights or options for, or securities convertible into
such shares) to issue, sell or dispose of any shares of its stock
of any class (other than directors' qualifying shares, if any)
except to the Borrower or another Subsidiary.
ARTICLE VIII.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any
of the following specified events (each an "Event of Default"):
Section 8.01. Payments. Borrower shall fail to make
promptly when due (including, without limitation, by mandatory
prepayment) any principal payment with respect to the Loans, or
Borrower shall fail to make any payment of interest, fee or other
amount payable hereunder within three (3) days of its due date;
Section 8.02. Covenants Without Notice. Borrower
shall fail to observe or perform any covenant or agreement
contained in Sections 6.01, 6.05, 6.07, 6.08, 6.09 or Article
VII;
Section 8.03. Other Covenants. Borrower shall fail to
observe or perform any covenant or agreement contained in this
Agreement, other than those referred to in Sections 8.01 and
8.02, and, if capable of being remedied, such failure shall
remain unremedied for 30 days after the earlier of (i) Borrower's
obtaining knowledge thereof, or (ii) written notice thereof shall
have been given to Borrower by Agent or any Lender;
Section 8.04. Representations. Any representation or
warranty made or deemed to be made by Borrower or any other
Credit Party or by any of its officers under this Agreement or
any other Credit Document (including the Schedules attached
thereto), or any certificate or other document submitted to the
Agent or the Lenders by any such Person pursuant to the terms of
this Agreement or any other Credit Document, shall be incorrect
in any material respect when made or deemed to be made or
submitted;
Section 8.05. Non-Payments of Other Indebtedness. Any
Consolidated Company shall fail to make when due (whether at
stated maturity, by acceleration, on demand or otherwise, and af-
ter giving effect to any applicable grace period) any payment of
principal of or interest on any Indebtedness (other than the
Obligations) exceeding $5,000,000 individually or in the
aggregate;
Section 8.06. Defaults Under Other Agreements; Change
In Control Provisions. (a) Any Consolidated Company shall fail
to observe or perform any covenants or agreements (whether or not
waived) contained in any agreements or instruments relating to
any of its Indebtedness exceeding $5,000,000 individually or in
the aggregate, or any other event shall occur if the effect of
such failure or other event is to accelerate, or with notice or
passage of time or both, to permit the holder of such
Indebtedness or any other Person to accelerate, the maturity of
such Indebtedness; or any such Indebtedness shall be required to
be prepaid (other than by a regularly scheduled required
prepayment) in whole or in part prior to its stated maturity; or
(b) any event or condition shall occur or exist which, pursuant
to the terms of any Change in Control Provision, requires or
permits the holder(s) of the Indebtedness subject to such Change
in Control Provision to require that such Indebtedness be
redeemed, repurchased, defeased, prepaid or repaid, in whole or
in part, or the maturity of such Indebtedness to be accelerated;
Section 8.07. Bankruptcy. The Borrower or any
Material Subsidiary shall commence a voluntary case concerning
itself under the Bankruptcy Code or applicable foreign bankruptcy
laws; or an involuntary case for bankruptcy is commenced against
Borrower or any Material Subsidiary and the petition is not
controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) or similar official under applicable foreign
bankruptcy laws is appointed for, or takes charge of, all or any
substantial part of the property of the Borrower or any Material
Subsidiary; or the Borrower or any Material Subsidiary commences
proceedings of its own bankruptcy or to be granted a suspension
of payments or any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction,
whether now or hereafter in effect, relating to the Borrower or
any Material Subsidiary or there is commenced against the
Borrower or any Material Subsidiary any such proceeding which
remains undismissed for a period of 60 days; or the Borrower or
any Material Subsidiary is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or
proceeding is entered; or the Borrower or any Material Subsidiary
suffers any appointment of any custodian or the like for it or
any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Borrower or any Material
Subsidiary makes a general assignment for the benefit of
creditors; or the Borrower or any Material Subsidiary shall fail
to pay, or shall state that it is unable to pay, or shall be
unable to pay, its debts generally as they become due; or the
Borrower or any Material Subsidiary shall call a meeting of its
creditors with a view to arranging a composition or adjustment of
its debts; or the Borrower or any Material Subsidiary shall by
any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate action is
taken by the Borrower or any Material Subsidiary for the purpose
of effecting any of the foregoing;
Section 8.08. ERISA. A Plan of either a Consolidated
Company or of any of its ERISA Affiliates which is subject tot
Title IV of ERISA:
(i) shall fail to be funded in accordance with the
minimum funding standard required by applicable
law, the terms of such Plan, Section 412 of the
Tax Code or Section 302 of ERISA for any plan year
or a waiver of such standard is sought or granted
with respect to such Plan under applicable law,
the terms of such Plan or Section 412 of the Tax
Code or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject
of termination proceedings under applicable law or
the terms of such Plan; or
(iii) shall require a Consolidated Company to provide
security under applicable law, the terms of such
Plan, Section 401 or 412 of the Tax Code or
Section 306 or 307 of ERISA; or
(iv) results in a liability to a Consolidated Company
under applicable law, the terms of such Plan, or
Title IV of ERISA;
and there shall result from any such failure, waiver, termination
or other event described in clauses (i) through (iv) above a
liability to the PBGC or a Plan that would have a Materially
Adverse Effect;
Section 8.09. Judgments. Judgments or orders for the
payment of money in excess of $5,000,000 individually or in the
aggregate or otherwise having a Materially Adverse Effect shall
be rendered against Borrower or any other Consolidated Company
and such judgment or order shall continue unsatisfied (in the
case of a money judgment) and in effect for a period of 30 days
during which execution shall not be effectively stayed or
deferred (whether by action of a court, by agreement or
otherwise);
Section 8.10. Ownership of Credit Parties. If
Borrower shall at any time fail to own and control the shares of
Voting Stock of any Guarantor which it owned or controlled at the
time such Guarantor became a Credit Party hereunder other than
due to sale of the Voting Stock of such Guarantor permitted
pursuant to Section 7.03 hereof;
Section 8.11. Change in Control of Borrower. Any
person or group (within the meaning of Rule 13d-5 of the Securi-
ties and Exchange Commission as in effect on the date hereof)
shall become the owner, beneficially or of record, of shares rep-
resenting more than forty percent (40%) of the aggregate ordinary
voting power represented by the issued and outstanding capital
stock of the Borrower;
Section 8.12. Default Under Other Credit Documents.
There shall exist or occur any "Event of Default" as provided un-
der the terms of any other Credit Document, or any Credit
Document ceases to be in full force and effect or the validity or
enforceability thereof is disaffirmed by or on behalf of Borrower
or any other Credit Party, or at any time it is or becomes
unlawful for Borrower or any other Credit Party to perform or
comply with its obligations under any Credit Document, or the
obligations of Borrower or any other Credit Party under any
Credit Document are not or cease to be legal, valid and binding
on Borrower or any such Credit Party;
then, and in any such event, and at any time thereafter if any
Event of Default shall then be continuing, the Agent may, and
upon the written or telex request of the Required Lenders, shall,
take any or all of the following actions, without prejudice to
the rights of the Agent, any Lender or the holder of any Note to
enforce its claims against Borrower or any other Credit Party:
(i) declare all Commitments terminated, whereupon the Commitments
of each Lender shall terminate immediately and any commitment fee
shall forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued
interest on the Loans, and all other Obligations owing hereunder
to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; provided, that,
if an Event of Default specified in Section 8.07 shall occur, the
result which would occur upon the giving of notice by the Agent
to any Credit Party, shall occur automatically without the giving
of any such notice, and (iii) may exercise any other rights or
remedies available under the Credit Documents, at law or in
equity.
ARTICLE IX.
THE AGENT AND THE ADMINISTRATIVE AGENT
Section 9.01. Appointment of Agent and the
Administrative Agent.
(a) Agent. Each Lender hereby designates TCB as Agent to
administer all matters concerning the Loans and to act as herein
specified. Each Lender hereby irrevocably authorizes, and each
holder of any Note by the acceptance of a Note shall be deemed
irrevocably to authorize, the Agent to take such actions on its
behalf under the provisions of this Agreement, the other Credit
Documents, and all other instruments and agreements referred to
herein or therein, and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental
thereto. The Agent may perform any of its duties hereunder by or
through their agents or employees.
(b) Administrative Agent. Each Lender hereby designates
Trust Company Bank as the Administrative Agent to administer
Money Market Bid Facility, to calculate the Tranche A Commitment
Fee and the Tranche B Commitment Fee and to receive the notices
and to undertake such other duties specifically delegated to the
Administrative Agent herein. Except as set forth in the
preceding sentence, the Administrative Agent, as such, shall have
no duties or obligations whatsoever under this Agreement or any
other Loan Document or any other document or any matter related
hereto or thereto, but shall nevertheless be entitled to all of
the indemnities and other protection afforded to the Agent under
this Article IX for all actions taken by the Administrative Agent
during the period that the Administrative Agent is TCB.
Section 9.02. Authorization of Agent with Respect to
the Security Documents. (a) Each Lender hereby authorizes the
Agent to enter into each of the Security Documents substantially
in the form attached hereto, and to take all action contemplated
thereby. All rights and remedies under the Security Documents
may be exercised by the Agent for the benefit of the Agent and
the Lenders and the other beneficiaries thereof upon the terms
thereof. The Lenders further agree that the Agent may assign its
rights and obligations under any of the Security Documents to any
affiliate of the Agent or to any trustee, if necessary or ap-
propriate under applicable law, which assignee in each such case
shall (subject to compliance with any requirements of applicable
law governing the assignment of such Security Documents) be en-
titled to all the rights of the Agent under and with respect to
the applicable Security Document.
(b) In each circumstance where, under any provision of
any Security Document, the Agent shall have the right to grant or
withhold any consent, exercise any remedy, make any determination
or direct any action by the Agent under such Security Document,
the Agent shall act in respect of such consent, exercise of rem-
edies, determination or action, as the case may be, with the con-
sent of and at the direction of the Required Lenders; provided,
however, that no such consent of the Required Lenders shall be
required with respect to any consent, determination or other mat-
ter that is, in the Agent's judgment, ministerial or administra-
tive in nature. In each circumstance where any consent of or di-
rection from the Required Lenders is required, the Agent shall
send to the Lenders a notice setting forth a description in rea-
sonable detail of the matter as to which consent or direction is
requested and the Agent's proposed course of action with respect
thereto. In the event the Agent shall not have received a re-
sponse from any Lender within five (5) Business Days after such
Lender's receipt of such notice, such Lender shall be deemed to
have agreed to the course of action proposed by the Agent.
Section 9.03. Nature of Duties of Agent. The Agent
shall have no duties or responsibilities except those expressly
set forth in this Agreement and the other Credit Documents. None
of the Agent nor any of its respective officers, directors, em-
ployees or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused
by its or their gross negligence or willful misconduct. The du-
ties of the Agent shall be ministerial and administrative in na-
ture; the Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in
this Agreement, express or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect
of this Agreement or the other Credit Documents except as
expressly set forth herein.
Section 9.04. Lack of Reliance on the Agent.
(a) Independently and without reliance upon the Agent,
each Lender, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of
the financial condition and affairs of the Credit Parties in con-
nection with the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of
the Credit Parties, and, except as expressly provided in this
Agreement, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with
any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at
any time or times thereafter.
(b) The Agent shall not be responsible to any Lender
for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the
Notes, the Guaranty Agreement or any other documents contemplated
hereby or thereby, or the financial condition of the Credit
Parties, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or con-
ditions of this Agreement, the Notes, the Guaranty Agreement or
the other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties, or the existence or
possible existence of any Default or Event of Default.
Section 9.05. Certain Rights of the Agent. If the
Agent shall request instructions from the Required Lenders with
respect to any action or actions (including the failure to act)
in connection with this Agreement, the Agent shall be entitled to
refrain from such act or taking such act, unless and until the
Agent shall have received instructions from the Required Lenders;
and the Agent shall not incur liability in any Person by reason
of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders.
Section 9.06. Reliance by Agent. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cable gram, radiogram, or-
der or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person. The Agent may consult with
legal counsel (including counsel for any Credit Party), indepen-
dent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the advice of such
counsel, accountants or experts.
Section 9.07. Indemnification of Agent. To the extent
the Agent is not reimbursed and indemnified by the Credit
Parties, each Lender will reimburse and indemnify the Agent,
ratably according to the respective amounts of the Loans
outstanding under all Facilities (or if no amounts are
outstanding, ratably in accordance with the Commitments), in
either case, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in
performing its duties hereunder, in any way relating to or
arising out of this Agreement or the other Credit Documents;
provided that no Lender shall be liable to the Agent for any por-
tion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct.
Section 9.08. The Agent in its Individual Capacity.
With respect to its obligation to lend under this Agreement, the
Loans made by it and the Notes issued to it, the Agent shall have
the same rights and powers hereunder as any other Lender or
holder of a Note and may exercise the same as though it were not
performing the duties specified herein; and the terms "Lenders",
"Required Lenders", "holders of Notes", or any similar terms
shall, unless the context clearly otherwise indicates, include
the Agent in its individual capacity. The Agent may accept de-
posits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with the
Consolidated Companies or any affiliate of the Consolidated
Companies as if it were not performing the duties specified
herein, and may accept fees and other consideration from the
Consolidated Companies for services in connection with this
Agreement and otherwise without having to account for the same to
the Lenders.
Section 9.09. Holders of Notes. The Agent may deem
and treat the payee of any Note as the owner thereof for all
purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any Person who, at
the time of making such request or giving such authority or
consent, is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
Section 9.10. Successor Agent.
(a) The Agent may resign at any time by giving written
notice thereof to the Lenders and Borrower and may be removed at
any time with or without cause by the Required Lenders; provided,
however, the Agent may not resign or be removed until a successor
Agent has been appointed and shall have accepted such
appointment. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Agent subject
to Borrower's prior written approval. If no successor Agent
shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent subject to
Borrower's prior written approval, which shall be a bank which
maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or any
State thereof, or any Affiliate of such bank, having a combined
capital and surplus of at least $1,000,000,000.
(b) Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article X shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was an Agent under this
Agreement. Prior to the exercise by the Borrower of the option
to assume the obligations of the Administrative Agent hereunder,
any resignation or removal of the Agent shall also be deemed to
be a resignation or removal of the Administrative Agent so that
the Agent and the Administrative Agent shall at all times be the
same Person except as provided in Section 9.11.
Section 9.11. Replacement of Administrative Agent with
the Borrower. Upon no less than thirty days' prior written
notice to the Administrative Agent and each Lender, the Borrower
shall have the option, on each anniversary of the Closing Date,
to elect to assume the obligations of the Administrative Agent
pursuant to this Agreement without the consent of the Agent or
any Lender. In the event that the Borrower so assumes such
obligations in writing, all references to the Administrative
Agent set forth herein or in any other Loan Document shall be
deemed to refer to the Borrower.
ARTICLE X.
MISCELLANEOUS
Section 10.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar teletransmission
or writing) and shall be given to such party at its address or
applicable teletransmission number set forth on the signature
pages hereof, or such other address or applicable
teletransmission number as such party may hereafter specify by
notice to the Agent and Borrower. Each such notice, request or
other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received, (ii) if
given by mail, 72 hours after such communication is deposited in
the mails with first class postage prepaid, addressed as
aforesaid, (iii) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and
the appropriate confirmation is received, or (iv) if given by any
other means (including, without limitation, by air courier), when
delivered or received at the address specified in this Section;
provided that notices to the Administrative Agent and the Agent
shall not be effective until received.
Section 10.02. Amendments, Etc. No amendment or
waiver of any provision of this Agreement or the other Credit
Documents, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders do any of the following: (i) waive any
of the conditions specified in Section 4.01 or 4.02, (ii)
increase the Commitments or contractual obligations of the
Lenders to Borrower under this Agreement, (iii) reduce the
principal of, or interest on, the Notes or any fees hereunder,
(iv) postpone any date fixed for the payment in respect of
principal of, or interest on, the Notes or any fees hereunder,
(v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number or identity
of Lenders which shall be required for the Lenders or any of them
to take any action hereunder, (vi) agree to release any Guarantor
from its obligations under any Guaranty Agreement, (vii) modify
the definition of "Required Lenders," or (viii) modify this
Section 10.02. Notwithstanding the foregoing, no amendment,
waiver or consent shall, unless in writing and signed by the
Agent and the Administrative Agent in addition to the Lenders
required hereinabove to take such action, affect the rights or
duties of the Agent and the Administrative Agent under this
Agreement or under any other Credit Document.
Section 10.03. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Administrative Agent, the
Agent any Lender or any holder of a Note in exercising any right
or remedy hereunder or under any other Credit Document, and no
course of dealing between any Credit Party and the Administrative
Agent, the Agent, any Lender or the holder of any Note shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy hereunder or under any other
Credit Document preclude any other or further exercise thereof or
the exercise of any other right or remedy hereunder or
thereunder. The rights and remedies herein expressly provided
are cumulative and not exclusive of any rights or remedies which
the Administrative Agent, the Agent, any Lender or the holder of
any Note would otherwise have. No notice to or demand on any
Credit Party not required hereunder or under any other Credit
Document in any case shall entitle any Credit Party to any other
or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent,
the Agent, the Lenders or the holder of any Note to any other or
further action in any circumstances without notice or demand.
Section 10.04. Payment of Expenses, Etc. Borrower
shall:
(i) whether or not the transactions hereby
contemplated are consummated, pay all reasonable,
out-of-pocket costs and expenses of the Administrative Agent
and the Agent in the administration (both before and after
the execution hereof and including reasonable expenses
actually incurred relating to advice of counsel as to the
rights and duties of the Administrative Agent, the Agent and
the Lenders with respect thereto) of, and in connection with
the preparation, execution and delivery of, preservation of
rights under, enforcement of, and, after a Default or Event
of Default, refinancing, renegotiation or restructuring of,
this Agreement and the other Credit Documents and the
documents and instruments referred to therein, and any
amendment, waiver or consent relating thereto (including,
without limitation, the reasonable fees actually incurred
and disbursements of counsel for the Administrative Agent
and the Agent), and in the case of enforcement of this
Agreement or any Credit Document after an Event of Default,
all such reasonable, out-of-pocket costs and expenses
(including, without limitation, the reasonable fees actually
incurred and reasonable disbursements and changes of
counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the ap-
plicable provisions of Section 3.07(b), pay and hold each of
the Lenders harmless from and against any and all present
and future stamp, documentary, and other similar Taxes with
respect to this Agreement, the Notes and any other Credit
Documents, any collateral described therein, or any payments
due thereunder, and save each Lender harmless from and
against any and all liabilities with respect to or resulting
from any delay or omission to pay such Taxes; and
(iii) indemnify the Administrative Agent, the Agent and
each Lender, and their respective officers, directors,
employees, representatives and agents from, and hold each of
them harmless against, any and all costs, losses,
liabilities, claims, damages or expenses incurred by any of
them (whether or not any of them is designated a party
thereto) (an "Indemnitee") arising out of or by reason of
any investigation, litigation or other proceeding related to
any actual or proposed use of the proceeds of any of the
Loans or any Credit Party's entering into and performing of
the Agreement, the Notes, or the other Credit Documents,
including, without limitation, the reasonable fees actually
incurred and disbursements of counsel incurred in connection
with any such investigation, litigation or other proceeding;
provided, however, Borrower shall not be obligated to
indemnify any Indemnitee for any of the foregoing arising
out of such Indemnitee's gross negligence or willful
misconduct;
(iv) without limiting the indemnities set forth in sub-
section (iii) above, indemnify each Indemnitee for any and
all expenses and costs (including without limitation, reme-
dial, removal, response, abatement, cleanup, investigative,
closure and monitoring costs), losses, claims (including
claims for contribution or indemnity and including the cost
of investigating or defending any claim and whether or not
such claim is ultimately defeated, and whether such claim
arose before, during or after any Credit Party's ownership,
operation, possession or control of its business, property
or facilities or before, on or after the date hereof, and
including also any amounts paid incidental to any compromise
or settlement by the Indemnitee or Indemnitees to the
holders of any such claim), lawsuits, liabilities,
obligations, actions, judgments, suits, disbursements,
encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural
resources), penalties and fines of any kind or nature
whatsoever (including without limitation in all cases the
reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith) incurred,
suffered or sustained by that Indemnitee based upon, arising
under or relating to Environmental Laws based on, arising
out of or relating to in whole or in part, the existence or
exercise of any rights or remedies by any Indemnitee under
this Agreement, any other Credit Document or any related
documents.
If and to the extent that the obligations of Borrower under this
Section 10.04 are unenforceable for any reason, Borrower hereby
agrees to make the maximum contribution to the payment and satis-
faction of such obligations which is permissible under applicable
law.
Section 10.05. Right of Setoff. In addition to and
not in limitation of all rights of offset that any Lender or
other holder of a Note may have under applicable law, each Lender
or other holder of a Note shall, upon the occurrence of any Event
of Default and whether or not such Lender or such holder has made
any demand or any Credit Party's obligations have matured, have
the right to appropriate and apply to the payment of any Credit
Party's obligations hereunder and under the other Credit Docu-
ments, all deposits of any Credit Party (general or special, time
or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such
Lender or other holder to any Credit Party, whether or not
related to this Agreement or any transaction hereunder.
Section 10.06. Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that Borrower may not
assign or transfer any of its interest hereunder without the
prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at,
to or for the account of, any of its branch offices or the office
of an Affiliate of such Lender.
(c) Each Lender may assign all or a portion of its in-
terests, rights and obligations under this Agreement (including
all or a portion of any of its Commitments and the Loans at the
time owing to it and the Notes held by it) to any Eligible As-
signee; provided, however, that (i) the Borrower must give its
prior written consent to such assignment (which consent shall not
be unreasonably withheld or delayed) unless such assignment is an
Affiliate of the assigning Lender or unless an Event of Default
has occurred and is continuing hereunder, (ii) the amount of the
Commitments of the assigning Lender subject to each assignment
(determined as of the date the assignment and acceptance with re-
spect to such assignment is delivered to the Agent) shall not be
less than an amount equal to $10,000,000 or greater integral mul-
tiplies of $1,000,000, (iii) the parties to each such assignment
shall execute and deliver to the Agent an Assignment and
Acceptance, together with a Note or Notes subject to such
assignment and, unless such assignment is to an Affiliate of such
Lender, a processing and recordation fee of $2,500, (iv) a Lender
must assign a proportionate amount of both its Tranche A
Commitment and Tranche B Commitment, and (v) no Lender shall make
more than two (2) assignments to any Person or Persons which are
not Affiliates of such Lender during the term of this Agreement
without the prior written consent of the Borrower and the Agent.
Borrower shall not be responsible for such processing and
recordation fee or any costs or expenses incurred by any Lender
or the Agent in connection with such assignment. From and after
the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business Days
after the execution thereof, the assignee thereunder shall be a
party hereto and to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement. Notwithstanding the foregoing, the
assigning Lender must retain after the consummation of such
Assignment and Acceptance, a minimum aggregate amount of Commit-
ments of $10,000,000; provided, however, no such minimum amount
shall be required with respect to any such assignment made at any
time there exists an Event of Default hereunder. Within five (5)
Business Days after receipt of the notice and the Assignment and
Acceptance, Borrower shall execute and deliver to the Agent, in
exchange for the surrendered Note or Notes, a new Note or Notes
to the order of such assignee in a principal amount equal to the
applicable Commitments assumed by it pursuant to such Assignment
and Acceptance and new Note or Notes to the assigning Lender in
the amount of its retained Commitment or Commitments. Such new
Note or Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Note or Notes,
shall be dated the date of the surrendered Note or Notes which
they replace, and shall otherwise be in substantially the form
attached hereto.
(d) Each Lender may, without the consent of Borrower
or the Agent or the Administrative Agent, sell participations to
one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a
portion of its Commitments in the Loans owing to it and the Notes
held by it), provided, however, that (i) no Lender may sell a
participation in its aggregate Commitments (after giving effect
to any permitted assignment hereof) unless it retains an
aggregate exposure of $10,000,000, provided, however, sales of
participations to an Affiliate of such Lender shall not be
included in such calculation; provided, however, no such maximum
amount shall be applicable to any such participation sold at any
time there exists an Event of Default hereunder, (ii) such
Lender's obligations under this Agreement shall remain unchanged,
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and (iv)
the participating bank or other entity shall not be entitled to
the benefit (except through its selling Lender) of the cost
protection provisions contained in Article III of this Agreement,
and (v) Borrower and the Administrative Agent, the Agent and
other Lenders shall continue to deal solely and directly with
each Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents,
and such Lender shall retain the sole right to enforce the
obligations of Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provisions of this
Agreement. Each Lender shall promptly notify in writing the
Agent and the Borrower of any sale of a participation hereunder.
(e) Any Lender or participant may, in connection with
the assignment or participation or proposed assignment or
participation, pursuant to this Section, disclose to the assignee
or participant or proposed assignee or participant any
information relating to Borrower or the other Consolidated
Companies furnished to such Lender by or on behalf of Borrower or
any other Consolidated Company. With respect to any disclosure
of confidential, non-public, proprietary information, such
proposed assignee or participant shall agree to use the
information only for the purpose of making any necessary credit
judgments with respect to this credit facility and not to use the
information in any manner prohibited by any law, including
without limitation, the securities laws of the United States.
The proposed participant or assignee shall agree not to disclose
any of such information except (i) to directors, employees,
auditors or counsel to whom it is necessary to show such
information, each of whom shall be informed of the confidential
nature of the information, (ii) in any statement or testimony
pursuant to a subpoena or order by any court, governmental body
or other agency asserting jurisdiction over such entity, or as
otherwise required by law (provided prior notice is given to
Borrower and the Agent unless otherwise prohibited by the sub-
poena, order or law), and (iii) upon the request or demand of any
regulatory agency or authority with proper jurisdiction. The
proposed participant or assignee shall further agree to return
all documents or other written material and copies thereof
received from any Lender, the Administrative Agent, the Agent or
Borrower relating to such confidential information unless
otherwise properly disposed of by such entity.
(f) Any Lender may at any time assign all or any por-
tion of its rights in this Agreement and the Notes issued to it
to a Federal Reserve Bank; provided that no such assignment shall
release the Lender from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.07(b)
have been levied or imposed so as to require withholdings and re-
ductions by the Borrower and payment by the Borrower of
additional amounts to any Lender as a result thereof or any
Lender shall make demand for payment of any material additional
amounts as compensation for increased cost pursuant to Section
4.10, then and in such event, upon request from the Borrower
delivered to such Lender, the Administrative Agent and the
Agent, such Lender shall assign, in accordance with the provi-
sions of Section 10.06(c), all of its rights and obligations
under this Agreement and the other Credit Documents to an
Eligible Assignee selected by the Borrower and consented to by
the Agent in consideration for the payment by such assignee to
the Lender of the principal of and interest on the outstanding
Loans accrued to the date of such assignment, the assumption of
such Lender's Commitments hereunder, together with any and all
other amounts owing to such Lender under any provisions of this
Agreement or the other Credit Documents accrued to the date of
such assignment.
Section 10.07. Governing Law; Submission to Jurisdic-
tion.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEOR-
GIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT, THE NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY, GEORGIA, OR ANY
OTHER COURT OF THE STATE OF GEORGIA OR OF THE UNITED STATES OF
AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND
BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS.
(c) BORROWER HEREBY IRREVOCABLY DESIGNATES
PRENTICE HALL CORPORATION, ATLANTA, GEORGIA, AS ITS DESIGNEE,
APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON BEHALF OF
BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
THE NOTES OR ANY DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT
A COPY OF SUCH PROCESS SERVED ON SUCH LOCAL AGENT WILL BE
PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF SUCH
PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPY
SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CER-
TIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS SAID ADDRESS,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the
Administrative Agent, the Agent, any Lender, any holder of a Note
or any Credit Party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise
proceed against Borrower in any other jurisdiction.
Section 10.08. Independent Nature of Lenders' Rights.
The amounts payable at any time hereunder to each Lender shall be
a separate and independent debt, and each Lender shall be
entitled to protect and enforce its rights pursuant to this
Agreement and its Notes, and it shall not be necessary for any
other Lender to be joined as an additional party in any
proceeding for such purpose.
Section 10.09. Counterparts. This Agreement may be
executed in any number of counterparts and by the different par-
ties hereto on separate counterparts, each of which when so ex-
ecuted and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
Section 10.10. Effectiveness; Survival.
(a) This Agreement shall become effective on the date
(the "Effective Date") on which all of the parties hereto shall
have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Agent or, in the case of
the Lenders, shall have given to the Agent written or telex
notice (actually received) that the same has been signed and
mailed to them.
(b) The obligations of Borrower under Sections
3.07(b), 3.10, 3.12, 3.13, 3.16 and 10.04 hereof shall survive
the payment in full of the Notes after the Maturity Date. All
representations and warranties made herein, in the certificates,
reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this
Agreement, the other Credit Documents, and such other agreements
and documents, the making of the Loans hereunder, and the
execution and delivery of the Notes.
Section 10.11. Severability. In case any provision in
or obligation under this Agreement or the other Credit Documents
shall be invalid, illegal or unenforceable, in whole or in part,
in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be af-
fected or impaired thereby.
Section 10.12. Independence of Covenants. All cov-
enants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant,
shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
Section 10.13. Change in Accounting Principles, Fiscal
Year or Tax Laws. If (i) any preparation of the financial state-
ments referred to in Section 6.07 hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions
by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accounts (or successors
thereto or agencies with similar functions) result in a material
change in the method of calculation of financial covenants,
standards or terms found in this Agreement, (ii) there is any
change in Borrower's fiscal quarter or fiscal year, or (iii)
there is a material change in federal tax laws which materially
affects any of the Consolidated Companies' ability to comply with
the financial covenants, standards or terms found in this
Agreement, Borrower and the Required Lenders agree to enter into
negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria
for evaluating any of the Consolidated Companies' financial
condition shall be the same after such changes as if such changes
had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
Section 10.14. Headings Descriptive; Entire Agreement.
The headings of the several sections and subsections of this
Agreement are inserted for convenience only and shall not in any
way affect the meaning or construction of any provision of this
Agreement. This Agreement, the other Credit Documents, and the
agreements and documents required to be delivered pursuant to the
terms of this Agreement constitute the entire agreement among the
parties hereto and thereto regarding the subject matters hereof
and thereof and supersede all prior agreements, representations
and understandings related to such subject matters.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Atlanta, Georgia,
by their duly authorized officers as of the day and year first
above written.
Address for Notices: MORRISON RESTAURANTS INC.
4271 Morrison Drive
P. O. Box 160266-0001
Mobile, Alabama 36625 By:/s/ J. Russell Mothershed
J. Russell Mothershed
Attn: Mr. J. Russell Mothershed Senior Vice President -
Finance and Treasurer
Telecopy: (205) 344-9513
Attest:/s/ Pfilip G. Hunt
Pfilip G. Hunt
Secretary
[CORPORATE SEAL]
STATE OF GEORGIA
COUNTY OF Fulton
Signed, sealed and delivered
in the presence of:
/s/ Brenda Drukenmiller
Notary Public
Date Executed by Notary:
September 28, 1994
My commission expires:
February 12, 1997
[NOTARIAL SEAL]
</PAGE>
<PAGE>
Address for Notices: TRUST COMPANY BANK,
As Agent and Administrative
Agent
25 Park Place, N.E.
24th Floor
Atlanta, Georgia 30303 By: /s/ James O. Clarke, III
Attention: Jeffrey A. Howard James O. Clarke, III
Group Vice President
Telecopy No.: 404/827-6270 By: /s/ Jeffrey A. Howard
Jeffrey A. Howard
Banking Officer
Payment Office:
25 Park Place, N.E.
24th Floor
Atlanta, Georgia 30303
</PAGE>
<PAGE>
Address for Notices: TRUST COMPANY BANK
25 Park Place, N.E.
24th Floor
Atlanta, Georgia 30303 By: /s/ James O. Clarke, III
Attention: Jeffrey A. Howard James O. Clarke, III
Group Vice President
Telecopy No.: 404/827-6270 By: /s/ Jeffrey A. Howard
Jeffrey A. Howard
Banking Officer
TRANCHE A COMMITMENT: $12,500,000
TRANCHE B COMMITMENT: $37,500,000
PRO RATA SHARE OF
COMMITMENTS: 25%
</PAGE>
<PAGE>
Address for Notices:
AMSOUTH BANK OF ALABAMA
63 South Royal Street
Commercial Lending Department
Second Floor By: /s/ Debra L. Harrison
Mobile, Alabama 36602 Title: Vice President
Attention: Debra L. Harrison
Telecopy: (205) 438-8377
TRANCHE A COMMITMENT: $12,500,000
TRANCHE B COMMITMENT: $37,500,000
PRO RATA SHARE OF
COMMITMENTS: 25%
</PAGE>
<PAGE>
Address for Notices:
WACHOVIA BANK OF GEORGIA, N.A.
191 Peachtree Street, N.W.
Atlanta, Georgia 30303
By: /s/ Peter J. Clemens, IV
Title: Assistant Vice President
Attention: Peter J. Clemens, IV
Telecopy: (404) 332-5016
TRANCHE A COMMITMENT: $10,000,000
TRANCHE B COMMITMENT: $30,000,000
PRO RATA SHARE OF
COMMITMENTS: 20%
</PAGE>
<PAGE>
Address for Notices:
FIRST AMERICAN NATIONAL BANK
First American Center
4th and Union
Nashville, TN 37237-0310 By: /s/ Russell S. Rogers
Title: Vice President
Attention: Russell S. Rogers
Telecopy: (615) 748-6072
TRANCHE A COMMITMENT: $5,000,000
TRANCHE B COMMITMENT: $15,000,000
PRO RATA SHARE OF
COMMITMENTS: 10%
</PAGE>
<PAGE>
Address for Notices:
BANK OF AMERICA ILLINOIS
231 South LaSalle Street
9th Floor
Chicago, Illinois 60697 By: /s/ Michael J. McKenney
Title: Vice President
Attention: Betty Hill - Account Administrator
Telecopy: (312) 987-5883/(312) 987-7384
Telephone: (312) 828-6580
TRANCHE A COMMITMENT: $5,000,000
TRANCHE B COMMITMENT: $15,000,000
PRO RATA SHARE OF
COMMITMENTS: 10%
</PAGE>
<PAGE>
Address for Notices:
BARNETT BANK OF JACKSONVILLE, N.A.
50 North Laura Street
17th Floor
Jacksonville, Florida 32202
By: /s/ Christina B. Uzzell
Title: Assistant Vice President
Attention: Christina Uzell
Telecopy: (904) 791-7023
TRANCHE A COMMITMENT: $5,000,000
TRANCHE B COMMITMENT: $15,000,000
PRO RATA SHARE OF
COMMITMENTS: 10%
</PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
September 30, 1994 $_______________
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, MORRISON
RESTAURANTS INC., a Delaware corporation ("Borrower"), promises
to pay to the order of TRUST COMPANY BANK, a Georgia banking
corporation ("Lender") at the principal office of the Agent at 25
Park Place, Atlanta, Georgia 30303, or at such other place as the
holder hereof may designate in immediately available funds in
lawful money of the United States, the principal sum of (i)
______________ AND NO/100 DOLLARS ($__________) or (ii) so much
as shall have been advanced hereunder as Eurodollar Advances and
Base Rate Advances and remaining outstanding as shown on the
records of the Agent and the Lender, plus all accrued and unpaid
interest thereon as set forth in that certain Credit Agreement
dated as of even date herewith among the Borrower, Trust Company
Bank, individually and as Agent and as Administrative Agent, and
the financial institutions from time to time a party thereto (as
the same may hereafter be amended, modified, extended or
supplemented from time to time, the "Agreement"). Interest shall
accrue from the date hereof up to and through the date on which
all principal and interest hereunder is paid in full, shall be
computed on the basis of actual days elapsed in a 360-day year,
and shall be calculated on the outstanding principal balance
hereunder at the interest rates specified in Section 3.03 of the
Agreement.
Principal and interest hereunder shall be paid on the
dates specified in the Agreement and shall be due and payable in
full on the Maturity Date (as defined in the Agreement). Any
installment of principal and, to the extent permitted by law,
interest due under this Note that is not paid on the due date
therefor whether on the maturity date, or resulting from the
acceleration of maturity upon the occurrence of an Event of
Default (as defined in the Agreement), shall bear interest from
the date due until payment in full at the default rate specified
in Section 3.03 of the Agreement.
This Note evidences the Revolving Loans made pursuant
to the terms and conditions of the Agreement, to which Agreement
reference is hereby made for a full and complete description of
such terms and conditions, including, without limitation,
provisions for the acceleration of the maturity hereof upon the
existence or occurrence of certain conditions or events, and the
terms of any permitted prepayments hereof. All capitalized terms
used in this Note shall have the same meanings as set forth in
the Agreement.
Upon the existence or occurrence of any Event of
Default, the principal and all accrued interest hereof shall
automatically become, or may be declared, due and payable in the
manner and with the effect provided in the Agreement.
Lender shall at all times have a right of set-off
against any deposit balances of Borrower in the possession of
Lender, and Lender may apply the same against payment of this
Note or any other indebtedness of Borrower to Lender arising
under the Credit Documents. The payment of any indebtedness
evidenced by this Note shall not affect the enforceability of
this Note as to any future, different or other indebtedness
evidenced hereby. In the event the indebtedness evidenced by
this Note is collected by legal action or through an attorney-at-
law, or in bankruptcy or other judicial proceedings, Lender shall
be entitled to recover from Borrower all costs of collection,
including, without limitation, reasonable attorneys' fees
actually incurred.
Failure or forbearance of Lender to exercise any right
hereunder, or otherwise granted by the Agreement or by law, shall
not affect or release the liability of Borrower hereunder, and
shall not constitute a waiver of such right unless so stated by
Lender in writing. This Note shall be deemed to be made under,
and shall be construed in accordance with and governed by, the
laws of the State of Georgia.
DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND
PROTEST ARE HEREBY WAIVED.
Time is of the essence hereunder.
<PAGE>
EXECUTED AND DELIVERED under seal of Borrower by its
duly authorized officers as of the day and year first above
written in Atlanta, Georgia.
MORRISON RESTAURANTS INC.
[CORPORATE SEAL] By:_________________________________
J. Russell Mothershed
Senior Vice President - Finance
and Treasurer
Attest:_____________________________
Pfilip G. Hunt
Secretary
</PAGE>
EXHIBIT B
MONEY MARKET NOTE
September __, 1994 $200,000,000.00
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, MORRISON
RESTAURANTS INC., a Delaware corporation ("Borrower"), promises
to pay to the order of _______________________________, a
_______________ ("Lender") at the principal office of the Agent
at 25 Park Place, Atlanta, Georgia 30303, or at such other place
as the holder hereof may designate in immediately available funds
in lawful money of the United States, the principal sum of (i)
TWO HUNDRED MILLION AND NO/100 DOLLARS ($200,000,000.00) or (ii)
so much as shall have been advanced hereunder as Money Market
Rate Advances and remaining outstanding as shown on the records
of the Agent and the Lender, plus all accrued and unpaid interest
thereon as set forth in that certain Credit Agreement dated as of
even date herewith among the Borrower, Trust Company Bank,
individually and as Agent and as Administrative Agent, and the
financial institutions from time to time a party thereto (as the
same may hereafter be amended, modified, extended or supplemented
from time to time, the "Agreement"). Interest shall accrue from
the date hereof up to and through the date on which all principal
and interest hereunder is paid in full, shall be computed on the
basis of actual days elapsed in a 360-day year, and shall be
calculated on the outstanding principal balance hereunder at the
interest rates specified in Section 3.03 of the Agreement.
Principal and interest hereunder shall be paid on the
dates specified in the Agreement and shall be due and payable in
full on the Maturity Date (as defined in the Agreement). Any
installment of principal and, to the extent permitted by law,
interest due under this Note that is not paid on the due date
therefor whether on the maturity date, or resulting from the
acceleration of maturity upon the occurrence of an Event of
Default (as defined in the Agreement), shall bear interest from
the date due until payment in full at the default rate specified
in Section 3.03 of the Agreement.
This Note evidences the Money Market Rate Advances made
pursuant to the terms and conditions of the Agreement, to which
Agreement reference is hereby made for a full and complete
description of such terms and conditions, including, without
limitation, provisions for the acceleration of the maturity
hereof upon the existence or occurrence of certain conditions or
events, and the terms of any permitted prepayments hereof. All
capitalized terms used in this Note shall have the same meanings
as set forth in the Agreement.
Upon the existence or occurrence of any Event of
Default, the principal and all accrued interest hereof shall
automatically become, or may be declared, due and payable in the
manner and with the effect provided in the Agreement.
Lender shall at all times have a right of set-off
against any deposit balances of Borrower in the possession of
Lender, and Lender may apply the same against payment of this
Note or any other indebtedness of Borrower to Lender arising
under the Credit Documents. The payment of any indebtedness
evidenced by this Note shall not affect the enforceability of
this Note as to any future, different or other indebtedness
evidenced hereby. In the event the indebtedness evidenced by
this Note is collected by legal action or through an attorney-at-
law, or in bankruptcy or other judicial proceedings, Lender shall
be entitled to recover from Borrower all costs of collection,
including, without limitation, reasonable attorneys' fees
actually incurred.
Failure or forbearance of Lender to exercise any right
hereunder, or otherwise granted by the Agreement or by law, shall
not affect or release the liability of Borrower hereunder, and
shall not constitute a waiver of such right unless so stated by
Lender in writing. This Note shall be deemed to be made under,
and shall be construed in accordance with and governed by, the
laws of the State of Georgia.
DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND
PROTEST ARE HEREBY WAIVED.
Time is of the essence hereunder.
<PAGE>
EXECUTED AND DELIVERED under seal of Borrower by its
duly authorized officers as of the day and year first above
written.
MORRISON RESTAURANTS INC.
[CORPORATE SEAL] By:___________________________
Title:______________________
Attest:_______________________
Title:______________________
</PAGE>
EXHIBIT C
SUBSIDIARY GUARANTY AGREEMENT
This SUBSIDIARY GUARANTY AGREEMENT (this "Guaranty"),
dated as of September 30, 1994, made, jointly and severally, by
RUBY TUESDAY, INC., a corporation organized and existing under
the laws of the State of Delaware and CUSTOM MANAGEMENT
CORPORATION, a corporation organized and existing under the laws
of the Commonwealth of Pennsylvania (hereinafter, collectively,
with all Additional Guarantors hereafter becoming party hereto,
the "Guarantor"), in favor of TRUST COMPANY BANK, a Georgia
banking corporation (the "Agent"), in its capacity as agent for
banks and other lending institutions parties to the Credit
Agreement (as hereinafter defined) and each assignee thereof
becoming a "Lender" as provided therein (the "Lenders"), the
Lenders and the Agent being collectively referred to herein as
the "Guaranteed Parties");
W I T N E S S E T H:
WHEREAS, MORRISON RESTAURANTS INC., a corporation
organized and existing under the laws of the State of Delaware
(the "Borrower"), the Lenders, the Agent and Trust Company Bank
as Administrative Agent have entered into that certain Credit
Agreement dated as of September 30, 1994 (as the same may
hereafter be amended, restated, supplemented or otherwise
modified from time to time, and including all schedules, riders,
and supplements thereto, the "Credit Agreement"; terms defined
therein and not otherwise defined herein being used herein as
therein defined);
WHEREAS, the Borrower owns, directly or indirectly, all
or a majority of the outstanding capital stock of the Guarantor;
WHEREAS, the Borrower and the Guarantor share an
identity of interest as members of a consolidated group of
companies engaged in substantially similar businesses with the
Borrower providing certain centralized financial, accounting and
management services to the Guarantor;
WHEREAS, consummation of the transactions pursuant to
the Credit Agreement will facilitate expansion and enhance the
overall financial strength and stability of the Borrower's entire
corporate group, including the Guarantor; and
WHEREAS, it is a condition precedent to the Lenders'
obligations to enter into the Credit Agreement and to make
extensions of credit thereunder that the Guarantor execute and
deliver this Guaranty, and the Guarantor desires to execute and
deliver this Guaranty to satisfy such condition precedent;
NOW, THEREFORE, in consideration of the premises and in
order to induce the Lenders to enter into and perform their
obligations under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. Guaranty. The Guarantor hereby,
irrevocably and unconditionally, guarantees the punctual payment
when due, whether at stated maturity, by acceleration or
otherwise, of all Loans and all other Obligations owing by the
Borrower to the Lenders or the Agent or the Administrative Agent,
or any of them, under the Credit Agreement, the Notes and the
other Credit Documents, including all renewals, extensions,
modifications and refinancings thereof, now or hereafter owing,
whether for principal, interest, fees, expenses or otherwise, and
any and all reasonable out-of-pocket expenses (including
reasonable attorneys' fees actually incurred and expenses)
incurred by the Agent in enforcing any rights under this Guaranty
(collectively, the "Guaranteed Obligations"), including without
limitation, all interest which, but for the filing of a petition
in bankruptcy with respect to the Borrower, would accrue on any
principal portion of the Guaranteed Obligations. Any and all
payments by the Guarantor hereunder shall be made free and clear
of and without deduction for any set-off, counterclaim, or
withholding so that, in each case, each Guaranteed Party will
receive, after giving effect to any Taxes (as such term is
defined in the Credit Agreement, but excluding Taxes imposed on
overall net income of the Guaranteed Party to the same extent as
excluded pursuant to the Credit Agreement), the full amount that
it would otherwise be entitled to receive with respect to the
Guaranteed Obligations (but without duplication of amounts for
Taxes already included in the Guaranteed Obligations). The
Guarantor acknowledges and agrees that this is a guarantee of
payment when due, and not of collection, and that this Guaranty
may be enforced up to the full amount of the Guaranteed
Obligations without proceeding against the Borrower, against any
security for the Guaranteed Obligations or under any other
guaranty covering any portion of the Guaranteed Obligations.
SECTION 2. Guaranty Absolute. The Guarantor
guarantees that the Guaranteed Obligations will be paid strictly
in accordance with the terms of the Credit Documents, regardless
of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any
Guaranteed Party with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional
in accordance with its terms and shall remain in full force and
effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance
or occurrence whatsoever, including, without limitation, the
following (whether or not the Guarantor consents thereto or has
notice thereof):
(a) any change in the time, place or manner of payment
of, or in any other term of, all or any of the Guaranteed
Obligations, any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or
supplement to or deletion from or any other action or
inaction under or in respect of the Credit Agreement, the
other Credit Documents, or any other documents, instruments
or agreements relating to the Guaranteed Obligations or any
other instrument or agreement referred to therein or any
assignment or transfer of any thereof;
(b) any lack of validity or enforceability of the
Credit Agreement, the other Credit Documents, or any other
document, instrument or agreement referred to therein or any
assignment or transfer of any thereof;
(c) any furnishing to the Guaranteed Parties of any
additional security for the Guaranteed Obligations, or any
sale, exchange, release or surrender of, or realization on,
any security for the Guaranteed Obligations;
(d) any settlement or compromise of any of the
Guaranteed Obligations, any security therefor, or any
liability of any other party with respect to the Guaranteed
Obligations, or any subordination of the payment of the
Guaranteed Obligations to the payment of any other liability
of the Borrower;
(e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other
like proceeding relating to the Guarantor or the Borrower,
or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such
proceeding;
(f) any nonperfection of any security interest or lien
on any collateral, or any amendment or waiver of or consent
to departure from any guaranty or security, for all or any
of the Guaranteed Obligations;
(g) any application of sums paid by the Borrower or
any other Person with respect to the liabilities of the
Borrower to the Guaranteed Parties, regardless of what
liabilities of the Borrower remain unpaid;
(h) any act or failure to act by any Guaranteed Party
which may adversely affect the Guarantor's subrogation
rights, if any, against the Borrower to recover payments
made under this Guaranty; and
(i) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the
Guarantor.
If claim is ever made upon any Guaranteed Party for repayment or
recovery of any amount or amounts received in payment or on
account of any of the Guaranteed Obligations, and any Guaranteed
Party repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body
having jurisdiction over the Guaranteed Party or any of its
property, or (b) any settlement or compromise of any such claim
effected by the Guaranteed Party with any such claimant
(including the Borrower or a trustee in bankruptcy for the
Borrower), then and in such event the Guarantor agrees that any
such judgment, decree, order, settlement or compromise shall be
binding on it, notwithstanding any revocation hereof or the
cancellation of the Credit Agreement, the other Credit Documents,
or any other instrument evidencing any liability of the Borrower,
and the Guarantor shall be and remain liable to the Guaranteed
Party for the amounts so repaid or recovered to the same extent
as if such amount had never originally been paid to the
Guaranteed Party.
SECTION 3 Waiver. The Guarantor hereby waives notice
of acceptance of this Guaranty, notice of any liability to which
it may apply, and further waives presentment, demand of payment,
protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Guaranteed
Parties against, and any other notice to, the Borrower or any
other party liable with respect to the Guaranteed Obligations
(including the Guarantor or any other Person executing a guaranty
of the obligations of the Borrower).
SECTION 4. Waiver of Subrogation. The Guarantor will
not exercise any rights against the Borrower which it may acquire
by way of subrogation or contribution, by any payment made
hereunder or otherwise. The Guarantor hereby expressly waives
any claim, right or remedy which the Guarantor may now have or
hereafter acquire against the Borrower that arises hereunder
and/or from the performance by the Guarantor hereunder,
including, without limitation, any claim, right or remedy of the
Guaranteed Parties against the Borrower or any security which the
Guaranteed Parties now has or hereafter acquires, whether or not
such claim, right or remedy arises in equity, under contract, by
statute, under color of law or otherwise. This waiver is for the
benefit of the Borrower.
SECTION 5. Severability. Any provision of this
Guaranty which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 6. Amendments, Etc. No amendment or waiver of
any provision of this Guaranty nor consent to any departure by
the Guarantor therefrom shall in any event be effective unless
the same shall be in writing executed by the Agent.
SECTION 7. Notices. All notices and other
communications provided for hereunder shall be given in the
manner specified in the Credit Agreement (i) in the case of the
Agent, at the address specified for the Agent in the Credit
Agreement, and (ii) in the case of the Guarantor, at the
addresses specified for the Guarantor in this Guaranty or the
applicable supplement hereto.
SECTION 8. No Waiver; Remedies. No failure on the
part of the Agent or other Guaranteed Parties to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or
the exercise of any other right. No notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other
further notice or demand in any similar or other circumstances or
constitute a waiver of the rights of the Agent or other
Guaranteed Parties to any other or further action in any
circumstances without notice or demand. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9. Right Of Set Off. In addition to and not
in limitation of all rights of offset that the Agent or other
Guaranteed Parties may have under applicable law, the Agent or
other Guaranteed Parties shall, upon the occurrence of any Event
of Default and whether or not the Agent or other Guaranteed
Parties have made any demand or the Guaranteed Obligations are
matured, have the right to appropriate and apply to the payment
of the Guaranteed Obligations, all deposits of the Guarantor
(general or special, time or demand, provisional or final) then
or thereafter held by and other indebtedness or property then or
thereafter owing by the Agent or other Guaranteed Parties to the
Guarantor, whether or not related to this Guaranty or any
transaction hereunder. The Guaranteed Parties shall promptly
notify the Guarantor of any offset hereunder.
SECTION 10. Continuing Guaranty; Transfer Of
Obligations. This Guaranty is a continuing guaranty and shall
(i) remain in full force and effect until payment in full of the
Guaranteed Obligations and all other amounts payable under this
Guaranty and the termination of the Commitments, (ii) be binding
upon the Guarantor, its successors and assigns, and (iii) inure
to the benefit of and be enforceable by the Agent, its
successors, transferees and assigns, for the benefit of the
Guaranteed Parties.
SECTION 11. Governing Law; Appointment Of Agent For
Service Of Process; Submission To Jurisdiction; Waiver of Jury
Trial.
(a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS GUARANTY OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE
SUPERIOR COURT OF FULTON COUNTY OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA,
AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE
OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE AGENT AND OTHER
GUARANTEED PARTIES WITH RESPECT TO THIS GUARANTY OR ANY DOCUMENT
RELATED HERETO. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES
PRENTICE HALL CORPORATION OF ATLANTA, GEORGIA, AS THE DESIGNEE,
APPOINTEE AND AGENT OF THE GUARANTOR TO RECEIVE, FOR AND ON
BEHALF OF THE GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION
IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
OR ANY DOCUMENT RELATED HERETO AND SUCH SERVICE SHALL BE DEEMED
COMPLETED THIRTY DAYS AFTER MAILING THEREOF TO SAID AGENT. IT IS
UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL
BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF
PROCESS BY MAIL TO THE GUARANTOR AT ITS ADDRESS SET FORTH HEREIN,
BUT THE FAILURE OF THE GUARANTOR TO RECEIVE SUCH COPY SHALL NOT,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN
RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED THERETO.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY
OTHER JURISDICTION.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS GUARANTY OR ANY OTHER CREDIT DOCUMENT OR ANY
MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER.
SECTION 12. Subordination Of the Borrower's
Obligations To the Guarantors. As an independent covenant, the
Guarantor hereby expressly covenants and agrees for the benefit
of the Agent and other Guaranteed Parties that all obligations
and liabilities of the Borrower to the Guarantor of whatsoever
description including, without limitation, all intercompany
receivables of the Guarantor from the Borrower ("Junior Claims")
shall be subordinate and junior in right of payment to all
obligations of the Borrower to the Agent and other Guaranteed
Parties under the terms of the Credit Agreement and the other
Credit Documents ("Senior Claims").
If an Event of Default shall occur, then, unless and
until such Event of Default shall have been cured, waived, or
shall have ceased to exist, no direct or indirect payment (in
cash, property, securities by setoff or otherwise) shall be made
by the Borrower to the Guarantor on account of or in any manner
in respect of any Junior Claim except such payments and
distributions the proceeds of which shall be applied to the
payment of Senior Claims.
In the event of a Proceeding (as hereinafter defined),
all Senior Claims shall first be paid in full before any direct
or indirect payment or distribution (in cash, property,
securities by setoff or otherwise) shall be made to any Guarantor
on account of or in any manner in respect of any Junior Claim
except such payments and distributions the proceeds of which
shall be applied to the payment of Senior Claims. For the
purposes of the previous sentence, "Proceeding" means the
Borrower or the Guarantor shall commence a voluntary case
concerning itself under the Bankruptcy Code or any other
applicable bankruptcy laws; or any involuntary case is commenced
against the Borrower or the Guarantor; or a custodian (as defined
in the Bankruptcy Code or any other applicable bankruptcy laws)
is appointed for, or takes charge of, all or any substantial part
of the property of the Borrower or the Guarantor, or the Borrower
or the Guarantor commences any other proceedings under any
reorganization arrangement, adjustment of debt, relief of debtor,
dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the
Borrower or the Guarantor, or any such proceeding is commenced
against the Borrower or the Guarantor, or the Borrower or the
Guarantor is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is
entered; or the Borrower or the Guarantor suffers any appointment
of any custodian or the like for it or any substantial part of
its property; or the Borrower or the Guarantor makes a general
assignment for the benefit of creditors; or the Borrower or the
Guarantor shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they
become due; or the Borrower or the Guarantor shall call a meeting
of its creditors with a view to arranging a composition or
adjustment of its debts; or the Borrower or the Guarantor shall
by any act or failure to act indicate its consent to, approval of
or acquiescence in any of the foregoing; or any corporate action
shall be taken by the Borrower or the Guarantor for the purpose
of effecting any of the foregoing.
In the event any direct or indirect payment or
distribution is made to the Guarantor in contravention of this
Section 12, such payment or distribution shall be deemed received
in trust for the benefit of the Agent and other Guaranteed
Parties and shall be immediately paid over to the Agent for
application against the Guaranteed Obligations in accordance with
the terms of the Credit Agreement.
The Guarantor agrees to execute such additional
documents as the Agent may reasonably request to evidence the
subordination provided for in this Section 12.
SECTION 13. Automatic Acceleration in Certain Events.
Upon the occurrence of an Event of Default specified in Section
8.07 of the Credit Agreement, all Guaranteed Obligations shall
automatically become immediately due and payable by the
Guarantor, without notice or other action on the part of the
Agent or other Guaranteed Parties, and regardless of whether
payment of the Guaranteed Obligations by the Borrower has then
been accelerated. In addition, if any event of the types
described in Section 8.07 of the Credit Agreement should occur
with respect to the Guarantor, then the Guaranteed Obligations
shall automatically become immediately due and payable by the
Guarantor, without notice or other action on the part of the
Agent or other Guaranteed Parties, and regardless of whether
payment of the Guaranteed Obligations by the Borrower has then
been accelerated.
SECTION 14. Savings Clause. (a) It is the intent
of the Guarantor and the Guaranteed Parties that the Guarantor's
maximum obligations hereunder shall be, but not in excess of:
(i) in a case or proceeding commenced by or against
the Guarantor under the Bankruptcy Code on or within one
year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other
obligations of the Guarantor to the Guaranteed Parties) to
be avoidable or unenforceable against the Guarantor under
(A) Section 548 of the Bankruptcy Code or (B) any state
fraudulent transfer or fraudulent conveyance act or statute
applied in such case or proceeding by virtue of Section 544
of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against
the Guarantor under the Bankruptcy Code subsequent to one
year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other
obligations of the Guarantor to the Guaranteed Parties) to
be avoidable or unenforceable against the Guarantor under
any state fraudulent transfer or fraudulent conveyance act
or statute applied in any such case or proceeding by virtue
of Section 544 of the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against
the Guarantor under any law, statute or regulation other
than the Bankruptcy Code (including, without limitation, any
other bankruptcy, reorganization, arrangement, moratorium,
readjustment of debt, dissolution, liquidation or similar
debtor relief laws), the maximum amount which would not
otherwise cause the Guaranteed Obligations (or any other
obligations of the Guarantor to the Guaranteed Parties) to
be avoidable or unenforceable against the Guarantor under
such law, statute or regulation including, without
limitation, any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or
proceeding.
(The substantive laws under which the possible avoidance or
unenforceability of the Guaranteed Obligations (or any other
obligations of the Guarantor to the Guaranteed Parties) shall be
determined in any such case or proceeding shall hereinafter be
referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 14(a), but only to
the extent that the Guaranteed Obligations would otherwise
be subject to avoidance under the Avoidance Provisions if
the Guarantor is not deemed to have received valuable
consideration, fair value or reasonably equivalent value for
the Guaranteed Obligations, or if the Guaranteed Obligations
would render the Guarantor insolvent, or leave the Guarantor
with an unreasonably small capital to conduct its business,
or cause the Guarantor to have incurred debts (or to have
intended to have incurred debts) beyond its ability to pay
such debts as they mature, in each case as of the time any
of the Guaranteed Obligations are deemed to have been
incurred under the Avoidance Provisions and after giving
effect to the contribution by the Guarantor, the maximum
Guaranteed Obligations for which the Guarantor shall be
liable hereunder shall be reduced to that amount which,
after giving effect thereto, would not cause the Guaranteed
Obligations (or any other obligations of the Guarantor to
the Guaranteed Parties), as so reduced, to be subject to
avoidance under the Avoidance Provisions. This Section
14(b) is intended solely to preserve the rights of the
Guaranteed Parties hereunder to the maximum extent that
would not cause the Guaranteed Obligations of the Guarantor
to be subject to avoidance under the Avoidance Provisions,
and neither the Guarantor nor any other Person shall have
any right or claim under this Section 14 as against the
Guaranteed Parties that would not otherwise be available to
such Person under the Avoidance Provisions.
(c) None of the provisions of this Section 14 are
intended in any manner to alter the obligations of any
holder of Subordinated Debt or the rights of the holders of
"senior indebtedness" as provided by the terms of the
Subordinated Debt. Accordingly, it is the intent of the
Guarantor that, in the event that any payment or
distribution is made with respect to the Subordinated Debt
prior to the payment in full of the Guaranteed Obligations
by virtue of the provisions of this Section 14, in any case
or proceeding of the kinds described in clauses (i)-(iii) of
Section 14(a), the holders of the Subordinated Debt shall be
obligated to pay or deliver such payment or distribution to
or for the benefit of the Guaranteed Parties. Furthermore,
in respect of the Avoidance Provisions, it is the intent of
the Guarantor that the subrogation rights of the holders of
Subordinated Debt with respect to the obligations of the
Guarantor under this Guaranty, be subject in all respects to
the provisions of Section 14(b).
SECTION 15. Information. The Guarantor assumes all
responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations and the nature, scope and extent of the
risks that the Guarantor assumes and incurs hereunder, and agrees
that none of the Guaranteed Parties will have any duty to advise
the Guarantor of information known to it or any of them regarding
such circumstances or risks.
SECTION 16. Representations and Warranties. The
Guarantor represents and warrants as to itself that all
representations and warranties relating to it contained in
Sections 5.01 through 5.06 of the Credit Agreement are true and
correct.
SECTION 17. Survival of Agreement. All agreements,
representations and warranties made herein shall survive the
execution and delivery of this Guaranty and the Credit Agreement,
the making of the Loans and the execution and delivery of the
Notes and the other Credit Documents.
SECTION 18. Counterparts. This Guaranty and any
amendments, waivers, consents or supplements may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
SECTION 19. Additional Guarantors. Upon execution
and delivery by any Subsidiary of the Borrower of an instrument
in the form of Annex 1, such Subsidiary of the Borrower shall
become a Guarantor hereunder with the same force and effect as if
originally named a Guarantor herein (each an "Additional
Guarantor") and its obligations hereunder shall be joint and
several with the Guarantor. The execution and delivery of any
such instrument shall not require the consent of any other
Guarantor hereunder. The rights and obligations of the Guarantor
hereunder shall remain in full force and effect notwithstanding
the addition of any Additional Guarantor as a party to this
Guaranty.
<PAGE>
IN WITNESS WHEREOF, the Guarantor and the Agent have
caused this Guaranty to be duly executed and delivered by their
respective duly authorized officers as of the date first above
written in Atlanta, Georgia.
Address for Notices: RUBY TUESDAY, INC.
4271 Morrison Drive
P. O. Box 160266
Mobile, Alabama 36625-0001
By:____________________________
Attn: Mr. J. Russell Mothershed J. Russell Mothershed
Senior Vice President -
Finance and Treasurer
Telecopy: (205) 344-9513
Attest:________________________
Pfilip G. Hunt
Secretary
[CORPORATE SEAL]
STATE OF GEORGIA
COUNTY OF _____________
Signed, sealed and delivered
in the presence of:
Notary Public
Date Executed by Notary:
My commission expires:
[NOTARIAL SEAL]
</PAGE>
<PAGE>
Address for Notices: CUSTOM MANAGEMENT CORPORATION
4271 Morrison Drive
P. O. Box 160266
Mobile, Alabama 36625-0001
By:__________________________
Attn: Mr. J. Russell Mothershed J. Russell Mothershed
Vice President/Treasurer
Telecopy: (205) 344-9513
Attest:______________________
Pfilip G. Hunt
Secretary
[CORPORATE SEAL]
STATE OF GEORGIA
COUNTY OF _____________
Signed, sealed and delivered
in the presence of:
Notary Public
Date Executed by Notary:
My commission expires:
[NOTARIAL SEAL]
</PAGE>
<PAGE>
TRUST COMPANY BANK
("Agent")
By:_______________________________
Title:_________________________
By:_______________________________
Title:_________________________
</PAGE>
<PAGE>
SECTION 12 OF THE
FOREGOING GUARANTY
ACKNOWLEDGED AND
AGREED TO:
MORRISON RESTAURANTS INC.
By:
J. Russell Mothershed
Senior Vice President-Finance
</PAGE>
SUPPLEMENT
TO
SUBSIDIARY GUARANTY AGREEMENT
THIS FIRST SUPPLEMENT TO SUBSIDIARY GUARANTY AGREEMENT
(this "Supplement to Guaranty Agreement"), dated as of
___________, 1994, made by ______________________, a ________
corporation (the "Additional Guarantor"), in favor of TRUST
COMPANY BANK, a Georgia banking corporation (the "Agent"), in its
capacity as agent for banks and other lending institutions
parties to the Credit Agreement (as hereinafter defined) and each
assignee thereof becoming a "Lender" as provided therein (the
"Lenders"), the Lenders and the Agent being collectively referred
to herein as the "Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, MORRISON RESTAURANTS INC. (the "Borrower"),
the Lenders, the Agent and the Administrative Agent are parties
to a Credit Agreement, dated as of September 30, 1994 (as the
same may hereafter be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement")
pursuant to which the Lenders have made commitments to make loans
to the Borrower;
WHEREAS, a certain Subsidiaries (collectively, the
"Subsidiary Guarantor") of the Borrower has executed and
delivered a Subsidiary Guaranty Agreement dated as of September
30, 1994 (the "Subsidiary Guaranty") pursuant to which the
Subsidiary Guarantor has agreed to guarantee all of the
obligations of the Borrower under the Credit Agreement and the
other Credit Documents (as defined in the Credit Agreement);
WHEREAS, the Borrower, the Subsidiary Guarantor and the
Additional Guarantor share an identity of interests as members of
a consolidated group of companies engaged in substantially
similar businesses; the Borrower provides certain centralized
financial, accounting and management services to the Additional
Guarantor; and the making of the loans will facilitate expansion
and enhance the overall financial strength and stability of the
Borrower's corporate group, including the Additional Guarantor;
WHEREAS, it is a condition subsequent to the Lenders'
obligation to make loans to the Borrower under the Credit
Agreement that the Additional Guarantor execute and deliver to
the Agent this Supplement to Guaranty Agreement, and the
Additional Guarantor desires to execute and deliver this
Supplement to Guaranty Agreement to satisfy such condition
subsequent;
NOW, THEREFORE, in consideration of the premises and in
order to induce the Lenders to make the loans to the Borrower
under the Credit Agreement, the Additional Guarantor hereby
agrees as follows:
1. Defined Terms. Capitalized terms not otherwise defined
herein which are used in the Subsidiary Guaranty are used herein
with the meanings specified for such terms in the Subsidiary
Guaranty.
2. Additional Guarantor. The Additional Guarantor agrees that
it shall be and become a Guarantor for all purposes of the
Subsidiary Guaranty and shall be fully liable, jointly and
severally thereunder to the Agent and other Guaranteed Parties to
the same extent and with the same effect as though the Additional
Guarantor had been a Guarantor originally executing and
delivering the Subsidiary Guaranty. Without limiting the
foregoing, the Additional Guarantor hereby jointly and severally
(with respect to the guaranties made by the Subsidiary Guarantor
under the Subsidiary Guaranty), irrevocably and unconditionally,
guarantees the punctual payment when due, whether at stated
maturity by acceleration of otherwise, of the Borrowings and all
other Obligations (as defined in the Credit Agreement, and
including all renewals, extensions, modifications and
refinancings thereof, now or hereafter existing, whether for
principal, interest, fees, expenses or otherwise, and any and all
expenses (including reasonable attorneys' fees actually incurred
and reasonable out-of-pocket expenses) incurred by the Agent and
other Guaranteed Parties in enforcing any rights under the
Subsidiary Guaranty (as supplemented hereby), subject, however,
to the limitations expressly provided in the Subsidiary Guaranty
in Section 14 thereof. All references in the Subsidiary Guaranty
to the "Guarantor" shall be deemed to include and to refer to the
Additional Guarantor.
3. Governing Law; Appointment of Agent for Service of Process;
Submission to Jurisdiction; Waiver of Jury Trial.
(a) THIS SUPPLEMENT TO GUARANTY AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE
STATE OF GEORGIA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS SUPPLEMENT TO GUARANTY AGREEMENT RELATED HERETO MAY BE
BROUGHT IN THE SUPERIOR COURT OF FULTON COUNTY OF THE STATE OF
GEORGIA OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF GEORGIA, AND, BY EXECUTION AND DELIVERY OF THIS
SUPPLEMENT TO GUARANTY AGREEMENT, THE ADDITIONAL GUARANTOR HEREBY
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF
ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE AGENT OR OTHER
GUARANTEED PARTIES WITH RESPECT TO THIS SUPPLEMENT TO GUARANTY
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE ADDITIONAL
GUARANTOR HEREBY IRREVOCABLY DESIGNATES PRENTICE HALL CORPORATION
OF ATLANTA, GEORGIA, AS THE DESIGNEE, APPOINTEE AND AGENT OF THE
ADDITIONAL GUARANTOR TO RECEIVE, FOR AND ON BEHALF OF THE
ADDITIONAL GUARANTOR, SERVICE OF PROCESS IN SUCH JURISDICTION IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUPPLEMENT TO
GUARANTY AGREEMENT OR ANY DOCUMENT RELATED HERETO AND SUCH
SERVICE SHALL BE DEEMED COMPLETED THIRTY (30) DAYS AFTER MAILING
THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH
PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY SUCH
LOCAL AGENT AND BY THE SERVER OF PROCESS BY MAIL TO THE
ADDITIONAL GUARANTOR AT ITS ADDRESS SET FORTH HEREIN, BUT THE
FAILURE OF THE ADDITIONAL GUARANTOR TO RECEIVE SUCH COPY SHALL
NOT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY
THE SERVICE OF SUCH PROCESS. THE ADDITIONAL GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS IN RESPECT OF THIS SUPPLEMENT TO GUARANTY AGREEMENT
OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE ADDITIONAL GUARANTOR IN ANY OTHER JURISDICTION.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADDITIONAL GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR IN CONNECTION WITH THIS SUPPLEMENT TO GUARANTY AGREEMENT OR
ANY OTHER CREDIT DOCUMENT OR ANY MATTER ARISING IN CONNECTION
HEREUNDER OR THEREUNDER.
<PAGE>
IN WITNESS WHEREOF, the Additional Guarantor has caused
this Supplement to Guaranty to be duly executed and delivered
under seal by its duly authorized officers as of the date first
above written.
Address for Notices: ADDITIONAL GUARANTOR:
__________________________
By:________________________________
Title:__________________________
Attest: ___________________________
Title:______________________
[CORPORATE SEAL]
</PAGE>
<PAGE>
<TABLE>
ITEM 6.(a)
EXHIBIT 11: COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
DEC.3, 1994 DEC.4, 1993 DEC.3, 1994 DEC.4, 1993
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Average common shares outstanding...... 34,636 36,132 34,948 36,113
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treasury stock method", at the
average market price)................ 1,455 1,389 1,376 1,331
TOTALS.............. 36,091 37,521 36,324 37,444
Net Income............................. $12,131 $12,038 $36,641 $20,147
Primary earnings per common and
common equivalent share.............. $0.34 $0.32 $1.01 $0.54
</TABLE>
</PAGE>
<PAGE>
<TABLE>
ITEM 6.(a) (continued)
EXHIBIT 11: COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
DEC.3, 1994 DEC.4, 1993 DEC.3, 1994 DEC.4, 1993
<S> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Average common shares outstanding...... 34,636 36,132 34,948 36,113
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)........................ 1,456 1,389 1,435 1,359
TOTALS.............. 36,092 37,521 36,383 37,472
Net Income............................. $12,131 $12,038 $36,641 $20,147
Fully diluted earnings per common and
common equivalent share.............. $0.34 $0.32 $1.01 $0.54
</TABLE>
</PAGE>
<TABLE> <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 DECEMBER 3,
1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-03-1995
<PERIOD-END> DEC-03-1994
<CASH> 5,060
<SECURITIES> 0
<RECEIVABLES> 23,547
<ALLOWANCES> 2,641
<INVENTORY> 13,833
<CURRENT-ASSETS> 85,490
<PP&E> 543,027
<DEPRECIATION> 244,181
<TOTAL-ASSETS> 432,967
<CURRENT-LIABILITIES> 156,522
<BONDS> 1,465
<COMMON> 436
0
0
<OTHER-SE> 215,682
<TOTAL-LIABILITY-AND-EQUITY> 432,967
<SALES> 492,949
<TOTAL-REVENUES> 493,773
<CGS> 142,507
<TOTAL-COSTS> 420,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (351)
<INCOME-PRETAX> 63,816
<INCOME-TAX> 27,175
<INCOME-CONTINUING> 36,641
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,641
<EPS-PRIMARY> $1.01
<EPS-DILUTED> $1.01
</TABLE>
