UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 6, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-12454
RUBY TUESDAY, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 63-0475239
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 West Church Avenue Maryville, TN 37801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423)379-5700
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
$0.01 par value Common Stock New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.[X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing sale price of Common Stock on
August 12, 1998 as reported on the New York Stock Exchange, was
approximately $498,771,209.
The number of shares of the Registrant's common stock outstanding at
August 12, 1998 was 32,828,029.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended June 6, 1998 are incorporated by reference into Parts I and
II.
Portions of the Registrant's definitive proxy statement dated August 28,
1998 are incorporated by reference into Part III.
INDEX
PART I
Page
Number
Item 1. Business 4 -10
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of
Security Holders 11
Executive Officers of the Company 12-13
PART II
Item 5. Market for the Registrant's Common Equity and
Related Shareholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
Item 7A. Quantitative and Qualitative Disclosure About
Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14
PART III
Item 10. Directors and Executive Officers of the
Registrant 14-15
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial
Owners and Management 15
Item 13. Certain Relationships and Related Transactions 15
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 16-22
PART I
Item 1. Business.
General
Prior to March 9, 1996, Ruby Tuesday, Inc. (the "Company") was known as
Morrison Restaurants Inc. ("Morrison"). Morrison operated three
businesses in the foodservice industry. These businesses were organized
into two operating groups, the Ruby Tuesday Group, consisting of the
Company's casual dining concepts, and the Morrison Group which was
comprised of Morrison's family dining restaurant and health care food and
nutrition services businesses.
On March 7, 1996, the shareholders of Morrison approved the distribution
(the "Distribution") of its family dining restaurant business (then known
as Morrison Fresh Cooking, Inc.) and its health care food and nutrition
services business (Morrison Health Care, Inc.) to its shareholders in a
spin-off transaction effective March 9, 1996. In conjunction with the
Distribution, the Company reincorporated in the state of Georgia,
effected a one-for-two reverse stock split of its common stock and
changed its name to Ruby Tuesday, Inc. On May 8, 1998, the Company
effected a two-for-one stock split in the form of a stock dividend paid
to shareholders of record on April 17, 1998.
The first Ruby Tuesday restaurant was opened in 1972 in Knoxville,
Tennessee near the campus of the University of Tennessee. The Ruby
Tuesday concept, with 16 operational units, was acquired by Morrison in
1982. During the following years, Morrison added other casual dining
concepts, including the internally-developed Mozzarella's American Cafe
(formerly "Silver Spoon"). In January 1995, Morrison completed the
acquisition of Tias, Inc., a chain of Tex-Mex restaurants, which allowed
it to enter into one of the fastest growing segments of the casual dining
market. The Company moved into franchising in 1997 with the opening of
one domestic franchised Ruby Tuesday restaurant and two international
franchised Ruby Tuesday restaurants.
During fiscal 1998, the Company moved its executive and certain other
administrative support departments to a new Restaurant Support Services
Center in Maryville, Tennessee. Also in fiscal 1998, agreements for the
franchise development of new Ruby Tuesday restaurants were signed with
nine casual-dining operators who became domestic franchise partners. In
conjunction with the signing of these agreements, the Company sold 46
units in its non-priority growth markets to the franchise partners.
The information presented below relates to the business of the Company
following the Distribution unless the context indicates otherwise.
Operations
The Company owns and operates three separate and distinct casual dining
concepts comprised of Ruby Tuesday, Mozzarella's American Cafe and Tia's
Tex-Mex restaurants. The Company also offers franchises for the Ruby
Tuesday concept in domestic and international markets. As of June 6,
1998, the Company owned and operated 382 casual dining restaurants in 32
states. Also, as of fiscal year end, there were 49 domestic and six
international Ruby Tuesday franchised units.
Ruby Tuesday
Ruby Tuesday restaurants are casual, full-service restaurants with
mahogany woods and whimsical artifacts, classic brass and Tiffany lamps
which create a comfortable, nostalgic look and feel. As part of a
continuing focus on making Ruby Tuesday feel even more fun and a little
more casual, black and white checked table cloths accent the tables,
servers dress in red polo shirts, black pants, and short black aprons,
and lighter, brighter wall colors are used. Ruby Tuesday's menu is based
on variety, with something for just about everyone. Some of Ruby
Tuesday's most popular entree items which are prepared fresh daily are:
fajitas, baby-back ribs, chicken entrees, pasta entrees, soups,
sandwiches, salad bar, and signature Tallcake desserts in strawberry
and chocolate-Oreo varieties. Entree selections range in price from $4.99
to $14.99.
At June 6, 1998, the Company owned and operated 315 Ruby Tuesday units
concentrated primarily in the Southeast, Northeast, Mid-Atlantic and
Midwest regions. Ruby Tuesday is the Company's primary growth vehicle.
The Company intends to open approximately 43 additional Company owned
units in fiscal 1999 with the majority of new units expected to be opened
in existing markets. The concept's current development plans call for a
continued shift towards freestanding units versus mall-based with
approximately 95% of new units scheduled to be freestanding. Existing
prototypes range in size from 4,500 to 5,500 square feet with seating for
170 to 212 guests. Located on smaller, and therefore less expensive,
parcels of land, the Company's new 5,000 square-foot, 206-seat units are
more efficient and cost less to build. The new units are being operated
by Managing Partners who have a financial stake in the success of their
restaurants and generate average-unit volume that exceeds the system
average. Because they cost less to open but are able to generate sales
at the same or greater level than larger units, the Company believes its
new units provide the opportunity for improved unit-level returns on
investment. Other than population and traffic volume, site criteria
requirements for new units include annual household incomes ranging from
$30,000 to $50,000 and good accessibility and visibility of the location.
Mozzarella's American Cafe
Mozzarella's American Cafe is a Company-developed, full-service
restaurant with a menu that features a variety of pastas and thin-crust
gourmet pizzas, along with made-from-scratch soups, entree salads and
sandwiches, fresh seafood selections, prime steak and grilled chicken all
prepared with signature recipes. Entree selections range in price from
$5.49 to $13.99.
Mozzarella's American Cafe's decor is upbeat and colorful with polished
wood trim and paneling, European poster art, strings of overhead lights
and tile floors. Displays of olive oil, tomatoes, pasta and other food
products contribute to the appeal of the restaurant. Servers approach
the guests dressed in white button-down shirts and black trousers
accented with a colorful tie.
Mozzarella's American Cafe restaurants are primarily located in the
Southeast and Mid-Atlantic regions. At June 6, 1998, the Company
operated 46 Mozzarella's American Cafe units. In an effort to
concentrate on improving the operational efficiency and effectiveness of
existing units, the Company does not currently intend to open any new
Mozzarella's American Cafe units in fiscal 1999.
Tia's Tex-Mex
Tia's, the Company's newest concept, is a full-service, casual dining
restaurant. The decor is reminiscent of an authentic Mexican restaurant
with chandeliers replicating those of an old Mexican hotel and colors,
textures and artifacts that reflect the restaurants' genuine Southwestern
heritage. Tortillas are made by hand in a display station which
contributes to Tia's unique atmosphere.
Tia's menu items, which are all fresh and made from scratch, include an
array of traditional Tex-Mex favorites such as: fajitas, enchiladas,
tacos, nachos and quesadillas and a selection of unique grilled and
sauteed dishes. The menu also provides the guest with a variety of
appetizers and desserts. Entree items range in price from $4.99 to
$17.49. Chips are cooked fresh throughout the day and served with just-
made salsa to every guest. Each guest is greeted by a casually dressed
server wearing a red polo shirt, blue jeans and a short black apron.
The Company had 21 Tia's operational at the end of fiscal 1998 and plans
to open two units in fiscal 1999. New and existing units will be and are
located in the Southwest, Southeast and Mid-Atlantic regions. New units
will have approximately 4,800 square feet with seating capacity for 168
visitors. New Tia's restaurants are considered in areas with annual
household incomes greater than $40,000, with sites which are visible,
accessible and meet certain population and traffic criteria.
Franchising
The franchise program, which the Company began in fiscal 1997, allows the
Company to become a financial partner with some of the best domestic and
international restaurant operators from the casual dining industry.
Franchising efforts are concentrated outside the Company's priority-
growth markets. Pursuant to the franchise agreements, the Company
receives development and operating fees from the franchise partners for
the right to develop and operate Ruby Tuesday restaurants in their
respective areas over the next several years. The Company also receives
royalty fees from the franchisees based on a percentage of each
restaurant's sales as well as support service revenues from a variety of
services including the maintenance of franchisees' accounting records.
In order to assist the franchise partners in obtaining capital needed for
new unit development, the Company has established a $52.5 million line of
credit agreement with several banks. The Company is a partial guarantor
of this credit facility.
During 1998, the Company sold 46 Ruby Tuesday units to several domestic
franchisees to bring the total of domestic franchised units to 49 with
ten domestic franchise partners as of June 6, 1998. The 49 units are
located in the following states: Arizona (7), Colorado (10), Florida (29)
and Kentucky (3). Also, during May and June 1998, the Company entered
into a series of agreements with three franchise partners which provide
for the sale of a total of 13 units outside the Company's core growth
market.
The Company also continued its international franchise development by
opening four international franchise units during the year. At present,
the Company has six international franchised units located in Hong Kong
and Taiwan with its international franchisee Jardine Pacific Restaurants
Group Limited ("Jardine Pacific") with whom, the Company has a
development agreement (the "Agreement"), entered into in 1995, to open
Ruby Tuesday restaurants in the Asia-Pacific region. Under the terms of
the Agreement, the Company is to receive a licensing fee on the first
seven Ruby Tuesday restaurants opened by Jardine Pacific in the Asia-
Pacific region and royalties from all units derived, as applicable, from
sales or profits as defined in the Agreement. The Company does not expect
the Agreement to have a material effect on future operations, nor is it
currently engaged in material operations in foreign countries.
All Company-owned operations are located within the United States;
however, in conjunction with the franchise program discussed above, the
Company established a new International Division in 1997. The
International Division intends to develop relationships with large
companies around the world for global franchise expansion of the Ruby
Tuesday brand.
Training
In conjunction with the relocation of its executive and certain other
administrative support departments to Maryville, Tennessee, the Company
established a centralized training center, called "WOW-U", which includes
classrooms and a test kitchen in the new Restaurant Support Services
Center and sleeping quarters and relaxed meeting areas in renovated and
newly constructed buildings on a wooded campus just minutes away from the
Restaurant Support Services Center. The WOW-U facilities serve as the
training and development centers for managers from all the Company's
concepts and for the franchisees. WOW-U programs are designed to
contribute to the skill and enhance the dedication of the Company's teams
and to strengthen its corporate culture. Participants are provided with
classroom instruction and compete in various competitions to learn the
benefit of team unity.
Research and Development
The Company does not engage in any material research and development
activities. The Company, however, engages in on-going studies in
connection with the development of menu items for all of its restaurant
concepts. Additionally, it conducts consumer research to determine guest
preferences, trends, and opinions.
Raw Materials
Raw materials essential to the operation of the Company's business are
obtained through MRT Purchasing, LLC ("MRT"). MRT was organized to serve
as a purchasing cooperative to allow the Company, Morrison Health Care,
Inc. and Morrison Fresh Cooking, Inc. to pool their collective purchasing
power and to coordinate the purchase of certain food, equipment and
services. The Company is obligated to purchase all core products through
MRT arrangements; non-core products may be purchased independently. The
Company is committed to this purchasing arrangement for an initial term
of five years from March 9, 1996, the effective date of the Distribution,
and the agreement will automatically renew for additional five-year
terms. The Company may terminate its participation in these purchasing
arrangements upon six months prior written notice, provided it continues
to honor its purchase commitments under any then existing contracts to
which MRT is a party that extend beyond the termination date.
Raw materials are purchased by MRT principally from U.S. Foodservice,
Inc. under a cost-plus arrangement. Purchases are made in accordance
with a Contract Supplies Agreement entered into on March 16, 1998.
Purchasing obligations have been allocated to the three member companies
based on past practice. Due to its acquisition by Picadilly, Inc.,
effective October 1, 1998, MRT will no longer negotiate purchase
contracts for Morrison Fresh Cooking, Inc. If U.S. Foodservice, Inc. is
unable to meet the Company's supply needs, the Company negotiates
directly with primary suppliers to obtain competitive prices. The
Company uses purchase commitment contracts to stabilize the potentially
volatile pricing associated with certain commodities. Because of the
relatively short storage life of inventories, limited storage facilities
at the restaurants themselves, the Company's requirement for freshness
and the numerous sources of goods, a minimum amount of inventory is
maintained at the units. If necessary, all essential food, beverage and
operational products are available and can be obtained from alternative
suppliers in all cities in which the Company operates.
Trademarks of the Company
The Company has registered certain trademarks and service marks, with the
United States Patent and Trademark Office, including Ruby Tuesday,
Mozzarella's American Cafe, and Tia's. The Company believes that these
and other related marks are of material importance to the Company's
business. Registrations of the trademarks listed above expire from 2004
to 2005, unless renewed.
Seasonality
The Company's business is moderately seasonal. Average restaurant sales
of the Company are slightly higher during the winter months than during
the summer months as the Company, although shifting towards more
freestanding units, is currently concentrated in mall-based units which
generally peak during the holiday season. Freestanding restaurant sales
are higher in the summer months.
Customer Dependence
No material part of the business of the Company is dependent upon a
single customer, or very few customers, the loss of any one of which
would have a material adverse effect on the Company.
Competition
The Company's activities in the restaurant industry are subject to
vigorous competition relating to restaurant location and service, as well
as quality, variety and value perception of the food products offered.
The Company is in competition with other food service operations, with
locally-owned operations, as well as national and regional chains that
offer the same type of services and products as the Company.
Government Compliance
The Company is subject to various licensing requirements and regulations
at both the state and local levels for items such as zoning, land use,
sanitation, alcoholic beverage control, and health and fire safety, all
of which could delay the opening of a new restaurant or the operation of
an existing unit. The Company's business is subject to various other
regulations at the federal level such as health care, minimum wage, and
fair labor standards. Compliance with these regulations has not had, and
is not expected to have, a material adverse effect on the Company's
operations.
There is no material portion of the Company's business that is subject to
renegotiation of profits or termination of contracts or sub-contracts at
the election of the Government.
Environmental Compliance
Compliance with federal, state and local laws and regulations which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment,
is not expected to have a material effect upon the capital expenditures,
earnings or competitive position of the Company.
Personnel
The Company employs approximately 7,700 full-time and 16,500 part-time
employees. The Company believes working conditions are favorable and
employee compensation is comparable with its competition. None of the
Company's employees are covered by a collective bargaining agreement.
Item 2. Properties.
Information regarding the locations of the Company's Ruby Tuesday,
Mozzarella's American Cafe and Tia's Tex-Mex operations is shown in the
list below. Of the 382 Company-owned and operated restaurants as of June
6, 1998, the Company owned the buildings and held long-term land leases
for 92 restaurants, owned the land and held building leases for eight
restaurants, owned the land and buildings for 54 restaurants, and held
leases covering land and buildings for 228 restaurants. During fiscal
1998, the Company opened a new Restaurant Support Services Center in
Maryville, Tennessee. The new facility is covered under a lease
agreement with an initial term of five years with two five-year renewal
options. Executive and certain other administrative personnel of the
Company are located in the Maryville Support Sevices Center. The Company
also has a Restaurant Support Services Center facility located in Mobile,
Alabama, which is leased under a long-term lease agreement.
Additional information concerning the properties of the Company and its
leasing arrangements is incorporated herein by reference to Note 6 of the
Notes to Consolidated Financial Statements included in the Annual Report
to Shareholders for the fiscal year ended June 6, 1998.
As of June 6, 1998, the Company operated 382 restaurants, including 315
Ruby Tuesday, 46 Mozzarella's American Cafe and 21 Tia's Tex-Mex
restaurants in the following locations:
Alabama (27) Louisiana (4) New York (24)
Arkansas (3) Maine (1) North Carolina (8)
Connecticut (10) Maryland (19) Ohio (16)
Delaware (4) Massachusetts (6) Oklahoma (1)
Florida (28) Michigan (17) Pennsylvania (20)
Georgia (38) Minnesota (3) Rhode Island (1)
Illinois (11) Mississippi (5) South Carolina (9)
Indiana (8) Missouri (11) Tennessee (31)
Iowa (1) Nebraska (2) Texas (18)
Kansas (2) New Hampshire (1) Virginia (39)
Kentucky (2) New Jersey (12)
Item 3. Legal Proceedings.
The Company is currently, and from time to time, subject to pending
claims and lawsuits arising in the ordinary course of its business. In
addition, the Company, as successor to Morrison Restaurants Inc.
("Morrison"), is a party to a case (Morrison Restaurants Inc. v. United
States of America, et al.), originally filed by Morrison in 1994 to claim
a refund of taxes paid in the amount of approximately $3,000 and
abatement of taxes assessed by the Internal Revenue Service ("IRS")
against Morrison on account of the employer's share of FICA taxes on
unreported tips allegedly received by employees. The IRS filed a
counterclaim for approximately $7,000 in additional taxes. The case was
decided by the U.S. District Court in favor of the Company in February
1996 on summary judgment. The IRS appealed the District Court's decision
and, on August 12, 1997, the U.S. Court of Appeals for the Eleventh
Circuit reversed the award of summary judgment and remanded the case to
the District Court for proceedings consistent with the Court's opinion.
In its reversal, the Eleventh Circuit upheld the IRS' enforcement policy
with respect to the employer's share of FICA taxes on allegedly
unreported tips. The Company subsequently petitioned the U.S. Court of
Appeals for a review of the matter by the full Court. Such petition was
denied. There are five additional lawsuits on this issue filed by other
restaurant companies pending in other U.S. federal courts. Although the
amount in dispute is not material, it is possible that the IRS will
attempt to assess taxes in additional units of the Company (as well as
other restaurant companies). In such event, the Company believes that a
business tax credit would be available to the Company to offset, over a
period of years, a majority of any additional taxes determined to be due.
Moreover, the Company is a participant in an IRS enforcement program
which would eliminate the risk of additional assessments by the IRS in
return for a restaurant employer's proactive role in encouraging employee
tip reporting. In light of the proactive role of the Company, the
protection against additional assessment afforded by the agreement should
be available to the Company. In the opinion of management, the ultimate
resolution of all pending legal proceedings will not have a material
adverse effect on the Company's operations or financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Company.
Executive officers of the Company are appointed by and serve at the
discretion of the Company's Board of Directors. Information regarding the
Company's executive officers as of August 12, 1998 is provided below.
Executive
Officer
Name Age Position with the Company Since
S. E. Beall, III 48 Chairman of the Board and 1982
Chief Executive Officer
R. D. McClenagan 50 President- Ruby Tuesday 1985
Division
J. R. Mothershed 50 Senior Vice President and 1992
Chief Financial Officer,
Treasurer and Assistant
Secretary
S. L. Turner 45 Senior Vice President, 1997
Human Resources
D. T. Cronk 45 Senior Vice President, 1997
General Counsel and
Secretary
Mr. Beall has been Chairman of the Board and Chief Executive Officer
of the Company and prior to the Distribution, Morrison, since May 5,
1995. Mr. Beall served as President and Chief Executive Officer of
Morrison from June 6, 1992 to May 4, 1995 and as President and Chief
Operating Officer of Morrison from September 1986 to June 1992.
Mr. McClenagan has been President of the Ruby Tuesday Division of the
Company and prior to the Distribution, Morrison, since March 1994. He
served as President of the Ruby Tuesday Group of Morrison from April
1990 to March 1994 and as Senior Vice President of the Specialty
Restaurant Division of Morrison from March 1985 to April 1990.
Mr. Mothershed joined Morrison in July 1972 and was named Senior Vice
President, Finance in March 1994. Mr. Mothershed has been Senior
Vice President of the Company since the Distribution and in June 1996
was also named Chief Financial Officer of the Company. He served as
Vice President, Controller and Treasurer of Morrison from March 1989
until March 1994.
Ms. Turner joined Ruby Tuesday in September 1997 and has served as
Senior Vice President-Human Resources since that time. Prior to
joining the Company, Ms. Turner served as Senior Vice President-Human
Resources of Hasbro, Inc. from 1993 to 1998.
Mr. Cronk joined Ruby Tuesday as Senior Vice President-Legal in July
1997 and was named Senior Vice President, General Counsel and
Secretary of the Company in April 1998. Prior to joining the
Company, Mr. Cronk was Vice President-Worldwide Development, Friday's
Hospitality Worldwide, Inc. from November 1995 to July 1997 and Vice
President and General Counsel, Friday's Hospitality Worldwide, Inc.
from January 1991 to November 1995.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters.
Certain information required by this item is incorporated herein by
reference to Note 12 of the Notes to Consolidated Financial Statements of
the Registrant's Annual Report to Shareholders for the fiscal year ended
June 6, 1998.
During fiscal 1997, the Board of Directors approved a dividend policy as
a means of returning excess capital to its shareholders. This policy
calls for payment of semi-annual dividends of $.045 per share. The
payment of a dividend in any particular future period and the actual
amount thereof remain, however, at the discretion of the Board of
Directors and no assurance can be given that dividends will be paid in
the future as currently anticipated. The Company declared and paid its
first semi-annual dividend since the Distribution during the third
quarter of fiscal 1998. On June 30, 1998, the Company's Board of
Directors declared a semi-annual dividend of $.045 per share payable on
July 31, 1998 to shareholders of record as of record on July 10, 1998.
Under various financing agreements, the Company has agreed to restrict
dividend payments (other than stock dividends) and purchases of its
capital stock (collectively, "Restricted Payments") to amounts based on
earnings after fiscal year 1996. Specifically, the maximum amount
available for Restricted Payments at any time is the excess of
shareholders' equity above $180 million plus 100% of any equity or
subordinate debt offerings. At June 6, 1998, the maximum amount of
permissible Restricted Payments was $32.1 million.
Item 6. Selected Financial Data.
The information contained under the caption "Summary of Operations" of
the Registrant's Annual Report to Shareholders for the fiscal year ended
June 6, 1998 is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information contained under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of the
Registrant's Annual Report to Shareholders for the fiscal year ended June
6, 1998 is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
The following consolidated financial statements and the related report of
the Company's independent auditors contained in the Registrant's Annual
Report to Shareholders for the fiscal year ended June 6, 1998 are
incorporated herein by reference:
Consolidated Statements of Income - Fiscal years ended
June 6, 1998, May 31, 1997 and June 1, 1996.
Consolidated Balance Sheets - As of June 6, 1998 and May 31, 1997.
Consolidated Statements of Shareholders' Equity - Fiscal
years ended June 6, 1998, May 31, 1997 and June 1, 1996.
Consolidated Statements of Cash Flows - Fiscal years ended
June 6, 1998, May 31, 1997 and June 1, 1996.
Notes to Consolidated Financial Statements.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Company.
(a) The information regarding directors of the Company is incorporated
herein by reference to the information set forth in the table captioned
"Director and Director Nominee Information" under "Election of Directors"
in the definitive proxy statement of the Registrant dated August 28, 1998
relating to the Registrant's annual meeting of shareholders to be held on
October 5, 1998.
(b) Pursuant to Form 10-K General Instruction G(3), the information
regarding executive officers of the Company has been included in Part I
of this Report under the caption "Executive Officers of the Company".
Item 11. Executive Compensation.
The information required by this Item 11 is incorporated herein by
reference to the information set forth under the captions "Executive
Compensation" and "Directors' Fees and Attendance" in the definitive
proxy statement of the Registrant dated August 28, 1998 relating to the
Registrant's annual meeting of shareholders to be held on October 5,
1998.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this Item 12 is incorporated herein by
reference to the information set forth in the table captioned "Beneficial
Ownership of Common Stock" under "Election of Directors" in the
definitive proxy statement of the Registrant dated August 28, 1998
relating to the Registrant's annual meeting of shareholders to be held on
October 5, 1998.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item 13 is incorporated herein by
reference to the information set forth under the caption "Certain
Transactions" in the definitive proxy statement of the Registrant dated
August 28, 1998 relating to the Registrant's annual meeting of
shareholders to be held on October 5, 1998.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are incorporated by reference into
or are filed as a part of this report:
1. Financial Statements:
The following consolidated financial statements and the
independent auditors' report thereon, included in the
Registrant's Annual Report to Shareholders for the fiscal
year ended June 6, 1998, a copy of which is contained in
the exhibits to this report, are incorporated herein by
reference:
Page Reference
in paper version
of Annual Report
to Shareholders
Consolidated Statements of Income for
the fiscal years ended June 6, 1998,
May 31, 1997 and June 1, 1996 18
Consolidated Balance Sheets as of
June 6, 1998 and May 31, 1997 19
Consolidated Statements of Shareholders'
Equity for the fiscal years ended
June 6, 1998, May 31, 1997 and
June 1, 1996 20
Consolidated Statements of Cash Flows
for the fiscal years ended June 6, 1998,
May 31, 1997 and June 1, 1996 21
Notes to Consolidated Financial Statements 22-34
Report of Independent Auditors 35
2. Financial Statement Schedules:
Financial statement schedules are omitted because they are either
not required or the required information is shown in the financial
statements or notes thereto.
3. Exhibits
The following exhibits are filed as part of this report:
RUBY TUESDAY, INC. AND SUBSIDIARIES
LIST OF EXHIBITS
Exhibit
Number Description
3.1 Articles of Incorporation and all mergers of Ruby Tuesday,
Inc. (1)
3.2 Bylaws, as amended, of Ruby Tuesday, Inc.
4.1 Specimen Common Stock Certificate. (1)
4.2 Articles of Incorporation and all mergers of Ruby Tuesday,
Inc. (filed as Exhibit 3.1 hereto). (1)
4.3 Bylaws, as amended, of Ruby Tuesday, Inc. (filed as Exhibit
3.2 hereto).
10.1 Executive Supplemental Pension Plan together with First
Amendment made June 30, 1994 and Second Amendment made July
31, 1995.* (2)
10.2 Master Agreement dated as of May 30, 1997 among Ruby Tuesday,
Inc., as Lessee and Guarantor, Atlantic Financial Group ,
LTD., as lessor, AmSouth Bank of Alabama, as a Lender,
Barnett Bank of Jacksonville, N.A., as a Lender, First
American National Bank, as a Lender, Wachovia Bank of
Georgia, N.A., as a Lender, Hibernia National Bank, as a
Lender, First Tennessee Bank, as a Lender, and SunTrust Bank,
Atlanta, as Agent and as a Lender; together with the Lease
Agreement dated as of May 31, 1997 between Atlantic Financial
Group, LTD., as lessor and Ruby Tuesday, Inc. as lessee; and
the Loan Agreement dated as of May 31, 1997 among Atlantic
Financial Group, LTD., as lessor and borrower, the financial
institutions party hereto, as lenders, and SunTrust Bank
Atlanta, as Agent. (17)
10.3 Morrison Restaurants Inc. Stock Incentive and Deferred
Compensation Plan for Directors together with First Amendment
dated June 29, 1995.*(3)
10.4 1993 Executive Stock Option Program.* (4)
10.5 1993 Management Stock Option Program (July 1, 1993 - June 30,
1996).* (5)
10.6 [Reserved]
10.7 Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified
Stock Option Plan, and Related Agreement.* (6)
10.8 Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive
Plan.* (7)
10.9 Morrison Restaurants Inc. Deferred Compensation Plan, as
restated effective January 1, 1994, together with amended and
restated Trust Agreement (dated December 1, 1992) to Deferred
Compensation Plan.* (8)
10.10 Supply Agreement Between Morrison Restaurants Inc. and
PYA/Monarch, Inc. dated July 8, 1988. (9)
10.11 Letter Agreement dated March 5, 1996 amending Supply Agreement
between Morrison Restaurants Inc. and PYA/Monarch, Inc. (1)
10.12 Morrison Restaurants Inc. Management Retirement Plan together
with First Amendment made June 30, 1994 and Second Amendment
made July 31, 1995.* (10)
10.13 Asset Purchase Agreement dated June 27, 1994, by and among
Morrison Restaurants Inc. and Gardner Merchant Food Services,
Inc. and the related exhibits to such agreement. (11)
10.14 Morrison Restaurants Inc. Salary Deferral Plan, as amended and
restated December 31, 1993, together with First and Second
Amendments to the Plan dated October 21, 1994 and June 30,
1995, respectively.* (12)
10.15 Executive Group Life and Executive Accidental Death and
Dismemberment Plan.* (13)
10.16 Ruby Tuesday, Inc. Salary Deferral Plan Trust Agreement dated
July 1, 1997. (17)
10.17 Ruby Tuesday, Inc. Deferred Compensation Plan Trust Agreement
dated July 1, 1997. (17)
10.18 Form of Non-Qualified Stock Option Agreement for Executive
Officers Pursuant to the Morrison Restaurants Inc. Stock
Incentive Plan.* (14)
10.19 [Reserved]
10.20 [Reserved]
10.21 Amendments to Morrison Restaurants Inc. 1987 Stock Bonus and
Non-Qualified Stock Option Plan.* (15)
10.22 Morrison Restaurants Inc. Executive Life Insurance Plan.* (16)
10.23 Distribution Agreement dated as of March 2, 1996 among Morrison
Restaurants Inc., Morrison Fresh Cooking, Inc. and Morrison
Health Care, Inc. (1)
10.24 Amended and Restated Tax Allocation and Indemnification
Agreement dated as of March 2, 1996 among Morrison
Restaurants Inc., Custom Management Corporation of
Pennsylvania, Custom Management Corporation, John C. Metz &
Associates, Inc., Morrison International, Inc., Morrison
Custom Management Corporation of Pennsylvania, Morrison Fresh
Cooking, Inc., Ruby Tuesday, Inc., a Delaware corporation,
Ruby Tuesday (Georgia), Inc., a Georgia corporation, Tias,
Inc. and Morrison Health Care, Inc. (1)
10.25 Agreement Respecting Employee Benefit Matters dated as of March
2, 1996 among Morrison Restaurants Inc., Morrison Fresh
Cooking, Inc. and Morrison Health Care, Inc. (1)
10.26 License Agreement dated as of March 2, 1996 between Ruby
Tuesday (Georgia), Inc. and Morrison Health Care, Inc. (1)
10.27 Amended and Restated Operating Agreement of MRT Purchasing, LLC
dated as of March 2, 1996 among Morrison Restaurants Inc.,
Ruby Tuesday, Inc., Morrison Fresh Cooking, Inc. and Morrison
Health Care, Inc. (1)
10.28 Form of 1996 Stock Incentive Plan.* (1)
10.29 Form of Second Amendment to Stock Incentive and Deferred
Compensation Plan for Directors.* (1)
10.30 Form of First Amendment to 1993 Non-Executive Stock Incentive
Plan.* (1)
10.31 Form of Third Amendment to Executive Supplemental Pension
Plan.* (1)
10.32 Form of Third Amendment to Management Retirement Plan.* (1)
10.33 Form of Third Amendment to Salary Deferral Plan.* (1)
10.34 Form of First Amendment to Deferred Compensation Plan.* (1)
10.35 Form of Second Amendment to Retirement Plan.* (1)
10.36 Form of Fourth Amendment to 1987 Stock Bonus and Non-Qualified
Stock Option Plan.* (1)
10.37 [Reserved]
10.38 Form of Indemnification Agreement to be entered into with
executive officers and directors. (1)
10.39 Form of Change of Control Agreement to be entered into with
executive officers.* (1)
10.40 Credit Agreement dated as of March 6, 1996 among Ruby Tuesday
(Georgia), Inc., SunTrust Bank, Atlanta, for itself and as
Agent and Administrative Agent, and the other lenders
signatories thereto. (1)
10.41 Purchase agreement dated July 2, 1997 between Ruby Tuesday,
Inc., a Georgia corporation, and RT Orlando Franchise, L.P.,
d/b/a RT Orlando Franchise Ltd., a Delaware limited
partnership. (17)
10.42 Purchase agreement dated July 2, 1997 between Ruby Tuesday,
Inc., a Georgia corporation, and RT Tampa Franchise, L.P.,
d/b/a RT Tampa Franchise Ltd., a Delaware limited
partnership. (17)
10.43 Purchase agreement dated July 2, 1997 between Ruby Tuesday,
Inc., a Georgia corporation, and RT South Florida Franchise,
L.P., d/b/a RT South Florida Franchise Ltd., a Delaware
limited partnership. (17)
10.44 Loan Facility Agreement and Guaranty dated May 30, 1997 by
and among Ruby Tuesday, Inc., Suntrust Bank, Atlanta, and the
other lender signatories thereto. (18)
10.45 Form of first amendment to Ruby Tuesday, Inc. Deferred
Compensation Plan Trust Agreement.*
10.46 Form of first amendment to Credit Agreement.
10.47 Form of second amendment to Credit Agreement.
10.48 Form of first amendment to Master Agreement.
10.49 Form of first amendment to Loan Facility Agreement and
Guarantee.
10.50 Form of second amendment to Loan Facility Agreement and
Guarantee.
10.51 Form of third amendment to Loan Facility Agreement and
Guarantee.
10.52 Lease agreement dated October 1, 1997 between Riverfront
Capital Business Trust, a Pennsylvania business trust and
Ruby Tuesday, Inc., a Georgia corporation.
10.53 Amended and restated Contribution Agreement dated January 12,
1998, and entered into as of March 20, 1998 between Ruby
Tuesday, Inc., a Georgia corporation, RT Colorado, Inc., a
Colorado corporation and RT Denver Franchise, L.P., a
Delaware limited partner.
10.54 Stock purchase agreement dated January 12, 1998 between Ruby
Tuesday, Inc., a Georgia corporation, Timothy P. Kaliher, RT
Colorado, Inc., a Colorado corporation, and RT Denver
Franchise, L.P., a Delaware limited partnership.
10.55 Purchase agreement dated December 16, 1997 between Ruby
Tuesday, Inc., a Georgia corporation, and RT Southwest
Franchise, LLC, a Delaware limited liability company.
10.56 Purchase agreement dated June 25, 1998 between Ruby Tuesday,
Inc., a Georgia corporation, and RT Long Island Franchise,
LLC, a Delaware limited liability company.
10.57 Purchase agreement dated May 7, 1998 between Ruby Tuesday,
Inc., a Georgia corporation, and RT West Palm Beach
Franchise, L.P., a Delaware limited partnership.
11 Statement regarding computation of per share earnings.
13 Annual Report to Shareholders for the fiscal year ended June
6, 1998 (Only portions specifically incorporated by reference
in the Form 10-K are being filed herewith).
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule as of and for the Six Month
Period Ended November 29, 1997.
27.3 Restated Financial Data Schedule as of and for the Three
Month Period Ended August 30, 1997.
27.4 Restated Financial Data Schedule as of and for the Year Ended
May 31, 1997.
27.5 Restated Financial Data Schedule as of and for the Six Month
Period Ended November 30, 1996.
27.6 Restated Financial Data Schedule as of and for the Three
Month Period Ended August 31, 1996.
27.7 Restated Financial Data Schedule as of and for the Year Ended
June 1, 1996.
Footnote Description
* Management contract or compensatory plan or arrangement.
(1) Incorporated by reference to Exhibit of the same number on
Form 8-B dated March 15, 1996 of Ruby Tuesday, Inc. (File No.
0-12454).
(2) Incorporated by reference to Exhibit 10(b) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(3) Incorporated by reference to Exhibit 10(c) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(4) Incorporated by reference to Exhibit 10(d) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(5) Incorporated by reference to Exhibit 10(e) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(6) Incorporated by reference to Exhibit 28.1 to Registration
Statement on Form S-8 of Morrison Restaurants Inc. (Reg. No.
33-13593).
(7) Incorporated by reference to Exhibit 10(h) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(8) Incorporated by reference to Exhibit 10(i) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(9) Incorporated by reference to Exhibit 10(m) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended May 28, 1988 (File No. 0-1750).
(10) Incorporated by reference to Exhibit 10(n) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(11) Incorporated by reference to Exhibit (2) to the Current
Report on Form 8-K dated July 27, 1995 of Morrison
Restaurants Inc. (File No. 1-12454)
(12) Incorporated by reference to Exhibit 10(p) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(13) Incorporated by reference to Exhibit 10(q) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1989 (File No. 0-1750).
(14) Incorporated by reference to Exhibit 10(v) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(15) Incorporated by reference to Exhibit 10(z) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 4, 1994 (File No. 1-12454).
(16) Incorporated by reference to Exhibit 10(a)(a) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 4, 1994 (File No. 1-12454).
(17) Incorporated by reference to Exhibit of the same number on Form
10-K for Ruby Tuesday, Inc. for the fiscal year ended May 31,
1997 (File No. 0-12454).
(18) Incorporated by reference to Exhibit 99.1 on Form 10-Q dated
October 14, 1997 for Ruby Tuesday, Inc. for the three month
period ended August 30, 1997 (File No. 0-12454).
(b) Reports on Form 8-K
None.
(c) Exhibits filed with this report are attached hereto.
(d) The financial statement schedules listed in subsection
(a) (2) above are attached hereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
RUBY TUESDAY, INC.
Date 9/3/98 By: /s/ Samuel E. Beall, III
Samuel E. Beall, III
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
Date 9/3/98 By: /s/ Samuel E. Beall, III
Samuel E. Beall, III
Chairman of the Board and
Chief Executive Officer
Date 9/3/98 By: /s/ J. Russell Mothershed
J. Russell Mothershed
Senior Vice President, Finance
Chief Financial Officer
Treasurer and Assistant Secretary
Date 9/3/98 By:/s/J.B. McKinnon
J. B. McKinnon
Director
Date 9/3/98 By: /s/ Dr. Donald Ratajczak
Dr. Donald Ratajczak
Director
Date 9/3/98 By:/s/ Dolph W. von Arx
Dolph W. von Arx
Director
Date 9/3/98 By:/s/ Claire L. Arnold
Claire L. Arnold
Director
Date 9/3/98 By:/s/ Arthur R. Outlaw
Arthur R. Outlaw
Vice-Chairman of the Board
Date 9/3/98 By:/s/ Dr. Benjamin F. Payton
Dr. Benjamin F. Payton
Director
RUBY TUESDAY, INC. AND SUBSIDIARIES
LIST OF EXHIBITS
Exhibit
Number Description
3.1 Articles of Incorporation and all mergers of Ruby Tuesday,
Inc. (1)
3.2 Bylaws, as amended, of Ruby Tuesday, Inc.
4.1 Specimen Common Stock Certificate. (1)
4.2 Articles of Incorporation and all mergers of Ruby Tuesday,
Inc. (filed as Exhibit 3.1 hereto). (1)
4.3 Bylaws, as amended, of Ruby Tuesday, Inc. (filed as Exhibit
3.2 hereto).
10.1 Executive Supplemental Pension Plan together with First
Amendment made June 30, 1994 and Second Amendment made July
31, 1995.* (2)
10.2 Master Agreement dated as of May 30, 1997 among Ruby Tuesday,
Inc., as Lessee and Guarantor, Atlantic Financial Group ,
LTD., as lessor, AmSouth Bank of Alabama, as a Lender,
Barnett Bank of Jacksonville, N.A., as a Lender, First
American National Bank, as a Lender, Wachovia Bank of
Georgia, N.A., as a Lender, Hibernia National Bank, as a
Lender, First Tennessee Bank, as a Lender, and SunTrust Bank,
Atlanta, as Agent and as a Lender; together with the Lease
Agreement dated as of May 31, 1997 between Atlantic Financial
Group, LTD., as lessor and Ruby Tuesday, Inc. as lessee; and
the Loan Agreement dated as of May 31, 1997 among Atlantic
Financial Group, LTD., as lessor and borrower, the financial
institutions party hereto, as lenders, and SunTrust Bank
Atlanta, as Agent. (17)
10.3 Morrison Restaurants Inc. Stock Incentive and Deferred
Compensation Plan for Directors together with First Amendment
dated June 29, 1995.*(3)
10.4 1993 Executive Stock Option Program.* (4)
10.5 1993 Management Stock Option Program (July 1, 1993 - June 30,
1996).* (5)
10.6 [Reserved]
10.7 Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified
Stock Option Plan, and Related Agreement.* (6)
10.8 Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive
Plan.* (7)
10.9 Morrison Restaurants Inc. Deferred Compensation Plan, as
restated effective January 1, 1994, together with amended and
restated Trust Agreement (dated December 1, 1992) to Deferred
Compensation Plan.* (8)
10.10 Supply Agreement Between Morrison Restaurants Inc. and
PYA/Monarch, Inc. dated July 8, 1988. (9)
10.11 Letter Agreement dated March 5, 1996 amending Supply Agreement
between Morrison Restaurants Inc. and PYA/Monarch, Inc. (1)
10.12 Morrison Restaurants Inc. Management Retirement Plan together
with First Amendment made June 30, 1994 and Second Amendment
made July 31, 1995.* (10)
10.13 Asset Purchase Agreement dated June 27, 1994, by and among
Morrison Restaurants Inc. and Gardner Merchant Food Services,
Inc. and the related exhibits to such agreement. (11)
10.14 Morrison Restaurants Inc. Salary Deferral Plan, as amended and
restated December 31, 1993, together with First and Second
Amendments to the Plan dated October 21, 1994 and June 30,
1995, respectively.* (12)
10.15 Executive Group Life and Executive Accidental Death and
Dismemberment Plan.* (13)
10.16 Ruby Tuesday, Inc. Salary Deferral Plan Trust Agreement dated
July 1, 1997. (17)
10.17 Ruby Tuesday, Inc. Deferred Compensation Plan Trust Agreement
dated July 1, 1997. (17)
10.18 Form of Non-Qualified Stock Option Agreement for Executive
Officers Pursuant to the Morrison Restaurants Inc. Stock
Incentive Plan.* (14)
10.19 [Reserved]
10.20 [Reserved]
10.21 Amendments to Morrison Restaurants Inc. 1987 Stock Bonus and
Non-Qualified Stock Option Plan.* (15)
10.22 Morrison Restaurants Inc. Executive Life Insurance Plan.* (16)
10.23 Distribution Agreement dated as of March 2, 1996 among Morrison
Restaurants Inc., Morrison Fresh Cooking, Inc. and Morrison
Health Care, Inc. (1)
10.24 Amended and Restated Tax Allocation and Indemnification
Agreement dated as of March 2, 1996 among Morrison
Restaurants Inc., Custom Management Corporation of
Pennsylvania, Custom Management Corporation, John C. Metz &
Associates, Inc., Morrison International, Inc., Morrison
Custom Management Corporation of Pennsylvania, Morrison Fresh
Cooking, Inc., Ruby Tuesday, Inc., a Delaware corporation,
Ruby Tuesday (Georgia), Inc., a Georgia corporation, Tias,
Inc. and Morrison Health Care, Inc. (1)
10.25 Agreement Respecting Employee Benefit Matters dated as of March
2, 1996 among Morrison Restaurants Inc., Morrison Fresh
Cooking, Inc. and Morrison Health Care, Inc. (1)
10.26 License Agreement dated as of March 2, 1996 between Ruby
Tuesday (Georgia), Inc. and Morrison Health Care, Inc. (1)
10.27 Amended and Restated Operating Agreement of MRT Purchasing, LLC
dated as of March 2, 1996 among Morrison Restaurants Inc.,
Ruby Tuesday, Inc., Morrison Fresh Cooking, Inc. and Morrison
Health Care, Inc. (1)
10.28 Form of 1996 Stock Incentive Plan.* (1)
10.29 Form of Second Amendment to Stock Incentive and Deferred
Compensation Plan for Directors.* (1)
10.30 Form of First Amendment to 1993 Non-Executive Stock Incentive
Plan.* (1)
10.31 Form of Third Amendment to Executive Supplemental Pension
Plan.* (1)
10.32 Form of Third Amendment to Management Retirement Plan.* (1)
10.33 Form of Third Amendment to Salary Deferral Plan.* (1)
10.34 Form of First Amendment to Deferred Compensation Plan.* (1)
10.35 Form of Second Amendment to Retirement Plan.* (1)
10.36 Form of Fourth Amendment to 1987 Stock Bonus and Non-Qualified
Stock Option Plan.* (1)
10.37 [Reserved]
10.38 Form of Indemnification Agreement to be entered into with
executive officers and directors. (1)
10.39 Form of Change of Control Agreement to be entered into with
executive officers.* (1)
10.40 Credit Agreement dated as of March 6, 1996 among Ruby Tuesday
(Georgia), Inc., SunTrust Bank, Atlanta, for itself and as
Agent and Administrative Agent, and the other lenders
signatories thereto. (1)
10.41 Purchase agreement dated July 2, 1997 between Ruby Tuesday,
Inc., a Georgia corporation, and RT Orlando Franchise, L.P.,
d/b/a RT Orlando Franchise Ltd., a Delaware limited
partnership. (17)
10.42 Purchase agreement dated July 2, 1997 between Ruby Tuesday,
Inc., a Georgia corporation, and RT Tampa Franchise, L.P.,
d/b/a RT Tampa Franchise Ltd., a Delaware limited
partnership. (17)
10.43 Purchase agreement dated July 2, 1997 between Ruby Tuesday,
Inc., a Georgia corporation, and RT South Florida Franchise,
L.P., d/b/a RT South Florida Franchise Ltd., a Delaware
limited partnership. (17)
10.44 Loan Facility Agreement and Guaranty dated May 30, 1997 by
and among Ruby Tuesday, Inc., Suntrust Bank, Atlanta, and the
other lender signatories thereto. (18)
10.45 Form of first amendment to Ruby Tuesday, Inc. Deferred
Compensation Plan Trust Agreement.*
10.46 Form of first amendment to Credit Agreement.
10.47 Form of second amendment to Credit Agreement.
10.48 Form of first amendment to Master Agreement.
10.49 Form of first amendment to Loan Facility Agreement and
Guarantee.
10.50 Form of second amendment to Loan Facility Agreement and
Guarantee.
10.51 Form of third amendment to Loan Facility Agreement and
Guarantee.
10.52 Lease agreement dated October 1, 1997 between Riverfront
Capital Business Trust, a Pennsylvania business trust and
Ruby Tuesday, Inc., a Georgia corporation.
10.53 Amended and restated Contribution Agreement dated January 12,
1998, and entered into as of March 20, 1998 between Ruby
Tuesday, Inc., a Georgia corporation, RT Colorado, Inc., a
Colorado corporation and RT Denver Franchise, L.P., a
Delaware limited partner.
10.54 Stock purchase agreement dated January 12, 1998 between Ruby
Tuesday, Inc., a Georgia corporation, Timothy P. Kaliher, RT
Colorado, Inc., a Colorado corporation, and RT Denver
Franchise, L.P., a Delaware limited partnership.
10.55 Purchase agreement dated December 16, 1997 between Ruby
Tuesday, Inc., a Georgia corporation, and RT Southwest
Franchise, LLC, a Delaware limited liability company.
10.56 Purchase agreement dated June 25, 1998 between Ruby Tuesday,
Inc., a Georgia corporation, and RT Long Island Franchise,
LLC, a Delaware limited liability company.
10.57 Purchase agreement dated May 7, 1998 between Ruby Tuesday,
Inc., a Georgia corporation, and RT West Palm Beach
Franchise, L.P., a Delaware limited partnership.
11 Statement regarding computation of per share earnings.
13 Annual Report to Shareholders for the fiscal year ended June
6, 1998 (Only portions specifically incorporated by reference
in the Form 10-K are being filed herewith).
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule as of and for the Six Month
Period Ended November 29, 1997.
27.3 Restated Financial Data Schedule as of and for the Three
Month Period Ended August 30, 1997.
27.4 Restated Financial Data Schedule as of and for the Year Ended
May 31, 1997.
27.5 Restated Financial Data Schedule as of and for the Six Month
Period Ended November 30, 1996.
27.6 Restated Financial Data Schedule as of and for the Three
Month Period Ended August 31, 1996.
27.7 Restated Financial Data Schedule as of and for the Year Ended
June 1, 1996.
Footnote Description
* Management contract or compensatory plan or arrangement.
(1) Incorporated by reference to Exhibit of the same number on
Form 8-B dated March 15, 1996 of Ruby Tuesday, Inc. (File No.
0-12454).
(2) Incorporated by reference to Exhibit 10(b) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(3) Incorporated by reference to Exhibit 10(c) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(4) Incorporated by reference to Exhibit 10(d) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(5) Incorporated by reference to Exhibit 10(e) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(6) Incorporated by reference to Exhibit 28.1 to Registration
Statement on Form S-8 of Morrison Restaurants Inc. (Reg. No.
33-13593).
(7) Incorporated by reference to Exhibit 10(h) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(8) Incorporated by reference to Exhibit 10(i) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(9) Incorporated by reference to Exhibit 10(m) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended May 28, 1988 (File No. 0-1750).
(10) Incorporated by reference to Exhibit 10(n) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(11) Incorporated by reference to Exhibit (2) to the Current
Report on Form 8-K dated July 27, 1995 of Morrison
Restaurants Inc. (File No. 1-12454)
(12) Incorporated by reference to Exhibit 10(p) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1995 (File No. 1-12454).
(13) Incorporated by reference to Exhibit 10(q) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 3, 1989 (File No. 0-1750).
(14) Incorporated by reference to Exhibit 10(v) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 5, 1993 (File No. 0-1750).
(15) Incorporated by reference to Exhibit 10(z) to Annual Report on
Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 4, 1994 (File No. 1-12454).
(16) Incorporated by reference to Exhibit 10(a)(a) to Annual Report
on Form 10-K of Morrison Restaurants Inc. for the fiscal year
ended June 4, 1994 (File No. 1-12454).
(17) Incorporated by reference to Exhibit of the same number on Form
10-K for Ruby Tuesday, Inc. for the fiscal year ended May 31,
1997 (File No. 0-12454).
(18) Incorporated by reference to Exhibit 99.1 on Form 10-Q dated
October 14, 1997 for Ruby Tuesday, Inc. for the three month
period ended August 30, 1997 (File No. 0-12454).
BYLAWS, AS AMENDED
OF
RUBY TUESDAY, INC.
As in effect June 30, 1998
[Revised to reflect (i) the change in name of Ruby Tuesday (Georgia), Inc.
to Ruby Tuesday, Inc. following and as a result of the merger of Ruby
Tuesday, Inc., a Delaware corporation, into Ruby Tuesday (Georgia), Inc.
effective March 9, 1996, (ii) the amendment to Section 7.1, to change the
Company's fiscal year end, approved by the Board of Directors on January
14, 1998, and (iii) the amendment to Section 2.2, to allow Shareholder
meetings to be held in either September or October, approved by the Board
of Directors on June 30, 1998.]
INDEX
Page
ARTICLE I OFFICES 1
ARTICLE II STOCKHOLDERS' MEETINGS 1
2.1 PLACE OF MEETINGS 1
2.2 ANNUAL MEETINGS 1
2.3 SPECIAL MEETINGS 1
2.4 MEETINGS WITHOUT NOTICE 1
2.5 VOTING 1
2.6 QUORUM 2
2.7 LIST OF STOCKHOLDERS 2
2.8 ACTION WITHOUT MEETING 2
ARTICLE III BOARD OF DIRECTORS 3
3.1 POWERS 3
3.2 NUMBER, QUALIFICATION AND TERM 3
3.3 COMPENSATION 3
3.4 MEETINGS AND QUORUM 4
3.5 EXECUTIVE COMMITTEE 4
3.6 OTHER COMMITTEES 4
3.7 CONFERENCE TELEPHONE MEETINGS 5
3.8 ACTION WITHOUT MEETING 5
ARTICLE IV OFFICERS 6
4.1 TITLES AND ELECTION 6
4.2 DUTIES 6
(a) Chairman of the Board of Directors 6
(b) Vice Chairman of the Board of Directors 6
(c) President 7
(d) Vice President 7
(e) Secretary 7
(f) Treasurer 7
4.3 Chief Executive Officer and Chief
Operating Officer 7
4.4 Chief Financial Officer and Chief
Accounting Officer 8
4.5 Delegation of Authority 8
4.6 Compensation 8
ARTICLE V RESIGNATIONS, VACANCIES AND REMOVALS 9
5.1 RESIGNATIONS 9
5.2 VACANCIES 9
(a) Directors 9
(b) Officers 8
5.3 REMOVALS 8
(a) Directors 8
(b) Officers 9
ARTICLE VI CAPITAL STOCK 10
6.1 CERTIFICATES OF STOCK 10
6.2 TRANSFER OF STOCK 10
6.3 STOCK TRANSFER RECORDS 9
6.4 RECORD DATES 9
6.5 LOST CERTIFICATES 11
ARTICLE VII FISCAL YEAR, BANK DEPOSITS, CHECKS, ETC. 11
7.1 FISCAL YEAR 11
7.2 BANK DEPOSITS, CHECKS, ETC 11
ARTICLE VIII BOOKS AND RECORDS 10
8.1 PLACE OF KEEPING BOOKS 10
8.2 EXAMINATION OF BOOKS 10
ARTICLE IX NOTICES 12
9.1 REQUIREMENTS OF NOTICE 12
9.2 WAIVERS 12
ARTICLE X SEAL 11
ARTICLE XI POWERS OF ATTORNEY 11
ARTICLE XII INDEMNIFICATION OF DIRECTORS, OFFICERS,
AND OTHER PERSONS 13
12.1 INDEMNIFIED ACTIONS 13
12.2 INDEMNIFICATION AGAINST 13
12.3 ADVANCES OF EXPENSES 12
12.4 RIGHT OF AGENT TO INDEMNIFICATION UPON
APPLICATION; PROCEDURE UPON APPLICATION 12
12.5 OTHER RIGHTS AND REMEDIES 14
12.6 INSURANCE OF AGENTS 14
12.7 CERTAIN DEFINITIONS 14
12.8 INDEMNIFICATION AND INSURANCE OF OTHER
PERSONS 13
12.9 SURVIVAL OF INDEMNIFICATION 13
12.10 SAVINGS CLAUSE 13
ARTICLE XIII AMENDMENTS 15
RUBY TUESDAY, INC.
BYLAWS, AS AMENDED
ARTICLE I
OFFICES
The Corporation shall at all times maintain a registered office in
the State of Georgia and a registered agent at that address but may have
other offices located in or outside of the State of Georgia as the Board
of Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS' MEETINGS
II.1 Place of Meetings. All meetings of stockholders shall be
held at such place or places in or outside of the State of Georgia as the
Board of Directors may from time to time determine or as may be
designated in the notice of meeting or waiver of notice thereof, subject
to any provisions of the laws of the State of Georgia.
II.2 Annual Meetings. The annual meeting of Shareholders shall
be held on such date in the month of September or October each year and
at such time as shall be determined by the Board of Directors from time
to time or with respect to any particular annual meeting for the purpose
of electing directors and transacting such other business as may come
properly before the meeting. Written notice of the date, time and place
of the annual meeting shall be given by mail to each stockholder entitled
to vote at his address as it appears on the records of the Corporation
not less than ten (10) nor more than sixty (60) days prior to the
scheduled date thereof, unless such notice is waived as provided by
Article IX of these Bylaws.
II.3 Special Meetings. A special meeting of stockholders may be
called at any time by the Board of Directors, the Chairman of the Board
of Directors or the President. Written notice of the time, place and
specific purposes of such meeting shall be given by mail to each
stockholder entitled to vote thereat at his address as it appears on the
records of the Corporation not less than ten (10) nor more than sixty
(60) days prior to the scheduled date thereof, unless such notice is
waived as provided in Article IX of these Bylaws.
II.4 Meetings Without Notice. Meetings of the stockholders may
be held at any time without notice when all the stockholders entitled to
vote thereat are present in person or by proxy.
II.5 Voting. At all meetings of stockholders, each stockholder
entitled to vote on the record date as determined under Article VI,
Section 6.4 of these Bylaws, or if not so determined, as prescribed under
the laws of the State of Georgia, shall be entitled to one vote for each
share of common stock, or such other number of votes prescribed in the
Articles of Incorporation for each share of stock other than common
stock, standing of record in his name, subject to any restrictions or
qualifications set forth in the Articles of Incorporation, and may vote
either in person or by proxy.
II.6 Quorum. At any meeting of stockholders, a majority of the
number of shares of stock outstanding and entitled to vote thereat,
present in person or by proxy, shall constitute a quorum, but a smaller
interest may adjourn any meeting from time to time, and the meeting may
be held as adjourned without further notice, subject to such limitation
as may be imposed under the laws of the State of Georgia. At any such
adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the originally scheduled
meeting.
When a quorum is present at any meeting, a majority of the number of
shares of stock entitled to vote present thereat shall decide any question
brought before such meeting, unless the question is one upon which a
different vote is required by express provision of the laws of the State
of Georgia, or the Articles of Incorporation or these Bylaws, in which
case such express provision shall govern.
II.7 List of Stockholders. At least one (1) day before every
meeting, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of and
the number of shares registered in the name of each stockholder, shall be
prepared by the Secretary or the transfer agent in charge of the stock
ledger of the Corporation. Such list shall be open for examination by
any stockholder at the time and place of the meeting. The stock ledger
shall be the only evidence as to who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or
by proxy at such meeting.
II.8 Action Without Meeting. Any action required by the laws of
the State of Georgia or the Articles of Incorporation to be taken at any
annual or special meeting of stockholders, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by all the
holders of outstanding shares of stock entitled to vote on such action.
ARTICLE III
BOARD OF DIRECTORS
III.1 Powers. The business and affairs of the Corporation shall
be carried on by or under the direction of the Board of Directors, which
shall have all the powers authorized by the laws of the State of Georgia,
subject to such limitations as may be provided by the Articles of
Incorporation or these Bylaws.
III.2 Number, Qualification and Term. The initial number of
directors shall be such as may be determined by the incorporator(s) and
thereafter the number of directors shall be not less than three (3) and
not more than twelve (12), the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution
of a majority of the Board of Directors or by the affirmative vote of the
holders of at least 80% of all outstanding shares of capital stock
entitled to vote in the election of directors, voting together as a
single class, as provided in the Articles of Incorporation.
Directors shall be of full age, and no person shall be nominated for
the Board of Directors who shall have attained the age of seventy (70) on
or before the annual meeting of stockholders at which directors are
elected, provided, however, under special conditions in the best interests
of the Corporation, as determined by the Board of Directors or the
shareholders, a person may be nominated for the Board of Directors who has
attained the age of seventy (70) before such meeting. Directors need not
be residents of the State of Georgia.
The initial Board of Directors shall be elected by the incorporator.
Thereafter, Directors shall be elected at the annual meeting of
stockholders by a plurality of the votes cast at such election. Each
director shall serve until the election and qualification of his successor
or until his earlier death, resignation or removal as provided in the
Articles of Incorporation and these Bylaws. In case of an increase in the
number of directors between elections by the stockholders, the additional
directorships shall be considered vacancies and shall be filled in the
manner prescribed in Article V of these Bylaws.
The Board of Directors may, by majority vote, elect a Chairman of the
Board of Directors. The Chairman shall be a member of the Board and shall
preside at all meetings of the stockholders and of the Board of Directors
and shall have such other powers and perform such other duties as the
Board of Directors may prescribe from time to time.
III.3 Compensation. The Board of Directors, or a committee
thereof, may from time to time by resolution authorize the payment of
fees or other compensation to the directors for services as such to the
Corporation, including, but not limited to, fees for attendance at all
meetings of the Board of Directors or any committee thereof, and
determine the amount of such fees and compensation. Directors shall in
any event be paid their traveling expenses for attendance at all meetings
of the Board of Directors or any committee thereof. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor in
amounts authorized or otherwise approved from time to time by the Board
of Directors or a committee thereof.
III.4 Meetings and Quorum. Meetings of the Board of Directors
may be held either in or outside of the State of Georgia. A quorum shall
be one-third (1/3) of the number of directors then fixed in the manner
provided in Section 3.2 of this Article but not less than two (2)
directors. The act of a majority of the directors present at a meeting
at which there is a quorum shall be the act of the Board of Directors.
If a quorum is not present at any meeting, the Directors who are present
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is obtained, subject to such
limitation as may be imposed under the laws of the State of Georgia.
The Board of Directors shall, at the close of each annual meeting of
stockholders and without further notice other than these Bylaws, if a
quorum of directors is then present or as soon thereafter as may be
convenient, hold a regular meeting for the election of officers and the
transaction of any other business.
The Board of Directors may from time to time provide for the holding
of regular meetings with or without notice and may fix the times and
places at which such meetings are to be held. Meetings other than regular
meetings may be called at any time by the Chairman of the Board of
Directors or the President and must be called by the Chairman of the
Board, the President, the Secretary or an Assistant Secretary upon the
request of at least three (3) directors.
Notice of each meeting, other than a regular meeting (unless required
by the Board of Directors), shall be given to each director by mailing the
same to each director at his residence or business address at least two
(2) days before the meeting or by delivering the same to him personally or
by telephone, facsimile transmission or telegraph at least one (1) day
before the meeting unless, in case of exigency, the Chairman of the Board
of Directors, the President, the Secretary or an Assistant Secretary, as
the case may be, shall prescribe a shorter notice to be given personally
or by telephone, telegraph, cable or facsimile transmission to all or any
one or more of the directors at their respective residences or places of
business. Notice will be deemed to have been given at the time it is
mailed, postage-prepaid, or sent by telegraph, cable or facsimile
transmission, or given by telephone, as the case may be.
Notice of any meeting shall state the time and place of such meeting,
but need not state the purposes thereof unless otherwise required by the
laws of the State of Georgia, the Articles of Incorporation or the Board
of Directors.
III.5 Executive Committee. The Board of Directors, by
resolution adopted by a majority of the number of directors then fixed in
the manner provided in Section 3.2 of this Article, may provide for an
Executive Committee of three (3) or more directors and shall elect the
members thereof to serve during the pleasure of the Board of Directors.
The Executive Committee shall elect its own chairman, unless a chairman
has been designated by the Board of Directors. Special meetings of the
Executive Committee may be called by the chairman of the committee or by
the Board of Directors, and notice of meetings of the Executive Committee
shall be given by the chairman of the committee or by the Secretary, in
the manner provided in Section 3.4 of this Article for notice of meetings
of the Board of Directors.
The Board of Directors may at any time change the membership of the
Executive Committee, fill vacancies in it, designate alternate members to
replace any absent or disqualified members at any meeting of the Executive
Committee, or dissolve it.
During the intervals between the meetings of the Board of Directors,
the Executive Committee shall possess and may exercise any or all of the
powers of the Board of Directors in the management or direction of the
business and affairs of the Corporation to the extent authorized by
resolution adopted by a majority of the number of directors then fixed in
the manner provided in Section 3.2 of this Article, subject to such
limitations as may be imposed by the laws of the State of Georgia.
Except as inconsistent with these Bylaws or the resolution of the
Board of Directors from time to time, the Executive Committee may
determine its rules of procedure and the notice to be given of its
meeting, and it may appoint such sub-committees as it shall from time to
time deem necessary. A majority of the members of the Executive Committee
shall constitute a quorum. The Executive Committee shall keep minutes of
its meetings and shall report the same to the Board of Directors.
III.6 Other Committees. The Board of Directors may by
resolution provide for such other committees as it deems desirable and
may discontinue the same at its pleasure. Each such committee shall have
the powers and perform such duties, not inconsistent with law, as may be
assigned to it by the Board of Directors.
Each such committee shall elect its own chairman, unless a chairman
has been designated by the Board of Directors.
Except as inconsistent with these Bylaws or the resolution of the
Board of Directors from time to time, each such committee may determine
its rules of procedure and the notice to be given of its meeting, and it
may appoint such committees as it shall from time to time deem necessary.
Special meetings of any such committee may be called by the chairman of
that committee or by the Board of Directors, and notice of any meeting of
any such committee shall be given by the chairman of that committee or by
the Secretary in the manner provided in Section 3.4 of this Article for
notice of meetings of the Board of Directors. A majority of the members
of any such committee then in office shall constitute a quorum. Each such
committee shall keep minutes of its meetings and report the same to the
Board of Directors.
III.7 Conference Telephone Meetings. Any one or more members of
the Board of Directors or any committee thereof may participate in a
meeting by means of a conference telephone or similar communication
equipment by means of which all persons participating in the meeting can
hear each other, and such participation shall constitute presence in
person at such meeting.
III.8 Action Without Meeting. To the extent authorized by
Georgia law, any action required or permitted to be taken at any meeting
of the Board of Directors or any committee thereof may be taken without a
meeting if all members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of the proceedings of the Board of Director or
committee.
ARTICLE IV
OFFICERS
IV.1 Titles and Election. The officers of the Corporation shall
be the Chairman of the Board of Directors, the Vice Chairman of the Board
of Directors, the President, one or more Vice Presidents, the Secretary
and the Treasurer, who shall have such authority and perform such duties
as may be prescribed by the Board of Directors or as otherwise provided
in these Bylaws.
The Board of Directors, in its discretion, may also at any time elect
or appoint such other officers as it may deem advisable, each of whom
shall have such authority and shall perform such duties as may be
prescribed or determined from time to time by the Board of Directors or,
if not prescribed or determined by the Board of Directors, as the Chairman
of the Board, the President or the then senior executive officer may
prescribe or determine.
The Board of Directors may assign such additional titles and duties
to one or more of the officers as it shall deem appropriate.
Any person may hold more than one office if the duties can be
consistently performed by the same person.
The officers of the Corporation shall initially be elected as soon as
convenient by the Board of Directors and thereafter, in the absence of
earlier deaths, resignations or removals, shall be elected at the first
meeting of the Board of Directors following each annual meeting of
stockholders. Each officer shall hold office at the pleasure of the Board
of Directors except as may otherwise be approved by the Board of
Directors, or until his earlier resignation, removal or other termination
of his employment.
The Board of Directors may require any officer or other employee or
agent to give bond for the faithful performance of his duties in such form
and with such sureties as the Board may require.
IV.2 Duties. Subject to such extension, limitations, and other
provisions as the Board of Directors may from time to time prescribe or
determine, the following officers shall have the following powers and
duties:
(a) Chairman of the Board of Directors. The Chairman of the
Board of Directors shall be a director and, when present, shall preside
at all meetings of the stockholders and of the Board of Directors and
shall have such other powers and perform such other duties as the Board
of Directors may prescribe from time to time.
(b) Vice Chairman of the Board of Directors. The Vice Chairman
of the Board of Directors shall be a director and, in the absence of the
Chairman of the Board, shall preside at all meetings of the stockholders
and of the Board of Directors and shall have such other powers and
perform such other duties as the Board of Directors may prescribe from
time to time.
(c) President. The President shall exercise the powers and
authority and perform all of the duties commonly incident to his office
and shall perform such other duties as the Board of Directors shall
specify from time to time. In the absence or disability of the Chairman
of the Board, the President shall perform those duties of the Chairman of
the Board not assigned to the Vice-Chairman of the Board, unless
otherwise provided by the Board of Directors.
(d) Vice President. The Vice President or Vice Presidents shall
perform such duties and have such powers as may be assigned to them from
time to time by the Board of Directors, the Chairman of the Board or the
President. Any Vice President may have the title of Executive Vice
President, Senior Vice President, Assistant Vice President or such other
title deemed appropriate by the Board of Directors from time to time.
In the absence or disability of the President, the Vice Presidents in
order of seniority may, unless otherwise determined by the Board of
Directors or the Chairman of the Board, exercise the powers and perform
the duties pertaining to the office of the President.
(e) Secretary. The Secretary, or in his absence an Assistant
Secretary, shall keep the minutes of all meetings of stockholders and of
the Board of Directors and any committee thereof, cause all notices to be
duly given to and served on the stockholders and directors, attend to
such correspondence as may be assigned to him, keep or cause to be kept
in safe custody the seal and corporate records of the Corporation and
affix such seal to all such instruments properly executed as may require
it, have general charge of the stock transfer books of the Corporation
and shall in general perform all duties incident to his office, and shall
have such other duties and powers as may be prescribed or determined from
time to time by the Board of Directors, the Chairman of the Board or the
President.
In the absence or disability of the Secretary, the Assistant
Secretary, or if there he more than one, the Assistant Secretaries in the
order determined by the Board of Directors, or if no such determination
has been made, in the order of their election, shall perform the duties
and exercise the powers of the Secretary. Each Assistant Secretary also
shall perform such other duties and have such other powers as may be
assigned to him from time to time by the Board of Directors, the Chairman
of the Board or the President.
(f) Treasurer. The Treasurer shall have the care and custody of
and be responsible for the monies, funds, securities, financial records
and other valuable papers of the Corporation (other than his own bond, if
any, which shall be in the custody of the President); shall keep full and
accurate accounts of receipts and disbursements and shall render account
thereof whenever required by the Board of Directors, the Chairman of the
Board or the President; shall have and perform, under the supervision of
the Board of Directors, the Chairman of the Board and the President all
the powers and duties commonly incident to his office; shall deposit or
cause to be deposited all funds of the Corporation in such bank or banks,
trust company or trust companies, or with such firm or firms doing a
banking business as may be designated by the Board of Directors, the
Chairman of the Board or the President; may endorse for deposit or
collection all checks, notes, and similar instruments payable to the
Corporation or to its order; and shall have such other duties as may be
prescribed or determined from time to time by the Board of Directors, the
Chairman of the Board or the President.
In the absence or disability of the Treasurer, the Assistant
Treasurer, or if there be more than one, the Assistant Treasurers in the
order determined by the Board of Directors, or if no such determination
has been made, in the order of their election, shall perform the duties
and exercise the powers of the Treasurer and such other duties as may be
assigned to them from time to time by the Board of Directors, the Chairman
of the Board or the President.
IV.3 Chief Executive Officer and Chief Operating Officer. In
its discretion, the Board of Directors may designate either the Chairman
of the Board or the President to serve as the Chief Executive Officer or
the Chief Operating Officer, or both, of the Corporation.
The Chief Executive Officer shall, subject to the direction and
control of the Board of Directors, have general supervision, direction and
control of the business and officers of the Corporation and have the
powers and duties otherwise customary to the office.
The Chief Operating Officer shall, subject to the direction and
control of the Board of Directors, have general supervision, management
and control of the operations and personnel of the Corporation and the
powers and duties otherwise customary to the office.
IV.4 Chief Financial Officer and Chief Accounting Officer. In
its discretion, the Board of Directors may at any time designate any
officer as the Chief Financial Officer, the Chief Accounting Officer, or
both, of the Corporation.
IV.5 Delegation of Authority. The Board of Directors may at any
time delegate the powers and duties of any officer for the time being to
any other officer, director or employee.
IV.6 Compensation. The compensation of the officers shall be
fixed by the Board of Directors or a committee thereof and the fact that
any officer is a director shall not preclude him from receiving
compensation or from voting upon the resolution providing the same.
ARTICLE V
RESIGNATIONS, VACANCIES AND REMOVALS
V.1 Resignations. Any director or officer may resign at any
time by giving written notice thereof to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the
time be not specified, upon receipt thereof; and unless otherwise
specified therein, the acceptance of any resignation shall not be
necessary to make it effective.
V.2 Vacancies.
(a) Directors. Any vacancy in the Board of Directors caused by
reason of death, incapacity, resignation, removal, increase in the
authorized number of directors or otherwise may be filled by a majority
vote of the remaining directors though less than a quorum, or by the sole
remaining director.
Any director so elected by the Board of Directors shall serve until
the next annual meeting of stockholders at which directors of the class in
which such director serves are to be elected and until the election and
qualification of his successor or until his earlier death, resignation or
removal as provided in the Articles of Incorporation or these Bylaws. The
Board of Directors also may reduce their authorized number by the number
of vacancies in the Board, provided such reduction does not reduce the
Board to less than the minimum authorized by the laws of the State of
Georgia or the Articles of Incorporation, or to less than the number of
directors then in office.
(b) Officers. The Board of Directors may at any time or from
time to time fill any vacancy among the officers of the Corporation.
V.3 Removals.
(a) Directors. The entire Board of Directors, or any individual
member thereof, may be removed only as provided in the Articles of
Incorporation.
(b) Officers. Subject to the provisions of any validly existing
agreement, the Board of Directors may at any meeting remove from office
any officer, with or without cause, and may elect or appoint a successor.
ARTICLE VI
CAPITAL STOCK
VI.1 Certificates of Stock. Every stockholder shall be entitled
to a certificate or certificates for shares of the capital stock of the
Corporation in such form as may be prescribed or authorized by the Board
of Directors, duly numbered and setting forth the number and kind of
shares represented thereby. Such certificates shall be signed by the
Chairman of the Board, the Vice-Chairman of the Board, the President or a
Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary. If and to the extent permitted by
Georgia law, any or all of such signatures may be in facsimile if the
certificate is countersigned by a transfer agent or registered by a
registrar other than the Corporation itself or an employee of the
Corporation. The transfer agent or registrar may sign either manually or
by facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate has ceased to
be such officer, transfer agent or registrar before the certificate has
been issued, such certificate may nevertheless be issued and delivered by
the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
VI.2 Transfer of Stock. Shares of the capital stock of the
Corporation shall be transferable only upon the books of the Corporation
upon the surrender of the certificate or certificates properly assigned
and endorsed for transfer.
The Board of Directors may appoint a transfer agent and one or more
co-transfer agents and a registrar and one or more co-registrars and may
make or authorize such agents to make all such rules and regulations
deemed expedient concerning the issue, transfer and registration of shares
of stock. If the Corporation has a transfer agent or registrar acting on
its behalf, the signature of any officer or representative thereof may be
in facsimile.
VI.3 Stock Transfer Records. Unless the Corporation has a stock
transfer agent to keep such records, the Secretary shall keep a stock
book or books containing the names, alphabetically arranged, with the
address of every stockholder showing the number of shares of each kind,
class or series of stock held of record.
The person in whose name shares of stock stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for
all purposes.
VI.4 Record Dates. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the
Board of Directors shall fix in advance a record date which, in the case
of a meeting, shall not be less than ten (10) nor more than sixty (60)
days prior to the scheduled date of such meeting and which, in the case
of any other action, shall be not more than sixty (60) days prior to any
such action permitted by the laws of the State of Georgia.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
VI.5 Lost Certificates. In case of loss, mutilation or
destruction of a stock certificate, a duplicate certificate may be issued
upon such terms as may be determined or authorized by the Board of
Directors, the Chairman of the Board or the President.
ARTICLE VII
FISCAL YEAR, BANK DEPOSITS, CHECKS, ETC.
VII.1 Fiscal Year. The fiscal year of the Corporation shall end
on the first Sunday following May 30 each year.
VII.2 Bank Deposits, Checks, Etc The funds of the Corporation
shall be deposited in the name of the Corporation or of any division
thereof in such banks or trust companies in the United States or
elsewhere as may be designated from time to time by the Board of
Directors, or by such officer or officers as the Board of Directors may
authorize to make such designations.
All checks, drafts or other orders for the withdrawal of funds from
any bank account shall be signed by such person or persons as may be
designated from time to time by the Board of Directors. The signatures on
checks, drafts or other orders for the withdrawal of funds may be in
facsimile if authorized in the designation.
ARTICLE VIII
BOOKS AND RECORDS
VIII.1 Place of Keeping Books. The books and records of the
Corporation may be kept in or outside of the State of Georgia, as the
Board of Directors may from time to time determine.
VIII.2 Examination of Books. Except as may otherwise be
provided by the laws of the State of Georgia, the Articles of
Incorporation or these Bylaws, the Board of Directors shall have power to
determine from time to time whether and to what extent and at what times
and places and under what conditions any of the accounts, records and
books of the Corporation are to be open to the inspection of any
stockholder. No stockholder shall have any right to inspect any account
or book or document of the Corporation except as prescribed by law or
authorized by express resolution of the stockholders or of the Board of
Directors.
ARTICLE IX
NOTICES
IX.1 Requirements of Notice. Whenever notice is required to be
given by statute, the Articles of Incorporation or these Bylaws, it shall
not mean personal notice unless so specified, but such notice may be
given in writing by depositing the same in a post office, letter box, or
mail chute postage prepaid and addressed to the person to whom such
notice is directed at the address of such person on the records of the
Corporation, and such notice shall be deemed given at the time when the
same shall be thus mailed.
IX.2 Waivers. Any stockholder, director or officer may, in
writing delivered via first class mail, hand-delivery or facsimile
transmission or by telegram or cable, at any time waive any notice or
other formality required by statute, the Articles of Incorporation or
these Bylaws. Such waiver of notice, whether given before or after any
meeting or action, shall be deemed equivalent to notice. Presence of a
stockholder either in person or by proxy at any meeting of stockholders
and presence of any director at any meeting of the Board of Directors
shall constitute a waiver of such notice as may be required by any
statute, the Articles of Incorporation or these Bylaws.
ARTICLE X
SEAL
The corporate seal of the Corporation shall be in such form as the
Board of Directors shall determine from time to time and may consist of a
facsimile thereof or the words "Corporate Seal" or "Seal" enclosed in
parentheses.
In the absence of the Secretary, any other officer of the Corporation
may affix and attest the seal of the Corporation to any instrument
requiring it, unless otherwise provided by resolution of the Board of
Directors.
ARTICLE XI
POWERS OF ATTORNEY
The Board of Directors may authorize one or more of the officers of
the Corporation to execute powers of attorney delegating to named
representatives or agents power to represent or act on behalf of the
Corporation, with or without power of substitution.
In the absence of any action by the Board of Directors, any officer
of the Corporation may execute for and on behalf of the Corporation
waivers of notice of meetings of stockholders and proxies for such
meetings of any company in which the Corporation may hold voting
securities.
ARTICLE XII
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND OTHER PERSONS
XII.1 Indemnified Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, and whether external or internal to the
Corporation (including a judicial action or suit brought by or in the
right of the Corporation), by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise (all
such persons being referred to hereafter as an "Agent"), against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person
shall have been adjudged liable to the Corporation or subjected to
injunctive relief in favor of the Corporation: (a) for any appropriation,
in violation of his duties, of any business opportunity of the
Corporation; (b) for acts or omissions which involve intentional
misconduct or a knowing violation of law; (c) for unlawful distributions
pursuant to Section 14-2-832 of the Georgia Business Corporation Code; or
(d) for any transaction from which he received an improper personal
benefit.
XII.2 Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article XII, to the extent
that an Agent has been successful on the merits or otherwise in defense
of any proceeding or in defense of any claim, issue or matter therein,
such Agent shall be indemnified against all expenses incurred in
connection therewith.
XII.3 Advances of Expenses. Expenses incurred in defending or
investigating any action, suit, proceeding or investigation shall be paid
by the Corporation in advance of the final disposition of such matter, if
the Agent shall provide the Corporation with (i) a written affirmation of
his good faith belief that his conduct does not constitute behavior of
the kind described in any of the clauses (a) through (d) of Section 12.1,
and (ii) a written undertaking, executed personally or on his behalf, to
repay any advances if it is ultimately determined that he is not entitled
to indemnification under Section 12.1.
XII.4 Right of Agent to Indemnification Upon Application;
Procedure Upon Application. Any indemnification under Sections 12.1 and
12.2 hereof or advance under Section 12.3 hereof shall be made promptly
and in any event within forty-five (45) days after receipt of the written
request of the Agent, unless the Agent is not entitled to such
indemnification or advance pursuant to the terms of such sections. The
right to indemnification or advances as granted by this Article XIl shall
be enforceable by the Agent in any court of competent jurisdiction if the
Corporation denies the claim, in whole or in part, or if no disposition
of such claim is made within forty-five (45) days of the Agent's request.
The Agent's expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any
such proceeding shall also be indemnified by the Corporation.
XII.5 Other Rights and Remedies. The indemnification provided
by this Article XII shall not be deemed exclusive of any other rights to
which an Agent seeking indemnification may be entitled under any
agreement, vote of stockholders or disinterested directors, court order
or otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. It is the policy of the
Corporation that indemnification of Agents shall be made to the fullest
extent permitted by law. All rights to indemnification under this
Article XII shall be deemed to be provided by a contract between the
Corporation and the Agent who serves in such capacity at any time while
these Bylaws and other relevant provisions of the Georgia Business
Corporation Code and other applicable law, if any, are in effect. Any
repeal or modification thereof shall not affect any rights or obligations
then existing.
XII.6 Insurance of Agents. To the extent permitted by Georgia
law, the Corporation may purchase and maintain insurance on behalf of any
person who is or was an Agent against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this Article XII.
XII.7 Certain Definitions. For purposes of this Article XII,
references to the "Corporation" shall include, in addition to the
resulting or surviving corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued, would have had
power to indemnify its directors, officers and employees or agents, so
that any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this Article XII with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued; references to "other enterprise" shall include employee
benefit plans; references to "fines" shall include any excise taxes
assessed a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include
any service as a director or officer of the Corporation which imposes
duties on, or involves services by, such director or officer with respect
to any employee benefit plan, its participants, or beneficiaries.
XII.8 Indemnification and Insurance of Other Persons. The
provisions of this Article XII shall not be deemed to preclude the
Corporation from either indemnifying or purchasing and maintaining
insurance on behalf of, or both, any person who is not an Agent but whom
the Corporation has the power or obligation to indemnify or insure under
the provisions of the Georgia Business Corporation Code or otherwise.
The Corporation may, in its sole discretion, indemnify or insure, or
both, an employee, trustee or other agent as permitted by the Georgia
Business Corporation Code. The Corporation shall indemnify or insure any
employee, trustee or other agent where required by law.
XII.9 Survival of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this
Article XII shall continue as to a person who has ceased to be an Agent
and shall inure to the benefit of the heirs, executors and administrators
of such Agent.
XII.10 Savings Clause. If this Article XII or any portion
thereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each
Agent against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, and
whether internal or external, including a grand jury proceeding and an
action or suit brought by or in the right of the Corporation, to the full
extent permitted by any applicable portion of this Article XII that shall
not have been invalidated or by any other applicable law.
ARTICLE XIII
AMENDMENTS
Unless otherwise provided by law, the Articles of Incorporation or
another provision of these Bylaws, these Bylaws may be amended or repealed
either:
(a) at any meeting of stockholders at which a quorum is present
by vote of the holders of a majority of the number of shares of stock
entitled to vote present in person or by proxy at such meeting as provided
in Article II, Sections 2.4 and 2.5 of these Bylaws, or
(b) at any meeting of the Board of Directors by a majority vote
of the directors then in office; provided the notice of such meeting of
stockholders or directors or waiver of notice thereof contains a statement
of the substance of the proposed amendment or repeal.
FIRST AMENDMENT TO THE RUBY TUESDAY, INC.
DEFERRED COMPENSATION PLAN
(As Restated Effective July 1, 1997)
THIS FIRST AMENDMENT is made as of this 28th day of May, 1998, by RUBY
TUESDAY, INC. (the "Primary Sponsor"), a corporation organized and
existing under the laws of the State of Georgia.
W I T N E S S E T H:
WHEREAS, the Primary Sponsor maintains the Ruby Tuesday, Inc. Deferred
Compensation Plan (the "Plan"), which was established by indenture dated
December 18, 1989 and restated effective as of July 1, 1997.
WHEREAS, the Primary Sponsor desires to amend the Plan to increase
deferral opportunities for Plan participants and to make certain other
changes in the design of the Plan, as described herein.
NOW, THEREFORE, the Plan is hereby amended, effective June 15, 1998,
as follows:
1. By adding two new final sentences to Section 1.1(a) as follows:
"The Employee Deferred Account may consist of a Company Stock
Subaccount which shall hold shares of Company Stock and cash attributable
to the investment of Deferral Amounts (and any earnings thereon) in an
Investment Fund consisting primarily of Company Stock and an Other
Investment Subaccount which shall hold all other assets attributable to
the Employee Deferred Account. The Company Stock Subaccount and Other
Investment Subaccount for the Employee Deferred Account shall be
maintained separately from the subaccounts maintained for the Company
Matching Account."
2. By adding a new Section 1.3A as follows:
"1.3A `Annual Bonus' means an amount paid to an Employee as an
incentive-based payment as a component of his Annual Compensation, but
which is specifically classified as an annual bonus payment by the
Company."
3. By deleting Section 1.4 in its entirety and by substituting
therefor the following:
"1.4 `Annual Compensation' means `Annual Compensation,' as
that term is defined under the Salary Deferral Plan for purposes of
making contributions pursuant to a salary deferral election, as the same
may be amended from time to time, but without regard to the limitation
on compensation that may be recognized under Code Section 401(a)(17),
plus any Deferral Amounts credited to a Member during the Plan Year and
amounts which are contributed by the Company pursuant to a salary
reduction agreement and which are not includable in the gross income of
the Member under Code Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b)."
4. By adding a new Section 1.26A as follows:
"1.26A `Trust' means the grantor trust maintained by the
Primary Sponsor as a source for the payment of benefit obligations under
the Plan."
5. By deleting Section 3.1 in its entirety and by substituting
therefor the following:
"3.1 (a) Each Plan Year, a Member who is an Eligible
Employee may elect to defer under the Plan a portion of the Annual
Compensation otherwise payable to him for the Plan Year, which amount
shall be at least two percent (2%) of Annual Compensation (exclusive of
any Annual Bonus) and shall be in increments of one percent (1%) of
Annual Compensation (exclusive of any Annual Bonus), but not in excess
of one hundred percent (100%) of Annual Compensation (exclusive of any
Annual Bonus), less all applicable withholdings.
(b) Each Plan Year, a Member who is an Eligible
Employee may elect to defer under the Plan a portion of any Annual Bonus
otherwise payable to him for the Plan Year, which amount shall be at
least two percent (2%) of any such Annual Bonus and shall be in
increments of one percent (1%) of any such Annual Bonus, but not in
excess of one hundred percent (100%) of any such Annual Bonus, less all
applicable withholdings."
6. By deleting Section 3.2 in its entirety and by substituting
therefor the following:
"3.2 All elections to defer Annual Compensation under Plan
Section 3.1 may only be made pursuant to an agreement between the Member
and the Plan Sponsor which shall be in such form and subject to such rules
and limitations as the Plan Administrator may prescribe and shall specify
the amount of the Annual Compensation of the Member that the Member
desires to defer. Once a Member has made an election for a Plan Year, the
Member may revoke or modify his election to reduce the rate of future
deferrals pursuant to normal administrative procedures as may be
established from time to time by the Plan Administrator. Once an election
has been revoked or modified, any subsequent election by the Member shall
be effective pursuant to normal administrative procedures as may be
established from time to time by the Plan Administrator. Notwithstanding
the foregoing, no election to defer Annual Bonus may be made after the
later of the last day of the performance period for which the Annual Bonus
is payable or the date on which the Annual Bonus is determined."
7. By deleting Section 4.3(c) in its entirety and by substituting
therefor the following:
"4.3(c) Subject to the other provisions of this Section and
such other rules as may be promulgated by the Plan Administrator from
time to time, a Member may select how his Employee Deferred Account is
to be invested among Investment Funds. If a Member selects an
Investment Fund consisting primarily of Company Stock for the investment
of future Deferral Amounts or any portion of his existing Employee
Deferred Account, the Member shall not be allowed at any later time to
reinvest those amounts among other Investment Funds. Notwithstanding
the foregoing, upon prior written notice to a Member, the Plan
Administrator may revise or give no effect to a Member's investment
selections. If no investment election has been properly or timely filed
with the Plan Administrator or if the Plan Administrator, upon prior
written notice to the Member, modifies the Member's election, the
Employee's Employee Deferred Account shall be credited with the net
income or net loss of the investment selected by the Plan Administrator.
Any selection of an investment by Reporting Persons shall be subject to
the further restrictions of Plan Section 4.3(d)."
8. By deleting from Section 5.1 the phrase "is an Employee and" from
the first sentence thereof.
9. By deleting the last sentence from Section 5.2 and by
substituting therefor the following:
"A payment under this Section shall be made in a lump sum (in
kind to the extent the Member's Employee Deferred Account is invested in
Company Stock) and shall be charged against the Member's Employee Deferred
Account as of the Valuation Date coinciding with or immediately preceding
the date of payment. Notwithstanding the foregoing, any shares of Company
Stock distributed to any Member who is or was a Reporting Person at any
time within six (6) months prior to the date that his Accrued Benefit is
paid shall be treated as restricted stock for a period of up to six months
from the distribution date as necessary to preserve available exemptions
under Section 16 of the Securities Exchange Act of 1934."
10. By deleting Section 7.2 in its entirety and by substituting
therefor the following:
"7.2 The form of payment of the Accrued Benefit of a Member
shall be selected by the Plan Administrator and shall be in either a lump
sum or annual or more frequent installments. The payment of a Member's
Employee Deferred Account shall be in kind in shares of Company Stock to
the extent that Account is invested in Company Stock and otherwise in cash
and the Member's Company Matching Account shall be paid in Company Stock;
except that on or after a Change of Control, payment of a Member's Accrued
Benefit shall be in cash. Notwithstanding the foregoing, any shares of
Company Stock distributed to any Member who is or was a Reporting Person
at any time within six (6) months prior to the date that his Accrued
Benefit is paid shall be treated as restricted stock for a period of up to
six months from the distribution date as necessary to preserve available
exemptions under Section 16 of the Securities Exchange Act of 1934."
Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to this First Amendment.
IN WITNESS WHEREOF, the Primary Sponsor has caused this First Amendment
to be executed as of the day and year first above written.
RUBY TUESDAY, INC.
By:
Title:
ATTEST:
By:
Title:
[CORPORATE SEAL]
AMENDMENT NO. 1 TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment") dated as
of May 30, 1997, by and among RUBY TUESDAY, INC., a Georgia corporation,
formerly known as Ruby Tuesday (Georgia), Inc. (the "Borrower"), SUNTRUST
BANK, ATLANTA, ("SunTrust"), AMSOUTH BANK OF ALABAMA, WACHOVIA BANK OF
GEORGIA, N.A., FIRST AMERICAN NATIONAL BANK, BARNETT BANK, N.A., formerly
known as Barnett Bank of Jacksonville, N.A. and HIBERNIA NATIONAL BANK
(collectively, the "Lenders") and SUNTRUST BANK, ATLANTA, as agent and
administrative agent for the Lenders (in such capacity, the "Agent" and
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, Borrower, the Lenders, the Agent and the Administrative
Agent are parties to a certain Credit Agreement dated as of March 6, 1996
(as heretofore amended or modified, the "Credit Agreement"; defined terms
used herein without definition shall have the meanings ascribed to such
terms in the Credit Agreement);
WHEREAS, Borrower has requested, and the Lenders have agreed, that
the Credit Agreement be amended to make certain modifications to the
covenants set forth therein and the related definitions, all as more
specifically set forth below;
WHEREAS, the parties wish to amend the Credit Agreement to reflect
this agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
SECTION 1. Amendments to Credit Agreement. Subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof,
and effective as of the Effective Date (as hereinafter defined), the
Credit Agreement is hereby amended as follows:
1. Section 1.01 of the Credit Agreement is hereby amended by
adding the following new defined terms in alphabetical order, as follows:
""Franchisee Loan Program" shall mean that transaction evidenced by
(i) that certain Loan Facility Agreement dated as of May 30, 1997 by and
among the Borrower, SunTrust Bank, Atlanta, as servicer and the other
financial institutions party thereto wherein the Borrower has guaranteed,
to the extent set forth therein, certain obligations of franchisees of
the Borrower, and (ii) the other "Operative Documents" (as such term is
defined therein) executed by the Consolidated Companies in connection
therewith.
"LIBOR Lease Transaction" shall mean, collectively, (a) that
transaction evidenced by (i) that certain Lease Agreement, dated as of
May 30, 1997, by and between Borrower, as lessee and Atlantic Financial
Group, LLP, as lessor, (ii) that certain Participation Agreement, dated
as of May 30, 1997 by and among Borrower, Atlantic Financial Group, LLP,
SunTrust Bank, Atlanta, as agent and the other financial institutions
named therein and (iii) the other Operative Documents (as such term is
defined in such Participation Agreement) executed by the Consolidated
Companies in connection therewith and (b) certain similar lease
transaction entered into hereafter by the Consolidated Companies with a
syndicate of lenders agented by SunTrust Bank, Atlanta providing an
aggregate amount of financing to the Consolidated Companies in the
approximate amount of $75,000,000."
"Standard & Poor's" shall mean Standard & Poor's Rating Service, a
division of The McGraw-Hill Companies.
2. Section 1.01 of the Credit Agreement is hereby amended by
deleting the existing definitions of "Consolidated Net Worth", "Funded
Debt" and "Rental Obligations" and substituting therefor the following:
"Consolidated Net Worth" shall mean the shareholders' equity of the
Borrower and its Subsidiaries calculated in accordance with GAAP, less
treasury stock.
"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
(i) all Indebtedness of such Person for borrowed money under a line of
credit, guidance line, revolving credit, bankers acceptance facility or
similar arrangement for borrowed money, including, without limitation,
all unpaid drawings under letters of credit and unreimbursed amounts
pursuant to letter of credit reimbursement agreements, regardless of the
maturity date thereof, and (ii) as of any date of determination with
respect to the Borrower, the aggregate guaranty obligations of the
Borrower calculated as of such date (without giving effect to any
liability of the Borrower on any subsequent date) pursuant to the
Franchise Loan Program, 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,
and with respect to the Borrower, shall include the rental obligations of
the Borrower arising pursuant to the LIBOR Lease Transaction assuming,
for the purposes of such calculation regardless of the Borrower's actual
election pursuant to the documents executed in connection therewith, that
the Borrower has exercised and will exercise all optional extensions
thereof and will exercise its option to remarket the leased properties at
the end of the lease term.
"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, office equipment and other similar items 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 and expressly including
all rental obligations arising pursuant to the LIBOR Lease Transaction
(excluding supplemental or contingent lease obligations thereunder).
3. Section 8.01 of the Credit Agreement is hereby amended by
deleting subsection (e) thereof in its entirety and substituting the
following in lieu thereof:
"(e) Indebtedness of Borrower or any of its Subsidiaries arising
under (i) Interest Rate Contracts, (ii) the Franchisee Loan Program, and
(iii) to the extent constituting Indebtedness, the LIBOR Lease
Transaction;"
4. Section 8.02 of the Credit Agreement is hereby amended by
deleting subsection (b) thereof in its entirety and substituting the
following in lieu thereof:
"(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), including any Lien arising
pursuant to the LIBOR Lease Transaction;"
5. Section 8.02 of the Credit Agreement is hereby further
amended by deleting the last proviso thereof in its entirety and
substituting the following in lieu thereof:
"provided that, the aggregate amount of Indebtedness secured by
Liens permitted pursuant to this Section 8.02, excluding Indebtedness,
if any, arising pursuant to the LIBOR Lease Transaction, 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."
6. Section 8.04 of the Credit Agreement is hereby amended by
deleting subsection (a) thereof in its entirety and substituting the
following in lieu thereof:
"(a) Investments in Subsidiaries of Borrower existing as of the
Closing Date and Investments in franchisees of Borrower arising pursuant
to the Franchisee Loan Program;"
SECTION 2. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written (the "Effective
Date") on the first day when all of the foregoing shall have occurred:
1. This Amendment shall have been executed and delivered by
Borrower and the Lenders to the Agent; and
2. All conditions precedent to the effectiveness of the
Franchisee Loan Program and the LIBOR Lease Transaction shall have been
fulfilled or waived and the Administrative Agent shall be satisfied that
such transactions are in full force and effect.
SECTION 3. Representations and Warranties of Borrower.
Borrower, without limiting the representations and warranties provided in
the Credit Agreement, represents and warrants to the Lenders and the
Agent as follows:
1. The execution, delivery and performance by Borrower of this
Amendment are within Borrower's corporate powers, have been duly
authorized by all necessary corporate action (including any necessary
shareholder action) and do not and will not (a) violate any provision of
any law, rule or regulation, any judgment, order or ruling of any court
or governmental agency, the articles of incorporation or by-laws of
Borrower or any indenture, agreement or other instrument to which
Borrower is a party or by which Borrower or any of its properties is
bound or (b) be in conflict with, result in a breach of, or constitute
with notice or lapse of time or both a default under any such indenture,
agreement or other instrument.
2. This Amendment constitutes the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with
its terms.
3. No Default or Event of Default has occurred and is continuing
as of the Effective Date.
SECTION 4. Survival. Each of the foregoing representations and
warranties and each of the representations and warranties made in the
Credit Agreement shall be made at and as of the Effective Date. Each of
the foregoing representations and warranties shall constitute a
representation and warranty of Borrower under the Credit Agreement, and
it shall be an Event of Default if any such representation and warranty
shall prove to have been incorrect or false in any material respect at
the time when made. Each of the representations and warranties made
under the Credit Agreement (including those made herein) shall survive
and not be waived by the execution and delivery of this Amendment or any
investigation by the Lenders or the Agent or the Administrative Agent.
SECTION 5. No Waiver, Etc. Borrower hereby agrees that nothing
herein shall constitute a waiver by the Lenders of any Default or Event
of Default, whether known or unknown, which may exist under the Credit
Agreement. Borrower hereby further agrees that no action, inaction or
agreement by the Lenders, including without limitation, any indulgence,
waiver, consent or agreement altering the provisions of the Credit
Agreement which may have occurred with respect to the non-payment of any
obligation during the terms of the Credit Agreement or any portion
thereof, or any other matter relating to the Credit Agreement, shall
require or imply any future indulgence, waiver, or agreement by the
Lenders. In addition, Borrower acknowledges and agrees that it has no
knowledge of any defenses, counterclaims, offsets or objections in its
favor against any Lender with regard to any of the obligations due under
the terms of the Credit Agreement as of the date of this Amendment.
SECTION 6. Affirmation of Covenants. Borrower hereby affirms
and restates as of the date hereof all covenants set forth in the Credit
Agreement, as amended hereby, and such covenants are incorporated by
reference herein as if set forth herein directly.
SECTION 7. Ratification of Credit Agreement. Except as
expressly amended herein, all terms, covenants and conditions of the
Credit Agreement and the other Loan Documents shall remain in full force
and effect, and the parties hereto do expressly ratify and confirm the
Credit Agreement as amended herein. All future references to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended
hereby.
SECTION 8. Binding Nature. This Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
SECTION 9. Costs, Expenses and Taxes. Borrower agrees to pay on
demand all reasonable costs and expenses of the Agent and the
Administrative Agent in connection with the preparation, execution and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent and the
Administrative Agent with respect thereto and with respect to advising
the Agent and the Administrative Agent as to its rights and
responsibilities hereunder and thereunder. In addition, Borrower shall
pay any and all stamp and other taxes payable or determined to be payable
in connection with the execution and delivery of this Amendment and the
other instruments and documents to be delivered hereunder, and agrees to
save the Agent, the Administrative Agent and each Lender harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
SECTION 10. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of Georgia.
SECTION 11. Entire Understanding. This Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or agreements, whether
written or oral, with respect thereto.
SECTION 12. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which
taken together shall constitute but one and the same instrument.
[Signatures Set Forth on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment through their authorized officers as of the date first above
written.
RUBY TUESDAY, INC.
By:
Name:
Title:
[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]
SUNTRUST BANK, ATLANTA,
individually and as Agent and Administrative
Agent
By:
Name:
Title:
By:
Name:
Title:
AMSOUTH BANK OF ALABAMA
By:
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:
Name:
Title:
FIRST AMERICAN NATIONAL BANK
By:
Name:
Title:
BARNETT BANK, N.A., formerly known as
BARNETT BANK OF JACKSONVILLE, N.A.
By:
Name:
Title:
HIBERNIA NATIONAL BANK
By:
Name:
Title:
EXECUTION COUNTERPART
AMENDMENT NO. 2 TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment") dated as
of March 4, 1998 by and among RUBY TUESDAY, INC., a Georgia corporation,
formerly known as Ruby Tuesday (Georgia), Inc. (the "Borrower"), SUNTRUST
BANK, ATLANTA, ("SunTrust"), AMSOUTH BANK OF ALABAMA, WACHOVIA BANK OF
GEORGIA, , N.A., FIRST AMERICAN NATIONAL BANK, BARNETT BANK, N.A., and
HIBERNIA NATIONAL BANK (collectively, the "Lenders") and SUNTRUST BANK,
ATLANTA, as agent and administrative agent for the Lenders (in such
capacity, the "Agent" and "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Borrower, the Lenders, the Agent and the Administrative
Agent are parties to a certain Credit Agreement dated as of March 6,
1996, as amended by a certain Amendment No.1 to Credit Agreement, dated
as of May 30, 1997 (as heretofore amended or modified, the "Credit
Agreement"; defined terms used herein without definition shall have the
meanings ascribed to such terms in the Credit Agreement);
WHEREAS, Borrower has requested, and the Lenders have agreed, that
the Credit Agreement be amended to make certain modifications to the
covenants set forth therein and the related definitions, all as more
specifically set forth below;
WHEREAS, the parties wish to amend the Credit Agreement to reflect
this agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
SECTION 1. Amendments to Credit Agreement. Subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof,
and effective as of the Effective Date (as hereinafter defined), the
Credit Agreement is hereby amended as follows:
1. Section 1.01 of the Credit Agreement is hereby amended by
adding the following new defined terms in alphabetical order, as follows:
"Franchise Partner Program" shall mean the optional financing and
business structuring program offered by the Sponsor to a limited number
of qualified restaurant operators, such operators to be determined by the
Sponsor in its sole discretion, which provides such restaurant operators
a business structure for organizing, owning and funding the establishment
and operation of at least 8 to 10 restaurants.
"Mozzarella's" shall mean "Mozzarella's American Cafes", an
operating concept of Sponsor.
"Ruby Tuesday" shall mean "Ruby Tuesday", an operating concept of
Sponsor.
"Tia's" shall mean "Tia's Mexican Restaurants", an operating concept
of Tias, Inc., a Texas corporation, a wholly owned subsidiary of Sponsor.
2. Section 7.08 of the Credit Agreement is hereby amended by
deleting subsection (c) thereof in its entirety and substituting the
following in lieu thereof:
"(c) Consolidated Net Worth. Maintain at all times Consolidated Net
Worth in an amount not less than the sum of (i) $180,000,000.00, plus
(ii) 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."
3. Section 8.03 of the Credit Agreement is hereby amended by
deleting said Section 8.03 in its entirety and substituting the following
in lieu thereof:
"Section 8.03. Mergers, Sales, Etc. (a)Merge or consolidate with
any other Person, except that this Section 8.03 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 8.03 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, (ii)
disposition of equipment or inventory determined in good faith to be
obsolete or unusable by the Borrower or its Subsidiaries, or (iv) any
other sale of the Borrower's assets during the term of this Agreement
(excluding the sale of any assets pertaining to Mozzarella's or Tia's
units or any Ruby Tuesday units pursuant to the Borrower's Franchise
Partner Program) 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, however, that no transaction pursuant to clause (a),
clause (b)(i) or clause (b)(iv) 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 2. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written (the "Effective
Date") on the first day when all of the foregoing shall have occurred:
1. This Amendment shall have been executed and delivered by
Borrower and the Lenders to the Agent; and
2. All conditions precedent to the effectiveness of the
Franchisee Loan Program and the LIBOR Lease Transaction shall have been
fulfilled or waived and the Administrative Agent shall be satisfied that
such transactions are in full force and effect.
SECTION 3. Representations and Warranties of Borrower.
Borrower, without limiting the representations and warranties provided in
the Credit Agreement, represents and warrants to the Required Lenders and
the Agent as follows:
1. The execution, delivery and performance by Borrower of this
Amendment are within Borrower's corporate powers, have been duly
authorized by all necessary corporate action (including any necessary
shareholder action) and do not and will not (a) violate any provision of
any law, rule or regulation, any judgment, order or ruling of any court
or governmental agency, the articles of incorporation or by-laws of
Borrower or any indenture, agreement or other instrument to which
Borrower is a party or by which Borrower or any of its properties is
bound or (b) be in conflict with, result in a breach of, or constitute
with notice or lapse of time or both a default under any such indenture,
agreement or other instrument.
2. This Amendment constitutes the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with
its terms.
3. No Default or Event of Default has occurred and is continuing
as of the Effective Date.
SECTION 4. Survival. Each of the foregoing representations and
warranties and each of the representations and warranties made in the
Credit Agreement shall be made at and as of the Effective Date. Each of
the foregoing representations and warranties shall constitute a
representation and warranty of Borrower under the Credit Agreement, and
it shall be an Event of Default if any such representation and warranty
shall prove to have been incorrect or false in any material respect at
the time when made. Each of the representations and warranties made
under the Credit Agreement (including those made herein) shall survive
and not be waived by the execution and delivery of this Amendment or any
investigation by the Lenders or the Agent or the Administrative Agent.
SECTION 5. No Waiver, Etc. Borrower hereby agrees that nothing
herein shall constitute a waiver by the Lenders of any Default or Event
of Default, whether known or unknown, which may exist under the Credit
Agreement. Borrower hereby further agrees that no action, inaction or
agreement by the Lenders, including without limitation, any indulgence,
waiver, consent or agreement altering the provisions of the Credit
Agreement which may have occurred with respect to the non-payment of any
obligation during the terms of the Credit Agreement or any portion
thereof, or any other matter relating to the Credit Agreement, shall
require or imply any future indulgence, waiver, or agreement by the
Lenders. In addition, Borrower acknowledges and agrees that it has no
knowledge of any defenses, counterclaims, offsets or objections in its
favor against any Lender with regard to any of the obligations due under
the terms of the Credit Agreement as of the date of this Amendment.
SECTION 6. Affirmation of Covenants. Borrower hereby affirms
and restates as of the date hereof all covenants set forth in the Credit
Agreement, as amended hereby, and such covenants are incorporated by
reference herein as if set forth herein directly.
SECTION 7. Ratification of Credit Agreement. Except as
expressly amended herein, all terms, covenants and conditions of the
Credit Agreement and the other Loan Documents shall remain in full force
and effect, and the parties hereto do expressly ratify and confirm the
Credit Agreement as amended herein. All future references to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended
hereby.
SECTION 8. Binding Nature. This Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
SECTION 9. Costs, Expenses and Taxes. Borrower agrees to pay on
demand all reasonable costs and expenses of the Agent and the
Administrative Agent in connection with the preparation, execution and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent and the
Administrative Agent with respect thereto and with respect to advising
the Agent and the Administrative Agent as to its rights and
responsibilities hereunder and thereunder. In addition, Borrower shall
pay any and all stamp and other taxes payable or determined to be payable
in connection with the execution and delivery of this Amendment and the
other instruments and documents to be delivered hereunder, and agrees to
save the Agent, the Administrative Agent and each Lender harmless from
and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
SECTION 10. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of Georgia.
SECTION 11. Entire Understanding. This Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or agreements, whether
written or oral, with respect thereto.
SECTION 12. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which
taken together shall constitute but one and the same instrument.
[Signatures Set Forth on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
RUBY TUESDAY, INC.
By: /s/ J. Russell Mothershed
Name: /s/ J. Russell Mothershed
Title: C.F.O
[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]
SUNTRUST BANK, ATLANTA,
individually and as Agent and Administrative Agent
By:
Name:
Title:
By:
Name:
Title:
AMSOUTH BANK OF ALABAMA
By:
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:
Name:
Title:
FIRST AMERICAN NATIONAL BANK
By:
Name:
Title:
BARNETT BANK, N.A.
By:
Name:
Title:
HIBERNIA NATIONAL BANK
By:
Name:
Title:
EXECUTION COUNTERPART
FIRST AMENDMENT TO MASTER AGREEMENT
THIS FIRST AMENDMENT TO MASTER AGREEMENT (this "Amendment") dated as
of March 4, 1998, by and among RUBY TUESDAY, INC., a Georgia corporation
("Lessee"); ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership
(the "Lessor"), AMSOUTH BANK OF ALABAMA, an Alabama banking corporation
("Amsouth"), BARNETT BANK, N.A., a national banking association
("Barnett"), FIRST AMERICAN NATIONAL BANK, a national banking association
("First American"), WACHOVIA BANK OF GEORGIA, N.A., a national banking
association ("Wachovia"), HIBERNIA NATIONAL BANK, a national banking
association ("Hibernia"), FIRST TENNESSEE BANK, a Tennessee banking
corporation ("First Tennessee") and SUNTRUST BANK, ATLANTA, a Georgia
banking corporation ("SunTrust"; Amsouth, Barnett, First American,
Wachovia, SunTrust, Hibernia and First Tennessee, together with any other
financial institution that becomes a party hereto as a lender,
collectively referred to as "Lenders" and individually as a "Lender"),
and SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as agent for
the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, in order to complete certain transactions whereby the
Lessee leases land from the Lessor and the Lessor finances Lessee's
construction of buildings thereon, the Lessee, the Lessor, the Lenders
and the Agent entered into that certain Master Agreement, dated as of May
30, 1997 (as amended or modified, the "Master Agreement");
WHEREAS, the Lessee has requested, and the Lessor, the Lenders and
the Agent have agreed to enter into certain amendments to the Master
Agreement;
WHEREAS, the Lessee, Lessor, the Lenders and the Agent wish to enter
into this Amendment to set forth their understandings regarding the
amendments.
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
SECTION I. Definitions. All terms used herein without definition
shall have the meanings set forth for such terms in the Master Agreement.
SECTION II. Amendments.
1. Amendment to Section 5.1 of the Master Agreement. Section
5.1 of the Master Agreement is hereby amended by deleting Section
5.1(h)(iii) thereof and substituting the following in lieu thereof:
"(iii) Consolidated Net Worth. Maintain at all times
Consolidated Net Worth in an amount not less than the sum of (i)
$180,000,000, plus (ii) an amount equal to 100% of the Net Proceeds of
all issuances of stock, warrants, Subordinated Debt, or other equity of
the Lessee issued following the date hereof."
2. Amendment to Section 5.2 of the Master Agreement. Section
5.2 of the Master Agreement is hereby amended by deleting Section 5.2(c)
thereof and substituting the following in lieu thereof:
"(c) Mergers, Sales, Etc. (A) Merge or consolidate with any
other Person, except that this Section 5.2(c) shall not apply to (i) any
merger or consolidation of Lessee with any other Person provided that the
Lessee is the surviving corporation after such merger or consolidation,
(ii) any merger or consolidation of any of the Lessee'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 Lessee, and (B) sell, lease, transfer or
otherwise dispose of its accounts, property or other assets (including
capital stock of any Subsidiary of Lessee), except that this Section
5.2(c) shall not apply to (i) any sale, lease, transfer or other
disposition of assets of any Subsidiary of the Lessee to the Lessee or
any of its Material Subsidiaries, (ii) sales of inventory in the ordinary
course of business of the Lessee and its Subsidiaries, (iii) disposition
of equipment or inventory determined in good faith to be obsolete or
unusable by the Lessee or its Subsidiaries, or (iv) any other sale of the
Lessee's assets during the Lease Term (excluding the sale of any assets
pertaining to Mozzarella's or Tia's units or any Ruby Tuesday's units
pursuant to the Lessee's Franchise Partner Program) with an aggregate
book value, when aggregated with all other such sales since May 30, 1997,
not exceeding 7.5% of the aggregate book value of all of the Lessee's
assets on the date of such transfer; provided, however, that no
transaction pursuant to clause (A), clause (B)(i) or clause B(iv) above
shall be permitted if a Potential Event of Default or Event of Default
exists at the time of such transaction or would exist as a result of such
transaction."
3. Amendments to Appendix A of the Master Agreement. Appendix
A of the Master Agreement is hereby amended by adding the following new
definitions to such Appendix A in alphabetical order:
"Franchise Partner Program" shall mean the optional financing
and business structuring program offered by the Sponsor to a limited
number of qualified restaurant operators, such operators to be determined
by the Sponsor in its sole discretion, which provides such restaurant
operators a business structure for organizing, owning and funding the
establishment and operation of at least 8 to 10 restaurants doing
business under operating concepts owned by Sponsor.
"Mozzarella's" shall mean "Mozzarella's American Cafes," an
operating concept of the Sponsor.
"Ruby Tuesday" shall mean "Ruby Tuesday," an operating
concept of Sponsor.
"Tia's" shall mean "Tia's Mexican Restaurants," an operating
concept of Tias, Inc., a Texas corporation, a wholly owned subsidiary of
Sponsor.
SECTION III. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written (the "Effective
Date") when this Amendment shall have been executed and delivered by
Lessee and the Required Lenders to the Agent.
SECTION IV. Representations and Warranties of Lessee. Lessee,
without limiting the representations and warranties provided in the
Master Agreement, represents and warrants to the Lenders and the Agent as
follows:
(a) The execution, delivery and performance by Lessee of this
Amendment are within Lessee's corporate powers, have been duly authorized
by all necessary corporate action (including any necessary shareholder
action) and do not and will not (a) violate any provision of any law,
rule or regulation, any judgment, order or ruling of any court or
governmental agency, the articles of incorporation or by-laws of Lessee
or any indenture, agreement or other instrument to which Lessee is a
party or by which Lessee or any of its properties is bound or (b) be in
conflict with, result in a breach of, or constitute with notice or lapse
of time or both a default under any such indenture, agreement or other
instrument.
(b) This Amendment constitutes the legal, valid and binding
obligations of Lessee, enforceable against Lessee in accordance with
their respective terms.
(c) No Potential Event of Default or Event of Default has
occurred and is continuing as of the Effective Date.
SECTION V. Survival. Each of the foregoing representations and
warranties and each of the representations and warranties made in the
Master Agreement shall be made at and as of the Effective Date. Each of
the foregoing representations and warranties shall constitute a
representation and warranty of Lessee under the Master Agreement, and it
shall be an Event of Default if any such representation and warranty
shall prove to have been incorrect or false in any material respect at
the time when made. Each of the representations and warranties made
under the Master Agreement (including those made herein) shall survive
and not be waived by the execution and delivery of this Amendment or any
investigation by the Lenders or the Agent.
SECTION VI. No Waiver, Etc. Lessee hereby agrees that nothing
herein shall constitute a waiver by the Lenders of any Event of Default,
whether known or unknown, which may exist under the Master Agreement.
Lessee hereby further agrees that no action, inaction or agreement by the
Lenders, including without limitation, any indulgence, waiver, consent or
agreement altering the provisions of the Master Agreement which may have
occurred with respect to the non-payment of any obligation during the
terms of the Master Agreement or any portion thereof, or any other matter
relating to the Master Agreement, shall require or imply any future
indulgence, waiver, or agreement by the Lenders. In addition, Lessee
acknowledges and agrees that it has no knowledge of any defenses,
counterclaims, offsets or objections in its favor against any Lender with
regard to any of the obligations due under the terms of the Master
Agreement as of the date of this Amendment.
SECTION VII. Ratification of Master Agreement. Except as expressly
amended herein, all terms, covenants and conditions of the Master
Agreement and the other Operative Documents shall remain in full force
and effect, and the parties hereto do expressly ratify and confirm the
Master Agreement as amended herein. All future references to the Master
Agreement shall be deemed to refer to the Master Agreement as amended
hereby.
SECTION VIII. Binding Nature. This Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
SECTION IX. Costs, Expenses and Taxes. Lessee agrees to pay on
demand all reasonable costs and expenses of the Agent in connection with
the preparation, execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for
the Agent with respect thereto and with respect to advising the Agent as
to its rights and responsibilities hereunder and thereunder. In
addition, Lessee shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of
this Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save the Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
SECTION X. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION XI. Entire Understanding. This Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or agreements, whether
written or oral, with respect thereto.
SECTION XII. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
RUBY TUESDAY, INC., as Lessee
By: /s/ J. Russell Mothershed
Title: C.F.O
Attest: /s/ Pfilip G. Hunt
Secretary
[CORPORATE SEAL]
ATLANTIC FINANCIAL GROUP, LTD., as Lessor
By:
Title:
Attest:
Secretary
SUNTRUST BANK, ATLANTA, as Agent
By:
Title:
By:
Title:
SUNTRUST BANK, ATLANTA, as a Lender
By:
Title:
By:
Title:
AMSOUTH BANK OF ALABAMA, as a Lender
By:
Title:
FIRST AMERICAN NATIONAL BANK, as a Lender
By:
Title:
WACHOVIA BANK, N.A., as a Lender
By:
Title:
BARNETT BANK, N.A., as a Lender
By:
Title:
HIBERNIA NATIONAL BANK, as a Lender
By:
Title:
FIRST TENNESSEE BANK, as a Lender
By:
Title:
FIRST AMENDMENT TO LOAN FACILITY AGREEMENT
AND GUARANTY
THIS FIRST AMENDMENT TO LOAN FACILITY AGREEMENT AND GUARANTY (this
"Amendment") dated as of October 30, 1997, by and between RUBY TUESDAY,
INC., a Georgia corporation ("Sponsor"), each of the financial
institutions listed on the signature pages hereof (the "Participants")
and SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as servicer
(in such capacity, the "Servicer");
W I T N E S S E T H:
WHEREAS, Sponsor and Servicer, in order to make available a loan
facility to certain franchisees of Sponsor, entered into that certain
Loan Facility Agreement and Guaranty dated as of May 30, 1997 (as
hereafter amended or modified, the "Loan Facility Agreement") by and
among Sponsor, Servicer and the Participants;
WHEREAS, in order to expedite the ongoing operations of the loan
facility, Sponsor and the Servicer entered into that certain Servicing
Agreement, dated as of May 30, 1997 (the "Servicing Agreement") to set
forth certain agreements regarding fees and operations;
WHEREAS, the Sponsor has requested, and the Servicer and the
Participants have agreed, to enter into certain amendments to the Loan
Facility Agreement to allow for, and set forth provisions governing the
issuance of, standby letters of credit by the Servicer on behalf of the
franchisees;
WHEREAS, the Sponsor, the Participants and the Servicer wish to
enter into this Amendment to set forth their understandings regarding the
issuance of such letters of credit, all as more particularly set forth
below;
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
SECTION I. Definitions. All terms used herein without definition
shall have the meanings set forth for such terms in the Loan Facility
Agreement.
SECTION II. Amendments.
1. Amendments to Section 1.1 of the Loan Facility Agreement.
Section 1.1 of the Loan Facility Agreement is hereby amended as follows:
(a) By adding the following new definitions to such Section 1.1
in alphabetical order:
"Letter of Credit" shall mean a standby letter of credit issued by
the Servicer on behalf of a Borrower pursuant to the terms of the
applicable Loan Commitment on the terms and conditions set forth in the
applicable Loan Agreement.
"Letter of Credit Fee" shall mean the fee paid by each Borrower
pursuant to the terms of the applicable Loan Agreement with respect to
all outstanding Letter of Credit Obligations thereunder.
"Letter of Credit Obligations" shall mean, with respect to each
Borrower, the aggregate of the face amount of all outstanding Letters of
Credit issued by the Servicer on behalf of such Borrower pursuant to the
applicable Loan Agreement plus, without duplication, the aggregate amount
of unreimbursed draws on such Letters of Credit.
"Letter of Credit Outstandings" shall mean the aggregate amount of
all Letter of Credit Obligations.
"Participant's Letter of Credit Fee" shall have the meaning set
forth in Section 2.4(b).
"Servicer's Letter of Credit Fee" shall have the meaning set forth
in the Servicing Agreement.
"Sponsor's Letter of Credit Fee" shall have the meaning set forth in
the Servicing Agreement.
(b) By deleting the definitions of "Loan Documents", "Loan
Indebtedness", and "Participant's Unused Commitment" in their entirety
and substituting the following in lieu thereof:
"Loan Documents" means the Loan Agreement, the Promissory Note, any
Personal Guaranty, any Spousal Consent, the Collateral Agreements, any
Letters of Credit and any other documents relating to the Loan or Letters
of Credit delivered by any Borrower or any guarantor or surety thereof to
the Servicer and any amendments thereto (provided that such amendments
are made with the consent of Sponsor, where such consent is required
under this Agreement).
"Loan Indebtedness" means all amounts due and payable by a Borrower
under the terms of the Loan Documents for a given Loan and outstanding
Letters of Credit, including, without limitation, outstanding principal,
accrued interest, any commitment fees, letter of credit fees and all
reasonable costs and expenses of any legal proceeding brought by the
Servicer to collect any of the foregoing (including without limitation,
reasonable attorneys' fees actually incurred).
"Participant's Unused Commitment" shall mean, with respect to any
Participant, the difference between such Participant's Participating
Commitment and such Participant's Funded Participant's Interest, as
further reduced by such Participant's Pro Rata Share of the Letter of
Credit Outstandings.
2. Amendment to Article II of the Loan Facility Agreement.
Article II of the Loan Facility Agreement is hereby amended by deleting
Sections 2.1, 2.2, 2.3, 2.4 and 2.10 thereof and substituting the
following in lieu thereof:
"2.1 Establishment of Commitment; Terms of Loans and Letters of
Credit.
(a) Commitment. Subject to and upon the terms and conditions
set forth in this Agreement and the other Operative Documents, and in
reliance upon the guaranty of the Sponsor set forth herein, the Servicer
hereby establishes a Commitment to the Sponsor to establish Loan
Commitments and make Advances to such Franchisees (and to issue Letters
of Credit on behalf of such Franchisees) as may be designated by the
Sponsor in its Funding Approval Notices during a period commencing on the
date hereof and ending on May 29, 1998 (as such period may be extended
for one or more subsequent 364-day periods pursuant to Section 2.8
hereof, the "Commitment Termination Date") in an aggregate committed
amount at any one time outstanding not to exceed THIRTY-FIVE MILLION AND
NO/100 DOLLARS ($35,000,000) (the "Commitment").
(b) Authorization of Loan Commitments; Loan Terms; Letter of
Credit Terms. Within the limits of the Commitment and in accordance with
the procedures set forth in the Servicing Agreement, the Sponsor may
authorize the Servicer to establish a Loan Commitment in favor of a
Franchisee who meets the credit criteria established by the Sponsor. The
amount of each Loan Commitment shall be determined by the Sponsor but
shall not be less than $250,000 nor exceed $3,500,000 for any Franchisee.
Pursuant to the Loan Commitment, the Servicer shall agree to make
Advances to the Borrower thereunder in a minimum amount of $25,000 and in
integral multiples of $1,000, such Advances not to exceed six (6) per
month unless the Servicer shall otherwise agree. In addition, the
Servicer shall agree to issue Letters of Credit on behalf of such
Borrower in an aggregate amount at any one time outstanding not to exceed
$250,000. Each Loan shall bear interest at the Borrower Rate designated
by Sponsor in the applicable Funding Approval Notice, and interest shall
be payable on each Payment Date and on the Maturity Date of such Loan
when all principal and interest shall be due and payable in full. Each
Loan may be prepaid in full or in part on any Business Day, without
premium or penalty. The Loan Term of each Loan shall not exceed
thirty-seven months. Each Letter of Credit shall be for a term of not
more than one year (unless otherwise agreed by the Servicer) and shall
mature on a date which is at least ten (10) days prior to the Maturity
Date. Any drawing upon a Letter of Credit which is not reimbursed by the
applicable Borrower on the same Business Day, the applicable Borrower
shall be deemed to have requested an Advance to repay such amount and the
Servicer shall make such Advance regardless of the minimum requirements
set forth above and regardless of whether or not a Default or Event of
Default exists under the applicable Loan Documents, which amounts shall
be Advances for all purposes hereunder.
(c) Obligation to Establish Loan Commitments. Servicer's
obligation to establish each Loan Commitment under the Operative
Documents is subject to the fulfillment of the following conditions as of
the Closing Date of such Loan:
(i) this Agreement and each of the other Operative Documents
shall be in full force and effect;
(ii) the representations and warranties of the Sponsor contained
in Sections 5.1 and 5.2 hereof shall be true and correct with the same
effect as though such representations and warranties had been made on the
Closing Date of such Loan;
(iii) the Servicer shall have received a Funding Approval Notice
from the Sponsor authorizing such Loan Commitment;
(iv) all precedents and conditions to the Loan Commitment
specified in the Servicing Agreement, together with such additional
precedents and conditions as may, at Sponsor's election, be included in
the applicable Funding Approval Notice, shall have been completed to the
Servicer's reasonable satisfaction; and
(v) no Credit Event or Unmatured Credit Event shall have
occurred and be continuing.
2.2 Conveyance of Participant's Interest.
(a) The Servicer hereby sells, assigns, transfers and conveys to
the Participants, without recourse or warranty, and each Participant
hereby purchases from the Servicer, an undivided percentage ownership
interest (which percentage shall be equal to each Participant's Pro Rata
Share) in (i) the Commitment, (ii) the Loan Commitments, (iii) the Loans
and Letter of Credit Obligations, (iv) the Collateral, (v) all rights
against any guarantor of any Loan, including the Sponsor, and (vi) all
right, title and interest to any payment or right to receive payment with
respect to the foregoing (collectively, the "Participant's Interest").
Notwithstanding the foregoing, each Participant's right to receive
payments of interest, commitments fees, letter of credit fees or other
fees with respect to the Commitment, the Loan Commitments, the Loans and
the Letter of Credit Obligations shall not exceed the amounts which such
Participant is entitled to receive pursuant to the terms of this
Agreement.
(b) In consideration of the entry by each Participant into this
Agreement and the obligation of each Participant hereunder, the Servicer
shall issue to each Participant on the Closing Date, a Participation
Certificate. Each Participation Certificate shall be in the amount of
the relevant Participant's Participating Commitment, and the Funded
Participant's Interest outstanding thereunder shall bear interest as
hereinafter set forth and shall be payable as hereinafter set forth.
(c) In accordance with the terms and conditions hereof, and in
consideration of the sale of the Participant's Interest to such
Participant, each Participant severally agrees from time to time, during
the period commencing on the Closing Date and ending on the Final
Termination Date, to fund its Pro Rata Share of outstanding Loans
(including Advances made by the Servicer in connection with unreimbursed
drawing upon outstanding Letters of Credit) made by the Servicer in an
aggregate amount at any one outstanding not to exceed such Participant's
Participating Commitment (subject to each Participant's obligations
pursuant to Section 2.3(d) hereof).
2.3 Funding of Advances; Funding of Participant's Interest in
Loans; Purchase of Participation in Letters of Credit.
(a) Funding of Advances and Issuance of Letters of Credit.. The
Servicer shall fund Advances requested by the Borrowers pursuant to the
terms of the Loan Documents in accordance with the terms of the
applicable Loan Documents and the Servicing Agreement. On the date of
any such funding, the Servicer shall elect whether or not to require the
Participants to fund their respective Pro Rata Share of such Advance or
Advances to be made on such date. In the event that the Servicer elects
not to require the Participants to fund their Pro Rata Share of the
Advances on such date, the Servicer shall make such Advance (each, a
"Fronting Advance") to the Borrower for the account of the Servicer;
provided that, the aggregate amount of Fronting Advances outstanding on
any date shall not exceed the amount of STBA's Participating Commitment
and further provided that the sum of (x) the aggregate Fronting Advances
plus (y) the aggregated Funded Participant's Interest plus (z) the
aggregate Letter of Credit Outstandings shall not exceed the amount of
the Commitment. If (i) any Credit Event shall have occurred, (ii) after
giving effect to any Advance, the aggregate Fronting Advances outstanding
hereunder would exceed STBA's Participating Commitment, or (iii) the
Servicer otherwise determines in its sole discretion to request a
Participant Funding hereunder, then the Servicer shall notify the
Participants pursuant to subsection (b) requesting a Participant Funding.
The Servicer shall issue Letters of Credit requested by the Borrowers
pursuant to the terms of the Loan Documents in accordance with the terms
of the applicable Loan Documents and the Servicing Agreement. The
Participants shall be notified in each Servicing Report of the aggregate
amount of Letter of Credit Outstandings.
(b) Notification of Participant Funding. In the event that the
Servicer desires that the Participants fund their respective Pro Rata
Shares of Advances or Loans made or outstanding pursuant to the Loan
Documents, the Servicer shall deliver written or telecopy notice to the
Participants (or telephonic notice promptly confirmed in writing or by
telecopy) (a "Participant Funding Request") by no later than 10:00 a.m.
(Atlanta, Georgia time) on the date which is the requested date of the
Participant Funding which shall specify (x) the date of the Participant
Funding, which shall be a Business Day, and (y) each Participant's Pro
Rata Share of the Loans outstanding to be funded in connection with such
Participant Funding.
(c) Participant Obligation. Each Participant shall make its
Participant Funding in the amount of its Pro Rata Share on the proposed
date thereof by wire transfer of immediately available funds to the
Servicer in Atlanta, Georgia by not later than 2:00 P.M. (Atlanta,
Georgia time). Unless the Servicer shall have received notice from a
Participant prior to the date of any Participant Funding that such
Participant will not make available to the Servicer such Participant's
Pro Rata Share of such Participant Funding, the Servicer may assume that
the Participant has made such portion available to the Servicer on the
date of such Participant Funding in accordance with this subsection (c)
and the Servicer may, in reliance on such assumption, make available to
the Borrowers a corresponding amount or credit the same to Fronting
Advances. If and to the extent that such Participant shall not have made
such portion available to the Servicer, such Participant and the Sponsor
shall severally agree to repay the Servicer forthwith (on demand in the
case of the Participant and within three (3) days of such demand in the
case of the Sponsor), without duplication, such amount with interest at
the Federal Funds Rate plus 2% per annum and, until such time as such
Participant has repaid to the Servicer such amount, such Participant
shall (i) have no right to vote regarding any issue on which voting is
required or advisable under this Agreement or the other Operative
Documents, and (ii) shall not be entitled to receive any payments of
interest, fees or repayment of the principal amount of such Advance which
the Participant has failed to pay to the Servicer. If such Participant
shall repay to the Servicer such amount, then such amount shall
constitute part of such Participant's Funded Participant's Interest.
(d) Participant's Obligation Absolute and Unconditional. Each
Participant's obligations to fund its Pro Rata Share of any requested
Participant Funding shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any
setoff, counterclaim, recoupment, defense, or other right which such
Participant may have against the Servicer, the Sponsor, any Borrower or
any other Person for any reason whatsoever, (ii) the occurrence of any
Credit Event or Unmatured Credit Event, (iii) the occurrence of any Loan
Default, (iv) any adverse change in the condition (financial or
otherwise) of the Sponsor or any other Credit Party or any Borrower, (v)
the acceleration or maturity of any Loan or the Sponsor's obligations
hereunder or the termination of the Commitment, Loan Commitment or the
Participating Commitments after the making of any Fronting Advance, (vi)
any breach of this Agreement by the Sponsor or any other Participant, or
(vii) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
(e) Fundings Following Default. Notwithstanding the foregoing
provisions of this Section 2.3, no Participant shall be required to fund
its Pro Rata Share of any requested Participant Funding for purposes of
refunding a Fronting Advance pursuant to subsection (d) above if a Credit
Event, Unmatured Credit Event or Loan Default with respect to the
relevant Loan has occurred and is continuing and, prior to the making by
the Servicer of such Fronting Advance, the Servicer had received written
notice from Sponsor, the relevant Borrower or any Participant specifying
that such Credit Event, Unmatured Credit Event or Loan Default had
occurred and was continuing (and identifying the same as a Credit Event,
Unmatured Credit Event or Loan Default, as the case may be); provided
that , in the case of an Unmatured Credit Event or Credit Event where the
Participants are not pursuing remedies, the Participants will be
obligated to fund their respective Pro Rata Shares of Fronting Advances
as long as the aggregate amount of such Fronting Advances does not exceed
$2,000,000. Each Participant expressly agrees, however, that it shall be
obligated to fund its Pro Rata Share of requested Participant Funding
with respect to Advances made by the Servicer with respect to
unreimbursed drawings upon outstanding Letters of Credit whether or not a
Credit Event, Unmatured Credit Event or Loan Default has occurred and is
continuing and whether or not made as a Fronting Advance.
2.4 Commitment Fees and Participant's Letter of Credit Fees.
(a) Each Participant will receive from amounts paid by the
Borrowers under the Loan Documents and the Sponsor under the Operative
Documents, a commitment fee (the "Commitment Fee") with respect to the
average daily amount of each Participant's Unused Commitment, for the
period commencing on the Closing Date and ending on the Final Termination
Date, or such earlier date as the Participating Commitment shall expire
or terminate, equal to 0.1875% per annum, such Commitment Fee to be
payable in arrears on each Payment Date which is the last day of a
calendar quarter (a "Quarterly Date") commencing on June 30, 1997,
calculated on the basis of a 360-day year and the actual number of days
elapsed. The Letters of Credit Outstanding shall be deemed to be a
utilization of the Commitment for purposes of calculating the Commitment
Fee.
(b) Each Participant will receive from amounts paid by the
Borrowers under the Loan Documents and the Sponsor under the Operative
Documents, a letter of credit fee (the "Participant's Letter of Credit
Fee") with respect to the average daily amount of each Participant's Pro
Rata Share of the Letter of Credit Outstandings, for the period
commencing on the Closing Date and ending on the Final Termination Date,
or such earlier date as the Participating Commitment shall expire or
terminate, equal to 0.90% per annum, such Participant's Letter of Credit
Fee to be payable in arrears on each Quarterly Date commencing on
December 31, 1997, calculated on the basis of a 360-day year and the
actual number of days elapsed.
(c) All Commitment Fees and Participant's Letter of Credit Fees
shall be paid on the dates due, in immediately available funds, to the
Participants by the Servicer from amounts received from the Borrowers and
Sponsor.
(d) In the event that (i) the commitment fees received by the
Servicer from the Borrowers and the Sponsor are not sufficient on any
Quarterly Date to pay the Commitment Fees to the Participants required
pursuant hereto, or (ii) the Letter of Credit Fees received by the
Servicer from the Borrowers and the Sponsor are not sufficient on any
Quarterly Date to pay the Participant's Letter of Credit Fees required
pursuant hereto, the Sponsor shall, upon demand of the Servicer,
immediately fund such difference to the Servicer (with such payment
allocated to specific Loan Payment Defaults as agreed by Sponsor and
Servicer) and either, at the election of the Sponsor, (x) the Sponsor
shall be reimbursed by the Servicer upon receipt of such amount from the
Borrower, (y) the Loan Indebtedness shall be deemed to be reduced by such
amount upon a repayment or purchase of such Defaulted Loan by Sponsor in
accordance with the terms of this Agreement, or (z) such amount shall be
deemed to have satisfied Sponsor's obligation to cure such Loan Payment
Default hereunder.
2.10. Pro Rata Treatment.
Subject to the application of payments pursuant to Article III and except
as specifically provided therein, each payment of principal of any Funded
Participant's Interest, each payment of interest with respect to the
Funded Participant's Interest, each payment of the Commitment Fees and
Participant's Letter of Credit Fees and each reduction of the Commitment
shall be allocated pro rata among the Participants in accordance with
their respective applicable Pro Rata Share. Each Participant agrees that
in computing such Participant's portion of any Funded Participant's
Interest to be made hereunder, the Servicer may, in its discretion, round
each Participant's percentage of such Participant Funding Request to the
next higher or lower whole dollar amount."
3. Amendment to Article III of the Loan Facility Agreement.
Article III of the Loan Facility Agreement is hereby amended by deleting
such Article in its entirety and substituting the following in lieu
thereof:
III. SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS
3.1 Servicer's Obligations with Respect to Loans; Collateral;
Non-Recourse.
(a) The Servicer shall, for itself and the benefit of all of the
Participants and the Sponsor, (i) document, close, manage, administer and
collect the Loans and issue and administer the Letters of Credit in
accordance with the terms of this Agreement and the Servicing Agreement
and exercise all discretionary powers involved in such management,
administration and collection and (ii) shall distribute the funds
received with respect to the Loans and Letter of Credit Obligations and
from the Sponsor in accordance with the terms of this Agreement. The
Servicer agrees that it will exercise the same care in administering the
Loans as it exercises with respect to loans of similar size and type in
which no participations are allocated, and each of the Participants
agrees that the Servicer shall have no further responsibility to the
Participants.
(b) The forms of Loan Agreement and Promissory Note used by the
Servicer as documentation for each Loan shall be substantially in the
forms attached hereto. The Sponsor shall have the right to direct the
Servicer to make modifications to such forms and amendments thereto from
time but the Sponsor may not direct the Servicer to revise or amend such
forms so as to be inconsistent with the terms of Section 2.1 hereof.
(c) Notwithstanding anything in this Agreement to the contrary,
each of the Participants acknowledges and agrees that the Servicer shall
have no obligation to the Participants with respect to (i) the creation,
perfection, priority or continuation of any Lien on any Collateral
obtained by the Servicer with respect to the Loans at the request of the
Sponsor, or (ii) the obtaining or retention of any guaranties required by
the Sponsor (other than to distribute any proceeds therefrom in
accordance with the terms of this Article III). The Participants
acknowledge and agree that the Sponsor has the right to release or modify
the terms of, any Collateral or any Personal Guaranty.
(d) Each of the Participants acknowledges and agrees that all
payments made to the Participants pursuant to this Agreement by the
Servicer shall be made solely from amounts received from the Sponsor, the
Borrowers and other obligors or Collateral under the applicable Loan
Documents and the Servicer shall have no personal liability for any
amounts payable to the Participants hereunder.
3.2 Application of Payments.
(a) The Servicer and the Sponsor shall instruct each Borrower to
make payments with respect to Loans, Letter of Credit Obligations and the
Loan Commitments directly to the Servicer, either by mail, wire transfer
or debit pursuant to an ACH Authorization (as such term is defined in the
Servicing Agreement).
(b) On each Payment Date which is the last day of a calendar
quarter, all payments of commitments fees received by the Servicer from
the Borrowers and the Sponsor and not previously distributed, shall be
applied to pay the Commitment Fees, with any excess amount applied in
accordance with the terms of the Servicing Agreement.
(c) On each Payment Date, all payments of interest received by
the Servicer from the Borrowers and the Sponsor pursuant to its Guaranty
contained herein with respect to the Loans and not previously distributed
by the Servicer, shall be applied to pay all accrued but unpaid interest
on the Funded Participant's Interest pursuant to this Agreement, then to
pay all accrued but unpaid Servicing Fees and then to pay the Sponsor's
Fee, in accordance with the terms of the Servicing Agreement.
(d) On each Payment Date, all payments of Letter of Credit Fees
received by the Servicer from the Borrowers and the Sponsor pursuant to
its Guaranty contained herein with respect to the Letter of Credit
Obligations and not previously distributed by the Servicer, shall be
applied to pay all accrued but unpaid Participant's Letter of Credit Fees
on the Funded Participant's Letter of Credit Interest pursuant to this
Agreement, then to pay all accrued but unpaid Servicer's Letter of Credit
Fees and then to pay the Sponsor's Letter of Credit Fee, in accordance
with the terms of the Servicing Agreement.
(e) On any Business Day on which the Servicer shall receive any
payment in respect of the principal amount of any Loan, whether from a
Borrower, the Sponsor pursuant to its Guaranty contained herein, or any
other obligor with respect thereto, the Servicer may elect, in its sole
discretion to (i) apply such principal payment to fund any requested
Advances, (ii) apply such amount to repay any outstanding Fronting
Advances, or (iii) to either (x) distribute such amount to the
Participants to reduce each Participant's Funded Participant's Interest
or (y) apply such amount to STBA's Funded Participant's Interest only
(with the understanding that the Funded Participant's Interest of each
Participant shall not be deemed to have been repaid until such amount is
actually received by such Participant); provided that, in the event that
the Servicer elects to apply any repayment to reduce STBA's Funded
Participant's Interest without a corresponding reduction of the other
Participant's Funded Participant's Interest, STBA shall be obligated to
make a payment to each Participant equal to such Participant's Pro Rata
Share of such payment upon the earlier of (i) the next Payment Date and
(ii) the occurrence of a Credit Event hereunder.
(f) If during any period when no Credit Event has occurred and
is continuing, amounts received by Servicer are not capable of being
allocated to any specific Loan or Letter of Credit Obligations or, in the
case of amounts allocable to a specific Loan or Letter of Credit
Obligations, are not sufficient to repay all obligations then due and
owing with respect thereto, such amounts shall be applied by the Servicer
as follows: (i) first, to the payment of Commitment Fees and
Participant's Letter of Credit Fees owing to the Participants hereunder,
(ii) second, to the payment of accrued interest on the Funded
Participant's Interest hereunder, (iii) third, to the payment of the
Servicing Fees and Servicer's Letter of Credit Fees owing under the
Servicing Agreement, (iv) fourth, to the repayment of the Funded
Participant's Interests outstanding hereunder, (v) fifth, to the payment
of all other amounts owing to the Servicer or any Participant hereunder,
and (vi) sixth, if all obligations of the Sponsor pursuant to the
Operative Documents have been satisfied in full, to the Sponsor.
(g) During any period when a Credit Event has occurred and is
continuing, any amounts received by Servicer with respect to the Loans or
the Letter of Credit Obligations shall be applied, after deduction of any
expenses incurred in the collection of any such amounts, as follows (i)
first, to the payment of any accrued and unpaid Servicing Fees and
Servicer's Letter of Credit Fees, (ii) second, to each Participant in
accordance with Pro Rata Share, and (iii) thereafter, to such Persons as
may be legally entitled thereto.
(h) If not sooner repaid, all amounts due and payable to the
Servicer and the Participants shall be due and payable in full on the
Final Termination Date, and if any Letter of Credit Obligations are
outstanding on such date, the Sponsor shall be required to post cash
collateral for such Letter of Credit Obligations in an amount equal to
105% thereof.
3.3. Servicing Report.
On each Payment Date, the Servicer shall telecopy to the Sponsor and
each Participant a servicing report in the form of Exhibit F attached
hereto (the "Servicing Report") setting forth the following information
with respect the Loans:
a. the aggregate principal balance of the Loans as of the close
of business on the last Business Day of the preceding Payment Period;
b. the aggregate amount of Loans repurchased by the Sponsor or
amounts collected with respect to the Collateral for the Loans;
c. the aggregate amount of Letter of Credit Outstandings as of
the close of business on the last Business Day of the preceding Payment
Period;
d. the aggregate Loan Commitments as of the close of business on
the last Business Day of the preceding Payment Period; and
e. each Loan which is fifteen days or more past due (including
the past due amount and the number of days past due)."
4. Amendment to Article IV of the Loan Facility Agreement
Article IV of the Loan Facility Agreement is hereby amended by deleting
Sections 4.3 and 4.4 thereof and substituting the following in lieu
thereof:
4.3 Defaulted Loan Guaranty Demand.
(a) In the event that following the end of a Response Period, a
Loan Payment Default is not cured or in the event that any other Loan
Default is not then waived, the Servicer shall have the right at any time
thereafter, to demand payment of the entire Loan Indebtedness with
respect to such Loan from the Sponsor pursuant to Article VIII hereof,
which amount, subject to the limitations set forth therein, shall be due
and payable on the date which is five (5) days following demand. The
Sponsor hereby acknowledges and agrees that the requirement for payment
in full of the Loan Indebtedness shall include the posting of cash
collateral with the Servicer in an amount equal to 105% of the
outstanding Letter of Credit Obligations of such Borrower.
(b) In the event that the Sponsor is not obligated to repay the
Loan Indebtedness with respect to a Defaulted Loan pursuant to the
Article VIII hereof or in the event that a Credit Event has occurred and
is continuing and Sponsor has not purchased all outstanding Loans
hereunder, the Sponsor agrees that the Servicer shall be released from
its obligations to the Sponsor hereunder with respect to administering
and enforcing all Loans and may administer and enforce such Loans and
Letter of Credit Obligations as it deems appropriate, without regard to
any limitations or restrictions set forth herein (but subject to
Article III hereof in all events) or in any other Operative Document."
4.4 No Waiver or Cure Available.
Notwithstanding anything contained in this Article to the contrary,
the Sponsor shall, within seven (7) days of its receipt of a written
demand from the Servicer instructing it to do so, make payment of the
Loan Indebtedness of any Loan and assume the Loan Commitment of a
Defaulted Borrower whose Loan Default either arises from the bankruptcy
or insolvency of the Borrower or the termination of the Sponsor's
franchise agreement with such Borrower. The Sponsor hereby acknowledges
and agrees that the requirement for payment in full of the Loan
Indebtedness shall include the posting of cash collateral with the
Servicer in an amount equal to 105% of the outstanding Letter of Credit
Obligations of such Borrower."
5. Amendment to Section 7.1 of the Loan Facility Agreement.
Section 7.1 of the Loan Facility Agreement is hereby amended by adding
the following sentence at the end thereof:
"The Sponsor hereby acknowledges and agrees that its obligation
hereunder to purchase all outstanding Loans and Loan Commitments shall
include the obligation to immediately post cash-collateral for all
outstanding Letter of Credit Obligations in an amount equal to 105% of
the amount thereof."
6. Amendment to Section 9.1 of the Loan Facility Agreement.
Section 9.1(b) of the Loan Facility Agreement is hereby amended by
deleting such subsection in it entirety and substituting the following in
lieu thereof:
(b) In addition to amounts payable elsewhere provided in this
Agreement, without duplication, the Sponsor hereby agrees to protect,
indemnify, pay and save the Servicer and each Participant harmless from
and against any and all claims, demands, liabilities, damages, losses,
costs, charges and reasonable expenses (including reasonable attorney's
fees and disbursements) which the Servicer or any Participant may incur
or be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit for the account of a Borrower, other
than as a result of the gross negligence or willful misconduct of the
Servicer; (ii) the failure of the Servicer to honor a drawing under any
Letter of Credit due to any act or omission (whether rightful or
wrongful) of any present or future de jure or de facto government or
governmental authority; or (iii) any third party claim arising
therefrom."
7. Amendment to Article X of the Loan Facility Agreement
Article X of the Loan Facility Agreement is hereby amended by deleting
such Article in its entirety and substituting the following in lieu
thereof:
ARTICLE X
The terms of this Loan Facility Agreement shall survive the
termination of the Commitment hereunder and the termination of any Loan
Commitment established pursuant the terms hereof until (x) the
indefeasible payment in full of each of the Loans, (y) the termination of
each of the Letters of Credit outstanding, and (z) the indefeasible
payment in full of all outstanding Letter of Credit Obligations.
Notwithstanding the foregoing, Article IX hereof shall survive the
termination of this Agreement upon such repayment and termination."
8. Amendment to Exhibits to the Loan Facility Agreement The
Loan Facility Agreement is hereby amended by deleting Exhibits C and F
thereto in their entirety and substituting the forms of Exhibits C and F
attached hereto in lieu thereof.
SECTION III. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written (the "Effective
Date") when this Amendment shall have been executed and delivered by
Sponsor and the Participants to the Servicer.
SECTION IV. Representations and Warranties of Sponsor. Sponsor,
without limiting the representations and warranties provided in the Loan
Facility Agreement, represents and warrants to the Participants and the
Servicer as follows:
(a) The execution, delivery and performance by Sponsor of this
Amendment are within Sponsor's corporate powers, have been duly
authorized by all necessary corporate action (including any necessary
shareholder action) and do not and will not (a) violate any provision of
any law, rule or regulation, any judgment, order or ruling of any court
or governmental agency, the articles of incorporation or by-laws of
Sponsor or any indenture, agreement or other instrument to which Sponsor
is a party or by which Sponsor or any of its properties is bound or (b)
be in conflict with, result in a breach of, or constitute with notice or
lapse of time or both a default under any such indenture, agreement or
other instrument.
(b) This Amendment constitutes the legal, valid and binding
obligations of Sponsor, enforceable against Sponsor in accordance with
their respective terms.
(c) No Unmatured Credit Event or Credit Event has occurred and
is continuing as of the Effective Date.
SECTION V. Survival. Each of the foregoing representations and
warranties and each of the representations and warranties made in the
Loan Facility Agreement shall be made at and as of the Effective Date.
Each of the foregoing representations and warranties shall constitute a
representation and warranty of Sponsor under the Loan Facility Agreement,
and it shall be an Credit Event if any such representation and warranty
shall prove to have been incorrect or false in any material respect at
the time when made. Each of the representations and warranties made
under the Loan Facility Agreement (including those made herein) shall
survive and not be waived by the execution and delivery of this Amendment
or any investigation by the Participants or the Servicer.
SECTION VI. No Waiver, Etc. Sponsor hereby agrees that nothing
herein shall constitute a waiver by the Participants of any Unmatured
Credit Event or Credit Event, whether known or unknown, which may exist
under the Loan Facility Agreement. Sponsor hereby further agrees that no
action, inaction or agreement by the Participants, including without
limitation, any indulgence, waiver, consent or agreement altering the
provisions of the Loan Facility Agreement which may have occurred with
respect to the non-payment of any obligation during the terms of the Loan
Facility Agreement or any portion thereof, or any other matter relating
to the Loan Facility Agreement, shall require or imply any future
indulgence, waiver, or agreement by the Participants. In addition,
Sponsor acknowledges and agrees that it has no knowledge of any defenses,
counterclaims, offsets or objections in its favor against any Participant
with regard to any of the obligations due under the terms of the Loan
Facility Agreement as of the date of this Amendment.
SECTION VII. Ratification of Loan Facility Agreement. Except as
expressly amended herein, all terms, covenants and conditions of the Loan
Facility Agreement and the other Operative Documents shall remain in full
force and effect, and the parties hereto do expressly ratify and confirm
the Loan Facility Agreement as amended herein. All future references to
the Loan Facility Agreement shall be deemed to refer to the Loan Facility
Agreement as amended hereby.
SECTION VIII. Binding Nature. This Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
SECTION IX. Costs, Expenses and Taxes. Sponsor agrees to pay on
demand all reasonable costs and expenses of the Servicer in connection
with the preparation, execution and delivery of this Amendment and the
other instruments and documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Servicer with respect thereto and with respect to
advising the Servicer as to its rights and responsibilities hereunder and
thereunder. In addition, Sponsor shall pay any and all stamp and other
taxes payable or determined to be payable in connection with the
execution and delivery of this Amendment and the other instruments and
documents to be delivered hereunder, and agrees to save the Servicer and
each Participant harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes.
SECTION X. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
SECTION XI. Entire Understanding. This Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or agreements, whether
written or oral, with respect thereto.
SECTION XII. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.
[Signatures Set Forth on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
RUBY TUESDAY, INC.
By: /s/ J. Russell Mothershed
Title: C.F.O.
Attest: /s/ Pfilip G. Hunt
Secretary
[CORPORATE SEAL]
SUNTRUST BANK, ATLANTA, as Servicer
By:
Title:
By:
Title:
SUNTRUST BANK, ATLANTA
By:
Title:
By:
Title:
AMSOUTH BANK OF ALABAMA
By:
Title:
WACHOVIA BANK, N.A.
By:
Title:
BARNETT BANK, N.A.
By:
Title:
HIBERNIA NATIONAL BANK
By:
Title:
FIRST TENNESSEE BANK
By:
Title:
EXECUTION COUNTERPART
SECOND AMENDMENT TO LOAN FACILITY
AGREEMENT AND GUARANTY
THIS SECOND AMENDMENT TO LOAN FACILITY AGREEMENT AND GUARANTY (this
"Second Amendment") dated as of March 4, 1998, by and between RUBY
TUESDAY, INC., a Georgia corporation ("Sponsor"), each of the financial
institutions listed on the signature pages hereof (the "Participants")
and SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as servicer
(in such capacity, the "Servicer");
W I T N E S S E T H:
WHEREAS, the Sponsor, Participants and Servicer, in order to make
available a loan facility to certain franchisees of Sponsor, entered into
that certain Loan Facility Agreement and Guaranty dated as of May 30,
1997, as amended by that certain First Amendment to Loan Facility
Agreement and Guaranty, dated as of October 30, 1997 (as hereafter
amended or modified, the "Loan Facility Agreement") by and among Sponsor,
Servicer and the Participants;
WHEREAS, in order to expedite the ongoing operations of the loan
facility, Sponsor and the Servicer entered into that certain Servicing
Agreement, dated as of May 30, 1997 (as amended or modified, the
"Servicing Agreement") to set forth certain agreements regarding fees and
operations;
WHEREAS, the Sponsor has requested, and the Servicer and the
Participants have agreed, to enter into certain amendments to the Loan
Facility Agreement;
WHEREAS, the Sponsor, the Participants and the Servicer wish to
enter into this Second Amendment to set forth their understandings
regarding the amendments;
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
I. Definitions. All terms used herein without definition shall
have the meanings set forth for such terms in the Loan Facility
Agreement.
II. Amendments.
A. Amendments to Section 1.1 of the Loan Facility Agreement.
Section 1.1 of the Loan Facility Agreement is hereby amended by adding
the following new definitions to such Section 1.1 in alphabetical order:
"Franchise Partner Program" shall mean the optional financing
and business structuring program offered by the Sponsor to a limited
number of qualified restaurant operators, such operators to be determined
by the Sponsor in its sole discretion, which provides such restaurant
operators a business structure for organizing, owning and funding the
establishment and operation of at least 8 to 10 restaurants doing
business under operating concepts owned by Sponsor.
"Mozzarella's" shall mean "Mozzarella's American Cafes", an
operating concept of the Sponsor.
"Ruby Tuesday" shall mean "Ruby Tuesday", an operating concept
of Sponsor.
"Tia's" shall mean "Tia's Mexican Restaurants", an operating
concept of Tias, Inc., a Texas corporation, a wholly owned subsidiary of
Sponsor.
B. Amendment to Section 6.1 of the Loan Facility Agreement.
Section 6.1 of the Loan Facility Agreement is hereby amended by deleting
Section 6.1(h)(iii) thereof and substituting the following in lieu
thereof:
"(iii) Consolidated Net Worth. Maintain at all times
Consolidated Net Worth in an amount not less than the sum of (i)
$180,000,000, plus (ii) an amount equal to 100% of the Net Proceeds of
all issuances of stock, warrants, Subordinated Debt, or other equity of
the Sponsor issued following the date hereof."
C. Amendment to Section 6.2 of the Loan Facility Agreement.
Section 6.2 of the Loan Facility Agreement is hereby amended by deleting
Section 6.2(c) thereof and substituting the following in lieu thereof:
"(c) Mergers, Sales, Etc.(A) Merge or consolidate with any
other Person, except that this Section 6.2(c) shall not apply to (i) any
merger or consolidation of Sponsor with any other Person provided that
the Sponsor is the surviving corporation after such merger or
consolidation, (ii) any merger or consolidation of any of the Sponsor'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 Sponsor, and (B) sell, lease,
transfer or otherwise dispose of its accounts, property or other assets
(including capital stock of any Subsidiary of Sponsor), except that this
Section 6.2(c) shall not apply to (i) any sale, lease, transfer or other
disposition of assets of any Subsidiary of the Sponsor to the Sponsor or
any of its Material Subsidiaries, (ii) sales of inventory in the ordinary
course of business of the Sponsor and its Subsidiaries, (iii) disposition
of equipment or inventory determined in good faith to be obsolete or
unusable by the Sponsor or its Subsidiaries, or (iv) any other sale of
the Sponsor's assets during the term of this Agreement (excluding the
sale of any assets pertaining to Mozzarella's or Tia's units or any Ruby
Tuesday units pursuant to the Company's Franchise Partner Program) with
an aggregate book value, when aggregated with all other such sales since
may 30, 1997, not exceeding 7.5% of the aggregate book value of all of
the Sponsor's assets on the date of such transfer; provided, however,
that no transaction pursuant to clause (A), clause (B)(i) or clause
(B)(iv) above shall be permitted if any Unmatured Credit Event or Credit
Event exists at the time of such transaction or would exist as a result
of such transaction."
III. Conditions of Effectiveness. This Second Amendment shall
become effective as of the date first above written (the "Effective
Date") when this Second Amendment shall have been executed and delivered
by Sponsor and the Required Participants to the Servicer.
IV. Representations and Warranties of Sponsor. Sponsor, without
limiting the representations and warranties provided in the Loan Facility
Agreement, represents and warrants to the Participants and the Servicer
as follows:
1. The execution, delivery and performance by Sponsor of this
Second Amendment are within Sponsor's corporate powers, have been duly
authorized by all necessary corporate action (including any necessary
shareholder action) and do not and will not (a) violate any provision of
any law, rule or regulation, any judgment, order or ruling of any court
or governmental agency, the articles of incorporation or by-laws of
Sponsor or any indenture, agreement or other instrument to which Sponsor
is a party or by which Sponsor or any of its properties is bound or (b)
be in conflict with, result in a breach of, or constitute with notice or
lapse of time or both a default under any such indenture, agreement or
other instrument.
2. This Second Amendment constitutes the legal, valid and
binding obligations of Sponsor, enforceable against Sponsor in accordance
with their respective terms.
3. No Unmatured Credit Event or Credit Event has occurred and
is continuing as of the Effective Date.
V. Survival. Each of the foregoing representations and warranties
and each of the representations and warranties made in the Loan Facility
Agreement shall be made at and as of the Effective Date. Each of the
foregoing representations and warranties shall constitute a
representation and warranty of Sponsor under the Loan Facility Agreement,
and it shall be a Credit Event if any such representation and warranty
shall prove to have been incorrect or false in any material respect at
the time when made. Each of the representations and warranties made
under the Loan Facility Agreement (including those made herein) shall
survive and not be waived by the execution and delivery of this Second
Amendment or any investigation by the Participants or the Servicer.
VI. No Waiver, Etc. Sponsor hereby agrees that nothing herein
shall constitute a waiver by the Participants of any Unmatured Credit
Event or Credit Event, whether known or unknown, which may exist under
the Loan Facility Agreement. Sponsor hereby further agrees that no
action, inaction or agreement by the Participants, including without
limitation, any indulgence, waiver, consent or agreement altering the
provisions of the Loan Facility Agreement which may have occurred with
respect to the non-payment of any obligation during the terms of the Loan
Facility Agreement or any portion thereof, or any other matter relating
to the Loan Facility Agreement, shall require or imply any future
indulgence, waiver, or agreement by the Participants. In addition,
Sponsor acknowledges and agrees that it has no knowledge of any defenses,
counterclaims, offsets or objections in its favor against any Participant
with regard to any of the obligations due under the terms of the Loan
Facility Agreement as of the date of this Second Amendment.
VII. Ratification of Loan Facility Agreement. Except as expressly
amended herein, all terms, covenants and conditions of the Loan Facility
Agreement and the other Operative Documents shall remain in full force
and effect, and the parties hereto do expressly ratify and confirm the
Loan Facility Agreement as amended herein. All future references to the
Loan Facility Agreement shall be deemed to refer to the Loan Facility
Agreement as amended hereby.
VIII. Binding Nature. This Second Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
IX. Costs, Expenses and Taxes. Sponsor agrees to pay on demand all
reasonable costs and expenses of the Servicer in connection with the
preparation, execution and delivery of this Second Amendment and the
other instruments and documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Servicer with respect thereto and with respect to
advising the Servicer as to its rights and responsibilities hereunder and
thereunder. In addition, Sponsor shall pay any and all stamp and other
taxes payable or determined to be payable in connection with the
execution and delivery of this Second Amendment and the other instruments
and documents to be delivered hereunder, and agrees to save the Servicer
and each Participant harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay
such taxes.
X. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
XI. Entire Understanding. This Second Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or agreements, whether
written or oral, with respect thereto.
XII. Counterparts. This Second Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment through their authorized officers as of the date first above
written.
RUBY TUESDAY, INC.
By: /s/ J. Russell Mothershed
Title: C.F.O.
Attest:
Secretary
[CORPORATE SEAL]
SUNTRUST BANK, ATLANTA, as Servicer
By:
Title:
By:
Title:
SUNTRUST BANK, ATLANTA
By:
Title:
By:
Title:
AMSOUTH BANK OF ALABAMA
By:
Title:
FIRST AMERICAN NATIONAL BANK
By:
Title
WACHOVIA BANK, N.A.
By:
Title:
BARNETT BANK, N.A.
By:
Title:
HIBERNIA NATIONAL BANK
By:
Title:
FIRST TENNESSEE BANK
By:
Title:
EXECUTION COUNTERPART
THIRD AMENDMENT TO LOAN FACILITY AGREEMENT
AND GUARANTY
THIS THIRD AMENDMENT TO LOAN FACILITY AGREEMENT AND GUARANTY (this
"Third Amendment") dated as of June 18, 1998, by and between RUBY
TUESDAY, INC., a Georgia corporation ("Sponsor"), each of the financial
institutions listed on the signature pages hereof (the "Participants")
and SUNTRUST BANK, ATLANTA, a Georgia banking corporation, as servicer
(in such capacity, the "Servicer");
W I T N E S S E T H:
WHEREAS, the Sponsor, Participants and Servicer, in order to make
available a loan facility to certain franchisees of Sponsor, entered into
that certain Loan Facility Agreement and Guaranty dated as of May 30,
1997, as amended by that certain First Amendment to Loan Facility
Agreement and Guaranty, dated as of October 30, 1997, as amended by that
certain Second Amendment to Loan Facility Agreement and Guaranty, dated
as of March 4, 1998 (as hereafter amended or modified, the "Loan Facility
Agreement") by and among Sponsor, Servicer and the Participants;
WHEREAS, in order to expedite the ongoing operations of the loan
facility, Sponsor and Servicer entered into that certain Servicing
Agreement, dated as of May 30, 1997 (as amended or modified from time to
time, the "Servicing Agreement") to set forth certain agreements
regarding fees and operations;
WHEREAS, the Sponsor has requested (i) that the Commitment be
increased to $52,500,000.00 (by increase of the Participating Commitments
of the existing Participants), and (ii) that the Commitment Termination
Date be extended to May 28, 1999;
WHEREAS, the Participants and Servicer are willing to agree to the
foregoing upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
I. Definitions. All terms used herein without definition shall
have the meanings set forth for such terms in the Loan Facility
Agreement.
II. Amendments.
A. Amendment to Section 2.1 of the Loan Facility Agreement.
Section 2.1 of the Loan Facility Agreement is hereby amended by deleting
Section 2.1(a) in its entirety and substituting in lieu thereof the
following Section 2.1(a):
(1) Commitment. Subject to and upon the terms and
conditions set forth in this Agreement and the other Operative
Documents, and in reliance upon the guaranty of the Sponsor set
forth herein, the Servicer hereby establishes a Commitment to the
Sponsor to establish Loan Commitments and make Advances to such
Franchisees as may be designated by the Sponsor in its Funding
Approval Notices during a period commencing on the date hereof and
ending on May 28, 1999 (as such period may be extended for one or
more subsequent 364-day periods pursuant to Section 2.8 hereof, the
"Commitment Termination Date") in an aggregate committed amount at
any one time outstanding not to exceed FIFTY TWO MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($52,500,000.00) (the
"Commitment").
b. Notices. The address for notices, requests and other
communications to the Sponsor shall be changed to the address and
teletransmission number set forth on the signature page hereof.
III. Waiver. The Servicer and each of the Participants hereby
waive any (i) Default or Event of Default or (ii) violation of any
requirements, under Section 2.8 of the Loan Facility Agreement, resulting
from the extension of the Commitment by this Third Amendment. Except as
expressly set forth herein, this Section 4 shall not be deemed to be a
waiver of any provisions of the Loan Facility Agreement and shall not
preclude the future exercise of any right, power or privilege available
to the Servicer or any Participant whether under the Loan Facility
Agreement or otherwise
IV. Conditions of Effectiveness. The effectiveness of this Third
Amendment and the obligation of Servicer to make lines of credit
available to franchisees of Sponsor under the Loan Facility Agreement, as
amended hereby, and the obligation of each Participant to purchase its
participation therein, is subject to receipt by Servicer of each of the
following in form and substance satisfactory to Servicer and each of the
Participants:
A. from each of the parties hereto a duly executed counterpart
of this Third Amendment;
B. a certificate of Sponsor, dated as of the date hereof,
signed by the Secretary or Assistant Secretary of Sponsor, (i) certifying
as to names and true signatures of the officers of Sponsor authorized to
execute and deliver this Third Amendment, (ii) certifying that Sponsor's
articles of incorporation and bylaws delivered to Servicer on June 18,
1998 have not been amended or modified and are in full force and effect
as of the date hereof, and (iii) certifying a true and correct copy of
the action taken by the Board of Directors or the Sponsor authorizing the
Sponsor's execution, delivery and performance of this Amendment and the
certificates referred to herein;
C. a certificate of the Secretary of State of the State of
Georgia as to the existence of the Sponsor as a Georgia corporation; and
D. a favorable written opinion of Powell, Goldstein, Frazer &
Murphy, counsel for Sponsor and Guarantors, in form satisfactory to
Servicer and each Participant and covering such matters relating to the
transactions contemplated by this Third Amendment as Servicer may
reasonably request;
E. in addition, each of the Participants shall have received a
duly executed Participation Certificate from the Servicer.
V. Representations and Warranties of Sponsor. Sponsor, without
limiting the representations and warranties provided in the Loan Facility
Agreement, represents and warrants to the Participants and Servicer as
follows:
A. The execution, delivery and performance by Sponsor of this
Third Amendment are within Sponsor's corporate powers, have been duly
authorized by all necessary corporate action (including any necessary
shareholder action) and do not and will not (a) violate any provision of
any law, rule or regulation, any judgment, order or ruling of any court
or governmental agency, the articles of incorporation or by-laws of
Sponsor or any indenture, agreement or other instrument to which Sponsor
is a party or by which Sponsor or any of its properties is bound or (b)
be in conflict with, result in a breach of, or constitute with notice or
lapse of time or both a default under any such indenture, agreement or
other instrument.
B. This Third Amendment constitutes the legal, valid and
binding obligations of Sponsor, enforceable against Sponsor in accordance
with their respective terms.
C. No Unmatured Credit Event or Credit Event has occurred and
is continuing as of the Effective Date.
VI. Survival. Each of the foregoing representations and warranties
and each of the representations and warranties made in the Loan Facility
Agreement shall be made at and as of the Effective Date. Each of the
foregoing representations and warranties shall constitute a
representation and warranty of Sponsor under the Loan Facility Agreement,
and it shall be a Credit Event if any such representation and warranty
shall prove to have been incorrect or false in any material respect at
the time when made. Each of the representations and warranties made
under the Loan Facility Agreement (including those made herein) shall
survive and not be waived by the execution and delivery of this Third
Amendment or any investigation by the Participants or the Servicer.
VII. No Waiver, Etc. Sponsor hereby agrees that nothing herein
shall constitute a waiver by the Participants of any Unmatured Credit
Event or Credit Event, whether known or unknown, which may exist under
the Loan Facility Agreement. Sponsor hereby further agrees that no
action, inaction or agreement by the Participants, including without
limitation, any indulgence, waiver, consent or agreement altering the
provisions of the Loan Facility Agreement which may have occurred with
respect to the non-payment of any obligation during the terms of the Loan
Facility Agreement or any portion thereof, or any other matter relating
to the Loan Facility Agreement, shall require or imply any future
indulgence, waiver, or agreement by the Participants. In addition,
Sponsor acknowledges and agrees that it has no knowledge of any defenses,
counterclaims, offsets or objections in its favor against any Participant
with regard to any of the obligations due under the terms of the Loan
Facility Agreement as of the date of this Third Amendment.
VIII. Ratification of Loan Facility Agreement. Except as expressly
amended herein, all terms, covenants and conditions of the Loan Facility
Agreement and the other Operative Documents shall remain in full force
and effect, and the parties hereto do expressly ratify and confirm the
Loan Facility Agreement as amended herein. All future references to the
Loan Facility Agreement shall be deemed to refer to the Loan Facility
Agreement as amended hereby.
IX. Ratification of Guaranty Agreement. The Guarantor hereby
ratifies and confirms that the Guaranty Agreement remains in full force
and effect and is hereby affirmed by the Guarantor.
X. Binding Nature. This Third Amendment shall be binding upon and
inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
XI. Costs, Expenses and Taxes. Sponsor agrees to pay on demand all
reasonable costs and expenses of the Servicer in connection with the
preparation, execution and delivery of this Third Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for
the Servicer with respect thereto and with respect to advising the
Servicer as to its rights and responsibilities hereunder and thereunder.
In addition, Sponsor shall pay any and all stamp and other taxes payable
or determined to be payable in connection with the execution and delivery
of this Third Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save the Servicer and each Participant
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
XII. Governing Law. THIS THIRD AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
XIII. Entire Understanding. This Third Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or
agreements, whether written or oral, with respect thereto.
XIV. Counterparts. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Address for Notices:
RUBY TUESDAY, INC.
150 W. Church Avenue
Maryville, Tennessee 37801 By: /s/ J. Russell Mothershed
Attention: Mr. J. Russell Mothershed Title: C. F. O.
Telecopy: (423) 379-6817
[CORPORATE SEAL]
Address for Notices:
SUNTRUST BANK, ATLANTA, as Servicer
25 Park Place, N.E.
Atlanta, Georgia 30303
Attention: Center No. 113 By:
Telecopy No. (404) 724-3716 Title:
with a copy to:
By:
F. M. Clell Deaver, III Title:
25 Park Place
24th Floor
Atlanta, Georgia 30303
Address for Notices:
SUNTRUST BANK, ATLANTA
25 Park Place, N.E.
Atlanta, Georgia 30303
Attention: Center No. 113 By:
Telecopy No.: (404) 724-3716 Name:
Title:
with a copy to:
F. M. Clell Deaver, III By:
25 Park Place Name:
24th Floor Title:
Atlanta, Georgia 30303
Participating Commitment: $10,000,000.00
Pro Rata Share: 19.0476%
Address for Notices: AMSOUTH BANK
1900 5th Avenue North By:
Birmingham, Alabama 35203 Title:
Attention: Mr. Alan Lott
Telecopy: (205) 583-4474
Participating Commitment: $7,500,000.00
Pro Rata Share: 14.2857%
Address for Notices: WACHOVIA BANK, N.A.
191 Peachtree Street, N.E.
29th Floor
Atlanta, Georgia 30303
Attention: Mr. John Canty
Telecopy: (404) 332-5016 By:
Title:
Participating Commitment: $7,500,000.00
Pro Rata Share: 14.2857%
Address for Notices: FIRST AMERICAN NATIONAL BANK
First American Center
315 Union Center, 3rd Floor
Nashville, TN 37237-0310 By:
Attention: Ms. Hope Stuart Title:
Telecopy: (615) 748-6072
Participating Commitment: $7,500,000.00
Pro Rata Share: 14.2857%
Address for Notices: NATIONSBANK, N.A.,
successor to Barnett Bank, N.A.
100 North Tryon Street
Charlotte, NC 28255 By:
Attention: Mr. Johns Ellington Title:
location code: NC-1-007-08-08
Telecopy: (704) 386-1270
Participating Commitment: $7,500,000.00
Pro Rata Share: 14.2857%
Address for Notices: HIBERNIA NATIONAL BANK
313 Carondelet Street
New Orleans, LA 70130
Attention: Mr. Troy Villaffara By:
Telecopy: (504) 533-5344 Title:
Participating Commitment: $7,500,000.00
Pro Rata Share: 14.2857%
Address for Notices: FIRST TENNESSEE BANK, N.A.
800 South Gay Street
Knoxville, TN 37901
Attention: Mr. Mike Blackwell By:
Telecopy: (423) 971-2883 Title:
Participating Commitment: $5,000,000.00
Pro Rata Share: 9.5238%
ACKNOWLEDGMENT OF GUARANTORS
Each of the Guarantors acknowledges and agrees to the terms of the
foregoing Third Amendment, and further acknowledges and agrees that (i)
all of the obligations of the Sponsor shall continue to constitute
"Guaranteed Obligations" covered by Subsidiary Guaranty Agreement
executed by the undersigned, and (ii) the Subsidiary Guaranty Agreement
is and shall remain in full force and effect on and after the date
hereof, and (iii) the foregoing agreement shall in no way release,
discharge, or otherwise limit the obligations of such Guarantor under the
Subsidiary Guaranty Agreement.
This Acknowledgment of Guarantors made and delivered as of June 18,
1998.
TIAS, INC.
By:
Title:
[CORPORATE SEAL]
LEASE
This lease made effective as of the 1st day of October, 1997, by and
between Riverfront Capital Business Trust, a Pennsylvania business trust,
having its principal offices at Suite 602, 3510 North Causeway Boulevard,
Metairie, LA 70002, hereinafter called Landlord, and Ruby Tuesday, Inc.,
a Georgia corporation having its principal offices at 4721 Morrison
Drive, Mobile, Alabama, 36609, hereinafter called Tenant.
WITNESSETH:
1. PREMISES. Landlord hereby leases to Tenant the space
outlined and cross-hatched on the floor plans designated Exhibit A,
attached hereto and made a part hereof, such space referred to
hereinafter as the Premises and consisting of approximately 49,954 total
rentable square feet of the second floor and basement in a building
("Building") located at 4721 Morrison Drive, Mobile, Alabama 36609.
2. USE. To be used and occupied by the Tenant for offices and
office equipment and all other uses incidental and related hereto.
3. TERM. The Term of this Lease shall commence on October 1,
1997 and shall continue for a period of ten years, ending on September
30, 2007.
4. EXTENSION PERIODS. Provided that Tenant is not in default hereof,
Tenant may, at its option, extend this Lease for two (2), additional
five (5) year periods, subject to rent escalations and provisions as
hereinafter set forth, and otherwise upon the same terms and
conditions contained herein, by giving notice to the Landlord of its
intention to extend, at least six (6) months prior to the end of the
Term.
5. BASE RENT. During the entire initial term hereof, Tenant
shall pay to Landlord as base rent the sum of SIX MILLION TWO HUNDRED
FORTY-FOUR THOUSAND TWO HUNDRED FIFTY AND NO/100 Dollars
($6,244,250.00). The Base Rent shall be payable as follows:
The monthly installment of $52,035.42 shall be paid in
advance, without notice, on or before the first day of each month
during the term.
6. BASE RENT FOR EXTENSION PERIODS. The Base Rental during the
First and Second Extension Periods shall be an amount equal to the
prevailing fair market rental value of the Premises as determined by
reference to comparable space in the Building, and in comparable
buildings, for comparable tenants, in the City of Mobile, Alabama, at
the time of commencement of each extension period, but in no event
shall the Base Rental for the first year of any Extension Term be less
than one hundred ten percent (110%) of the Base Rent plus any
Operating Rent, as hereinafter defined, or additional rent being paid
by Tenant during the year prior to Tenant's exercise of its option to
extend the Lease. In the event Tenant exercises either of its options
as provided for in this Lease, Landlord shall, within thirty (30) days
after receipt of Tenant's extension notice, send to Tenant Landlord's
written evaluation ("Landlord's Evaluation") for the prevailing fair
market rental value of the Premises as of the time of commencement of
the extension period. Within thirty (30) days thereafter, Tenant
shall send to Landlord a notice ("Tenant's Acceptance or Rejection
Notice") stating either (i) Tenant's agreement with Landlord's
Evaluation, in which event said amount shall be the Base Rent payable
by Tenant for the five (5) year term of the extension period plus any
Operating Rent, as hereinafter defined, or additional rent being paid
by Tenant at the time the option to extend is exercised or (ii)
Tenant's rejection of Landlord's evaluation. If Tenant and Landlord
cannot agree on the fair market rental value within sixty (60) days
after Landlord's receipt of the extension notice, the value shall be
determined by a qualified appraiser mutually agreeable to Landlord and
Tenant. If Landlord and Tenant cannot agree on an appraiser, each
shall select an appraiser and the two appraisers shall select a third.
The majority vote of the appraisers shall control.
7. RENTS IN DEFAULT. If any installment or payment of Rent is
not received by Landlord within ten (10) days following the day such
installment or payment was due, then Tenant shall pay Landlord a
charge of Five (5%) Percent for each such late installment or payment,
the same being a non-exclusive remedy hereunder. Late rental payments
also shall bear interest at the rate of twelve percent (12%) per
annum.
8. OCCUPANCY.
(a) Beginning October 1, 1997, Landlord shall deliver to Tenant and
Tenant shall accept the Premises containing approximately 49,954
rentable square feet.
(b) Except as otherwise may be provided for in this Lease, Tenant
shall take occupancy of the space in its As-Is condition.
9. OPERATING EXPENSES. In addition to the Base Rent payable by
Tenant, Tenant will pay to Landlord, as additional rent, an amount
equal to the increase in operating expenses, as hereinafter defined,
for each of the lease years over the operating expenses, for the first
lease year (October 1, 1997, through September 30, 1998, hereinafter
referred to as the Base Lease Year) times 45% (Tenant's Proportionate
Share). Lease Year shall mean the period beginning October 1 of each
year and ending on September 30 of the following year. The additional
rent due pursuant to this section is hereinafter referred to as
Operating Rent.
During September of each year, or as soon after September as practicable,
Landlord will give Tenant notice of Landlord's estimate of any Operating
Rent due for the next Lease Year. The Tenant will pay 1/12th of the
estimated Operating Rent at the time Base Rent is payable. The estimated
Operating Rent payments will begin October 1 of each year and continue
through September 30 of the following year.
As soon as practicable after the end of each Lease Year, Landlord will
deliver to Tenant a statement of the actual Operating Rent for that Lease
Year. If Landlord's statement shows that Tenant owes an amount that is
less than the estimated Operating Rent payments made by Tenant for such
Lease Year, Landlord will credit such excess first against any sums then
owed by Tenant to Landlord and then against the next payments of rental.
If Landlord's statement shows that Tenant owes more than the estimated
Operating Rent payments made by Tenant for such Lease Year, Tenant will
pay the deficiency to Landlord within thirty (30) days after delivery of
the statement.
The termination of this Lease will not affect the obligations of Landlord
and Tenant pursuant to this section be performed after termination.
"Operating expenses" are defined as all direct expenses of operating and
maintaining the land, building, and Premises in a manner deemed
reasonable and appropriate and for the best interest of the tenants in
the building, including, but not limited to, the following:
(a) All costs and expenses directly related to the land, building, and
Premises for operating and cleaning the Tenant's space in the
building, and common areas , and for removing snow, ice and debris,
and costs of fire and extended coverage and liability insurance.
(b) All costs and expense, other than those of a capital nature, of
replacing paving, curbs, walkways, landscaping (including
replanting and replacing flowers and other planting), common and
public lighting facilities in the building and on the land.
(c) Power for lighting common and public areas; power and fuel used in
lighting, heating, ventilating and air-conditioning the building;
water used by the occupants of the building.
(d) Normal maintenance of mechanical and electrical equipment,
including heating ventilating and air-conditioning equipment in the
building, but excluding capital expenditures.
(e) Window cleaning and janitor service, including janitor equipment
and supplies for the common and public areas.
(f) Maintenance of elevators, restrooms, lobbies, hallways and other
common and public areas of the building.
(g) Real estate taxes levied or assessed against the building,
improvements and the land.
Operating expenses as defined herein shall be accounted for by Landlord
using generally accepted accounting principles and methods consistently
applied.
Taxes for the Base Lease Year shall be the general real estate taxes,
special assessments and any other taxes that may be imposed in lieu of or
partially in lieu of general real estate taxes, payable in the base year
of this Lease. Taxes for subsequent calendar years shall be deemed to be
the taxes payable in the respective calendar year, even though the levy
or assessment thereof may be for a different year, and shall include
general real estate taxes, special assessments, and any other taxes that
may be imposed in lieu of or partially in lieu of general real estate
taxes.
Operating expenses shall not include capital expenditures for which the
Landlord is reimbursed or indemnified (either by an insurer, condemnor,
tenant or otherwise); expenses incurred in leasing or procuring new
tenants (including, without limitation, lease commissions, advertising
expenses and expenses of renovating space for new tenants); interest or
amortization payments on any mortgage or mortgages, and rental under any
ground or underlying lease or leases; wages, salaries or other
compensation paid to any executive employees above the grade of building
manager; wages, salaries or other compensation paid for clerks or
attendants in concessions or newsstands operated by the Landlord;
expenses in connection with maintaining and operating any garage operated
by the Landlord; the cost of any work or service performed for or
facilities furnished to the Tenant or other tenants at the Tenant's cost;
and any cost or expense representing an amount paid to a corporation
related to Landlord which is in excess of the amount which would be paid
in the absence of such relationship.
10. MAINTENANCE AND IMPROVEMENTS
(a) Tenant agrees to maintain the Premises in good condition, normal
wear and tear expected, and shall not allow or commit any waste
with respect to the Premises. Tenant shall repair at its expense
any damage to the Premises or building resulting from acts or
neglect of Tenant or Tenant's agents, employees, patrons or
invitees. The Premises shall not be altered, changed, nor any
additions or improvements made without prior written consent of
Landlord. Unless otherwise provided in writing, all such work
shall be done by or under the direction of Landlord at Tenant's
expense, and any alterations, physical additions, or improvements,
except movable office furniture and trade fixtures, shall become
the property of Landlord and shall be surrendered to Landlord upon
termination of this Lease; provided, however, that Tenant shall
remove all such alterations, additions and improvements if
Landlord so requests.
(b) Landlord shall perform all maintenance and make all repairs and
replacements to the structural portions of the Premises and to
the parking facilities and other common areas as designated by
Landlord.
11. SERVICES. The Landlord shall furnish to Tenant the following
services, utilities, supplies, and facilities:
(a) Access to the Premises 24 hours a day, seven days a week.
(b) Subject to availability from public utility services, heat,
ventilation and air-conditioning from 6:00 a.m. to 7:00 p.m.,
each business day and on Saturdays from 8:00 a.m. to 5:00 p.m.
and air conditioning in Tenant's computer area, as shown on
Exhibit "A" highlighted in yellow and referred to as Computer
Room, twenty-four (24) hours per day, seven (7) days per week.
Any additional HVAC usage by Tenant shall be considered overtime
usage and Tenant will be billed accordingly for such usage.
(c) Cleaning and janitorial service, including removal of refuse and
rubbish and furnishing washroom supplies as deemed necessary by
Landlord.
(d) Electricity for lighting and for operation of the Tenant's
Premises.
(e) Provisions, installation and replacement of all necessary light
bulbs, tubes and ballasts.
(f) Maintenance of the driveways and parking facilities and
other common area serving the Premises.
(g) Pest extermination and control.
(h) Use, as a paying customer, of the building's cafeteria as long as
Landlord, at Landlord's option, makes available or operates same.
12. CASUALTY. In the event any portion of the Premises, the
common areas, or the building of which the Premises are a part are
damaged by fire or other casualty, Landlord may, at Landlord's option,
elect to repair and restore, and Landlord shall perform such acts
within a reasonable period of time. In the event Landlord elects not
to repair or restore, then Landlord shall, within ninety (90) days
following such casualty, notify Tenant of its election not to repair
or restore, and this Lease shall thereby be canceled and terminated
and Tenant shall have no further responsibility for rental owed
hereunder from and after the date of the casualty.
13. INSURANCE.
(a) From the date Tenant first enters upon the Premises for any purpose
and thereafter throughout the Term of this Lease, Tenant shall
obtain and keep in force, at Tenant's expense, insurance for the
full insurable value of Tenant's trade fixtures, furnishings,
equipment and all other items of personalty of Tenant located on or
within the Premises. Tenant agrees and recognizes that Landlord
has no obligation hereunder or otherwise to insure any personal
property or other contents within the Premises, and that such
insurance must be procured and kept in force by Tenant at Tenant's
expense. Tenant will keep in force at Tenant's expense from the
date Tenant first enters upon the Premises for any purpose and
thereafter, so long as this Lease remains in effect, public
liability insurance with respect to the Premises, the land and the
building ( including parking and the sidewalk), in form
satisfactory to Landlord, in companies reasonably approved by
Landlord, insuring Landlord and Tenant as named insured and having
minimum limits of $1,000,000.00 on account of bodily injuries to or
death of one person, and $1,000,000.00 on account of bodily
injuries to or death of more than one person as a result of any one
accident or disaster and $1,000,000.00 property damage. Tenant
will deposit a photocopy of the policy or policies of such
insurance or certificates thereof with Landlord prior to Tenant's
entering upon the Premises for any purpose. Each policy or
certificate of insurance shall include assumed contract coverage
and shall be endorsed to provide that the same may not be canceled
or modified except upon not less than the (10) day's prior written
notice by the insurer to Landlord and to any mortgagee or trustee
under deed of trust named as an insured. If Tenant does not comply
with this Section, Landlord may, at its option , cause insurance to
be issued. In such event, Tenant agrees to pay the premiums for
such insurance promptly upon Landlord's demand.
(b) Landlord will carry fire and extended coverage insurance, insuring
the building in such amounts that Landlord reasonably deems
necessary. Landlord shall also carry public liability insurance
with respect to the building and the sidewalks and parking areas
with policy limits in an amount that Landlord reasonably deems
necessary.
14. CONDEMNATION. If at any time during the term, the whole of the
building of which the Premises are a part, or the Premises, be taken
under any statute or by right of eminent domain, then this Lease shall
terminate and the Landlord shall be entitled to all damages awarded as
a result of the condemnation. Tenant shall be permitted to remove
such of its trade fixtures and equipment as Tenant has installed in
the Premises and Tenant has no further responsibility for the rent.
15. SIGNS. Tenant shall be permitted to maintain Tenant's
existing monument type sign in its present location and size.
16. DEFAULT. If ( i ) the Tenant shall fail to pay any rental or
other sum of money due hereunder within ten (10) days after its due
date, or (ii) if the Tenant shall default in the performance of any of
its other obligations and if such default shall continue for thirty
(30) days after notice thereof is received or refused by Tenant from
Landlord (except that if the Tenant cannot cure such default within
said thirty (30) days period, this period shall be extended for a
reasonable additional time, provided that the Tenant commences to cure
such default within said thirty (30) days and proceeds with due
diligence thereafter to effect such cure), or (ii) if the Tenant shall
file a petition in bankruptcy court or be adjudicated bankrupt or
insolvent according to law, or shall make an assignment for the
benefit of creditors, then the Landlord may, in addition to all other
remedies available to Landlord at equity or law, accelerate all rental
hereunder, lawfully enter the Premises and repossess the same as the
former estate of the Landlord and expel the Tenant and those claiming
under the Tenant without being deemed guilty of any manner of trespass
and without prejudice to any other remedies which the Landlord may
have. Upon entry as aforesaid, Landlord may, in addition to any other
remedies available to Landlord, either terminate this Lease Agreement
or it may from time to time without terminating this Lease Agreement,
make such alterations and repairs as may be necessary in order to
relet the Premises, and relet the Premises for such term and at such
rentals and upon such other terms and conditions as the Landlord may
deem advisable. In the event of such reletting, all rentals received
by Landlord shall be applied, first, to the payment of any cost and
expenses of such reletting, including to the expense of alterations
and repairs; second, to the payment of any indebtedness other than
rental due hereunder from the Tenant to the Landlord; third, to the
payment of rental due and unpaid hereunder, and the residue, if any,
shall be held by the Landlord and applied in payment of future rental
due and unpaid hereunder. If such reletting shall yield rentals
insufficient for any month to pay the rental due by the Tenant
hereunder for that month, the Tenant shall be liable to the Landlord
for the deficiency and the same shall be paid monthly. No such re-
entry or taking possession of the Premises by the Landlord shall be
construed as an election or terminate this Lease unless a written
notice of such intention be given by the Landlord to the Tenant at the
time of such re-entry; but, notwithstanding any such re-entry and re-
letting without termination, the Landlord may at any time thereafter
elect to terminate this Lease for such previous breach. In the event
of any termination of Landlord, whether before or after re-entry,
Landlord may recover from the Tenant damages incurred by reason of
such breach, including the cost of recovering the Premises and all
rental owed for the remainder of the term. If the Landlord defaults
in performance or observance of any provision of this Lease, the
Tenant shall give the Landlord notice specifying in what manner the
Landlord has defaulted and, except as otherwise stipulated in this
Lease, if such default shall not be cured by the Landlord within
thirty (30) days after the delivery of such notice (except that if the
Landlord cannot cure such default within said thirty (30) day period,
this Period shall be extended for a reasonable additional time,
provided that the Landlord commences to cure such default within the
thirty (30) day period and proceeds diligently thereafter to effect
such cure) the Tenant shall have such remedies to which it may be
entitled under this Lease and under law or equity.
17. HOLDOVER. If the Tenant remains in the Premises beyond
expiration of the term of this Lease, or any extension or renewal
thereof, such holding over in itself shall not constitute a renewal or
extension of this Lease, but in such event, a tenancy from month to
month at 150% of the then current total monthly rent being paid by
Tenant.
18. ASSIGNMENT AND SUBLETTING. The Tenant may not assign this
lease or sublet all or any part of the Premises without the prior
written consent of Landlord; provided, however, that no such
assignment or sublease shall release Tenant from its obligations or
liabilities hereunder.
19. QUIET ENJOYMENT. The Tenant, on paying the rent and
performing the covenants of this Lease on its part to be performed,
may peaceably and quietly have, hold and enjoy the Premises for the
term of this Lease.
20. SUBORDINATION. This Lease shall be subordinate to all matters of
public record from time to time and mortgages on the property on which
the Premises is located, whether now existing or hereafter entered
into by Landlord. Upon request by Landlord, Tenant shall execute all
estoppel, attornment, subordination and similar instruments if this
Lease or any part of the land or building are to be assigned or
conveyed.
21. RULES AND REGULATIONS. The Tenant shall abide by and observe
the reasonable rules and regulations as promulgated by the Landlord
from time to time for the operation, safety, security, maintenance and
otherwise for the building in which the Premises are located.
22. COUNTERPARTS. This Lease is executed in several
counterparts, each of which shall be deemed to be an original, and all
counterparts shall constitute one and the same instrument. This Lease
shall not be binding and in effect until a counterpart has been
executed by the duly authorized representative of the Landlord and the
Tenant and delivered by each party hereto to the other.
23. MEMORANDUM OF LEASE. Neither this Lease, nor a memorandum or
short form thereof, shall be recorded without Landlord's prior written
consent.
24. TRANSFER BY LANDLORD. In the event of any sale, assignment,
transfer or conveyance of the Building in which the Premises are
located and the Lease by Landlord, Landlord shall be relieved of its
obligations under this Lease, both those arising before and after such
transfer, provided such transferee assumes all such obligations.
25. APPLICABLE LAW. This Lease shall be governed in accordance
with the laws of the State of Alabama.
26. BINDING EFFECT. This lease shall inure to the benefit of and
will be binding upon Landlord's successors and assigns. This Lease
will inure to the benefit of and will be binding upon the Tenant's
successors and assigns so long as the succession or assignment is
permitted by the terms of this Lease.
27. ENTIRE AGREEMENT. This Lease contains the entire agreement of
the parties and may not be modified except by an instrument in writing
which is signed by both parties.
28. NOTICES. Any notices, demand or request under this Lease
shall be in writing, shall be addressed as hereinafter provided and
delivered by hand or by registered or certified mail (return receipt
requested) or delivered by private express mail service and shall be
deemed effective upon receipt or refusal. Any notice, demand or
request by Landlord to Ruby Tuesday, Inc., shall be addressed to Ruby
Tuesday, Inc., at its address stated in the preamble hereto, Attention
Fred Berls, until otherwise directed by Ruby Tuesday, Inc. Any notice,
demand or request by Ruby Tuesday, Inc. to Landlord shall be addressed
to Mr. Greg A. Hoppper, Riverfront Capital Business Trust, at its
address stated in the preamble hereto.
29. IDEMNIFICATION. Except to the extent that such event is
covered by a policy of insurance required to be kept hereunder,
Landlord shall indemnify, defend and hold harmless Tenant, its
directors, officers, employees, contractors, successors and assign
from any loss, damages, and cost of defense ( including reasonable
attorneys' fees and court costs) arising our of (i) property damage or
bodily injury including death to any person, occurring on or about the
land or building, to the extent caused by the negligence or
intentional misconduct of Landlord, its agents or employees, and (ii)
any breach of any provisions of this Lease by Landlord.
Except to the extent that such event is covered by a policy of insurance
required to be kept hereunder, Tenant shall idemnify, defend and hold
harmless Landlord, its directors, officers, employees, contractors,
successors and assigns from any loss, damages, and cost of defense
(including reasonable attorneys' fees and court cost) arising our of (i)
property damage or bodily injury, including death to any person,
occurring on or about the land or building, to the extent caused by the
negligence or intentional misconduct of Tenant, its agents or employees,
and/or (ii) any breach of any provision of this lease by Tenant.
Except as set forth in this section, in no event shall either party be
liable to the other for any indirect, consequential or incidental
damages, including loss of goodwill or loss of profits.
30. AGENCY DISCLOSURE. Landlord and Tenant warrant and represent
to one another that neither has dealt with any other real estate brokers
except for Metcalfe & Company, Inc. regarding this Lease nor has created
any obligations that might give rise to a claim for commissions made by
any other broker.
IN WITNESS WHEREOF, the parties have executed this Lease effective on the
date first above written, but executed on the dates appearing together
with their signatures below.
LANDLORD
Riverfront Capital Business Trust
ATTEST:
By: /s/ J. Stephen Harvey
By: R.J. Stevens
As Its: Trustee
Date: 9/29/97
TENANT
Ruby Tuesday, Inc.
ATTEST:
By: /s/ J. Russell Mothershed
BY: J. Russell Mothershead
Assistant Secretary
As Its: C.F.O.
Date: 9/26/97
STATE OF ALABAMA
COUNTY OF MOBILE
I, Kimberly S. Rooney a Notary Public in and for said County in said
State, hereby certify that Ronald J. Stevens, whose name as a Trustee of
Riverfront Capital Business Trust, a Pennsylvania business trust, is
signed to the forgoing instrument and who is known to me, acknowledged
before me on this date, that he , being informed of the contents of said
instrument and as such Trustee and with full authority, executed the
same voluntarily for and as the act of said trust.
Given under my hand and official seal the 29th day of September, 1997.
Kimberly S. Rooney
NOTARY PUBLIC
My commission expires:
STATE OF ALABAMA
COUNTY OF MOBILE
I, Sue B. Coley a Notary Public in and for said County in said State,
hereby certify that J. Russell Mothershed, whose name as Chief Financial
Officer of Ruby Tuesday, Inc. a Georgia Corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on
this date, that he being informed of the contents of said instrument and
as such officer and with full authority, executed the same voluntarily
for and as the act of said corporation.
Given under my hand and official seal this the 26th day of September,
1997.
/s/ Sue B. Coley
NOTARY PUBIC
My commission expires:
May 4, 1998
AMENDED AND RESTATED
CONTRIBUTION AGREEMENT
THIS AMENDED AND RESTATED CONTRIBUTION AGREEMENT (the "Agreement")
is dated as of the 12th day of January, 1998, and is entered into as of
the 20th day of March, 1998, among RUBY TUESDAY, INC., a Georgia
corporation ("Parent"), RT COLORADO, INC., a Colorado corporation and
wholly owned subsidiary of Parent ("Subsidiary") and RT DENVER FRANCHISE,
L.P., a Delaware limited partnership of which Subsidiary is the general
partner ("Partnership").
1. Introduction
Parent is currently engaged in the business of operating restaurants
under the trade name, trademark and service mark "Ruby Tuesday" at each
of the locations listed on Exhibit A attached hereto (hereinafter, the
business of operating each such restaurant at each such location being
referred to individually, as the "Business" and collectively as the
"Businesses"). Parent wishes to contribute to Partnership certain assets
of Parent used exclusively in operating the Businesses, upon the terms
and conditions set out in this Agreement. As of the date of this
Agreement, Partnership executed a development agreement in the form of
Exhibit E attached hereto (the "Development Agreement"), as well as an
operating agreement, regarding the first new restaurant to be developed
pursuant to the Development Agreement, in the form of Exhibit F attached
hereto (the "Standard Operating Agreement"), and a support services
agreement in the form attached as Exhibit G hereto (the "Support Services
Agreement"), all collectively referred to herein as the "Franchise
Documents". Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter set
forth and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
2. Contribution and Receipt of Assets; Assumption of Liabilities
The consummation of the transactions provided for herein (the
"Closing") shall take place at the offices of Parent at such time and
place as the parties may hereto agree in writing (the "Closing Date"),
provided, however, the Closing shall take place on the date that is the
later to occur of (i) the date that the temporary liquor licenses for the
Businesses have been issued to Partnership by the appropriate local
authority(ies) or (ii) the date that Partnership has received a firm
commitment for financing for the contribution of capital to Parent on
terms reasonably acceptable to Partnership. On the Closing Date:
(a) Contribution and Receipt of Assets. Subject to the terms and
conditions of this Agreement, Parent shall contribute to Partnership all
of Parent's right, title and interest in and to the following assets of
Parent used exclusively in the operation of the Businesses (the
"Assets"), which Assets shall be contributed AS-IS, WHERE-IS:
(i) all stock in trade and merchandise in Parent's inventory
used by Parent exclusively in the conduct of the Businesses as of the
Closing Date (the "Inventory");
(ii) all furniture, fixtures, furnishings, equipment and
leasehold improvements used by Parent exclusively in the conduct of the
Businesses as of the Closing Date (the "Personal Property");
(iii) all rights of Parent to the software used exclusively in
the conduct of the Businesses as of the Closing Date and located at the
premises where the Businesses are conducted, including, without
limitation, all rights of Parent to use such software and the
documentation related thereto (the "Software");
(iv) all rights of Parent pursuant to all contracts, leases
(except for any interest of Parent in any lease with any third party
regarding the premises at which the Businesses are conducted, other than
the interest(s), if any, to be subleased to Partnership pursuant to the
Sublease(s) defined below), warranties, commitments, agreements, purchase
and sale orders and other executory commitments of Parent related solely
to the Businesses as of the Closing Date (the "Contracts");
(v) all rights of Parent in and to the underlying land, if
any, described on Schedule III attached hereto, together with the
structure(s) building(s) and other improvements owned by Parent and
located on such land;
(vi) all rights of Parent (to the extent assignable) pursuant
to any governmental permits and licenses used exclusively in the
operation of the Businesses (the "Permits");
(vii) Parent's telephone numbers for the Businesses (the
"Telephone Numbers");
(viii) Parent's customary amount of petty cash on hand at the
Businesses as of the Closing Date (the "Petty Cash").
Notwithstanding the foregoing, the Assets do not include the
following assets of Parent:
(i) Parent's accounts or notes receivable;
(ii) Parent's cash on hand at or with respect to the
Businesses (other than the Petty Cash);
(iii) Parent's trade name, trademarks, service marks,
copyrights and all other intellectual property or intangible property of
Parent; and
(iv) to the extent that the Businesses are conducted on
premises leased by Parent from a third party (or third parties), all
rights of Parent in any leasehold or other interest in the premises at
which the Businesses are conducted (except for any interest(s) to be
subleased to Partnership pursuant to the Sublease(s), defined below).
(b) Assumption of Liabilities. Subject to the terms and conditions
of this Agreement, Parent shall assign, and Partnership shall assume and
agree to satisfy, pay, discharge, perform and fulfill, as applicable, as
they become due, without charge or cost to Parent except as provided for
in this Agreement, and agrees to hold Parent harmless with respect to,
the following liabilities and obligations of Parent (the "Assumed
Liabilities"):
(i) all liabilities and obligations of Parent related to
owning the Assets and operating the Businesses on and after the Closing
Date except for the Excluded Liabilities described below; and
(ii) all liabilities and obligations of Parent under the
Contracts, the Permits and the Telephone Numbers that arise or are
attributable to events or conditions occurring on or after the Closing
Date.
Notwithstanding the foregoing, the Assumed Liabilities shall
not include the following liabilities or obligations of Parent (the
"Excluded Liabilities"):
(i) except to the extent otherwise provided in this
Agreement, any liabilities or obligations, whether or not known, of
Parent to be performed prior to the Closing Date or arising out of or
relating to Parent's ownership of the Assets or operation of the
Businesses prior to the Closing Date; and
(ii) Parent's accounts payable, notes payable and other
obligations for or related to Parent's indebtedness to banks or financial
institutions.
3. Loan to Partnership.
At the Closing, Parent shall lend to Partnership, in consideration
of Partnership's promissory note, a sum in the amount of $4,709,000.
Partnership shall deliver to Parent Partnership's promissory note, dated
the Closing Date, in favor of Parent in such amount (the "Note") in the
form attached hereto as Exhibit B. As security for the payment of the
Note, Partnership shall deliver to Parent a second lien mortgage/deed of
trust, dated as of the Closing Date, with respect to any owned real
property described on Schedule III (collectively, the "Second Mortgages")
and such other documents as may be reasonably required by Parent to
perfect a security interest for the benefit of Parent in and to such real
property.
4. Delivery of Documents and Related Transactions.
(a) At the Closing, the following documents (the "Closing
Documents") shall be delivered as follows:
(i) Parent shall deliver to Partnership the following executed
documents (the "Parent's Documents"):
(A) a bill of sale, assignment and assumption agreement
for the Assets substantially in the form of Exhibit C attached hereto
(the "Bill of Sale"), evidencing the contribution to Partnership of all
of Parent's right, title and interest in and to said Assets, free and
clear of all encumbrances except as set forth on Schedule I, pursuant to
which Partnership will accept such Assets and assume the Assumed
Liabilities;
(B) to the extent that the Businesses are conducted on
premises leased by Parent from a third party (or third parties), the
following:
(1) a sublease or subleases between Parent, as
sublessor, and Partnership, as sublessee, of such premises, in the form
of Exhibit D attached hereto (the "Sublease(s)"); and
(2) the written consent of each landlord to the
Sublease(s), if required;
(C) to the extent that the Businesses are conducted on
premises owned by Parent, a deed conveying Parent's interest in and to
the underlying land, together with structure(s), building(s) and other
improvements at the premises described on Schedule III attached hereto
(the "Deed");
(D) the Franchise Documents; and
(E) other related documents that Partnership may have
reasonably requested on or prior to the Closing Date.
(ii) Partnership shall deliver to Parent the following
executed documents (the "Partnership's Documents"):
(A) the Note;
(B) the Bill of Sale;
(C) to the extent that the Businesses are conducted on
premises leased by Parent from a third party (or third parties), the
Sublease(s);
(D) the Second Mortgages and other security documents
referred to in Section 3 of this Agreement;
(E) the Franchise Documents; and
(F) other related documents that Parent may have
reasonably requested on or prior to the Closing Date.
(b) Further Assurances and Cooperation Post-Closing. Parent and
Partnership, from time to time after the Closing (but without obligation
separate from the obligations expressly provided by this Agreement),
hereby agree to execute, acknowledge and deliver to each other such
instruments of conveyance and transfer, and will take such other actions
and execute and deliver such other documents, certifications and further
assurances, as either party may reasonably request with respect to the
assignment, transfer and delivery of the Assets and the assumption of the
Assumed Liabilities and the perfection of Parent's security interest in
the Assets pursuant to Section 3(a)(ii), in order to consummate in full
the transactions provided for herein.
(c) Other Adjustments. At the Closing, or as soon as practicable
after the Closing, the parties shall make an appropriate adjustment, on a
dollar-for-dollar basis, to reflect the proration of all items of expense
or income directly relating to the Assets and the operation of the
Businesses as of the Closing Date, and the net adjustments for all such
items shall be paid in immediately available funds on or before the date
that occurs sixty (60) days after the Closing Date (the "Adjustment
Payment Date"). Prorated items shall include the following: rent, real
and personal property taxes, payroll and payroll taxes, insurance
premiums, utilities, security deposits, other prepaid items and other
items customarily prorated. To the extent possible, any prorations not
determinable as of the Closing Date shall be prorated on the basis of the
most current information available at Closing; provided, however, Parent
and Partnership agree that, upon presentation, on or before the
Adjustment Payment Date, of written confirmation of (i) a change in an
estimated amount, or (ii) a determination of the amount of any proration
that cannot be determined as of the Closing Date, such amount will be
reflected in the payment(s) to be made pursuant to this Section 3(b) on
or before the Adjustment Payment Date. To the extent any of the Existing
Restaurants are operated under leases that provide for payment of rent
based on a percentage of annual gross sales of such Existing Restaurant,
such rent shall be calculated in accordance with the terms of the
underlying lease and each of Parent and Partnership shall be responsible
for its respective pro rata share of such percentage rent amount based on
the amount of gross sales occurring during their respective period of
ownership. Such adjustment shall take place on the date such payments
are due under such underlying lease. Parent shall make such payments due
to landlord and Partnership shall reimburse Parent for Partnership's
share of such payments on receipt of invoice for such amounts due to
Parent.
(d) Employees. Partnership and Parent agree as follows:
(i) Partnership's Responsibilities. Partnership shall offer
employment, on substantially the same terms and conditions as currently
in effect, to commence on and as of the Closing Date, to each employee of
the Businesses as of the Closing Date (including, without limitation, any
employee who is absent from work on the Closing Date on paid vacation or
pursuant to any leave of absence authorized by Parent or required by law
(hereinafter, all employees accepting employment with Partnership being
referred to collectively as the "Transferred Employees")). Partnership
agrees to give the Transferred Employees credit for their years of
service with Parent for the purpose of determining any eligibility or
vesting provisions that may be contained in employee plans provided to
such Transferred Employees by Partnership in connection with their
employment with Partnership. Partnership also agrees to give the
Transferred Employees credit for all vacation and sick leave accrued
during their employment with Parent and to provide, for the fiscal year
ending June 6, 1998, the same vacation and sick leave benefits to all
Transferred Employees as they would have been eligible to receive under
the Parent's policies now in effect.
(ii) Parent's Responsibilities. Parent agrees that, except as
provided in Section 4(d)(i) above, Partnership shall not be subject to
any liability with respect to, or resulting from the termination by
Parent of any of its employees from, any profit sharing, 401(k), pension,
stock option, vacation pay, sick pay, personal leave, severance pay,
retirement, bonus, deferred compensation, group life and health insurance
or other employee benefit plan, agreement or commitment of Parent.
The foregoing Section 4(d) does not, and shall not be deemed or
construed to, create any right in, or confer any right on, any employee
or any other third party.
5. Conditions to Closing.
(a) Conditions to Obligations of Partnership. All obligations of
Partnership under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following
conditions precedent:
(i) The representations and warranties of Parent contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing as
if made at the Closing.
(ii) Parent shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by or prior to or at the Closing.
(iii) As of the Closing, no suit, action or other proceeding,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
(iv) Each consent or approval listed on Schedule II as
required or necessary under contract or applicable law for the
consummation of the transactions contemplated hereby shall have been
obtained; provided, however, those certain consents or approvals
identified on such Schedule II as being subject to deferral need not have
been obtained on or before the Closing to the extent that Parent shall
have made appropriate arrangements to secure to Partnership the practical
and economic benefits of the agreements or other arrangements to which
such consents or approvals relate.
(v) The documents to be delivered by Parent at Closing
pursuant to Section 4(a) shall have been executed and delivered.
(vi) Partnership shall have received a certificate from
Parent, dated the Closing Date and certifying in such detail as
Partnership may reasonably request, that the conditions specified in
Sections 5(a) hereof have been fulfilled.
(b) Conditions to Obligations of Parent. All obligations of Parent
under this Agreement are subject to the fulfillment or satisfaction prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Partnership
contained in this Agreement shall have been true on the date hereof in
all material respects, and shall be true in all material respects as of
the Closing if made at the Closing.
(ii) Partnership shall have performed and complied in all
material respects with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
(iii) As of the Closing, no suit, action or other proceedings,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
(iv) Each consent or approval listed on Schedule II as
required or necessary under contract or applicable law of the
consummation of the transactions contemplated hereby shall have been
obtained; provided, however, those certain consents or approvals
identified on such Schedule II as being subject to deferral need not have
been obtained on or before the Closing, to the extent that Parent shall
have made appropriate arrangements to secure to Partnership the practical
and economic benefits of the agreements or other arrangements to which
such consents or approvals relate.
(v) The documents to be delivered by Partnership at Closing
pursuant to Section 5(a) shall have been executed and delivered.
(vi) Parent shall have received a certificate from Partnership
dated the Closing Date and certifying in such detail as Parent may
reasonably request, that the conditions specified in Sections 5(b) hereof
have been fulfilled and that all consents and approvals required or
necessary to transfer to Partnership all licenses or permits held by
Parent or the Businesses with respect to the sale or consumption of
alcoholic beverages on the premises at which the Businesses are conducted
have been obtained.
6. Term and Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by mutual consent of Parent, Subsidiary and Partnership;
(b) by Parent, Subsidiary or Partnership, if such terminating party
is not otherwise in default in this Agreement and if the Closing shall
not have occurred on or before March 31, 1998, or such other extended
date, if any, mutually agreed to by the parties in writing; and
(c) by either party if there has been a material breach of any
representation, warranty, covenant or agreement by the other party that
has not been cured or for which adequate assurance (reasonably acceptable
to such terminating party) of cure has not been given, in either case
within fifteen (15) business days following receipt of notice of such
breach.
If either party terminates this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other party
specifying the provision hereof pursuant to which such termination is
made. Except for any liability for the breach of this Agreement, upon
the termination of this Agreement pursuant to this Section 8, this
Agreement shall forthwith become null and void and there shall be no
further liability or the obligation on the part of Parent or Partnership
hereunder or with respect hereto.
7. Miscellaneous.
(a) Mail Addressed to Parent. After the Closing Date, Partnership
may open all mail addressed to Parent at the premises of the Businesses.
Partnership shall promptly forward to Parent any mail that does not
require Partnership's action.
(b) Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expenses.
(c) Transfer, Documentary and Other Taxes. Notwithstanding any
other provision in this Agreement (including, without limitation, Section
2(b)), in addition to any taxes due in connection with the contribution
of the Assets and the assumption of the Assumed Liabilities contemplated
by this Agreement, Partnership shall pay all federal, state and local
sales, use, documentary, transfer or other taxes or recording fees, if
any, due as a result of the contribution of the Assets hereunder, whether
imposed by law on Parent or Partnership, and Partnership shall indemnify,
reimburse and hold harmless Parent in respect of the liability for
payment of or failure to pay any such taxes or the filing of or failure
to file any reports required to be filed in connection therewith.
(d) Entire Agreement. This Agreement, together with the Closing
Documents, sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and shall not be amended
or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, together with the
Closing Documents.
(e) Assignment and Binding Effect. This Agreement may not be
assigned by either party hereto without the prior written consent of the
other party. Subject to the foregoing, all of the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of and
be enforceable by the successors and assigns of Parent, Subsidiary and
Partnership, but shall not be construed as conferring any other rights on
any other person.
(f) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(g) Construction. All headings contained in this Agreement are for
convenience of reference only, and do not form a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.
(h) Exhibits and Schedules. All Exhibits and Schedules referred to
herein are intended to and hereby are specifically made part of this
Agreement.
(i) Severability. Any provision of this Agreement that is invalid
or enforceable in any jurisdiction shall be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original, and all of which counterparts taken together shall
constitute one and the same instrument.
(k) Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Georgia.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
PARENT:
RUBY TUESDAY, INC.
By: /s/ Daniel T. Cronk
Name: Daniel T. Cronk
Title: Senior Vice President
SUBSIDIARY:
RT COLORADO, INC.
By: /s/ Timothy P. Kaliher
Name: Timothy P. Kaliher
Title: Vice President
PARTNERSHIP:
RT DENVER FRANCHISE, L.P.
By: RT Colorado, Inc., General Partner
By: /s/ Timothy P. Kaliher
Name: Timothy P. Kaliher
Title: Vice President
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule I Permitted Encumbrances
Schedule II Required Consents and Approvals
Schedule III Legal Description of Owned Real Property
Exhibits
Exhibit A List of Restaurant Locations
Exhibit B Form of Note
Exhibit C Form of Bill of Sale
Exhibit D Form of Sublease
Exhibit E Form of Development Agreement
Exhibit F Form of Standard Operating Agreement
Exhibit G Form of Support Services Agreement
Schedule I
PERMITTED ENCUMBRANCES
1. Liens that are immaterial in character, amount or extent, and that do
not materially affect the value, or do not materially interfere with the
present use, of the Assets.
2. UCC-1 Financing Statement:
[LIST APPLICABLE FINANCING STATEMENTS]
3. The Second Mortgages
Schedule II
REQUIRED CONSENTS AND APPROVALS
1. All consents and approvals required or necessary to transfer to
Partnership all licenses or permits currently held by Parent or the
Businesses with respect to the sale or consumption of alcoholic beverages
on the premises at which the Businesses are conducted.
2. All consents required or necessary from any third party (or third
parties) with respect to the Sublease(s).
3. All consents required by Parent's current lender(s).
4. Approval by the Board of Directors of Parent.
Schedule III
LEGAL DESCRIPTION OF OWNED REAL PROPERTY
EXHIBIT A
(Contribution Agreement)
Existing Restaurants Owned or Leased
1. Ruby Tuesday Owned
5525 Wadsworth Bypass
Arvada, CO 80002
2. Ruby Tuesday Owned
14100 East Iliff Avenue
Aurora, CO 80014
3. Ruby Tuesday Leased
Crossroads Mall
1600 28th Street, Space 245
Boulder, CO 80301
4. Ruby Tuesday Owned
8880 East Arapahoe Crossing
Englewood, CO 80112
5. Ruby Tuesday Owned
110 Boardwalk Drive
Ft. Collins, CO 80525
6. Ruby Tuesday Owned
35 Springer Drive
Highlands Ranch, CO 80126
7. Ruby Tuesday Leased
8025 West Bowles Avenue
Littleton, CO 80123
8. Ruby Tuesday Owned
Centennial
994 Dillon Road
Louisville, CO 80027
9. Ruby Tuesday Leased
4150 N. Freeway
Pueblo, CO 81008
10. Ruby Tuesday Leased
Westminster Centre
9280 Sheridan Boulevard
Westminster, CO 80031
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 12th day of
January, 1998, by and among RUBY TUESDAY, INC., a Georgia corporation
(the "Seller"), TIMOTHY P. KALIHER (the "Buyer"), RT COLORADO, INC., a
Colorado corporation (the "Company"), and RT DENVER FRANCHISE, L.P., a
Delaware limited partnership (the "Partnership").
WHEREAS, Seller owns 100 shares of the capital stock, $.01 par
value, of the Company, which constitutes all of the issued and
outstanding capital stock of the Company (the "Stock"); and
WHEREAS, the Company is the General Partner of the Partnership
pursuant to that certain Limited Partnership Agreement of the
Partnership, dated as of the date hereof (the "Partnership Agreement");
and
WHEREAS, Seller is now conducting the business of operating
restaurants under the trade name Ruby Tuesday at each of the locations
listed on Exhibit A attached hereto (individually, a "Restaurant" and
collectively the "Restaurants"); and
WHEREAS, the parties have agreed that it is in their mutual best
interests for the Buyer to purchase the Stock on the terms and conditions
set forth herein and for the parties to enter into the other arrangements
and agreements described herein;
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties and covenants contained herein, the parties
agree as follows:
1. Purchase and Sale of the Stock
(a) For and in consideration of the sum of One Hundred Thousand
Dollars ($100,000) (the "Purchase Price") to be paid to Seller in
accordance with Section 1(b) below, subject to the terms and conditions
herein set forth, on the Closing Date (as hereinafter defined), Seller
shall sell, assign, convey, transfer and deliver the Stock to Buyer, and
Buyer shall purchase, accept and acquire the Stock from Seller.
(b) Payment of the Purchase Price shall be made by Buyer to Seller
at the Closing (as hereinafter defined) by delivery to Seller of Buyer's
promissory note in the form of Exhibit B attached hereto (the "Note") in
the principal amount of the Purchase Price. The obligations of Buyer
under the Note shall be secured by a pledge of the Stock in favor of
Seller, to be evidenced by a stock pledge agreement in the form of
Exhibit C attached hereto (the "Stock Pledge Agreement").
2. Closing
The closing (the "Closing") of this transaction shall take place
immediately after the occurrence of the events set forth in Section 4
(the "Closing Date"), or such later date as may the parties may agree in
writing, at the a location designated by Seller, or such other location
as the parties may agree in writing. At the Closing, Seller shall
deliver to Buyer the certificate(s) representing the Stock, duly endorsed
in blank for the transfer of the Stock to Buyer, free and clear of any
liens, claims, pledges, charges or other encumbrances.
3. Closing Documents
(a) At the Closing, the following documents (the "Closing
Documents") shall be delivered as follows:
(i) the Note, to be delivered by Buyer to Seller;
(ii) the Stock Pledge Agreement to be delivered by Buyer to
Seller;
(iii) a guaranty in the form of Exhibit D attached hereto, to
be delivered by Buyer to Seller;
(iv) an amended operating agreement for each of the
Restaurants contributed to Partnership pursuant to the Contribution
Agreement (as defined herein), in the form of Exhibit E attached hereto
(collectively, the "Amended Operating Agreements"), to be executed by
Seller, Partnership and Buyer (as Controlling Principal) and delivered to
the other parties thereto; and
(v) such other related documents as Seller or Buyer may have
reasonably requested on or prior to the Closing Date.
(b) Seller and Buyer hereby agree, from time to time after the
Closing (but without obligation separate from the obligations expressly
provided by this Agreement), to execute, acknowledge and deliver to each
other such instruments of conveyance and transfer, and will take such
other actions and execute and deliver such other documents,
certifications and further assurances, as either party may reasonably
request with respect to the assignment, transfer and delivery of the
Stock, in order to consummate in full the transactions provided for
herein.
4. Other Events
Seller and Buyer acknowledge and agree that each of the following
events (the "Other Events") shall have occurred prior to the Closing:
(a) The contribution of certain assets to the Partnership relating
to the Restaurants pursuant to that certain Contribution Agreement among
Seller, Company and Partnership, dated the date hereof (the "Contribution
Agreement") shall have occurred. (Hereinafter, capitalized terms used
but not defined herein shall have the meanings ascribed to them in the
Contribution Agreement.)
(b) Seller and Partnership shall have entered into the Development
Agreement and the Standard Operating Agreement and the Support Services
Agreement (as described in Section 1 of the Contribution Agreement).
(c) The Partnership shall have made a one-time distribution of
capital in an amount of $18,809,000 (the "Distributed Capital") to the
Company.
(d) The Company shall have declared and paid a one-time dividend to
Seller, as its sole shareholder in the amount of the Distributed Capital.
5. Representations and Warranties of Seller and Company
Each of Seller and Company represents and warrants to Buyer that the
following is true as of the date hereof and will be true as of the
Closing:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado and has all requisite corporate power
to own, lease and operate its properties and assets, to carry on its
business as conducted and to carry out the transactions provided for in
this Agreement and the Partnership Agreement.
(b) The execution and delivery of this Agreement and performance
under this Agreement have been duly authorized by all necessary action on
the part of each of Seller and Company, do not violate the terms of their
respective articles of incorporation or bylaws and do not violate or
constitute a breach of any material agreement, instrument, order or
judgment to which either of them is a party or by which either of them is
bound.
(c) This Agreement has been, and on the Closing Date each of
Closing Documents will have been, duly executed and delivered by a duly
authorized signatory of each of Seller or Company, as applicable, and
constitutes the valid and binding agreement of each of Seller and
Company, as applicable, enforceable against each such party in accordance
with its terms, subject to the effect of applicable bankruptcy and
insolvency laws and general equitable principles.
(d) Company is authorized to issue 1000 shares of capital stock,
$.01 par value. No shares of capital stock of Company are currently
issued and outstanding except for the Stock. The Stock is owned by
Seller, free and clear of any liens, claims and encumbrances. Seller has
full right, power and authority to sell, assign, transfer and convey to
Buyer the Stock as herein provided. Upon transfer of the Stock to Buyer
at the Closing, Buyer will receive good and valid title to the Stock,
free and clear of any liens, claims, pledges, charges or other
encumbrances.
(e) There is no litigation pending or, to the knowledge of Seller
or Company, threatened against it seeking to enjoin or challenge any of
the transactions contemplated by this Agreement
6. Representations and Warranties of Buyer
Buyer represents and warrants to Seller and Company that the
following is true as of the date hereof and will be true as of the
Closing:
(a) He has the capacity and power to enter into this Agreement.
(b) The execution and delivery of this Agreement and performance of
this Agreement have been duly authorized by all necessary action on his
part and do not violate or constitute a breach of any material agreement,
instrument, order or judgment to which he is a party or by which he is
bound.
(c) This Agreement has been duly executed and delivered and
constitutes his valid and binding agreement, enforceable against him in
accordance with its terms, subject to the effect of applicable bankruptcy
and insolvency laws and general equitable principles.
(d) There is no litigation pending or, to his knowledge,
threatened, against him seeking to enjoin or challenge any of the
transactions contemplated by this Agreement.
(e) Buyer (i) is acquiring the Stock solely for his own account,
for investment, and the Stock is not being purchased with a view to
resale or distribution, in whole or in part, (ii) has no contract,
undertaking, understanding, agreement or arrangement, formal or informal,
with any person or sell, transfer or pledge all or any portion of the
Stock, and (iii) has no plans to enter into any such contract,
undertaking, understanding, agreement or arrangement. Buyer represents
that he has knowledge and experience in business and financial matters,
is able to evaluate the risks and benefits of investment in the Stock and
in the Partnership, has received all information concerning Seller,
Company, Partnership and the Special Limited Partner (as defined in the
Partnership Agreement) as he deems relevant and has had the opportunity
to obtain additional information as desired in order to evaluate the
merits of and the risks inherent in acquiring the Stock and otherwise
performing his obligations under this Agreement and the transactions
contemplated hereby, including, without limitation, causing the Company
to perform its obligations under the Partnership Agreement. Buyer has
had full opportunity to inspect the Businesses and the Assets and to ask
all questions of Seller, Company and Partnership regarding the Businesses
and the Assets. Buyer has had the opportunity to conduct its own
independent investigation relating to all aspects of the Businesses and
to obtain whatever opinions of specialists and experts it has deemed
necessary in making the decisions to enter into this Agreement and the
Closing Documents and to consummate the transactions contemplated hereby
and thereby. In making such decisions, (i) Buyer has not relied on
information received by it from Seller, Company or Partnership regarding
the past or present earnings of the Businesses as a determinant or
indicator of future earnings of the Businesses, and (ii) Buyer has not
relied on information received from Seller, Company or Partnership
regarding the prospects of future earnings of the Businesses.
(f) Condition of Assets. BUYER ACKNOWLEDGES AND AGREES THAT ALL
ASSETS TO BE CONTRIBUTED TO PARTNERSHIP PURSUANT TO THE CONTRIBUTION
AGREEMENT SHALL BE CONTRIBUTED ON AN "AS IS, WHERE IS" BASIS, AND THAT,
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5 OF THIS AGREEMENT, NONE OF
SELLER, COMPANY OR PARTNERSHIP HAS MADE, IS MAKING, OR SHALL MAKE, ANY
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, RESPECTING
ANY OF THE ASSETS, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER MATTER. FURTHER, BUYER ACKNOWLEDGES THAT BUYER HAS
INFORMED ITSELF AS TO THE BUSINESSES, AND BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT NONE OF SELLER, COMPANY OR PARTNERSHIP HAS MADE, MAKES, OR
SHALL MAKE, ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO
THE BUSINESSES.
7. Representations and Warranties regarding the Assets.
Each of Seller and Company represents and warrants to Partnership
the following, as of the closing of the contribution of the Assets
pursuant to the Contribution Agreement (the "Contribution Closing"):
(a) Organization and Authority. Each of Seller and Company
possesses all requisite corporate power and authority to own the Assets
and operate the Businesses and to enter into and perform the Contribution
Agreement and the documents contemplated thereby (the "Contribution
Documents"). The execution and delivery and performance of each of the
Contribution Documents have been duly authorized by all necessary
corporate action.
(b) Compliance with Laws and Instruments. Except as set forth on
Schedule I, the execution, delivery and performance by Seller and Company
of the Contribution Documents will not result in any material violation
of or be in conflict with or constitute a material default under any
applicable statute, regulation, order, rule, writ, injunction or decree
of any court or governmental authority or of the Articles of
Incorporation or Bylaws of Seller or Company or of any material agreement
or other material instrument to which Seller or Company is a party or is
a subject, or constitute a default thereunder.
(c) Title to Assets. The Assets have been contributed to
Partnership, free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and
defects of title of any nature whatsoever, except for the liens described
on Schedule II (the "Permitted Encumbrances"). There are no existing
agreements, options, commitments or rights with, of or to any person
(other than Buyer) to acquire any of Seller's interests in the Assets.
(d) Condition of Assets. Each of Seller and Company makes no
representation or warranty as to the condition of the Assets, which have
been contributed to Partnership on an AS IS, WHERE IS basis.
8. Conditions to Closing.
(a) Conditions to Obligations of Buyer. All obligations of Buyer
under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions
precedent:
(i) The representations and warranties of Seller and Company
contained in this Agreement shall have been true on the date hereof in
all material respects, and shall be true in all material respects as of
the Closing as if made at the Closing.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by or prior to or at the Closing.
(iii) The Other Events shall have occurred.
(iv) As of the Closing, no suit, action or other proceeding,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
(v) The documents to be delivered by Seller, Company and
Partnership at Closing pursuant to Section 3(a) shall have been executed
and delivered.
(vi) Buyer shall have received a certificate from Seller,
dated the Closing Date and certifying in such detail as Buyer may
reasonably request, that the conditions specified in Section 8(b) have
been fulfilled.
(b) Conditions to Obligations of Seller. All obligations of Seller
under this Agreement are subject to the fulfillment or satisfaction prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Buyer contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing if
made at the Closing.
(ii) Buyer shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
(iii) The Other Events shall have occurred.
(iv) As of the Closing, no suit, action or other proceedings,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
(v) The documents to be delivered by Buyer at Closing pursuant
to Section 3(a) shall have been executed and delivered.
(vi) Seller shall have received a certificate from Buyer dated
the Closing Date and certifying in such detail as Seller may reasonably
request, that the conditions specified in Section 8(a).
9. Covenants of Buyer
Buyer covenants with Seller that, for so long as any obligations
under the Note remain unpaid:
(a) Company will not issue any new stock or other securities of
Company.
(b) Company will not repurchase or redeem any stock or other
securities of Company.
(c) None of Company's assets will be diverted to the use or benefit
of any other person or entity other than in the ordinary course of
business.
(d) No dividends will be declared with respect to the shares of
Company.
10. Term and Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by mutual consent of the parties hereto;
(b) by either Seller or Buyer, if such terminating party is not
otherwise in default in this Agreement and if the Closing shall not have
occurred on or before March 31, 1998, or such other extended date, if
any, mutually agreed to by the parties in writing; and
(c) by Buyer or Seller if there has been a material breach of any
representation, warranty, covenant or agreement by another party that has
not been cured or for which adequate assurance (reasonably acceptable to
such terminating party) of cure has not been given, in either case within
fifteen (15) business days following receipt of notice of such breach.
If any party terminates this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other party
specifying the provision hereof pursuant to which such termination is
made. Except for any liability for the breach of this Agreement, upon
the termination of this Agreement pursuant to this Section 10, this
Agreement shall forthwith become null and void and there shall be no
further liability or the obligation on the part of any party hereunder or
with respect hereto.
11. Miscellaneous.
(a) Survival. Unless this Agreement is terminated pursuant to
Section 10(a) or Section 10(b) hereof, all representations, warranties,
covenants and agreements made in this Agreement or in a certificate
delivered pursuant hereto by the parties hereto shall survive the
termination of this Agreement or the consummation of the transactions
contemplated hereby for a period of one (1) year after the Closing Date.
(b) Notices. All notices, requests, or other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered or refused, if delivered personally, or, if delivered by
overnight carrier, such as Federal Express, when delivered as follows:
If delivered to Seller or Partnership at any time or to Company
prior to Closing:
c/o Ruby Tuesday, Inc.
Attention: Legal Department
4721 Morrison Drive
Mobile, Alabama 36609-3350
If delivered to Buyer or Partnership at any time or to Company after
Closing:
c/o Timothy P. Kaliher
1403 East Briar Circle
Highland Ranch, CO 80126
(c) Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expenses.
(d) Sales, Transfer, Documentary and Other Taxes. Buyer shall
pay all federal, state and local sales, documentary, transfer or other
taxes or recording fees, if any, due as a result of the purchase, sale or
transfer of the Stock hereunder, whether imposed by law on Seller or
Buyer, and Buyer shall indemnify, reimburse and hold harmless Seller in
respect of the liability for payment of or failure to pay any such taxes
or the filing of or failure to file any reports required to be filed in
connection therewith.
(e) Entire Agreement. This Agreement, together with the Closing
Documents, sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and shall not be amended
or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, together with the
Closing Documents.
(f) Assignment and Binding Effect. This Agreement may not be
assigned by either party hereto without the prior written consent of the
other party. Subject to the foregoing, all of the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of and
be enforceable by the successors and assigns of each party, but shall not
be construed as conferring any other rights on any other person.
(g) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(h) Construction. All headings contained in this Agreement are for
convenience of reference only, and do not form a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.
(i) Exhibits and Schedules. All Exhibits and Schedules referred to
herein are intended to and hereby are specifically made part of this
Agreement.
(j) Severability. Any provision of this Agreement that is invalid
or enforceable in any jurisdiction shall be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
(k) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original, and all of which counterparts taken together shall
constitute one and the same instrument.
(l) Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Georgia.
(m) Restructuring for Tax Purposes. If after review by counsel it
is determined that the present structure of this transaction will have
significant adverse tax consequences, and that such consequences can be
lawfully avoided by restructuring this transaction, the parties agree to
restructure the transaction and execute all necessary documents on or
prior to the Closing Date to effect such re-characterization.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
SELLER:
RUBY TUESDAY, INC.
By: /s/ J. Russell Mothershed
Name: J. Russell Mothershed
Title: Senior Vice President
BUYER:
/s/ Timothy P. Kaliher
TIMOTHY P. KALIHER
COMPANY:
RT COLORADO, INC.
By: /s/J. Russell Mothershed
Name: J. Russell Mothershed
Title: Vice President
PARTNERSHIP:
RT DENVER FRANCHISE, L.P.
By: RT COLORADO, INC., its general partner
By: /s/ J. Russell Mothershed
Name: J. Russell Mothershed
Title: Vice President
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule I Consents, Approvals and Compliance
Schedule II Permitted Encumbrances
Schedule III Legal Description of Owned Real Property
Exhibits
Exhibit A List of Restaurant Locations
Exhibit B Form of Note
Exhibit C Form of Stock Pledge Agreement
Exhibit D Form of Guaranty
Exhibit E Form of Amended Operating Agreement
Schedule I
CONSENTS, APPROVALS AND COMPLIANCE
1. All consents and approvals required or necessary to transfer to
Partnership all licenses or permits currently held by Seller or the
Businesses with respect to the sale or consumption of alcoholic beverages
on the premises at which the Businesses are conducted.
2. All consents required or necessary from any third party (or third
parties) with respect to the Sublease(s) or the Contracts.
3. Approval by the Board of Directors of each of Seller and Company.
4. Seller and Company make no representation with respect to compliance
with the requirements of the Americans with Disabilities Act of 1990.
Schedule II
PERMITTED ENCUMBRANCES
1. Liens for current real, personal or other property taxes not yet due
and payable.
2. Liens that are immaterial in character, amount or extent, and that do
not materially affect the value, or do not materially interfere with the
present use, of the Assets.
3. UCC-1 Financing Statements:
[LIST APPLICABLE FINANCING STATEMENTS]
4. The Second Mortgages.
Schedule III
LEGAL DESCRIPTION OF OWNED REAL PROPERTY
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made as of the 16th day
of December, 1997, between RUBY TUESDAY, INC., a Georgia corporation,
whose address is 4721 Morrison Drive, Mobile, Alabama 36609-3350 (herein
"Seller"), and RT Southwest Franchise, LLC, a Delaware limited liability
company, whose address is 9848 E. Cinnabar Avenue, Scottsdale, Arizona
85258 (herein "Buyer").
1. Introduction. Seller is now conducting the business of operating
restaurants under the trade name Ruby Tuesday at each of the six (6)
location(s) listed on Exhibit A attached hereto (individually, an
"Existing Restaurant," and collectively, the "Existing Restaurants").
Seller is also in the process of constructing one (1) additional Ruby
Tuesday restaurant at the location described in Exhibit A (the
"Construction Restaurant"). Seller wishes to sell to Buyer, and Buyer
wishes to purchase from Seller, certain assets of Seller used exclusively
in operating the Existing and Construction Restaurants, upon the terms and
conditions set out in this Agreement. Seller and Buyer wish the Existing
and Construction Restaurants to continue to operate under the name and
marks Ruby Tuesday and the system developed by Seller for operating Ruby
Tuesday Restaurants in connection with the Seller's Franchise/Partner
Program (the "Franchise/Partner Program"). Seller and Buyer wish to also
establish a relationship pursuant to which Buyer will develop sixteen (16)
new Ruby Tuesday restaurants ("New Restaurant(s)") in the Designated
Market Areas of Phoenix, Arizona; Tucson, Arizona; Yuma, Arizona;
Albuquerque, New Mexico; Santa Fe, New Mexico and El Paso, Texas (the
"Territory"). The terms under which Buyer will develop such New
Restaurants will be set forth in a separate Development Agreement (the
"Development Agreement"). The terms under which Buyer will operate the
twenty three (23) Existing, Construction and New Restaurants
(collectively referred to as the "Restaurants") will be set forth in
separate Operating Agreements for each applicable restaurant (the
"Operating Agreements"). Therefore, in consideration of the premises, the
mutual representations, warranties, covenants and agreements hereinafter
set forth and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
2. Development Agreement, Operating Agreement, Support Services
Agreement, Participation and Operating Agreement, SunTrust Loan Documents
and Related Agreements. Simultaneous with the execution of this
Agreement, Buyer shall execute, and perform pursuant to, the Development
Agreement applicable to the New Restaurants, the form of Operating
Agreement for the first New Restaurant to be developed (the "Standard
Operating Agreement"), the Support Services Agreement specifying certain
services and assistance to be provided by the Seller to Buyer related to
the operation of the Restaurants and the conditions for the performance of
those services (the "Support Services Agreement"), and such other related
agreements customarily executed in connection with the Ruby Tuesday
Franchise/Partner Program (including Power of Attorneys related to tax
records, telephone listings, and the internet). James F. Deyo, III,
individually (the "Controlling Principal"), Buyer, and Seller shall also
have entered into a Participation and Operating Agreement (the
"Participation Agreement") simultaneously with the execution of this
Agreement that specifies the terms and conditions of the relationship of
the members and management of Buyer, and Controlling Principal shall have
made the capital contribution required thereby. The Controlling
Principal shall have also entered into an Employment Agreement with Buyer
in the form acceptable to Seller (the "Employment Agreement"). Forms of
such Development Agreement, Standard Operating Agreement, Support Services
Agreement, Participation Agreement and Employment Agreement are attached
hereto as Exhibits G-1 through G-5, respectively. Buyer also shall have
executed the required loan documents in connection with the line of
credit offered by Sun Trust Bank in connection with the Franchise Partner
Program, including a line of credit agreement (the "SunTrust Credit
Agreement"), master promissory note (the "SunTrust Note"), security
agreement (the "SunTrust Security Agreement"), guaranty agreement (the
"SunTrust Guaranty") and other documents required in connection therewith
(collectively, the "SunTrust Loan Documents).
3. Sale and Purchase of Assets; Assumption of Liabilities. The
consummation of the transactions provided for herein (the "Closing")
shall take place at the offices of Seller upon such date and at such time
as is designated by Seller in writing (the "Closing Date"), provided,
however, the Closing shall take place on or after the date that is the
later to occur of (i) the date that the temporary liquor licenses for the
Existing and Construction Restaurants have been issued to Buyer by the
applicable state licensing authority governing the sale of alcoholic
beverages, or (ii) the date that Buyer has received a firm commitment for
financing for the purchase of the Existing and Construction Restaurants
on terms reasonably acceptable to Buyer (Buyer agrees that terms not
materially different form those described in the Uniform Franchise
Offering Circular dated October 15, 1997, delivered to Controlling
Principal on November 3, 1997 [and Supplement to Item 19 dated October
15, 1997, delivered to Controlling Principal on November 2, 1997] are
acceptable to Buyer); provided, however, in the event the conditions
described in subsections 3.(i) and 3.(ii) above are satsified prior to
March 1, 1998, Seller, in its sole discretion, may cause the Closing to
occur on a date designated by Seller on or after March 1, 1998. On the
Closing Date and at the Closing:
(a) Sale and Purchase of Assets. Subject to the terms and
conditions of this Agreement, Buyer shall purchase from Seller, and Seller
shall sell, transfer, assign, convey and deliver, all of Seller's right,
title and interest in and to the following assets of Seller used
exclusively in the operation of the Existing and Construction Restaurants
(the "Assets"), which Assets shall be conveyed AS-IS, WHERE-IS, WITH ALL
FAULTS:
(i) all stock in trade and merchandise in Seller's inventory
used by Seller exclusively in the conduct of the Existing and Construction
Restaurants as of the Closing Date (the "Inventory");
(ii) all furniture, fixtures, furnishings and other equipment
used by Seller exclusively in the conduct of the Existing and Construction
Restaurants as of the Closing Date (the "Personal Property");
(iii) all rights of Seller pursuant to all contracts, leases
(except for any interest of Seller in any lease with any third party
regarding the premises at which the Existing or Construction Restaurants
are operated, other than the interest(s), if any, to be subleased to Buyer
pursuant to the form of sublease attached hereto as Exhibit H ( the
"Sublease(s)")), warranties, commitments, agreements, purchase and sale
orders and other executory commitments of Seller related solely to the
Existing and Construction Restaurants as of the Closing Date (the
"Contracts");
(iv) all rights of Seller in and to the structure(s),
building(s) and other improvements, if any, listed as owned by Seller on
Exhibit A at the premises where the Existing and Construction Restaurants
are located; and
(v) all rights of Seller in and to the two (2) parcels of real
estate that Seller owns on which two (2) of the Existing Restaurants are
located, as described in Exhibit A to this Agreement.
Notwithstanding the foregoing, the Assets do not include the following
assets of Seller:
(i) Seller's accounts or notes receivable;
(ii) Seller's cash on hand at the Existing and/or Construction
Restaurants;
(iii) Seller's trade name, trademarks, service marks,
copyrights and all other intellectual property or intangible property of
Seller; and
(iv) to the extent that the Existing and Construction
Restaurants are operated on premises leased by Seller from a third party
(or third parties), all rights of Seller in any leasehold or other
interest in the premises at which the Existing and Construction
Restaurants are operated (except for any interest(s) to be subleased to
Buyer pursuant to the Sublease(s)).
(b) Assumption of Liabilities. Subject to the terms and conditions
of this Agreement, Seller shall assign, and Buyer shall assume and agree
to satisfy, pay, discharge, perform and fulfill, as applicable, as they
become due, without charge or cost to Seller except as provided for in
this Agreement, and agrees to hold Seller harmless with respect to, the
following liabilities and obligations of Seller (the "Assumed
Liabilities"):
(i) all liabilities and obligations of Seller related to owning
the Assets and operating the Existing and Construction Restaurants on and
after the Closing Date except for the Excluded Liabilities described
below; and
(ii) all liabilities and obligations of Seller under the
Contracts that arise or are attributable to events or conditions occurring
on or after the Closing Date.
Notwithstanding the foregoing, the Assumed Liabilities shall not include
the following liabilities or obligations of Seller (the "Excluded
Liabilities"):
(i) except to the extent otherwise provided in this Agreement,
any liabilities or obligations of Seller to be performed prior to the
Closing Date; and
(ii) Seller's accounts payable, notes payable and other
obligations for or related to Seller's indebtedness to banks or financial
institutions.
4. Purchase Price. In consideration of the sale of Assets and assumption
of the Assumed Liabilities, at the Closing, Buyer shall deliver to Seller
the following (collectively, the "Purchase Price"):
(i) Ten Million Five Hundred Fifty Thousand Dollars ($10,550,000)
(the "Base Price");
(ii) any sales taxes, recording taxes and/or fees, and/or other
taxes and/or fees due on the sale of Assets and assumption of Liabilities
contemplated by this Agreement (the "Transaction Taxes").
(a) Payment of the Purchase Price. The Purchase Price shall be paid
as follows:
(i) by the delivery of the sum of (A) seventy five percent
(75%) of the Base Price, plus (B) the Transaction Taxes, all to be paid by
certified check drawn on a local bank or by wire transfer of funds; and
(ii) by the delivery to Seller of Buyer's promissory note,
dated the Closing Date, in favor of Seller in the original principal
amount equal to twenty-five percent (25%) of the Base Price (the "Note")
in the form attached hereto as Exhibit B. As security for the payment of
the Note and the other obligations of Buyer to Seller, Buyer shall deliver
to Seller a Security Agreement, dated as of the Closing Date, in the form
attached hereto as Exhibit C, a second lien mortgage/deed of trust, dated
as of the Closing Date, with respect to the parcels of real estate
described in Section 3.(a)(v) in a form satisfactory to Seller (the
"Second Mortgage"), and such other documents as may be reasonably required
by Seller to perfect a security interest and/or lien for the benefit of
Seller in and to Buyer's assets (including, without limitation, UCC-1
financing statements in favor of Seller), and Buyer shall cause the
Controlling Principal to enter into a Guaranty in the form attached hereto
as Exhibit D.
(b) Adjustments to Purchase Price. At the Closing, the Purchase
Price shall be adjusted as set forth below in this Section 3(b) to reflect
the proration of all items of expense or income directly relating to the
Assets and the operation of the Existing and/or Construction Restaurants
as of the Closing Date. Prorated items shall include the following:
rent, real and personal property taxes, payroll and payroll taxes,
insurance premiums, utilities, utilities deposits, security deposits,
other prepaid items and other items customarily prorated. The net
adjustments shall be made in immediately available funds on a dollar-for-
dollar basis, and shall be added to or subtracted from the Purchase Price,
as applicable. Any prorations not determinable as of the Closing Date
shall be prorated on the basis of the most current information available
at Closing; provided, however, Seller and Buyer agree that, upon
presentation, on or before the date that occurs one hundred twenty (120)
days after the Closing Date or confirmation of (i) overpayment or
underpayment based on such estimate, or (ii) a determination of the amount
of any proration that cannot be determined as of the Closing Date, the
party that has received the benefit of such overpayment, underpayment or
failure to determine a proration will reimburse the other party in
immediately available funds as soon as possible after receipt of such
confirmation. To the extent any of the Existing and/or Construction
Restaurants are operated under leases that provide for payment of rent
based on a percentage of annual gross sales of such restaurant, such rent
shall be calculated in accordance with the terms of the underlying lease
and Buyer and Seller shall each be responsible for their respective pro
rata share of such percentage rent amount based on the amount of gross
sales occurring during their respective period of ownership. Such
adjustment shall take place on the date such payments are due under such
underlying lease. Seller shall make such payments due to landlord and
Buyer shall reimburse Seller for Buyer's share of such payments on receipt
of invoice for such amounts due to Seller.
(c) Allocation of Purchase Price. The aggregate amount of the
Purchase Price and the Assumed Liabilities shall be allocated among the
Assets in accordance with a schedule (the "Allocation Schedule") to be
completed on or prior to the Closing Date. Seller and Buyer hereby agree
to use such allocation to complete and file Internal Revenue Service Form
8594 with the Internal Revenue Service.
(d) Development and Initial Fees Related to Existing and
Construction Restaurants. The parties agree that the "Development Fees"
and "Initial Fees" (as each term is defined under the Franchise Partner
Program) related to the Existing and Construction Restaurants are included
within the Base Price.
5. Delivery of Documents and Related Transactions.
(a) At the Closing, the following documents (the "Closing
Documents"), together with the cash portion of the Purchase Price, shall
be delivered as follows:
(i) Seller shall deliver to Buyer the following executed
documents (the "Seller's Documents"):
1) a bill of sale for the Personal Property and the
Inventory substantially in the form of Exhibit E attached hereto (the
"Bill of Sale");
2) an Assignment and Assumption of Liabilities in the form
of Exhibit F attached hereto (the "Assignment/Assumption");
3) to the extent that the Existing and Construction
Restaurants operate from premises leased by Seller from a third party (or
third parties), the following:
(A) the Sublease(s); and
(B) the written consent of each landlord to the
Sublease(s), if required;
4) to the extent that the Existing and Construction
Restaurants are operated from premises listed on Exhibit A as owned by
Seller, deeds conveying Seller's interest in and to the land,
structure(s), building(s) and other improvements at the premises from
where the Existing and Construction Restaurants operate, as applicable
(the "Deed" or "Deeds").
5) an Operating Agreement for each of the six (6) Existing
Restaurants and the one (1) Construction Restaurant, substantially in the
form attached hereto as Exhibit I (collectively, the "Amended Operating
Agreements");
6) other related documents that Buyer may have reasonably
requested on or prior to the Closing Date; and
7) a Certificate of Occasional or Isolated Sale
substantially in the form of Exhibit J attached hereto (the "Certificate
of Occasional or Isolated Sale");
(ii) Buyer shall deliver to Seller (x) the cash portion of the
Purchase Price, and (y) the following executed documents (the "Buyer's
Documents"):
1) the Note;
2) the Assignment/Assumption accepted by Buyer;
3) to the extent that the Existing and Construction
Restaurants are operated on premises leased by Seller from a third party
(or third parties), the executed Sublease(s);
4) the executed Security Agreement, Second Mortgage(s) and
other security documents referred to in Section 4(a)(ii) of this Agreement
(collectively the "Security Documents");
5) the executed Guaranty (or Guaranties);
6) the executed Amended Operating Agreements for the six
(6) Existing Restaurants and the one (1) Construction Restaurant;
7) the accepted Bill of Sale;
8) a non-foreign person affidavit in accordance with
Section 1445 of the Internal Revenue Code;
9) any and all licenses, permits, certificates of
insurance or other documents required by title company or other lenders to
close the sale of the Assets; and
10) any other related documents that Seller may have
reasonably requested on or prior to the Closing Date.
(b) Further Assurances and Cooperation Post-Closing. Seller and
Buyer, from time to time after the Closing (but without obligation
separate from the obligations expressly provided by this Agreement),
hereby agree to execute, acknowledge and deliver to each other such
instruments of conveyance and transfer, and will take such other actions
and execute and deliver such other documents, certifications and further
assurances, as either party may reasonably request with respect to the
assignment, transfer and delivery of the Assets and the assumption of the
Assumed Liabilities and the perfection of Seller's security interest in
the Assets pursuant to Section 4(a)(ii), in order to consummate in full
the transactions provided for herein.
(c) Employees. Buyer shall offer employment, on substantially the
same terms and conditions as currently in effect, to commence on and as of
the Closing Date, to each employee of the Existing and Construction
Restaurants as of the Closing Date (including, without limitation, any
employee who is absent from work on the Closing Date on paid vacation or
pursuant to any leave of absence authorized by Seller or required by law
(hereinafter, all employees accepting employment with Buyer being referred
to collectively as the "Transferred Employees"). Buyer agrees to give the
Transferred Employees credit for their years of service with Seller for
the purpose of determining any eligibility or vesting provisions that may
be contained in employee plans provided to such Transferred Employees by
Buyer in connection with their employment with Buyer. Buyer also agrees
to give the Transferred Employees credit for all vacation and sick leave
accrued during their employment with Seller and to provide, for the fiscal
year ending June 6, 1998, the same vacation and sick leave benefits to all
Transferred Employees as they would have been eligible to receive under
the Seller's policies now in effect.
(d) Bulk Sales. Buyer hereby waives compliance with any applicable
"bulk sales law" or similar law by Seller, and Seller shall indemnify and
hold Buyer harmless against any liability under any such laws for losses
resulting from non-compliance therewith or Seller's application of the
proceeds of the sale of Assets contemplated by this Agreement.
6. Seller's Representations and Warranties. Seller represents and
warrants to Buyer the following:
(a) Organization and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia. Subject to any consents and approvals required for the
consummation of the transactions contemplated herein, Seller possesses all
requisite corporate power and authority to own the Assets and operate the
Existing Restaurants and to enter into and perform this Agreement and the
Seller's Documents. Subject to any consents and approvals required to
consummate the transactions contemplated herein, the execution and
delivery and performance of each of this Agreement and the Seller's
Documents by Seller have been duly authorized by all necessary corporate
action. Buyer acknowledges that, as of the date of the execution of this
Agreement, Seller has not obtained the requisite approval of its board of
directors to consummate this transaction, and that such approval is
necessary as a condition to complete the transaction contemplated
hereunder. This Agreement has been duly executed and delivered on behalf
of Seller by duly authorized officers of Seller, and this Agreement
constitutes, and the Seller's Documents, when executed and delivered, will
constitute, the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with their respective terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting the rights of creditors and general
principles of equity.
(b) Compliance with Laws and Instruments. Except for any consents
and approvals required for the consummation of the transactions
contemplated herein (including board approval as described in Section
5.(a)), the execution, delivery and performance by Seller of this
Agreement and the Seller's Documents will not result in any material
violation of or be in conflict with or constitute a material default under
any applicable statute, regulation, order, rule, writ, injunction or
decree of any court or governmental authority or of the Articles of
Incorporation or Bylaws of Seller or of any material agreement or other
material instrument to which Seller is a party or is a subject, or
constitute a default thereunder.
(c) Title to Assets. To the knowledge of Seller, Seller has good,
valid and marketable title to all of the Assets, free and clear of all
mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except for (i) liens for current real, personal or other
property taxes not yet due and payable, and (ii) liens that are immaterial
in character, amount or extent, and which do not materially affect the
value, or do not materially interfere with the present use of the Assets.
There are no existing agreements, options, commitments or rights with, of
or to any person (other than Buyer) to acquire any of Seller's interests
in the Assets.
(d) Condition of Assets. Seller makes no representation or warranty
as to the condition of the Assets, which shall be conveyed to Buyer on an
AS IS, WHERE IS BASIS, WITH ALL FAULTS. Buyer acknowledges that Seller
makes no representations that the premises of the Existing or Construction
Restaurants are in compliance with the requirements of the Americans with
Disabilities Act of 1990 ("ADA"), and that Buyer is responsible for any
changes required to the Existing and Contruction Restaurants, or the
premises thereof, for ADA compliance, if any are necessary.
(e) No Finder's Fees. Seller has not employed any broker or finder
or incurred any liability for any brokerage fees or commissions or any
finder's fees in connection with the negotiations related to this
Agreement or the consummation of the transactions contemplated hereby.
(f) No Litigation. No suit, action or other proceeding, or any
injunction or final judgment relating thereto, is pending or, to the
knowledge of Seller, threatened, before any court or governmental or
regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the Seller's Documents, or the consummation of the
transactions contemplated hereby and thereby, and no investigation that
might result in any such suit, action or proceeding is pending or, to the
knowledge of Seller, threatened.
(g) Completion of Construction Restaurant. Seller shall
complete, at its expense, the construction and outfitting of the
Construction Restaurant and shall stock the Construction Restaurant with
initial inventory and such replacement inventory as is required in the
normal course of business until the Construction Restaurant is sold to,
and franchised by, Buyer as described herein. The Construction Restaurant
is currently scheduled to open during the month of March, 1998. In the
event the opening occurs following the Closing, Buyer and Seller shall
coordinate such opening as described in the applicable Amended Operating
Agreement.
7. Buyer's Representations. Buyer represents and warrants to Seller the
following:
(a) Organization and Authority. Buyer is a limited liability
company, duly organized, validly existing and in good standing under the
laws of the State of Delaware. The sole manager member of Buyer is James
F. Deyo, III, and the only members of Buyer are the sole manager member
and Seller. Buyer is duly qualified to do business and is in good
standing in each jurisdiction where the conduct of its business currently
requires it to be qualified or would require it to be qualified after the
consummation of the transactions provided for in this Agreement and the
Buyer's Documents. Buyer possesses all requisite power and authority to
enter into and perform this Agreement and the Buyer's Documents. The
execution and delivery and performance of this Agreement and the Buyer's
Documents by Buyer have been duly authorized by all necessary action
(including, without limitation, all necessary action by the manager member
of Buyer). This Agreement has been duly executed and delivered on behalf
of Buyer by the sole manager member, as duly authorized by Buyer, and this
Agreement constitutes, and the Buyer's Documents, when executed and
delivered, will constitute, the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting the rights of
creditors and general principles of equity.
(b) Compliance with Laws and Instruments. The execution, delivery
and performance by Buyer of this Agreement and the Buyer's Documents will
not result in any material violation of or be in conflict with or
constitute a material default under any applicable statute, regulation,
order, rule, writ, injunction or decree of any court or governmental
authority or of the Certificate of Limited Liability Company or Operating
Agreement of Buyer or of any material agreement or other material
instrument to which Buyer is a party or is subject, or constitute a
default thereunder.
(c) No Finder's Fees. Buyer has not employed any broker or finder
or incurred any liability for any brokerage fees or commissions or any
finder's fees in connection with the negotiations related to this
Agreement or the consummation of the transactions contemplated hereby.
(d) Independent Investigation. Buyer has had full opportunity to
inspect the Existing and Construction Restaurants and the Assets and to
ask all questions of Seller regarding the Restaurants and the Assets.
Buyer has conducted its own independent investigation relating to all
aspects of the Restaurants and has obtained whatever opinions of
specialists and experts as it has deemed necessary in making the decisions
to enter into this Agreement and the Buyer's Documents and to consummate
the transactions contemplated hereby and thereby. Buyer has relied solely
on information received by it from such investigation in making such
decisions, and Buyer has not relied on information received by it from
Seller regarding the past or present earnings of the Restaurants or the
prospects of future earnings of the Restaurants in making such decisions.
(e) Condition of Assets. BUYER ACKNOWLEDGES AND AGREES THAT ALL
ASSETS TO BE TRANSFERRED, ASSIGNED OR LICENSED PURSUANT TO THIS AGREEMENT
AND THE CLOSING DOCUMENTS SHALL BE TRANSFERRED, ASSIGNED OR LICENSED ON AN
"AS IS, WHERE IS" BASIS, WITH ALL FAULTS AND THAT, EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 5 OF THIS AGREEMENT, SELLER IS MAKING, AND SHALL MAKE, NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, RESPECTING ANY
OF THE ASSETS, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
COMPLIANCE WITH THE ADA, OR ANY OTHER MATTER. FURTHER, BUYER ACKNOWLEDGES
THAT BUYER HAS INFORMED ITSELF AS TO THE RESTAURANTS, AND BUYER FURTHER
ACKNOWLEDGES AND AGREES THAT SELLER MAKES, AND SHALL MAKE, NO
REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE RESTAURANTS.
(f) No Litigation. No suit, action or other proceeding, or any
injunction or final judgment relating thereto, is pending or, to the
knowledge of Buyer, threatened before any court or governmental or
regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the Buyer's Documents, or the consummation of the
transactions contemplated hereby, and no investigation that might result
in any such suit, action or proceeding is pending or, to the knowledge of
Buyer, threatened.
8. Conditions to Closing.
(a) Conditions to Obligations of Buyer. All obligations of Buyer
under this Agreement are subject to the fulfillment or satisfaction, prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Seller contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing as
if made at the Closing.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by or prior to or at the Closing.
(iii) As of the Closing, no suit, action or other proceeding,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding shall be pending
or threatened.
(iv) Each consent or approval listed on Schedule 7(a)(iv)
required or necessary under contract or applicable law for the
consummation of the transactions contemplated hereby shall have been
obtained; provided, however, those certain consents or approvals
identified on such Schedule 7(a)(iv) as being subject to deferral need not
have been obtained on or before the Closing to the extent that Seller
shall have made appropriate arrangements to secure to Buyer the practical
and economic benefits of the agreements or other arrangements to which
such consents or approvals relate. Notwithstanding the foregoing, Seller
shall not be required to make any additional payment or incur any
obligation to any third party in order to obtain any consent or approvals
required or necessary for the consummation of the transactions
contemplated hereby.
(v) The documents to be delivered by Seller at Closing pursuant
to Section 4(a) shall have been executed and delivered.
(vi) Buyer shall have received a certificate from Seller, dated
the Closing Date and certifying in such detail as Buyer may reasonably
request, that the conditions specified in Sections 7(a)(i) and 7(a)(ii)
hereof have been fulfilled.
(b) Conditions to Obligations of Seller. All obligations of Seller
under this Agreement are subject to the fulfillment or satisfaction prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Buyer contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing if
made at the Closing.
(ii) Buyer shall have performed and complied in all material
respects with all terms and conditions of this Agreement or any other
agreement by and between Buyer and Seller (or any financing agreements
where Seller is a guarantor) required to be performed or complied with by
Buyer prior to or at the Closing (including, but not limited to: Buyer
shall be in full compliance with all applicable terms and conditions of
the Participation Agreement, Employment Agreement, Support Services
Agreement, Development Agreement, Standard Operating Agreement, and
SunTrust Loan Documents).
(iii) As of the Closing, no suit, action or other proceedings,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding shall be pending
or threatened.
(iv) Each consent or approval listed on Schedule 7(a)(iv) as
required or necessary under contract or applicable law of the consummation
of the transactions contemplated hereby shall have been obtained;
provided, however, those certain consents or approvals identified on such
Schedule 7(a)(iv) as being subject to deferral need not have been obtained
on or before the Closing, to the extent that Seller shall have made
appropriate arrangements to secure to Buyer the practical and economic
benefits of the agreements or other arrangements to which such consents or
approvals relate. Notwithstanding the foregoing, Seller shall not be
required to make any additional payment or incur any obligation to any
third party in order to obtain any consent or approvals required or
necessary for the consummation of the transactions contemplated hereby.
(v) The documents to be delivered by Buyer at Closing pursuant
to Section 4(a) shall have been executed and delivered.
(vi) Seller shall have received a certificate from Buyer dated
the Closing Date and certifying in such detail as Seller may reasonably
request, that the conditions specified in Sections 7(b)(i) and 7(b)(ii)
hereof have been fulfilled and that all consents and approvals required or
necessary to transfer to Buyer all licenses or permits held by Seller or
the Existing and Construction Restaurants with respect to the sale or
consumption of alcoholic beverages on the premises at which the Existing
and Construction Restaurants operate have been obtained.
(c) Negotiation in Good Faith in the Event of Partial Performance.
In the event that Seller is unable to transfer the Assets or obtain the
consents or permits necessary to transfer all of the assets related to
the Existing and Construction Restaurants as described herein, the parties
agree to negotiate in good faith to reach an agreement acceptable to both
parties concerning the disposition of the transaction described herein,
which may include the sale of a portion of such Assets to Buyer or the
reversing of the transaction. If the parties are unable to reach
agreement to continue the relationship, the parties agree to cooperate
fully in the termination and dissolution of the relationship.
9. Term and Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of Seller and Buyer;
(b) by either Seller or Buyer, if such terminating party is not
otherwise in default in this Agreement and if the Closing shall not have
occurred on or before May 30, 1998 or such other extended date, if any,
mutually agreed to by the parties in writing; and
(c) by either party if there has been a material breach of any
representation, warranty, covenant or agreement by the other party that
has not been cured or for which adequate assurance (reasonably acceptable
to such terminating party) of cure has not been given, in either case
within fifteen (15) business days following receipt of notice of such
breach.
(d) by Seller if Buyer is in material default of any of the
following agreements: the Participation Agreement, Employment Agreement,
Support Services Agreement, Development Agreement, Standard Operating
Agreement, or SunTrust Loan Documents.
If either party terminates this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other party
specifying the provision hereof pursuant to which such termination is
made. Except for any liability for the breach of this Agreement or any of
the agreements described in Section 9.(d), upon the termination of this
Agreement pursuant to this Section 9, this Agreement shall forthwith
become null and void and there shall be no further liability or the
obligation on the part of Seller or Buyer hereunder or with respect
hereto.
10. Miscellaneous.
(a) Survival. Unless this Agreement is terminated pursuant to
Section 9(a) or Section 9(b) hereof, all representations, warranties,
covenants and agreements made in this Agreement or in a certificate
delivered pursuant hereto by the parties hereto shall survive the
termination of this Agreement or the consummation of the transactions
contemplated hereby, subject to Section 10.(n).
(b) Notices. All notices, requests, or other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered or refused, if delivered personally, or, if delivered by
overnight carrier, such as Federal Express, when delivered as follows:
If delivered to Seller:
Ruby Tuesday, Inc.
4721 Morrison Drive
Mobile, Alabama 36609-3350
Attn: Legal Department
If delivered to Buyer:
RT Southwest Franchise, LLC
9848 E. Cinnabar Ave.
Scottsdale, AZ 85258
Attn: James F. Deyo, III
(c) Mail Addressed to Seller. After the Closing Date, Buyer may
open all mail addressed to Seller at the premises of the Existing and
Construction Restaurants. Buyer shall promptly forward to Seller any mail
that does not require Buyer's action.
(d) Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(e) Sales, Transfer, Documentary and Other Taxes. In addition to
the Transaction Taxes paid herewith, Buyer shall pay all federal, state
and local sales, documentary, transfer or other taxes or recording fees,
if any, due as a result of the purchase, sale or transfer of the Assets
hereunder (including such taxes or fees related to the recording of UCC-1
financing statements related to the Security Agreement and the Second
Mortgage(s)), whether imposed by law on Seller or Buyer, and Buyer shall
indemnify, reimburse and hold harmless Seller in respect of the liability
for payment of or failure to pay any such taxes or the filing of or
failure to file any reports required to be filed in connection therewith.
(f) Entire Agreement. This Agreement, together with the Closing
Documents, sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and shall not be amended
or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, together with the
Closing Documents.
(g) Assignment and Binding Effect. This Agreement may not be
assigned by either party hereto without the prior written consent of the
other party. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Buyer, but shall
not be construed as conferring any other rights on any other person.
(h) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(i) Construction. All headings contained in this Agreement are for
convenience of reference only, and do not form a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.
(j) Exhibits and Schedules. All Exhibits and Schedules referred to
herein are intended to and hereby are specifically made part of this
Agreement.
(k) Severability. Any provision of this Agreement that is invalid
or enforceable in any jurisdiction shall be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
(l) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to
be an original, and all of which counterparts taken together shall
constitute one and the same instrument.
(m) Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Arizona.
(n) Limitations. SELLER, BUYER AND THE CONTROLLING PRINCIPAL HEREBY
AGREE THAT NO FORM OF PROCEEDING PERMITTED HEREBY WILL BE MAINTAINED BY
ANY PARTY TO ENFORCE ANY LIABILITY OR OBLIGATION OF THE OTHER PARTY,
WHETHER ARISING FROM THIS AGREEMENT, OR OTHER WISE, UNLESS BROUGHT BEFORE
THE EXPIRATION OF ONE (1) YEAR FROM THE DATE OF CLOSING.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
SELLER:
RUBY TUESDAY, INC.
/s/ Mary Jane Trainor By: /s/ J. Russell Mothershed
Witness Name: J. Russell Mothershed
Title: Senior Vice President
ATTEST:
/s/ Mary Jane Trainor By: /s/ Pfilip G. Hunt
Witness Name: Pfilip G. Hunt
Title: Secretary
BUYER:
RT SOUTHWEST FRANCHISE, LLC
/s/ Mary Jane Trainor By: /s/ James F. Deyo, III
Witness (James F. Deyo, III), Manager
/s/ Mary Jane Trainor By: /s/ James F. Deyo, III
Witness Name: James F. Deyo, III
Title: Controlling Principal
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule 7(a)(iv) Required Consents and Approvals
Exhibits
Exhibit A List of Restaurant Locations; List of Owned and
Leased Real Property
Exhibit B Form of Note
Exhibit C Form of Security Agreement
Exhibit D Form of Guaranty
Exhibit E Form of Bill of Sale
Exhibit F Form of Assignment/Assumption
Exhibit G-1 Form of Development Agreement
Exhibit G-2 Form of Standard Operating Agreement
Exhibit G-3 Form of Support Services Agreement
Exhibit G-4 Form of Participation Agreement
Exhibit G-5 Form of Employment Agreement
Exhibit H Form of Sublease
Exhibit I Form of Amended Operating Agreement
Exhibit J Form of Certificate of Occasional or Isolated Sale
Schedule 7(a)(iv)
REQUIRED CONSENTS AND APPROVALS
1. All consents and approvals required or necessary to transfer to Buyer
all licenses or permits currently held by Seller or the Existing or
Construction Restaurants with respect to the sale or consumption of
alcoholic beverages on the premises at which the Existing or Construction
Restaurants operate.
2. All consents required or necessary from any third party (or third
parties) with respect to the Sublease(s).
3. All consents required by Seller's current lender(s).
4. The consent of Seller's Board of Directors
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made as of the 25th day
of June, 1998, between RUBY TUESDAY, INC., a Georgia corporation, whose
address is 150 West Church Avenue, Maryville, Tennessee 37801, (herein
"Seller"), and RT LONG ISLAND FRANCHISE, LLC, a Delaware limited liability
company, whose address 7 Laurita Gate, Port Jefferson, New York, 11777
(herein "Buyer").
1. Introduction. Seller is now conducting the business of operating
restaurants under the trade name Ruby Tuesday at each of the six (6)
location(s) listed on Exhibit A attached hereto (individually, an
"Existing Restaurant," and collectively, the "Existing Restaurants").
Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
certain assets of Seller used exclusively in operating the Existing
Restaurants, upon the terms and conditions set out in this Agreement.
Seller and Buyer wish the Existing Restaurants to continue to operate
under the name and marks Ruby Tuesday and the system developed by Seller
for operating Ruby Tuesday Restaurants in connection with the Seller's
Franchise/Partner Program (the "Franchise/Partner Program"). Seller and
Buyer wish to also establish a relationship pursuant to which Buyer will
develop nine (9) new Ruby Tuesday restaurants ("New Restaurant(s)") on
Long Island, New York (excluding the Borough of Brooklyn) (the
"Territory"). The terms under which Buyer will develop such New
Restaurants will be set forth in a separate Development Agreement (the
"Development Agreement"). The terms under which Buyer will operate the
fifteen (15) Existing and New Restaurants (collectively referred to as
the "Restaurants") will be set forth in separate Operating Agreements for
each applicable restaurant (the "Operating Agreements"). Therefore, in
consideration of the premises, the mutual representations, warranties,
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties agree as follows:
2. Development Agreement, Operating Agreements, Support Services
Agreement, Participation and Operating Agreement, SunTrust Loan Documents
and Related Agreements. Simultaneous with the execution of this
Agreement, Buyer shall execute, and perform pursuant to, the Development
Agreement applicable to the New Restaurants, the Operating Agreement for
the first New Restaurant to be developed (together with amendment
applicable to all Restaurants relating to Buyer's purchase of Coca-Cola
fountain beverage products), the Support Services Agreement (with addendum
for certain services in connection with liquor licenses) specifying
certain services and assistance to be provided by the Seller to Buyer
related to the operation of the Restaurants and the conditions for the
performance of those services (the "Support Services Agreement"), and such
other related agreements customarily executed in connection with the Ruby
Tuesday Franchise/Partner Program (including Power of Attorneys related to
tax records, telephone listings, the internet, and the filing of sales/use
tax returns). Carl Bachmann, individually (the "Controlling Principal"),
Buyer, and Seller shall also have entered into a Participation and
Operating Agreement (the "Participation Agreement") simultaneously with
the execution of this Agreement that specifies the terms and conditions
of the relationship of the members and management of Buyer, and
Controlling Principal shall have made the capital contribution required
thereby ($50,000 of which shall be loaned by Seller to Controlling
Principal and his spouse, Holly Bachmann, pursuant to a note in the form
attached hereto as Exhibit G-6 [the "LLC Capital Note"] which LLC Capital
Note shall be executed and delivered by Controlling Principal and his
spouse simultaneously herewith). The Controlling Principal shall have
also entered into an Employment Agreement with Buyer in the form
acceptable to Seller (the "Employment Agreement"). Forms of such
Development Agreement, the Operating Agreements, Support Services
Agreement, Participation Agreement and Employment Agreement are attached
hereto as Exhibits G-1 through G-5, respectively. Buyer also shall have
executed the required loan documents in connection with the line of
credit offered by Sun Trust Bank in connection with the Franchise Partner
Program, including a line of credit agreement (the "SunTrust Credit
Agreement"), master promissory note (the "SunTrust Note"), security
agreement (the "SunTrust Security Agreement"), guaranty agreement
(subject to Section 8(a) (vii)) (the "SunTrust Guaranty") and other
documents required in connection therewith (collectively, the "SunTrust
Loan Documents).
3. Sale and Purchase of Assets; Assumption of Liabilities. The
consummation of the transactions provided for herein (the "Closing")
shall take place at the offices of Seller upon such date and at such time
as is designated by Seller in writing (the "Closing Date"), provided,
however, the Closing shall take place on or after the date that is the
later to occur of (i) the date that the temporary liquor licenses for the
Existing Restaurants have been issued to Buyer by the applicable state
licensing authority governing the sale of alcoholic beverages, or (ii)
the date that Buyer has received a firm commitment for financing for the
purchase of the Existing Restaurants on terms reasonably acceptable to
Buyer (Buyer agrees that terms not materially different form those
described in the Uniform Franchise Offering Circular dated November 18,
1997, delivered to Controlling Principal on May 16, 1998 and Supplement
to Item 19 dated October 15, 1997, delivered to Controlling Principal on
May 16, 1998 are acceptable to Buyer). Closing is currently planned for
September 4, 1998 (effective September 7, 1998), but may be rescheduled
by Seller in its sole discretion. On the Closing Date and at the Closing:
(a) Sale and Purchase of Assets. Subject to the terms and
conditions of this Agreement, Buyer shall purchase from Seller, and Seller
shall sell, transfer, assign, convey and deliver, all of Seller's right,
title and interest in and to the following assets of Seller used
exclusively in the operation of the Existing Restaurants (the "Assets"),
which Assets shall be conveyed AS-IS, WHERE-IS, WITH ALL FAULTS:
(i) all stock in trade and merchandise in Seller's inventory
used by Seller exclusively in the conduct of the Existing Restaurants as
of the Closing Date (the "Inventory");
(ii) all furniture, fixtures, furnishings and other equipment
used by Seller exclusively in the conduct of, together with the customary
amount of petty cash on hand at, the Existing Restaurants as of the
Closing Date (the "Personal Property");
(iii) all rights of Seller pursuant to all contracts, leases
(except for any interest of Seller in any lease with any third party
regarding the premises at which the Existing Restaurants are operated,
other than the interest(s), if any, to be subleased to Buyer pursuant to
the form of sublease attached hereto as Exhibit H ( the "Sublease(s)")),
warranties, commitments, agreements, purchase and sale orders and other
executory commitments of Seller related solely to the Existing
Restaurants as of the Closing Date (the "Contracts"); and
(iv) all rights of Seller in and to the structure(s),
building(s) and other improvements, if any, listed as owned by Seller on
Exhibit A at the premises where the Existing Restaurants are located.
Notwithstanding the foregoing, the Assets do not include the following
assets of Seller:
(A) Seller's accounts or notes receivable;
(B) Seller's cash on hand at the Existing Restaurants,
except for the petty cash described in sub-section 3(a)(ii) above;
(C) Seller's trade name, trademarks, service marks,
copyrights and all other intellectual property or intangible property of
Seller; and
(D) to the extent that the Existing Restaurants are
operated on premises leased by Seller from a third party (or third
parties), all rights of Seller in any leasehold or other interest in the
premises at which the Existing Restaurants are operated (except for any
interest(s) to be subleased to Buyer pursuant to the Sublease(s)).
(b) assumption of Liabilities. Subject to the terms and conditions
of this Agreement, Seller shall assign, and Buyer shall assume and agree
to satisfy, pay, discharge, perform and fulfill, as applicable, as they
become due, without charge or cost to Seller except as provided for in
this Agreement, and agrees to hold Seller harmless with respect to, the
following liabilities and obligations of Seller (the "Assumed
Liabilities"):
(i) all liabilities and obligations of Seller related to owning
the Assets and operating the Existing Restaurants on and after the
Closing Date except for the Excluded Liabilities described below; and
(ii) all liabilities and obligations of Seller under the
Contracts that arise or are attributable to events or conditions occurring
on or after the Closing Date.
Notwithstanding the foregoing, the Assumed Liabilities shall not include
the following liabilities or obligations of Seller (the "Excluded
Liabilities"):
(i) except to the extent otherwise provided in this
Agreement, any liabilities or obligations of Seller to be performed prior
to the Closing Date; and
(ii) Seller's accounts payable, notes payable and other
obligations for or related to Seller's indebtedness to banks or financial
institutions.
4. Purchase Price. In consideration of the sale of Assets and assumption
of the Assumed Liabilities, at the Closing, Buyer shall deliver to Seller
the following (collectively, the "Purchase Price"):
(i) SEVEN MILLION EIGHT HUNDRED EIGHTY THOUSAND DOLLARS ($7,880,000)
(the "Base Price");
(ii) any sales taxes, recording taxes and/or fees, and/or other
taxes and/or fees due on the sale of Assets and assumption of Assumed
Liabilities contemplated by this Agreement (the "Transaction Taxes").
(a) Payment of the Purchase Price. The Purchase Price shall be paid
as follows:
(i) by the delivery of the sum of (A) seventy five percent
(75%) of the Base Price, plus (B) the Transaction Taxes, all to be paid by
certified check drawn on a local bank or by wire transfer of funds; and
(ii) by the delivery to Seller of Buyer's promissory note,
dated the Closing Date, in favor of Seller in the original principal
amount equal to twenty-five percent (25%) of the Base Price (the "Note")
in the form attached hereto as Exhibit B. As security for the payment of
the Note and the other obligations of Buyer to Seller, Buyer shall deliver
to Seller a Security Agreement, dated as of the Closing Date, in the form
attached hereto as Exhibit C, a second lien leasehold mortgage/deed of
trust, dated as of the Closing Date, with respect to the Subleases
described in Section 3.(a)(iii) in a form satisfactory to Seller (the
"Second Mortgage"), and such other documents as may be reasonably required
by Seller to perfect a security interest and/or lien for the benefit of
Seller in and to Buyer's assets (including, without limitation, UCC-1
financing statements in favor of Seller), and Buyer shall cause the
Controlling Principal to enter into a Guaranty in the form attached
hereto as Exhibit D.
(b) Adjustments to Purchase Price. At the Closing, the Purchase
Price shall be adjusted as set forth below in this Section 3(b) to reflect
the proration of all items of expense or income directly relating to the
Assets and the operation of the Existing Restaurants as of the Closing
Date. Prorated items shall include the following: rent, real and
personal property taxes, payroll and payroll taxes, insurance premiums,
utilities, utilities deposits, security deposits, other prepaid items and
other items customarily prorated. The net adjustments shall be made in
immediately available funds on a dollar-for-dollar basis, and shall be
added to or subtracted from the Purchase Price, as applicable. Any
prorations not determinable as of the Closing Date shall be prorated on
the basis of the most current information available at Closing; provided,
however, Seller and Buyer agree that, upon presentation, on or before the
date that occurs one hundred twenty (120) days after the Closing Date or
confirmation of (i) overpayment or underpayment based on such estimate, or
(ii) a determination of the amount of any proration that cannot be
determined as of the Closing Date, the party that has received the benefit
of such overpayment, underpayment or failure to determine a proration will
reimburse the other party in immediately available funds as soon as
possible after receipt of such confirmation. To the extent any of the
Existing Restaurants are operated under leases that provide for payment
of rent based on a percentage of annual gross sales of such restaurant,
such rent shall be calculated in accordance with the terms of the
underlying lease and Buyer and Seller shall each be responsible for their
respective pro rata share of such percentage rent amount based on the
amount of gross sales occurring during their respective period of
ownership. Such adjustment shall take place on the date such payments
are due under such underlying lease. Seller shall make such payments due
to landlord and Buyer shall reimburse Seller for Buyer's share of such
payments on receipt of invoice for such amounts due to Seller.
(c) Allocation of Purchase Price. The aggregate amount of the
Purchase Price and the Assumed Liabilities shall be allocated among the
Assets in accordance with a schedule (the "Allocation Schedule") to be
completed on or prior to the Closing Date. Seller and Buyer hereby agree
to use such allocation to complete and file Internal Revenue Service Form
8594 with the Internal Revenue Service.
(d) Development and Initial Fees Related to Existing Restaurants.
The parties agree that the "Development Fees" and "Initial Fees" (as each
term is defined under the Franchise Partner Program) related to the
Existing Restaurants are included within the Base Price.
5. Delivery of Documents and Related Transactions.
(a) At the Closing, the following documents (the "Closing
Documents"), together with the cash portion of the Purchase Price, shall
be delivered as follows:
(i) Seller shall deliver to Buyer the following executed
documents (the "Seller's Documents"):
1) a bill of sale for the Personal Property and the
Inventory substantially in the form of Exhibit E attached hereto (the
"Bill of Sale");
2) an Assignment and Assumption of Liabilities in the form
of Exhibit F attached hereto (the "Assignment/Assumption");
3) to the extent that the Existing Restaurants operate
from premises leased by Seller from a third party (or third parties), the
following:
(A) the Sublease(s); and
(B) the written consent of each landlord to the
Sublease(s), if required;
4) an Operating Agreement for each of the Existing
Restaurants, substantially in the form attached hereto as Exhibit G-2;
and
5) other related documents that Buyer may have reasonably
requested on or prior to the Closing Date.
(ii) Buyer shall deliver to Seller (x) the cash
portion of the Purchase Price, and (y) the following executed documents
(the "Buyer's Documents"):
1) the Note;
2) the Assignment/Assumption accepted by Buyer;
3) to the extent that the Existing Restaurants
are operated on premises leased by Seller from a third party (or third
parties), the executed Sublease(s);
4) the executed Security Agreement, Second
Mortgage(s) and other security documents referred to in Section 4(a)(ii)
of this Agreement (collectively the "Security Documents");
5) the executed Guaranty (or Guaranties);
6) the executed Operating Agreements for the
Existing Restaurants;
7) the accepted Bill of Sale;
8) a non-foreign person affidavit in accordance
with Section 1445 of the Internal Revenue Code;
9) any and all licenses, permits, certificates
of insurance or other documents required by title company or other lenders
to close the sale of the Assets; and
10) any other related documents that Seller may
have reasonably requested on or prior to the Closing Date.
(b) Further Assurances and Cooperation Post-Closing. Seller and
Buyer, from time to time after the Closing (but without obligation
separate from the obligations expressly provided by this Agreement),
hereby agree to execute, acknowledge and deliver to each other such
instruments of conveyance and transfer, and will take such other actions
and execute and deliver such other documents, certifications and further
assurances, as either party may reasonably request with respect to the
assignment, transfer and delivery of the Assets and the assumption of the
Assumed Liabilities and the perfection of Seller's security interest in
the Assets pursuant to Section 4(a)(ii), in order to consummate in full
the transactions provided for herein.
(c) Employees. Buyer shall offer employment, on substantially the
same terms and conditions as currently in effect, to commence on and as of
the Closing Date, to each employee of the Existing Restaurants as of the
Closing Date (including, without limitation, any employee who is absent
from work on the Closing Date on paid vacation or pursuant to any leave of
absence authorized by Seller or required by law (hereinafter, all
employees accepting employment with Buyer being referred to collectively
as the "Transferred Employees"). Buyer agrees to give the Transferred
Employees credit for their years of service with Seller for the purpose of
determining any eligibility or vesting provisions that may be contained in
employee plans provided to such Transferred Employees by Buyer in
connection with their employment with Buyer. Buyer also agrees to give
the Transferred Employees credit for all vacation and sick leave accrued
during their employment with Seller and to provide, for the fiscal year
ending June 6, 1999, the same vacation and sick leave benefits to all
Transferred Employees as they would have been eligible to receive under
the Seller's policies now in effect.
(d) Bulk Sales. Buyer hereby waives compliance with any applicable
"bulk sales law" or similar law by Seller, and Seller shall indemnify and
hold Buyer harmless against any liability under any such laws for losses
resulting from non-compliance therewith or Seller's application of the
proceeds of the sale of Assets contemplated by this Agreement.
6. Seller's Representations and Warranties. Seller represents and
warrants to Buyer the following:
(a) Organization and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia. Subject to any consents and approvals required for the
consummation of the transactions contemplated herein, Seller possesses all
requisite corporate power and authority to own the Assets and operate the
Existing Restaurants and to enter into and perform this Agreement and the
Seller's Documents. Subject to any consents and approvals required to
consummate the transactions contemplated herein, the execution and
delivery and performance of each of this Agreement and the Seller's
Documents by Seller have been duly authorized by all necessary corporate
action. Buyer acknowledges that, as of the date of the execution of this
Agreement, Seller has not obtained the requisite approval of its board of
directors to consummate this transaction, and that such approval is
necessary as a condition to complete the transaction contemplated
hereunder. This Agreement has been duly executed and delivered on behalf
of Seller by duly authorized officers of Seller, and this Agreement
constitutes, and the Seller's Documents, when executed and delivered, will
constitute, the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with their respective terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting the rights of creditors and general
principles of equity.
(b) Compliance with Laws and Instruments. Except for any consents
and approvals required for the consummation of the transactions
contemplated herein (including board approval as described in Section
5.(a)), the execution, delivery and performance by Seller of this
Agreement and the Seller's Documents will not result in any material
violation of or be in conflict with or constitute a material default under
any applicable statute, regulation, order, rule, writ, injunction or
decree of any court or governmental authority or of the Articles of
Incorporation or Bylaws of Seller or of any material agreement or other
material instrument to which Seller is a party or is a subject, or
constitute a default thereunder.
(c) Title to Assets. To the knowledge of Seller, Seller has good,
valid and marketable title to all of the Assets, free and clear of all
mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except for (i) liens for current real, personal or other
property taxes not yet due and payable, and (ii) liens that are immaterial
in character, amount or extent, and which do not materially affect the
value, or do not materially interfere with the present use of the Assets.
There are no existing agreements, options, commitments or rights with, of
or to any person (other than Buyer) to acquire any of Seller's interests
in the Assets.
(d) Condition of Assets. Seller makes no representation or warranty
as to the condition of the Assets, which shall be conveyed to Buyer on an
AS IS, WHERE IS BASIS, WITH ALL FAULTS. Buyer acknowledges that Seller
makes no representations that the premises of the Existing Restaurants
are in compliance with the requirements of the Americans with
Disabilities Act of 1990 ("ADA"), and that Buyer is responsible for any
changes required to the Existing Restaurants, or the premises thereof,
for ADA compliance, if any are necessary.
(e) No Finder's Fees. Seller has not employed any broker or finder
or incurred any liability for any brokerage fees or commissions or any
finder's fees in connection with the negotiations related to this
Agreement or the consummation of the transactions contemplated hereby.
(f) No Litigation. No suit, action or other proceeding, or any
injunction or final judgment relating thereto, is pending or, to the
knowledge of Seller, threatened, before any court or governmental or
regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the Seller's Documents, or the consummation of the
transactions contemplated hereby and thereby, and no investigation that
might result in any such suit, action or proceeding is pending or, to the
knowledge of Seller, threatened.
7. Buyer's Representations. Buyer represents and warrants to Seller the
following:
(a) Organization and Authority. Buyer is a limited liability
company, duly organized, validly existing and in good standing under the
laws of the State of Delaware. The sole manager member of Buyer is Carl
Bachmann and the only members of Buyer are the sole manager member and
Seller. Buyer is duly qualified to do business and is in good standing in
each jurisdiction where the conduct of its business currently requires it
to be qualified or would require it to be qualified after the consummation
of the transactions provided for in this Agreement and the Buyer's
Documents. Buyer possesses all requisite power and authority to enter
into and perform this Agreement and the Buyer's Documents. The execution
and delivery and performance of this Agreement and the Buyer's Documents
by Buyer have been duly authorized by all necessary action (including,
without limitation, all necessary action by the manager member of Buyer).
This Agreement has been duly executed and delivered on behalf of Buyer by
the sole manager member, as duly authorized by Buyer, and this Agreement
constitutes, and the Buyer's Documents, when executed and delivered, will
constitute, the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with their respective terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting the rights of creditors and general
principles of equity.
(b) Compliance with Laws and Instruments. The execution, delivery
and performance by Buyer of this Agreement and the Buyer's Documents will
not result in any material violation of or be in conflict with or
constitute a material default under any applicable statute, regulation,
order, rule, writ, injunction or decree of any court or governmental
authority or of the Certificate of Limited Liability Company or Operating
Agreement of Buyer or of any material agreement or other material
instrument to which Buyer is a party or is subject, or constitute a
default thereunder.
(c) No Finder's Fees. Buyer has not employed any broker or finder
or incurred any liability for any brokerage fees or commissions or any
finder's fees in connection with the negotiations related to this
Agreement or the consummation of the transactions contemplated hereby.
(d) Independent Investigation. Buyer has had full opportunity to
inspect the Existing Restaurants and the Assets and to ask all questions
of Seller regarding the Restaurants and the Assets. Buyer has conducted
its own independent investigation relating to all aspects of the
Restaurants and has obtained whatever opinions of specialists and experts
as it has deemed necessary in making the decisions to enter into this
Agreement and the Buyer's Documents and to consummate the transactions
contemplated hereby and thereby. Buyer has relied solely on information
received by it from such investigation in making such decisions, and Buyer
has not relied on information received by it from Seller regarding the
past or present earnings of the Restaurants or the prospects of future
earnings of the Restaurants in making such decisions.
(e) Condition of Assets. BUYER ACKNOWLEDGES AND AGREES THAT ALL
ASSETS TO BE TRANSFERRED, ASSIGNED OR LICENSED PURSUANT TO THIS AGREEMENT
AND THE CLOSING DOCUMENTS SHALL BE TRANSFERRED, ASSIGNED OR LICENSED ON AN
"AS IS, WHERE IS" BASIS, WITH ALL FAULTS AND THAT, EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 5 OF THIS AGREEMENT, SELLER IS MAKING, AND SHALL MAKE, NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, RESPECTING ANY
OF THE ASSETS, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
COMPLIANCE WITH THE ADA, OR ANY OTHER MATTER. FURTHER, BUYER ACKNOWLEDGES
THAT BUYER HAS INFORMED ITSELF AS TO THE RESTAURANTS, AND BUYER FURTHER
ACKNOWLEDGES AND AGREES THAT SELLER MAKES, AND SHALL MAKE, NO
REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE RESTAURANTS.
(f) No Litigation. No suit, action or other proceeding, or any
injunction or final judgment relating thereto, is pending or, to the
knowledge of Buyer, threatened before any court or governmental or
regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the Buyer's Documents, or the consummation of the
transactions contemplated hereby, and no investigation that might result
in any such suit, action or proceeding is pending or, to the knowledge of
Buyer, threatened.
8. Conditions to Closing.
(a) Conditions to Obligations of Buyer. All obligations of Buyer
under this Agreement are subject to the fulfillment or satisfaction, prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Seller contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing as
if made at the Closing.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by or prior to or at the Closing.
(iii) As of the Closing, no suit, action or other proceeding,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding shall be pending
or threatened.
(iv) Each consent or approval listed on Schedule 7(a)(iv)
required or necessary under contract or applicable law for the
consummation of the transactions contemplated hereby shall have been
obtained; provided, however, those certain consents or approvals
identified on such Schedule 7(a)(iv) as being subject to deferral need not
have been obtained on or before the Closing to the extent that Seller
shall have made appropriate arrangements to secure to Buyer the practical
and economic benefits of the agreements or other arrangements to which
such consents or approvals relate. Notwithstanding the foregoing, Seller
shall not be required to make any additional payment or incur any
obligation to any third party in order to obtain any consent or approvals
required or necessary for the consummation of the transactions
contemplated hereby.
(v) The documents to be delivered by Seller at Closing pursuant
to Section 4(a) shall have been executed and delivered.
(vi) Buyer shall have received a certificate from Seller, dated
the Closing Date and certifying in such detail as Buyer may reasonably
request, that the conditions specified in Sections 7(a)(i) and 7(a)(ii)
hereof have been fulfilled.
(vii) Neither Controlling Principal nor his spouse shall be
required to personally guaranty Buyer's obligations (1) under the Sun
Trust Loan Document, or (2) pursuant to any loan for up to seventy-five
percent (75%) of the Base Price where CNL Fund Advisors, Inc. or AMERSCO
Commercial Lending Corporation (or an affiliate of either) is the lender
(respectively "CNL" and "CSC").
(viii) Buyer shall have obtained financing for the Base Price
(less any portion financed by Seller) from CNL or CSC.
(b) Conditions to Obligations of Seller. All obligations of Seller
under this Agreement are subject to the fulfillment or satisfaction prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Buyer contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing if
made at the Closing.
(ii) Buyer shall have performed and complied in all material
respects with all terms and conditions of this Agreement or any other
agreement by and between Buyer and Seller (or any financing agreements
where Seller is a guarantor) required to be performed or complied with by
Buyer prior to or at the Closing (including, but not limited to: Buyer
shall be in full compliance with all applicable terms and conditions of
the Participation Agreement, Employment Agreement, Support Services
Agreement, Development Agreement, Standard Operating Agreement, and
SunTrust Loan Documents).
(iii) As of the Closing, no suit, action or other proceedings,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding shall be pending
or threatened.
(iv) Each consent or approval listed on Schedule 7(a)(iv) as
required or necessary under contract or applicable law of the consummation
of the transactions contemplated hereby shall have been obtained;
provided, however, those certain consents or approvals identified on such
Schedule 7(a)(iv) as being subject to deferral need not have been obtained
on or before the Closing, to the extent that Seller shall have made
appropriate arrangements to secure to Buyer the practical and economic
benefits of the agreements or other arrangements to which such consents or
approvals relate. Notwithstanding the foregoing, Seller shall not be
required to make any additional payment or incur any obligation to any
third party in order to obtain any consent or approvals required or
necessary for the consummation of the transactions contemplated hereby.
(v) The documents to be delivered by Buyer at Closing pursuant
to Section 4(a) shall have been executed and delivered.
(vi) Seller shall have received a certificate from Buyer dated
the Closing Date and certifying in such detail as Seller may reasonably
request, that the conditions specified in Sections 7(b)(i) and 7(b)(ii)
hereof have been fulfilled and that all consents and approvals required or
necessary to transfer to Buyer all licenses or permits held by Seller or
the Existing Restaurants with respect to the sale or consumption of
alcoholic beverages on the premises at which the Existing Restaurants
operate have been obtained.
(c) Negotiation in Good Faith in the Event of Partial Performance.
In the event that Seller is unable to transfer the Assets or obtain the
consents or permits necessary to transfer all of the assets related to
the Existing Restaurants as described herein, the parties agree to
negotiate in good faith to reach an agreement acceptable to both parties
concerning the disposition of the transaction described herein, which may
include the sale of a portion of such Assets to Buyer or the reversing of
the transaction. If the parties are unable to reach agreement to continue
the relationship, the parties agree to cooperate fully in the termination
and dissolution of the relationship.
9. Term and Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of Seller and Buyer;
(b) by either Seller or Buyer, if such terminating party is not
otherwise in default in this Agreement and if the Closing shall not have
occurred on or before October 12, 1998 or such other extended date, if
any, mutually agreed to by the parties in writing; and
(c) by either party if there has been a material breach of any
representation, warranty, covenant or agreement by the other party that
has not been cured or for which adequate assurance (reasonably acceptable
to such terminating party) of cure has not been given, in either case
within fifteen (15) business days following receipt of notice of such
breach.
(d) by Seller if Buyer is in material default of any of the
following agreements: the Participation Agreement, Employment Agreement,
Support Services Agreement, Development Agreement, Standard Operating
Agreement, or SunTrust Loan Documents.
If either party terminates this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other party
specifying the provision hereof pursuant to which such termination is
made. Except for any liability for the breach of this Agreement or any of
the agreements described in Section 9.(d), upon the termination of this
Agreement pursuant to this Section 9, this Agreement shall forthwith
become null and void and there shall be no further liability or the
obligation on the part of Seller or Buyer hereunder or with respect
hereto.
10. Miscellaneous.
(a) Survival. Unless this Agreement is terminated pursuant to
Section 9(a) or Section 9(b) hereof, all representations, warranties,
covenants and agreements made in this Agreement or in a certificate
delivered pursuant hereto by the parties hereto shall survive the
termination of this Agreement or the consummation of the transactions
contemplated hereby, subject to Section 10.(n).
(b) Notices. All notices, requests, or other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered or refused, if delivered personally, or, if delivered by
overnight carrier, such as Federal Express, when delivered as follows:
If delivered to Seller:
Ruby Tuesday, Inc.
Attention: Legal Department
150 West Church Avenue
Maryville, Tennessee 37801
If delivered to Buyer:
Mr. Carl Bachmann
7 Laurita Gate
Port Jefferson, NY 11777
(c) Mail Addressed to Seller. After the Closing Date, Buyer may
open all mail addressed to Seller at the premises of the Existing
Restaurants. Buyer shall promptly forward to Seller any mail that does
not require Buyer's action.
(d) Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(e) Sales, Transfer, Documentary and Other Taxes. In addition to
the Transaction Taxes paid herewith, Buyer shall pay all federal, state
and local sales, documentary, transfer or other taxes or recording fees,
if any, due as a result of the purchase, sale or transfer of the Assets
hereunder (including such taxes or fees related to the recording of UCC-1
financing statements related to the Security Agreement and the Second
Mortgage(s)), whether imposed by law on Seller or Buyer, and Buyer shall
indemnify, reimburse and hold harmless Seller in respect of the liability
for payment of or failure to pay any such taxes or the filing of or
failure to file any reports required to be filed in connection therewith.
(f) Entire Agreement. This Agreement, together with the Closing
Documents, sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and shall not be amended
or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, together with the
Closing Documents.
(g) Assignment and Binding Effect. This Agreement may not be
assigned by either party hereto without the prior written consent of the
other party. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Buyer, but shall
not be construed as conferring any other rights on any other person.
(h) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(i) Construction. All headings contained in this Agreement are for
convenience of reference only, and do not form a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.
(j) Exhibits and Schedules. All Exhibits and Schedules referred to
herein are intended to and hereby are specifically made part of this
Agreement.
(k) Severability. Any provision of this Agreement that is invalid
or enforceable in any jurisdiction shall be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
(l) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to
be an original, and all of which counterparts taken together shall
constitute one and the same instrument.
(m) Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Tennessee.
(n) Limitations. SELLER, BUYER AND THE CONTROLLING PRINCIPAL HEREBY
AGREE THAT NO FORM OF PROCEEDING PERMITTED HEREBY WILL BE MAINTAINED BY
ANY PARTY TO ENFORCE ANY LIABILITY OR OBLIGATION OF THE OTHER PARTY,
WHETHER ARISING FROM THIS AGREEMENT, OR OTHER WISE, UNLESS BROUGHT BEFORE
THE EXPIRATION OF ONE (1) YEAR FROM THE DATE OF CLOSING.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
ATTEST: SELLER:
RUBY TUESDAY, INC.
/s/ Daniel T. Cronk By: /s/ J. Russell Mothershed
Name: J. Russell Mothershed
Title: C. F. O.
WITNESS: BUYER:
RT LONG ISLAND FRANCHISE, LLC
/s/ Daniel T. Cronk By: /s/ Carl Bachmann
Name: Daniel T. Cronk Carl Bachmann, Manager
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule 4(b) Description of Back Office Upgrade
Schedule 7(a)(iv) Required Consents and Approvals
Exhibits
Exhibit A List of Restaurant Locations; List of
Leased Real Property
Exhibit B Form of Note
Exhibit C Intentionally Omitted
Exhibit D Form of Guaranty
Exhibit E Form of Bill of Sale
Exhibit F Form of Assignment/Assumption
Exhibit G-1 Form of Development Agreement
Exhibit G-2 Form of Operating Agreement (with Coca-Cola
Amendment)
Exhibit G-3 Form of Support Services Agreement (with
Liquor License Addendum)
Exhibit G-4 Form of Participation Agreement
Exhibit G-5 Form of Employment Agreement
Exhibit G-6 Form of LLC Capital Note
Exhibit H Form of Sublease
Exhibit I Addendum to Operating Agreements
Schedule 7(a)(iv)
REQUIRED CONSENTS AND APPROVALS
1. All consents and approvals required or necessary to transfer to Buyer
all licenses or permits currently held by Seller or the Existing
Restaurants with respect to the sale or consumption of alcoholic beverages
on the premises at which the Existing Restaurants operate.
2. All consents required or necessary from any third party (or third
parties) with respect to the Sublease(s).
3. All consents required by Seller's current lender(s).
4. The consent of Seller's Board of Directors
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made as of the 7th day of
May, 1998, between RUBY TUESDAY, INC., a Georgia corporation, whose
address is 4721 Morrison Drive, Mobile, Alabama 36609-3350 (herein
"Seller"), and RT WEST PALM BEACH FRANCHISE, LP, a Delaware limited
partnership, whose address is 301 Cameron Court, Daphne, Alabama 36526
(herein "Buyer").
1. Introduction. Seller is now conducting the business of operating
restaurants under the trade name Ruby Tuesday at each of the four (4)
location(s) listed on Exhibit A attached hereto (individually, an
"Existing Restaurant," and collectively, the "Existing Restaurants").
Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller,
certain assets of Seller used exclusively in operating the Existing
Restaurants, upon the terms and conditions set out in this Agreement.
Seller and Buyer wish the Existing Restaurants to continue to operate
under the name and marks Ruby Tuesday and the system developed by Seller
for operating Ruby Tuesday Restaurants in connection with the Seller's
Franchise/Partner Program (the "Franchise/Partner Program"). Seller and
Buyer wish to also establish a relationship pursuant to which Buyer will
develop nine (9) new Ruby Tuesday restaurants ("New Restaurant(s)") in
the Designated Market Area of West Palm Beach, Florida (the "Territory").
The terms under which Buyer will develop such New Restaurants will be
set forth in a separate Development Agreement (the "Development
Agreement"). The terms under which Buyer will operate the thirteen (13)
Existing and New Restaurants (collectively referred to as the
"Restaurants") will be set forth in separate Operating Agreements for
each applicable restaurant (the "Operating Agreements"). Therefore, in
consideration of the premises, the mutual representations, warranties,
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties agree as follows:
2. Development Agreement, Operating Agreement, Support Services
Agreement, Limited Partnership Agreement, SunTrust Loan Documents and
Related Agreements. Simultaneous with the execution of this Agreement,
Buyer shall execute, and perform pursuant to, the Development Agreement
applicable to the New Restaurants, Operating Agreement for the first New
Restaurant to be developed [together with amendment relating to the Coca-
Cola fountain beverage program], the Support Services Agreement (together
with addendum relating to liquor license services) specifying certain
services and assistance to be provided by the Seller to Buyer related to
the operation of the Restaurants and the conditions for the performance of
those services (the "Support Services Agreement"), and such other related
agreements customarily executed in connection with the Ruby Tuesday
Franchise/Partner Program (including Powers of Attorney related to tax
records, telephone listings, the internet and sales/use tax filings).
EMPire Concepts, Inc., (the "General Partner"), and Seller (or its
subsidiary, RT West Palm Beach, Inc.) shall also have entered into a
Limited Partnership Agreement (the "Partnership Agreement")
simultaneously with the execution of this Agreement that specifies the
terms and conditions of the relationship of the partners and management
of Buyer, and General Partner shall have made the capital contribution
required thereby. Eric Paul, (the "Controlling Principal") shall have
also entered into an Employment Agreement with Buyer in the form
acceptable to Seller (the "Employment Agreement"). Controlling Principal
and Seller shall also have executed a termination and cancellation of the
January 12, 1998, letter agreement between Seller and Controlling
Principal (the "Termination Agreement") and Controlling Principal shall
have executed the Development Agreement and the Operating Agreement for
the first New Restaurant in such capacity. Forms of such Development
Agreement, Operating Agreement, Support Services Agreement, Partnership
Agreement and Employment Agreement are attached hereto as Exhibits G-1
through G-5, respectively. The form of Termination Agreement is attached
hereto as Exhibit J. Buyer also shall have executed the required loan
documents in connection with the line of credit offered by Sun Trust Bank
in connection with the Franchise Partner Program, including a line of
credit agreement (the "SunTrust Credit Agreement"), master promissory
note (the "SunTrust Note"), security agreement (the "SunTrust Security
Agreement"), guaranty agreement (the "SunTrust Guaranty") and other
documents required in connection therewith (collectively, the "SunTrust
Loan Documents).
3. Sale and Purchase of Assets; Assumption of Liabilities. The
consummation of the transactions provided for herein (the "Closing")
shall take place at the offices of Seller on such date and at such time
as is designated by Seller approximately sixty (60) to ninety (90) days
following the date hereof (the "Closing Date"), provided, however, that
the Closing shall take place on or after the date that is the later to
occur of the date (i) temporary liquor licenses for the Existing
Restaurants have been issued to Buyer by the applicable state licensing
authority governing the sale of alcoholic beverages, and (ii) Buyer has
received a firm commitment for financing for the purchase of the Existing
Restaurants on terms reasonably acceptable to Buyer (Buyer agrees that
terms not materially different form those described in the Uniform
Franchise Offering Circular dated November 18, 1997, delivered to
Controlling Principal on December 12, 1997 and Supplement to Item 19
dated October 15, 1997, delivered to Controlling Principal on December
12, 1997 (the "UFOC") are acceptable to Buyer); provided, however, that
the Closing shall occur on or before August 16, 1998. On the Closing
Date and at the Closing:
(a) Sale and Purchase of Assets. Subject to the terms and
conditions of this Agreement, Buyer shall purchase from Seller, and Seller
shall sell, transfer, assign, convey and deliver, all of Seller's right,
title and interest in and to the following assets of Seller used
exclusively in the operation of the Existing Restaurants (the "Assets"),
which Assets shall be conveyed AS-IS, WHERE-IS, WITH ALL FAULTS:
(i) all stock in trade and merchandise in Seller's inventory
used by Seller exclusively in
the conduct of the Existing Restaurants as of the Closing Date (the
"Inventory");
(ii) all furniture, fixtures, furnishings and other equipment
used by Seller exclusively in
the conduct of, together with the customary amount of petty cash on hand
at, the Existing Restaurants as of the Closing Date (the "Personal
Property");
(iii) all rights of Seller pursuant to all contracts, leases
(except for any interest of Seller in any lease with any third party
regarding the premises at which the Existing Restaurants are operated,
other than the interest(s), if any, to be subleased to Buyer pursuant to
the form of sublease attached hereto as Exhibit H (the "Sublease(s)"),
warranties, commitments, agreements, purchase and sale orders and other
executory commitments of Seller related solely to the Existing Restaurants
as of the Closing Date (the "Contracts"); and
(iv) all rights of Seller in and to the structure(s),
building(s) and other improvements, if any, listed as owned by Seller on
Exhibit A at the premises where the Existing Restaurants are located.
Notwithstanding the foregoing, the Assets do not include the following
assets of Seller:
(A) Seller's accounts or notes receivable;
(B) Seller's cash on hand at the Existing Restaurants
except for the petty cash described in sub-section 3(a)(ii) above);
(C) Seller's trade name, trademarks, service marks,
copyrights and all other intellectual property or intangible property of
Seller; and
(D) to the extent that the Existing Restaurants are
operated on premises leased by Seller from a third party (or third
parties), all rights of Seller in any leasehold or other interest in the
premises at which the Existing Restaurants are operated (except for any
interest(s) to be subleased to Buyer pursuant to the Sublease(s)).
(b) Assumption of Liabilities. Subject to the terms and conditions
of this Agreement, Seller shall assign, and Buyer shall assume and agree
to satisfy, pay, discharge, perform and fulfill, as applicable, as they
become due, without charge or cost to Seller except as provided for in
this Agreement, and agrees to hold Seller harmless with respect to, the
following liabilities and obligations of Seller (the "Assumed
Liabilities"):
(i) all liabilities and obligations of Seller related to owning
the Assets and operating the Existing Restaurants on and after the Closing
Date except for the Excluded Liabilities described below; and
(ii) all liabilities and obligations of Seller under the
Contracts that arise or are attributable to events or conditions occurring
on or after the Closing Date.
Notwithstanding the foregoing, the Assumed Liabilities shall not include
the following liabilities or obligations of Seller (the "Excluded
Liabilities"):
(A) except to the extent otherwise provided in this
Agreement, any liabilities or obligations of Seller to be performed prior
to the Closing Date; and
(B) Seller's accounts payable, notes payable and other
obligations for or related to Seller's indebtedness to banks or financial
institutions.
4. Purchase Price. In consideration of the sale of Assets and assumption
of the Assumed Liabilities, at the Closing, Buyer shall deliver to Seller
the following (collectively, the "Purchase Price"):
(i) FIVE MILLION SEVENTEEN THOUSAND DOLLARS ($5,017,000) (the "Base
Price");
(ii) any sales taxes, recording taxes and/or fees, and/or other
taxes and/or fees due on the sale of Assets and assumption of Assumed
Liabilities contemplated by this Agreement (the "Transaction Taxes").
(a) Payment of the Purchase Price. The Purchase Price shall be
paid as follows:
(i) by the delivery of the sum of (A) seventy five percent
(75%) of the Base Price, plus (B) the Transaction Taxes, all to be paid by
certified check drawn on a local bank or by wire transfer of funds; and
(ii) by the delivery to Seller of Buyer's promissory note,
dated the Closing Date, in favor of Seller in the original principal
amount equal to twenty-five percent (25%) of the Base Price (the "Note")
in the form attached hereto as Exhibit B. As security for the payment of
the Note and the other obligations of Buyer to Seller, Buyer shall deliver
to Seller a Security Agreement, dated as of the Closing Date, in the form
attached hereto as Exhibit C, a second lien mortgage/deed of trust, dated
as of the Closing Date, with respect to the parcels of real property
described in Section 3(a)(iii) and (iv) in a form satisfactory to Seller
(the "Second Mortgage"), and such other documents as may be reasonably
required by Seller to perfect a security interest and/or lien for the
benefit of Seller in and to Buyer's assets (including, without limitation,
UCC-1 financing statements in favor of Seller), and Buyer shall cause the
Controlling Principal to enter into a Guaranty in the form attached hereto
as Exhibit D.
(b) Adjustments to Purchase Price. At the Closing, the
Purchase Price shall be adjusted as set forth below in this Section 3(b)
to reflect the proration of all items of expense or income directly
relating to the Assets and the operation of the Existing Restaurants as of
the Closing Date. Prorated items shall include the following: rent, real
and personal property taxes, payroll and payroll taxes, insurance
premiums, utilities, utilities deposits, security deposits, other prepaid
items and other items customarily prorated. The net adjustments shall be
made in immediately available funds on a dollar-for-dollar basis, and
shall be added to or subtracted from the Purchase Price, as applicable.
Any prorations not determinable as of the Closing Date shall be prorated
on the basis of the most current information available at Closing;
provided, however, Seller and Buyer agree that, upon presentation, on or
before the date (the "Adjustment Date") that occurs one hundred twenty
(120) days after the Closing Date or confirmation of (i) overpayment or
underpayment based on such estimate, or (ii) a determination of the amount
of any proration that cannot be determined as of the Closing Date, the
party that has received the benefit of such overpayment, underpayment or
failure to determine a proration will reimburse the other party in
immediately available funds as soon as possible after receipt of such
confirmation. To the extent any of the Existing Restaurants are operated
under leases that provide for payment of rent based on a percentage of
annual gross sales of such restaurant, such rent shall be calculated in
accordance with the terms of the underlying lease and Buyer and Seller
shall each be responsible for their respective pro rata share of such
percentage rent amount based on the amount of gross sales occurring during
their respective period of ownership. Such adjustment shall take place
on the date such payments are due under such underlying lease. Seller
shall make such payments due to landlord and Buyer shall reimburse Seller
for Buyer's share of such payments on receipt of invoice for such amounts
due to Seller. On the Adjustment Date, Buyer shall reimburse Seller for
(A) cost of salary and benefits incurred or paid by Seller pursuant to the
Termination Agreement, including any reimbursed expenses(provided,
however, that the amount reimbursed shall not include the bonus described
in Paragraph 1 of the Termination Agreement); and (B) any amounts advanced
or paid by Seller with respect to the benefits afforded Eric M. Paul
pursuant to Section 4.5 of the Employment Agreement.
(c) Allocation of Purchase Price. The aggregate amount of the
Purchase Price and the Assumed Liabilities shall be allocated among the
Assets in accordance with a schedule (the "Allocation Schedule") to be
completed on or prior to the Closing Date. Seller and Buyer hereby agree
to use such allocation to complete and file Internal Revenue Service Form
8594 with the Internal Revenue Service.
(d) Development and Initial Fees Related to Existing
Restaurants. The parties agree that the "Development Fees" and "Initial
Fees" (as each term is defined under the Franchise Partner Program)
related to the Existing Restaurants are included within the Base Price.
5. Delivery of Documents and Related Transactions.
(a) At the Closing, the following documents (the "Closing
Documents"), together with the cash portion of the Purchase Price, shall
be delivered as follows:
(i) Seller shall deliver to Buyer the following executed
documents (the "Seller's Documents"):
1) a bill of sale for the Personal Property and the
Inventory substantially in the form of Exhibit E attached hereto (the
"Bill of Sale");
2) an Assignment and Assumption of Liabilities in the form
of Exhibit F attached hereto (the "Assignment/Assumption");
3) to the extent that the Existing Restaurants operate from
premises leased by Seller from a third party (or third parties), the
following:
(A) the Sublease(s); and
(B) the written consent of each landlord to the
Sublease(s), if required;
4) an Operating Agreement for each of the four (4)
Existing Restaurants;
5) other related documents that Buyer may have reasonably
requested on or prior to the Closing Date; and
7) a Certificate of Occasional or Isolated Sale
substantially in the form of Exhibit I attached hereto (the "Certificate
of Occasional or Isolated Sale");
(ii) Buyer shall deliver to Seller (x) the cash portion of the
Purchase Price, and (y) the following executed documents (the "Buyer's
Documents"):
1) the Note;
2) the Assignment/Assumption accepted by Buyer;
3) to the extent that the Existing Restaurants are
operated on premises leased by Seller from a third party (or third
parties), the executed Sublease(s);
4) the executed Security Agreement, Second Mortgage(s),
and other security documents referred to in Section 4(a)(ii) of this
Agreement (collectively the "Security Documents");
5) the executed Guaranty (or Guaranties);
6) the executed Operating Agreements for the four (4)
Existing Restaurants;
7) the accepted Bill of Sale;
8) a non-foreign person affidavit in accordance with
Section 1445 of the Internal Revenue Code, if required;
9) any and all licenses, permits, certificates of
insurance or other documents required by title company or other lenders to
close the sale of the Assets; and
10) any other related documents that Seller may have
reasonably requested on or prior to the Closing Date.
(b) Further Assurances and Cooperation Post-Closing. Seller and
Buyer, from time to time after the Closing (but without obligation
separate from the obligations expressly provided by this Agreement),
hereby agree to execute, acknowledge and deliver to each other such
instruments of conveyance and transfer, and will take such other actions
and execute and deliver such other documents, certifications and further
assurances, as either party may reasonably request with respect to the
assignment, transfer and delivery of the Assets and the assumption of the
Assumed Liabilities and the perfection of Seller's security interest in
the Assets pursuant to Section 4(a)(ii), in order to consummate in full
the transactions provided for herein.
(c) Employees. Buyer shall offer employment, on substantially the
same terms and conditions as currently in effect, to commence on and as of
the Closing Date, to each employee of the Existing Restaurants as of the
Closing Date (including, without limitation, any employee who is absent
from work on the Closing Date on paid vacation or pursuant to any leave of
absence authorized by Seller or required by law (hereinafter, all
employees accepting employment with Buyer being referred to collectively
as the "Transferred Employees")). Buyer agrees to give the Transferred
Employees credit for their years of service with Seller for the purpose of
determining any eligibility or vesting provisions that may be contained in
employee plans provided to such Transferred Employees by Buyer in
connection with their employment with Buyer. Buyer also agrees to give
the Transferred Employees credit for all vacation and sick leave accrued
during their employment with Seller and to provide, for the fiscal year
ending June 6, 1998, the same vacation and sick leave benefits to all
Transferred Employees as they would have been eligible to receive under
the Seller's policies now in effect.
(d) Bulk Sales. Buyer hereby waives compliance with any applicable
"bulk sales law" or similar law by Seller, and Seller shall indemnify and
hold Buyer harmless against any liability under any such laws for losses
resulting from non-compliance therewith or Seller's application of the
proceeds of the sale of Assets contemplated by this Agreement.
6. Seller's Representations and Warranties. Seller represents and
warrants to Buyer the following:
(a) Organization and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia. Subject to any consents and approvals required for the
consummation of the transactions contemplated herein, Seller possesses all
requisite corporate power and authority to own the Assets and operate the
Existing Restaurants and to enter into and perform this Agreement and the
Seller's Documents. Subject to any consents and approvals required to
consummate the transactions contemplated herein, the execution and
delivery and performance of each of this Agreement and the Seller's
Documents by Seller have been duly authorized by all necessary corporate
action. Buyer acknowledges that, as of the date of the execution of this
Agreement, Seller has not obtained the requisite approval of its board of
directors to consummate this transaction, and that such approval is
necessary as a condition to complete the transaction contemplated
hereunder. This Agreement has been duly executed and delivered on behalf
of Seller by duly authorized officers of Seller, and this Agreement
constitutes, and the Seller's Documents, when executed and delivered, will
constitute, the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with their respective terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting the rights of creditors and general
principles of equity.
(b) Compliance with Laws and Instruments. Except for any consents
and approvals required for the consummation of the transactions
contemplated herein (including board approval as described in Section
5.(a)), the execution, delivery and performance by Seller of this
Agreement and the Seller's Documents will not result in any material
violation of or be in conflict with or constitute a material default under
any applicable statute, regulation, order, rule, writ, injunction or
decree of any court or governmental authority or of the Articles of
Incorporation or Bylaws of Seller or of any material agreement or other
material instrument to which Seller is a party or is a subject, or
constitute a default thereunder.
(c) Title to Assets. To the knowledge of Seller, Seller has good,
valid and marketable title to all of the Assets, free and clear of all
mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except for (i) liens for current real, personal or other
property taxes not yet due and payable, and (ii) liens that are immaterial
in character, amount or extent, and which do not materially affect the
value, or do not materially interfere with the present use of the Assets.
There are no existing agreements, options, commitments or rights with, of
or to any person (other than Buyer) to acquire any of Seller's interests
in the Assets.
(d) Condition of Assets. Seller makes no representation or warranty
as to the condition of the Assets, which shall be conveyed to Buyer on an
AS IS, WHERE IS BASIS, WITH ALL FAULTS. Buyer acknowledges that Seller
makes no representations that the premises of the Existing Restaurants are
in compliance with the requirements of the Americans with Disabilities
Act of 1990 ("ADA"), and that Buyer is responsible for any changes
required to the Existing Restaurants, or the premises thereof, for ADA
compliance, if any are necessary.
(e) No Finder's Fees. Seller has not employed any broker or finder
or incurred any liability for any brokerage fees or commissions or any
finder's fees in connection with the negotiations related to this
Agreement or the consummation of the transactions contemplated hereby.
(f) No Litigation. No suit, action or other proceeding, or any
injunction or final judgment relating thereto, is pending or, to the
knowledge of Seller, threatened, before any court or governmental or
regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the Seller's Documents, or the consummation of the
transactions contemplated hereby and thereby, and no investigation that
might result in any such suit, action or proceeding is pending or, to the
knowledge of Seller, threatened.
7. Buyer's Representations. Buyer represents and warrants to Seller the
following:
(a) Organization and Authority. Buyer is a limited partnership,
duly organized, validly existing and in good standing under the laws of
the State of Delaware. The general partner of Buyer is EMPire Concepts,
Inc., and the only partners of Buyer are the General Partner and RT West
Palm Beach, Inc. Buyer is duly qualified to do business and is in good
standing in each jurisdiction where the conduct of its business currently
requires it to be qualified or would require it to be qualified after the
consummation of the transactions provided for in this Agreement and the
Buyer's Documents. Buyer possesses all requisite power and authority to
enter into and perform this Agreement and the Buyer's Documents. The
execution and delivery and performance of this Agreement and the Buyer's
Documents by Buyer have been duly authorized by all necessary action
(including, without limitation, all necessary action by the general
partner of Buyer). This Agreement has been duly executed and delivered on
behalf of Buyer by the general partner, as duly authorized by Buyer, and
this Agreement constitutes, and the Buyer's Documents, when executed and
delivered, will constitute, the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting the rights of
creditors and general principles of equity.
(b) Compliance with Laws and Instruments. The execution, delivery
and performance by Buyer of this Agreement and the Buyer's Documents will
not result in any material violation of or be in conflict with or
constitute a material default under any applicable statute, regulation,
order, rule, writ, injunction or decree of any court or governmental
authority or of the Partnership Certificate or Partnership Agreement of
Buyer or of any material agreement or other material instrument to which
Buyer is a party or is subject, or constitute a default thereunder.
(c) No Finder's Fees. Buyer has not employed any broker or finder
or incurred any liability for any brokerage fees or commissions or any
finder's fees in connection with the negotiations related to this
Agreement or the consummation of the transactions contemplated hereby.
(d) Independent Investigation. Buyer has had full opportunity to
inspect the Existing Restaurants and the Assets and to ask all questions
of Seller regarding the Restaurants and the Assets. Buyer has conducted
its own independent investigation relating to all aspects of the
Restaurants and has obtained whatever opinions of specialists and experts
as it has deemed necessary in making the decisions to enter into this
Agreement and the Buyer's Documents and to consummate the transactions
contemplated hereby and thereby. Buyer has relied solely on information
received by it from such investigation in making such decisions, and Buyer
has not relied on information received by it from Seller regarding the
past or present earnings of the Restaurants or the prospects of future
earnings of the Restaurants in making such decisions.
(e) Condition of Assets. BUYER ACKNOWLEDGES AND AGREES THAT ALL
ASSETS TO BE TRANSFERRED, ASSIGNED OR LICENSED PURSUANT TO THIS AGREEMENT
AND THE CLOSING DOCUMENTS SHALL BE TRANSFERRED, ASSIGNED OR LICENSED ON AN
"AS IS, WHERE IS" BASIS, WITH ALL FAULTS AND THAT, EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 6 OF THIS AGREEMENT, SELLER IS MAKING, AND SHALL MAKE, NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, RESPECTING ANY
OF THE ASSETS, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
COMPLIANCE WITH THE ADA, OR ANY OTHER MATTER. FURTHER, BUYER ACKNOWLEDGES
THAT BUYER HAS INFORMED ITSELF AS TO THE EXISTING RESTAURANTS, AND BUYER
FURTHER ACKNOWLEDGES AND AGREES THAT SELLER MAKES, AND SHALL MAKE, NO
REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE RESTAURANTS.
(f) No Litigation. No suit, action or other proceeding, or any
injunction or final judgment relating thereto, is pending or, to the
knowledge of Buyer, threatened before any court or governmental or
regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the Buyer's Documents, or the consummation of the
transactions contemplated hereby, and no investigation that might result
in any such suit, action or proceeding is pending or, to the knowledge of
Buyer, threatened.
8. Conditions to Closing.
(a) Conditions to Obligations of Buyer. All obligations of Buyer
under this Agreement are subject to the fulfillment or satisfaction, prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Seller contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing as
if made at the Closing.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by or prior to or at the Closing.
(iii) As of the Closing, no suit, action or other proceeding,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding shall be pending
or threatened.
(iv) Each consent or approval listed on Schedule 7(a)(iv)
required or necessary under contract or applicable law for the
consummation of the transactions contemplated hereby shall have been
obtained; provided, however, those certain consents or approvals
identified on such Schedule 7(a)(iv) as being subject to deferral need not
have been obtained on or before the Closing to the extent that Seller
shall have made appropriate arrangements to secure to Buyer the practical
and economic benefits of the agreements or other arrangements to which
such consents or approvals relate. Notwithstanding the foregoing, Seller
shall not be required to make any additional payment or incur any
obligation to any third party in order to obtain any consent or approvals
required or necessary for the consummation of the transactions
contemplated hereby.
(v) The documents to be delivered by Seller at Closing pursuant
to Section 4(a) shall have been executed and delivered.
(vi) Buyer shall have received a certificate from Seller, dated
the Closing Date and certifying in such detail as Buyer may reasonably
request, that the conditions specified in Sections 7(a)(i) and 7(a)(ii)
hereof have been fulfilled.
(vii) The leases for the Existing Restaurants marked with an
asterisk (*) on Exhibit A shall have been extended, renewed, or new leases
negotiated on such terms and conditions as are reasonably acceptable to
Buyer; provided, however, that if a financing source, whether described in
the UFOC or not, is willing to finance approximately seventy-five percent
(75%) of the Base Price following such extension, renewal or negotiation
upon terms and conditions not materially different from those terms
described in the UFOC and if Seller is willing to finance the balance of
the Base Price upon the terms (including, rate and amortization) described
in Exhibit B, then same shall be acceptable to Buyer.
(b) Conditions to Obligations of Seller. All obligations of Seller
under this Agreement are subject to the fulfillment or satisfaction prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Buyer contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing if
made at the Closing.
(ii) Buyer shall have performed and complied in all material
respects with all terms and conditions of this Agreement or any other
agreement by and between Buyer and Seller (or any financing agreements
where Seller is a guarantor) required to be performed or complied with by
Buyer prior to or at the Closing (including, but not limited to: Buyer
shall be in full compliance with all applicable terms and conditions of
the Partnership Agreement, Employment Agreement, Support Services
Agreement, Development Agreement, Operating Agreement, and SunTrust Loan
Documents).
(iii) As of the Closing, no suit, action or other proceedings,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceeding shall be pending
or threatened.
(iv) Each consent or approval listed on Schedule 7(a)(iv) as
required or necessary under contract or applicable law of the consummation
of the transactions contemplated hereby shall have been obtained;
provided, however, those certain consents or approvals identified on such
Schedule 7(a)(iv) as being subject to deferral need not have been obtained
on or before the Closing, to the extent that Seller shall have made
appropriate arrangements to secure to Buyer the practical and economic
benefits of the agreements or other arrangements to which such consents or
approvals relate. Notwithstanding the foregoing, Seller shall not be
required to make any additional payment or incur any obligation to any
third party in order to obtain any consent or approvals required or
necessary for the consummation of the transactions contemplated hereby.
(v) The documents to be delivered by Buyer at Closing pursuant
to Section 4(a) shall have been executed and delivered.
(vi) Seller shall have received a certificate from Buyer dated
the Closing Date and certifying in such detail as Seller may reasonably
request, that the conditions specified in Sections 7(b)(i) and 7(b)(ii)
hereof have been fulfilled and that all consents and approvals required or
necessary to transfer to Buyer all licenses or permits held by Seller or
the Existing Restaurants with respect to the sale or consumption of
alcoholic beverages on the premises at which the Existing Restaurants
operate have been obtained.
(vii) The leases for the Existing Restaurants marked with an
asterisk (*) on Exhibit A shall have been extended, renewed, or new leases
negotiated on such terms and conditions as are reasonably acceptable to
Seller.
(c) Negotiation in Good Faith in the Event of Partial Performance.
In the event that Seller is unable to transfer the Assets or obtain the
consents or permits necessary to transfer all of the assets related to
the Existing Restaurants as described herein, the parties agree to
negotiate in good faith to reach an agreement acceptable to both parties
concerning the disposition of the transaction described herein, which may
include the sale of a portion of such Assets to Buyer or the reversing of
the transaction. If the parties are unable to reach agreement to continue
the relationship, the parties agree to cooperate fully in the termination
and dissolution of the relationship.
9. Term and Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of Seller and Buyer;
(b) by either Seller or Buyer, if such terminating party is not
otherwise in default in this Agreement and if the Closing shall not have
occurred on or before August 16, 1998 or such other extended date, if any,
mutually agreed to by the parties in writing; and
(c) by either party if there has been a material breach of any
representation, warranty, covenant or agreement by the other party that
has not been cured or for which adequate assurance (reasonably acceptable
to such terminating party) of cure has not been given, in either case
within fifteen (15) business days following receipt of notice of such
breach.
(d) by Seller if Buyer is in material default of any of the
following agreements: the Partnership Agreement, Employment Agreement,
Support Services Agreement, Development Agreement, Operating Agreement,
or SunTrust Loan Documents.
If either party terminates this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other party
specifying the provision hereof pursuant to which such termination is
made. Except for any liability for the breach of this Agreement or any of
the agreements described in Section 9.(d), upon the termination of this
Agreement pursuant to this Section 9, this Agreement shall forthwith
become null and void and there shall be no further liability or the
obligation on the part of Seller or Buyer hereunder or with respect
hereto.
10. Miscellaneous.
(a) Survival. Unless this Agreement is terminated pursuant to
Section 9(a) or Section 9(b) hereof, all representations, warranties,
covenants and agreements made in this Agreement or in a certificate
delivered pursuant hereto by the parties hereto shall survive the
termination of this Agreement or the consummation of the transactions
contemplated hereby, subject to Section 10.(n).
(b) Notices. All notices, requests, or other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered or refused, if delivered personally, or, if delivered by
overnight carrier, such as Federal Express, when delivered as follows:
If delivered to Seller:
Ruby Tuesday, Inc.
Attention: Legal Department
4721 Morrison Drive
Mobile, Alabama 36609-3350
If delivered to Buyer:
RT West Palm Beach Franchise, LP
Attention: Eric M. Paul
301 Cameron Court
Daphne, Alabama 36526
(c) Mail Addressed to Seller. After the Closing Date, Buyer may
open all mail addressed to Seller at the premises of the Existing
Restaurants. Buyer shall promptly forward to Seller any mail that does
not require Buyer's action.
(d) Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(e) Sales, Transfer, Documentary and Other Taxes. In addition to
the Transaction Taxes paid herewith, Buyer shall pay all federal, state
and local sales, documentary, transfer or other taxes or recording fees,
if any, due as a result of the purchase, sale or transfer of the Assets
hereunder (including such taxes or fees related to the recording of UCC-1
financing statements related to the Security Agreement and the Second
Mortgage(s)), whether imposed by law on Seller or Buyer, and Buyer shall
indemnify, reimburse and hold harmless Seller in respect of the liability
for payment of or failure to pay any such taxes or the filing of or
failure to file any reports required to be filed in connection therewith.
(f) Entire Agreement. This Agreement, together with the Closing
Documents, sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and shall not be amended
or modified except by written instrument duly executed by each of the
parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, together with the
Closing Documents.
(g) Assignment and Binding Effect. This Agreement may not be
assigned by either party hereto without the prior written consent of the
other party. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Buyer, but shall
not be construed as conferring any other rights on any other person.
(h) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(i) Construction. All headings contained in this Agreement are for
convenience of reference only, and do not form a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.
(j) Exhibits and Schedules. All Exhibits and Schedules referred to
herein are intended to and hereby are specifically made part of this
Agreement.
(k) Severability. Any provision of this Agreement that is invalid
or enforceable in any jurisdiction shall be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
(l) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to
be an original, and all of which counterparts taken together shall
constitute one and the same instrument.
(m) Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Georgia.
(n) Limitations. SELLER, BUYER AND THE CONTROLLING PRINCIPAL HEREBY
AGREE THAT NO FORM OF PROCEEDING PERMITTED HEREBY WILL BE MAINTAINED BY
ANY PARTY TO ENFORCE ANY LIABILITY OR OBLIGATION OF THE OTHER PARTY,
WHETHER ARISING FROM THIS AGREEMENT, OR OTHER WISE, UNLESS BROUGHT BEFORE
THE EXPIRATION OF ONE (1) YEAR FROM THE DATE OF CLOSING.
[SIGNATURES FOLLOW ON NEXT PAGE
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
SELLER:
RUBY TUESDAY, INC.
By: /s/ J. Russell Mothershed
Name: J. Russell Mothershed
Title: Senior Vice President
ATTEST:
By: /s/ Daniel T. Cronk
Name: Daniel T. Cronk
Title: Senior Vice President
BUYER:
RT WEST PALM BEACH FRANCHISE, LP
By: /s/ Eric M. Paul
Eric M. Paul, President
EMPire Concepts, Inc., General Partner
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule 4(b) Description of Back Office Upgrade
Schedule 7(a)(iv) Required Consents and Approvals
Exhibits
Exhibit A List of Restaurant Locations; List of Owned and
Leased Real Property
Exhibit B Form of Note
Exhibit C Intentionally Omitted
Exhibit D Form of Guaranty
Exhibit E Form of Bill of Sale
Exhibit F Form of Assignment/Assumption
Exhibit G-1 Form of Development Agreement
Exhibit G-2 Form of Operating Agreement (with Coca Cola
amendment)
Exhibit G-3 Form of Support Services Agreement (with liquor
license addendum)
Exhibit G-4 Form of Partnership Agreement
Exhibit G-5 Form of Employment Agreement
Exhibit H Form of Sublease
Exhibit I Form of Certificate of Occasional or Isolated
Sale
Exhibit J Form of Termination Agreement
Exhibit K Form of Addendum to Operating Agreements
Schedule 7(a)(iv)
REQUIRED CONSENTS AND APPROVALS
1. All consents and approvals required or necessary to transfer to Buyer
all licenses or permits currently held by Seller or the Existing
Restaurants with respect to the sale or consumption of alcoholic beverages
on the premises at which the Existing Restaurants operate.
2. All consents required or necessary from any third party (or third
parties) with respect to the Sublease(s).
3. All consents required by Seller's current lender(s).
4. The consent of Seller's Board of Directors
RUBY TUESDAY, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER-SHARE DATA)
Fiscal Year Ended
June 6, May 31, June 1,
1998 1997 1996
BASIC EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Weighted-average common shares outstanding 33,205 35,190 34,626
Net income (loss)....................... $29,080 $25,045 $(2,884)
Basic earnings (loss) per common and
common equivalent share................. $ 0.88 $ 0.71 $ (0.08)
Fiscal Year Ended
June 6, May 31, June 1,
1998 1997 1996
DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Weighted-average common shares outstanding 33,205 35,190 34,626
Dilutive effect of stock options.......... 1,365 560 751
Number of shares used in computation of
diluted earnings per share.............. 34,570 35,750 35,377
Net income (loss)....................... $29,080 $25,045 $(2,884)
Diluted earnings (loss) per common
and common equivalent share............. $ 0.84 $ 0.70 $ (0.08)
Weighted average shares and all per-share data for prior years have been
restated to give effect to common stock dividends and common stock splits
through June 6, 1998 and the adoption of FAS 128.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Ruby Tuesday, Inc. owns and operates three casual dining restaurant
concepts: Ruby Tuesday, Mozzarella's American Cafe, and Tia's Tex-Mex.
Additionally, the Company franchises its Ruby Tuesday concept. As of June
6, 1998, the Company owned and operated 382 restaurants including 315 Ruby
Tuesday, 46 Mozzarella's American Cafe and 21 Tia's Tex-Mex restaurants,
located in 32 states. Franchise operations included 49 domestic units and
six international units.
During fiscal 1996, the Company distributed the shares of its then
family dining restaurant business (Morrison Fresh Cooking, Inc.) and its
health care food and nutrition services business (Morrison Health Care,
Inc.) to its shareholders in a spin-off transaction. The financial
results of those two businesses are reported as discontinued operations.
For an understanding of the significant factors that influenced the
Company's performance during the past three fiscal years, the following
should be read in conjunction with the Consolidated Financial Statements
and related Notes found on pages 18 to 35.
Results of Operations
The following table sets forth selected restaurant operating data as
a percentage of revenues for the periods indicated. All information is
derived from the Consolidated Financial Statements of the Company included
elsewhere in this Annual Report.
1998 1997 1996
Company restaurant sales 99.7% 100.0% 100.0%
Franchise revenues 0.3 0.0 0.0
Total revenues 100.0 100.0 100.0
Operating costs and expenses:
(As a percentage of Company
restaurant sales):
Cost of merchandise 27.5 27.1 27.5
Payroll and related costs 32.2 32.6 33.7
Other 20.7 21.5 21.6
(As a percentage of Total revenues):
Selling, general and
administrative 7.4 6.5 6.3
Depreciation and amortization 5.6 5.9 5.5
Interest expense, net 0.5 0.6 0.8
Loss on impairment of assets 4.2
Restructure charges 0.8
Total operating costs and expenses 93.7 94.1 100.4
Income (loss) from continuing
operations before income taxes 6.3 5.9 (0.4)
Provision (benefit) for
income taxes 2.2 2.1 (0.3)
Income (loss) from continuing
operations 4.1 3.8 (0.1)
Loss from discontinued
operations, net of applicable
income taxes (0.4)
Net income (loss) 4.1% 3.8% (0.5)%
During fiscal 1996, the Company recorded $31.1 million in charges
related to asset impairment and restructure costs. The effect of these
charges on fiscal 1996 results of operations is discussed below.
Fiscal 1998 compared to Fiscal 1997
Overview
During fiscal 1998, the Company opened 38 Ruby Tuesday, one
Mozzarella's American Cafe, and one Tia's Tex-Mex restaurants while
closing two Ruby Tuesday and three Mozzarella's American Cafe restaurants.
In addition, the Company sold 46 Ruby Tuesday units to several domestic
franchisees for aggregate consideration consisting of $34.8 million in
cash and $12.5 million in the form of promissory notes bearing interest at
rates ranging from 8% to 10%. Concurrent with the sale of the 46 units,
the Company also entered into development agreements with the franchisees
whereby the franchisees will open restaurants in their respective areas
over the next five to nine years. The Company also continued its
development of franchise programs through the opening of four
international franchise units during the year.
Revenues
The Company's revenues increased to $711.4 million in fiscal 1998
from $655.4 million in fiscal 1997. The 8.5% revenue increase was the
result of an additional week in fiscal 1998 coupled with increased same-
store sales and the net addition of 35 units during the year (not taking
into account units sold to franchisees) comprised of net additions to the
Ruby Tuesday concept (36 units) and Tia's Tex-Mex concept (one unit),
offset by a net reduction to the Mozzarella's American Cafe concept (two
units). This increase was somewhat offset by the reduction in revenue
which resulted from the sale of 46 units to franchisees. Same-store sales
in fiscal 1998 increased 2.8% for the Ruby Tuesday concept. Same-store
sales for Mozzarella's American Cafe and Tia's Tex-Mex were also positive
for the fiscal year.
Operating Profits
Pre-tax income increased $6.2 million in fiscal 1998 to $45.0
million. The increase in pre-tax income is the result of increased sales
due to increased same-store sales for all concepts and the addition of new
units coupled with the cost changes discussed below.
Cost of merchandise as a percentage of Company restaurant sales
increased 0.4% due to a change in menu strategy. During the year, various
menu promotions featured high cost, high gross profit food items.
Payroll and related costs decreased 0.4% as a percentage of Company
restaurant sales in fiscal 1998. The decrease resulted from a reduction
in hourly labor as a percentage of Company restaurant sales due to
increased average unit volumes and reduced turnover. In addition, payroll
taxes decreased as a result of a reduction in state unemployment tax
rates. Finally, workers' compensation expense as a percentage of Company
restaurant sales decreased as a result of favorable claims experience.
Other operating expenses decreased 0.8% as a percentage of Company
restaurant sales due to a decrease in supplies expense resulting from the
elimination of paper cocktail napkins and silverware wrappers and a
decrease in glassware breakage. Rent and leasing expense also decreased as
a result of the sale of certain high occupancy cost units to franchisees
and a continuing shift towards lower occupancy cost free standing units as
opposed to mall units.
Selling, general and administrative expenses increased 0.9% as a
percentage of total revenues. The increase resulted from additional local
store marketing in fiscal 1998, including coupon redemptions associated
with the Company's "Neighborhood Introduction Program" which began in the
third quarter of fiscal 1997. Also, during fiscal 1998, the Company
recognized costs associated with the start-up of its domestic and
international franchise programs.
Depreciation and amortization decreased 0.3% as a percentage of total
revenues due to the sale of 46 units to franchisees which had higher unit
depreciation costs and due to higher average unit volumes resulting from
positive same-store sales, and new unit openings which generated higher
sales volumes than in the previous year.
Net interest expense decreased slightly (0.1%) as a percentage of
total revenues due to an increase in interest income resulting from notes
receivable associated with the sale of units to franchisees.
The increase in income from continuing operations compared to the
prior year primarily relates to higher average unit volumes resulting
from positive same-store sales in fiscal 1998, new units that are
generating higher sales and profits than those of the previous year and
the addition of a 53rd week in fiscal 1998.
The effective tax rate remained relatively constant in fiscal 1998
as compared to fiscal 1997. The slight decrease (0.1%) as a percentage
of total revenues is primarily the result of reduced state taxes.
Fiscal 1997 compared to Fiscal 1996
Overview
During fiscal 1997, the Company opened 30 Ruby Tuesday, two
Mozzarella's American Cafe, and three Tia's Tex-Mex restaurants while
closing six Ruby Tuesday and one Tia's Tex-Mex restaurants. Also in 1997,
the Company began its domestic franchise program with the sale of one unit
to a franchisee.
Revenues
The Company's revenues increased to $655.4 million in fiscal 1997
from $620.1 million in fiscal 1996. The 5.7% revenue increase was the
result of the net addition of 28 units during the year, comprised of 24
Ruby Tuesday, two Mozzarella's American Cafe, and two Tia's Tex-Mex
restaurants. For the Ruby Tuesday concept, same-store sales decreased 0.8%
in fiscal 1997. Same-store sales for Tia's Tex-Mex also declined, while
Mozzarella's American Cafe experienced positive same-store sales.
Operating Profits
Pre-tax income from continuing operations increased $41.1 million in
fiscal 1997 to $38.8 million. The increase was due in part to $31.1
million of unusual non-recurring charges recorded in fiscal 1996 for
restructure charges and loss on impairment of assets. The remaining
increase in pre-tax income was the result of the net addition of 28 units
coupled with cost decreases discussed below.
Cost of merchandise as a percentage of Company restaurant sales
decreased 0.4% due to a new menu implemented in October 1996 which lowered
food costs significantly. Also, there was an increased focus regarding
food cost management at the unit level in fiscal 1997 and the Company
experienced an improvement in rebates and volume discounts.
Payroll and related costs decreased 1.2% as a percentage of Company
restaurant sales in fiscal 1997. The decrease was due to a reduction in
management labor resulting from a strategic decision to reduce unit
managers to a level that more accurately matches unit volume. The
remaining portion of the decrease was the result of reduced workers'
compensation expense as a percentage of Company restaurant sales
associated with favorable experience ratings in the fiscal 1997.
Other operating expenses decreased slightly as a percentage of
Company restaurant sales (0.1%) due to a decrease in supplies expense
resulting from tighter controls over such items.
Selling, general and administrative expenses increased 0.2% as a
percentage of total revenues. The increase resulted from additional local
store marketing in fiscal 1997, including coupon redemptions associated
with the Company's "Neighborhood Introduction Program" which began in the
third quarter of fiscal 1997.
Depreciation and amortization increased 0.4% as a percentage of total
revenues due to depreciation expense on information technology projects
completed during the prior year and a higher mix of free-standing units.
Net interest expense decreased 0.2% as a percentage of total revenues
from $4.6 million in fiscal 1996 to $3.9 million in fiscal 1997 due to the
net decrease in average debt outstanding during the year.
The increase in income from continuing operations compared to the
prior year primarily relates to unusual non-recurring charges recorded in
fiscal 1996. In fiscal 1996, the Company recorded charges of $31.1
million for loss on asset impairment and restructure charges (see further
discussion below).
The unusual charges referred to previously also contributed to the
unusual effective tax rate in fiscal 1996. Excluding the effects of
these charges in fiscal 1996, the effective income tax rate decreased
slightly in fiscal 1997 to 35.5% from 35.8% in fiscal 1996.
Asset Impairment/Restructure Charges
The Company adopted Statement of Financial Accounting Standards No.
121 ("FAS 121"), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of", during fiscal 1996. As a
result of the adoption of FAS 121, the Company recorded a pre-tax charge
for asset impairment of $3.9 million. This amount was the difference
between fair value and net realizable value of impaired assets. An
additional $22.0 million pre-tax charge for asset impairment was recorded
which did not relate to the adoption of FAS 121. The total charge of
$25.9 million (of which $3.9 million was the result of the adoption of
FAS 121) was comprised of the following: impairment on 16 units to be
closed ($10.0 million); impairment on in-unit computer equipment ($0.8
million) and write-offs resulting from management's decision to abandon
an information technology plan ($3.8 million); and impairment on units
remaining open ($11.3 million).
In addition to the write-down of fixed assets on the 16 units to be
closed, the Company accrued charges of $3.4 million relating to the
settlement of the related lease obligations and other charges of $1.8
million associated with the Distribution. See Note 1 and Note 3 of Notes
to Consolidated Financial Statements for further information regarding
the asset impairment and restructuring charges.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Cash provided by operating activities was $68.7 million in fiscal
1998 and exceeded capital expenditures by approximately $2.9 million.
Borrowings under the Company's credit facilities were increased by $3.6
million. Pursuant to the Company's financial strategy approved by the
Board during fiscal 1994, $62.1 million of the Company's stock was
reacquired during fiscal 1998 primarily from cash available from the
sales of certain units to franchisees and from borrowings under the
Company's credit facilities. (See the Consolidated Statements of Cash
Flows for more information.)
Capital Expenditures
The Company requires capital principally for new restaurants,
equipment replacement and remodeling of existing units. Property and
equipment expenditures for fiscal 1998 were $65.8 million for new units,
capital projects on existing units and information technology projects.
An additional $27.6 million was spent by a lessor on new unit
construction under operating lease arrangements with the Company. During
fiscal 1998, 38 Ruby Tuesday, one Mozzarella's American Cafe and one
Tia's Tex-Mex Company-owned restaurants were opened. Capital
expenditures for fiscal 1999 are projected to be $58.8 million.
Expenditures by a lessor for units to be leased by the Company under
operating leases are budgeted to be $39.8 million for fiscal 1999.
Planned Company-owned openings for fiscal 1999 include 41 Ruby Tuesday
and two Tia's Tex-Mex restaurants. There can be no assurance, however,
that the Company will be able to open the projected number of restaurants
in fiscal 1999 or invest the projected amount of money in capital
expenditures and lease commitments. See "Special Note Regarding Forward-
Looking Statements."
Borrowings, Credit, and Lease Facilities
At June 6, 1998, the Company had committed lines of credit amounting
to $20.0 million and non-committed lines of credit amounting to $15.0
million with several banks at various interest rates approximating 5.89%
at June 6, 1998. All of these lines are subject to periodic review by
each bank and may be canceled by the Company at any time. The Company
utilized its lines of credit to meet operational cash needs during fiscal
1998. Borrowings on these lines of credit were $16.2 million and $0.5
million at June 6, 1998 and May 31, 1997, respectively. In addition to
these lines of credit, the Company has a five-year credit facility with
several banks which allows the Company to borrow up to $100.0 million
under various interest rate options. The $100.0 million credit facility
is comprised of a $50.0 million five-year term note and a $50.0 million
five-year revolving credit facility. The Company had $65.0 million of
borrowings outstanding under this agreement at June 6, 1998, bearing
interest at approximately 6.1%. The credit facility provides for certain
restrictions on incurring additional indebtedness and certain covenants
regarding funded debt, net worth, and fixed charge coverage requirements.
The Company has entered into three interest rate swap agreements
with notional amounts aggregating $75.0 million. The swap agreements
effectively fix the interest rate on an equivalent amount of the
Company's debt to rates ranging from 5.73% to 6.03% for periods up to
five years.
During fiscal 1998, the Company entered into a $40.0 million master
operating lease agreement for the purpose of leasing new free-standing
units and the new Restaurant Support Center. Under this agreement, an
operating lease agreement will be entered into for each facility
providing for an initial lease term of five years with two five-year
renewal options. The leases also provide for substantial residual value
guarantees and include purchase options at the lessor's original cost of
the properties. During 1998, the Company entered into leases for 20
units (nine of which opened in fiscal 1998) and the new Maryville,
Tennessee Restaurant Support Center at an aggregated cost to the lessor
of approximately $27.6 million. During 1999, the Company intends to
enter into similar lease agreements under the remaining amount of the
$40.0 million master operating lease agreement and to enter into a new
master operating lease agreement for an amount in excess of $27.4
million. See "Special Note Regarding Forward-Looking Information."
During fiscal 1999, the Company expects to fund operations, capital
expansion, and the repurchase of common stock from operating cash flows,
bank lines of credit, the five-year revolving line of credit, the sale of
Ruby Tuesday units to franchisees, and through operating leases. (See
Note 5 of Notes to Consolidated Financial Statements for a detailed
discussion of borrowings and credit facilities.) Long-term debt
decreased a net $12.1 million in 1998 due to lower utilization of the
revolving credit facility while short-term borrowings under bank lines of
credit increased $15.7 million. The Company anticipates a net repayment
of debt in 1999 should cash flows meet current expectations. An increase
in debt could result if actual cash flows from operations are lower than
currently anticipated or if capital expenditures exceed budgeted amounts.
See "Special Note Regarding Forward-Looking Information."
Working Capital
The Company's working capital deficiency and current ratio as of
June 6, 1998 were $37.6 million and 0.6:1, respectively. The Company
typically carries current liabilities in excess of current assets because
cash (a current asset) generated from operating activities is reinvested
in capital expenditures (a long-term asset).
Dividends
During fiscal 1997, the Board of Directors approved a dividend
policy as an additional means of returning excess capital to its
shareholders. This policy calls for payment of semi-annual dividends of
$.045 per share. The payment of a dividend in any particular future
period and the actual amount thereof remain, however, at the discretion
of the Board of Directors and no assurance can be given that dividends
will be paid in the future as currently anticipated. See "Special Note
Regarding Forward-Looking Information." In addition, the Company's credit
facilities contain certain limitations on the payment of dividends. See
Note 5 of Notes to Consolidated Financial Statements for more
information.
The Company paid its first cash dividend since the spin-off in the
third quarter of fiscal 1998.
KNOWN EVENTS, UNCERTAINTIES AND TRENDS
Financial and Stock Repurchase Plan
The Company employs a financial strategy which utilizes a prudent amount
of debt to minimize the weighted average cost of capital while allowing the
Company to maintain financial flexibility and the equivalent of an
investment-grade (BBB) bond rating. This financial strategy sets a target
debt-to-capital ratio of 60%, including operating leases. The strategy
also provides for repurchasing Company stock whenever cash flow exceeds
funding requirements while maintaining the target capital structure.
During fiscal 1998, the Company purchased 4.6 million shares at a total
purchase price of $62.1 million under its stock repurchase program,
including 1,341,024 shares purchased in a "dutch auction" tender offer
completed on June 2, 1997. On April 6, 1998, the Board of Directors
authorized the repurchase of an additional 4.0 million shares for general
corporate purposes. After these repurchases and the additional
authorization, approximately 3.4 million shares remained available for
repurchase at June 6, 1998.
Franchising and Development Agreements
During May and June 1998, the Company entered into a series of agreements
with three entities (one limited partnership and two limited liability
corporations). These agreements provide for, among other things, the sale of
four Company-owned units in Florida, three in Minnesota and six in New York.
Upon completion of the sales, the 13 units will be operated as Ruby Tuesday
restaurants under separate franchising agreements. The Company also entered
into development agreements with these three entities whereby each of them will
open nine franchised restaurants in its respective area over the next five to
six years.
New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("FAS 131"), which is effective for fiscal
1999. FAS 131 requires a "management approach" towards identifying and
disclosing segment information. Disclosures include information about various
products and services, geographic areas in which the Company operates and major
customers. Management has not completed its analysis of the effect of FAS
131 on its reportable segments.
Impact of Inflation
Historically, the Company has been able to recover inflationary cost
increases to items such as food and beverages through increased menu prices.
There have been, and there may be in the future, delays in the
implementation of such menu price increases. Competitive pressures may
also limit the Company's ability to recover such cost increases in their
entirety. Historically, the effect of inflation on the Company's net
income has not been materially adverse.
Effects of the Year 2000
The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures. Software failures due to
processing errors potentially arising from calculations using the Year 2000
date are a known risk. The Company is addressing this risk to the availability
and integrity of financial systems and the reliability of operational systems
through a combination of actions. These include the implementation of a new
financial and human resource software package that is Year 2000 compliant and a
coordinated review of the Year 2000 readiness of key suppliers, financial
institutions and others with which it does business. The Company expects to
spend approximately $1.6 million in fiscal 1999 principally related to its new
financial and human resource software package which will address the Year 2000
issue. See "Special Note Regarding Forward-Looking Information."
Management's Outlook
The Company has made many advances to strategically position itself for
growth utilizing a diversified group of casual dining concepts and growth
vehicles including franchising. Ruby Tuesday, with its menu of burgers, ribs,
fajitas, chicken, soups, salads and sandwiches, will maintain its aggressive
posture. The Mozzarella's American Cafe concept will concentrate primarily on
improved sales and profits at existing units. The concept specializes in
gourmet pizzas, pastas, soups, salads and sandwiches, with a $9 average check.
Tia's the Tex-Mex concept features freshly prepared menu items and offers the
Company an attractive opportunity in a high growth segment of the industry.
The Company's focus for Tia's is to improve same-store sales and profits by
increasing customer visit frequency and continuing to add new and fresh items
to its menu. Management believes that it is positioned to take advantage of
growth opportunities well into the future.
The Company continues to identify potential restaurant owners - internal
and external - to become Ruby Tuesday managing partners and franchisees.
Approximately one-half of the Company's restaurant managers have a financial
stake in the success of their units as internal managing partners. The
franchise partner program - the Company's primary domestic franchising program
- - allows the Company to become a financial partner with regional operators from
the casual-dining industry who are expected to build approximately 10 units
each over the next five years in new and existing markets. See "Special Note
Regarding Forward-Looking Information."
In order to facilitate this development, the Company has established a
$52.5 million credit facility with several banks which will be used by these
franchise partners to help finance their expansion. The Company is a partial
guarantor of this credit facility.
In 1999, the Company will continue to focus on increasing
same-store sales, average-unit volume, customer visit frequency, and check
average. The Company also plans to further its franchise programs in
fiscal 1999 by adding at least six of the top casual dining operators in
the country to the growing list of domestic franchise partners, by
franchising units located in areas outside of the Company's primary growth
markets, and by pursuing further expansion of the international license
and franchise program with large and experienced partners in broad
geographic territories. The Company anticipates a 10% increase in owned
units in existing markets in fiscal 1999, however, there can be no
assurance the Company's anticipated growth will occur in fiscal 1999. See
"Special Note Regarding Forward-Looking Information."
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
The foregoing section contains various "forward-looking statements" which
represent the Company's expectations or beliefs concerning future events,
including the following: statements regarding unit growth (both Company-owned
and franchised), future capital expenditures, future borrowings and repayment
of debt, payment of dividends and the effects of Year 2000 software failures.
The Company cautions that a number of important factors could, individually or
in the aggregate, cause actual results to differ materially from those included
in the forward-looking statements including, without limitation, the following:
consumer spending trends and habits; mall-traffic trends; increased competition
in the casual dining restaurant market; weather conditions in the regions in
which the Company operates restaurants; consumers' acceptance of the Company's
development concepts; laws and regulations affecting labor and employee benefit
costs; the Company's ability to attract qualified managers and franchisees; and
changes in the availability of capital.
<TABLE>
RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per-share data)
<CAPTION>
For the Fiscal Year Ended
June 6, May 31, June 1,
1998 1997 1996
<S> <C> <C> <C>
Revenues
Restaurant sales and operating revenues.............. $ 709,184 $ 654,464 $ 618,803
Franchise revenues................................... 1,902 232
Other revenues....................................... 334 711 1,331
711,420 655,407 620,134
Operating costs and expenses:
Cost of merchandise.................................. 194,765 177,835 170,352
Payroll and related costs............................ 228,676 213,323 209,007
Other................................................ 146,655 140,619 134,043
Selling, general and administrative.................. 52,994 42,346 39,139
Depreciation and amortization........................ 39,519 38,560 34,131
Interest expense net of interest income totaling
$900 in 1998, $205 in 1997, and $160 in 1996....... 3,780 3,911 4,637
Loss on impairment of assets......................... 25,881
Restructure charges ................................. 5,257
666,389 616,594 622,447
Income (loss) from continuing operations before
income taxes......................................... 45,031 38,813 (2,313)
Provision (benefit) for federal and state income taxes. 15,951 13,768 (1,651)
Income (loss) from continuing operations............... 29,080 25,045 (662)
Loss from discontinued operations, net of
applicable income taxes.............................. (2,222)
Net income (loss)...................................... $ 29,080 $ 25,045 $ (2,884)
Earnings (loss) per share:
Basic:
Continuing operations.............................. $ 0.88 $ 0.71 $ (0.02)
Discontinued operations............................ (0.06)
$ 0.88 $ 0.71 $ (0.08)
Diluted:
Continuing operations.............................. $ 0.84 $ 0.70 $ (0.02)
Discontinued operations............................ (0.06)
$ 0.84 $ 0.70 $ (0.08)
Weighted average shares:
Basic.............................................. 33,205 35,190 34,626
Diluted............................................ 34,570 35,750 35,377
The accompanying notes are an integral part of the consolidated financial statements.
RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 6, May 31,
Assets 1998 1997
Current assets:
Cash and short-term investments................................ $ 8,291 $ 7,608
Accounts and notes receivables................................. 7,600 4,621
Inventories:
Merchandise...................................................... 5,620 6,088
China, silver and supplies....................................... 3,902 3,562
Income tax receivable............................................ 1,713 2,178
Prepaid rent..................................................... 2,880 2,736
Other Prepaid expenses........................................... 4,477 3,036
Assets held for disposal......................................... 9,894 1,275
Prepaid income taxes............................................. 2,506 4,388
Total current assets........................................ 46,883 35,492
Property and equipment - at cost:
Land............................................................. 34,665 35,643
Buildings........................................................ 62,404 70,163
Improvements..................................................... 188,867 195,034
Restaurant equipment............................................. 128,776 137,830
Other equipment.................................................. 39,518 38,284
Construction in progress......................................... 26,245 35,450
480,475 512,404
Less accumulated depreciation and amortization................... 170,083 165,640
310,392 346,764
Costs in excess of net assets acquired........................... 19,714 20,396
Other assets..................................................... 32,639 16,219
Total assets..................................................... $ 409,628 $ 418,871
Liabilities and shareholders' equity
Current liabilities:
Accounts payable............................................... $ 22,570 $ 28,828
Short-term borrowings.......................................... 16,220 534
Accrued liabilities:
Taxes, other than income taxes............................... 12,748 11,425
Payroll and related costs.................................... 12,731 8,982
Insurance.................................................... 8,928 8,800
Rent and other............................................... 11,136 10,393
Current portion of long-term debt.............................. 110 102
Total current liabilities........................................ 84,443 69,064
Long-term debt................................................... 65,895 78,006
Deferred income taxes............................................ 9,728 13,552
Other deferred liabilities....................................... 37,412 34,609
Shareholders' equity:
Common stock, $0.01 par value; (authorized: 100,000 shares;
issued: 1998 - 32,787 shares, 1997 - 17,720 shares)......... 328 177
Capital in excess of par value................................ 5,250 2,729
Retained earnings............................................. 207,034 223,399
212,612 226,305
Deferred compensation liability payable in Company stock...... 3,155
Company stock held by deferred compensation plan.............. (3,155) (2,665)
Other......................................................... (462)
212,150 223,640
Total liabilities and shareholders' equity................... $ 409,628 $ 418,871
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands except per-share data)
<CAPTION>
Common Capital in Deferred Total
Stock Issued Treasury Stock Excess of Retained Compensation Shareholders'
Shares Amount Shares Amount Par Value Earnings Liability Other Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 3, 1995.............. 43,644 $436 (9,119) $(137,639) $84,515 $298,181 $ 0 $ 0 $245,493
Net loss........................ (2,884) (2,884)
Shares issued under stock bonus
and stock option plans......... 84 1 129 1,926 1,663 251 3,841
Cash dividends of $0.272 per
common share................... (9,377) (9,377)
Purchase of treasury stock, net of changes
in Deferred Compensation Plan.. 240 (858) (858)
Equity transfers to MFC and MHC. 5,080 (43,952) (38,872)
Retirement of treasury stock.... (8,616) (86) 8,616 128,542 (84,591) (43,865) 0
1-for-2 reverse stock split.....(17,514) (175) 175 0
Balance, June 1, 1996.............. 17,598 176 (134) (2,949) 1,762 198,354 0 0 197,343
Net income...................... 25,045 25,045
Shares issued under stock bonus and stock
options plans.................. 310 3 4,249 4,252
Purchase of treasury stock, net
of changes in the Deferred
Compensation Plan.............. (188) (2) 7 284 (3,282) (3,000)
Balance, May 31, 1997.............. 17,720 177 (127) (2,665) 2,729 223,399 0 0 223,640
Net income...................... 29,080 29,080
Shares issued under stock bonus
and stock option plans......... 3,172 32 20,810 20,842
Cash dividends of $0.045 per
common share................... (1,468) (1,468)
Purchase of treasury stock, net
of changes in Deferred
Compensation Plan.............. (4,602) (46) (7) (490) (18,124) (43,977) (62,637)
Deferred Compensation Plan liability
payable in Company stock....... 3,155 3,155
Other........................... (462) (462)
2-for-1 stock split............. 16,497 165 (135) (165) 0
Balance, June 6, 1998.............. 32,787 $328 (269) $(3,155) $5,250 $207,034 $3,155 $(462) $212,150
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Fiscal Year Ended
June 6, May 31, June 1,
1998 1997 1996
<S> <C> <C> <C>
Operating activities:
Income (loss) from continuing operations............ $ 29,080 $ 25,045 $ (662)
Adjustments to reconcile net income (loss) to net...
cash provided by operating activities:.............
Loss on impairment of assets...................... 25,881
Depreciation and amortization..................... 39,519 38,560 34,131
Amortization of intangibles....................... 729 734 699
Other, net........................................ (1,118)
Deferred income taxes............................. (1,080) 3,712 (7,157)
Loss on disposition of assets..................... 2,552 331 2,592
Changes in operating assets and liabilities:
Increase in receivables......................... (2,631) (2,581) (282)
Increase in inventories......................... (1,040) (969) (1,197)
(Increase)/decrease in prepaid and
other assets................................... (3,017) 2,610 721
Increase in accounts payable,
accrued and other liabilities.................. 4,977 9,456 14,989
Increase/(decrease) in income taxes payable..... (397) 2,273 (4,493)
Cash provided by continuing operations.............. 68,692 79,171 64,104
Cash provided by discontinued operations............ 10,030
Net cash provided by operating activities............ 68,692 79,171 74,134
Investing activities:
Purchases of property and equipment................ (65,750) (74,049) (109,164)
Proceeds from disposal of assets................... 650 818 3,444
Proceeds from sale of restaurant properties
to franchisees.................................... 34,782
Proceeds from sale of home office building......... 5,450
Other, net......................................... (3,461) (3,161) (4,475)
Discontinued operations investing
activities, net................................. (14,448)
Net cash used by investing activities................ (28,329) (76,392) (124,643)
Financing activities:
Proceeds from long-term debt....................... 2,000 44,200
Net change in short-term borrowings................ 15,686 (5,467) (6,637)
Principal payments on long-term debt and
capital leases.................................... (12,103) (95) (87)
Proceeds from issuance of stock,
including treasury stock.......................... 20,842 4,252 3,841
Stock repurchases, net of changes in the
Deferred Compensation Plan....................... (62,637) (3,000) (858)
Dividends paid..................................... (1,468) (9,377)
Discontinued operations financing
activities, net................................. 20,609
Net cash provided (used) by financing activities..... (39,680) (2,310) 51,691
Increase in cash and short-term
investments......................................... 683 469 1,182
Cash and short-term investments:
Beginning of period................................. 7,608 7,139 5,957
End of period....................................... $ 8,291 $ 7,608 $ 7,139
Supplemental disclosure of cash flow information-
Cash paid for:
Interest (net of amount capitalized)............... $ 5,885 $ 3,599 $ 4,252
Income taxes, net.................................. $ 12,224 $ 7,783 $ 2,605
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
RUBY TUESDAY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 6, 1998
1. Summary of Significant Accounting Policies
Basis of Presentation
Ruby Tuesday, Inc. (the "Company") operates three separate and
distinct casual dining concepts comprised of Ruby Tuesday, Mozzarella's
American Cafe and Tia's Tex-Mex restaurants. The Company also offers
franchises for the Ruby Tuesday concept in domestic and international
markets. At June 6, 1998, the Ruby Tuesday concept consisted of 315 units
concentrated primarily in the Northeast, Southeast, Mid-Atlantic and the
Midwest. With 46 establishments, Mozzarella's American Cafe units are
primarily located in the Mid-Atlantic, Southeast regions. The Company's
newest concept, Tia's Tex-Mex, operates 21 units located in the Southwest,
Southeast and Mid-Atlantic regions. Also, as of year-end, there were 49
domestic franchise Ruby Tuesday franchised units concentrated primarily in
Florida, Colorado, Arizona, and Kentucky and six Ruby Tuesday restaurants
in the Asia Pacific Region.
Prior to March 9, 1996, the Company was known as Morrison Restaurants
Inc. ("Morrison"). Morrison operated three businesses in the foodservice
industry. These businesses were organized into two operating groups, the
Ruby Tuesday Group, consisting of the Company's casual dining concepts,
and the Morrison Group, which was comprised of Morrison's family dining
restaurant and health care food and nutrition businesses. Effective March
9, 1996, the shareholders of Morrison approved the spin-off (the
"Distribution") of its family dining restaurant and health care food and
nutrition businesses to its shareholders. The Distribution resulted in
the family dining restaurant and health care food and nutrition businesses
operating as two separate stand-alone, publicly-traded companies. In
accordance with Accounting Principles Board Opinion No. 30, the financial
results of these two businesses are reported as discontinued operations.
For accounting purposes, the Distribution was reflected as if it occurred
on March 2, 1996, the last day of the Company's third quarter of fiscal
1996. As part of the Distribution, Morrison reincorporated in Georgia and
changed its name to Ruby Tuesday, Inc.
The accompanying consolidated financial statements have been prepared
to reflect the operations of the family dining restaurant and health care
food and nutrition businesses as discontinued operations for 1996 as if
the Company's casual dining restaurant operations had operated as a stand-
alone entity. Thus all disclosures, except for the information relating
to discontinued operations as presented in Note 2 of Notes to the
Consolidated Financial Statements, relate to continuing operations only.
Fiscal Year
The Company's fiscal year ends on the first Saturday following May
30. The fiscal year ended June 6, 1998, was comprised of 53 weeks, and
the fiscal years ended May 31, 1997 and June 1, 1996 were comprised of 52
weeks.
Cash and Short-Term Investments
The Company's cash management program provides for the investment of
excess cash balances in short-term money market instruments. Short-term
investments are stated at cost, which approximates market value. The
Company considers marketable securities with a maturity of three months or
less when purchased to be short-term investments.
Inventories
Inventories consist of materials, food supplies, china and silver and
are stated at the lower of cost (first-in, first-out) or market.
Property and Equipment and Depreciation
Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful lives of the assets or, for
capital lease property, over the term of the lease, if shorter. Annual
rates of depreciation range from 3% to 5% for buildings and improvements
and from 8% to 34% for restaurant and other equipment.
Income Taxes
Deferred income taxes are determined utilizing a liability approach.
This method gives consideration to the future tax consequences associated
with differences between financial accounting and tax bases of assets and
liabilities.
Pre-Opening Expenses
Salaries, personnel training costs and other expenses of opening new
facilities are charged to expense as incurred.
Intangible Assets
Excess of costs over the fair value of net assets acquired of
purchased businesses generally is amortized on a straight-line basis over
40 years. At June 6, 1998 and May 31, 1997, accumulated amortization for
costs in excess of net assets acquired was $6.7 million and $6.0 million,
respectively.
Advertising Costs
The Company generally expenses advertising costs as incurred.
Advertising expense as a percentage of revenues ranged from 1.5% to 1.8%
for fiscal years 1998, 1997, and 1996.
Fair Value of Financial Instruments
The Company's financial instruments at June 6, 1998 and May 31, 1997
consisted of cash and short-term investments, Deferred Compensation Plan
investments, notes receivable, short-term borrowings, long-term debt, and
interest rate swap agreements. The fair value of these financial
instruments approximated the carrying amounts reported in the Consolidated
Balance Sheets.
Franchise Revenues
Franchise development and license fees received are recognized when
all material services have been substantially performed by the Company and
the restaurant has opened for business. Franchise royalties (based on a
percentage of monthly sales), support service fees, and marketing fees are
recognized as income on the accrual basis. Costs associated with
franchise operations are expensed as incurred.
Earnings Per Share
In the third quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128").
This statement requires the Company to disclose diluted earnings per
share, which includes the dilutive effect of stock options, in addition to
basic earnings per share. Basic earnings per share have been computed by
dividing net earnings (loss) by the weighted average number of common
shares outstanding during each year presented. Diluted earnings per share
have been computed by dividing net earnings (loss) by the weighted average
number of common shares outstanding plus the dilutive effect of options
outstanding during the applicable periods. The dilutive effect of the
Company's stock options increased the diluted weighted average shares
outstanding by 1,365,000, 560,000, and 751,000 for fiscal years 1998,
1997, and 1996 respectively. All earnings per share amounts have been
presented, and where appropriate, restated to conform to FAS 128
requirements.
The Company effected a two-for-one stock split in the form of a stock
dividend paid on May 8, 1998 to shareholders of record on April 17, 1998.
All shares and share-related data have been restated from their original
presentation to give effect to the stock split.
Stock-Based Employee Compensation Plans
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock issued to Employees" ("APB 25") and related
Interpretations in accounting for its employee stock options and adopted
the disclosure-only provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS 123").
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date
of grant and, accordingly, recognizes no compensation expense for the
stock option grants.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
2. Discontinued Operations
As previously mentioned, in fiscal 1996, Morrison distributed the
common stock of its family dining restaurant business (Morrison Fresh
Cooking, Inc., or "MFC") and its health care contract food and nutrition
business (Morrison Health Care, Inc., or "MHC") to its shareholders. The
financial results of the two businesses are reported as discontinued
operations in the accompanying consolidated financial statements.
The condensed results presented below include an allocation of
general expenses of Morrison, such as legal, data processing and
interest, on a specific identification method, where appropriate.
Management believes the allocation methods used are reasonable.
Condensed results of the discontinued operations are as follows:
(In Thousands)
Fiscal Year Ended
1996
Revenues......................... $ 370,439
Loss before benefit for
income taxes................... $ (2,434)
Benefit for income taxes......... (212)
Net loss......................... $ (2,222)
Included in the 1996 loss before benefit for income taxes is a
charge of $23.7 million for costs associated with asset impairment and
restructuring.
As a result of the Distribution, the Company does not have any
ownership interest in either MFC or MHC. Prior to the Distribution, the
Company entered into agreements with both MFC and MHC governing certain
operating relationships among the Company, MFC and MHC subsequent to the
Distribution including (i) an agreement providing for assumptions of
liabilities and cross-indemnities to allocate responsibilities for
liabilities arising out of or in connection with business activities
prior to the Distribution; (ii) a tax indemnity agreement which provides
that none of the three companies will take any action that would
jeopardize the intended tax free consequences of the Distribution; (iii)
a tax allocation agreement to the effect that MFC and MHC will pay their
respective shares of the Company's consolidated tax liability for the tax
years that MFC and MHC were included in the Company's consolidated
federal income tax return; (iv) a shared services agreement pursuant to
which each of the three companies agreed to provide to the other parties
certain services, subject to certain conditions, on an "as needed" basis;
(v) intellectual property license agreements which provided for the
licensing of rights currently owned by the Company to the three
companies; and (vi) an agreement providing for the allocation of employee
benefit rights and responsibilities among the three companies.
3.Impairment of Long-Lived Assets/Restructure Charges
In fiscal 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 ("FAS 121"), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." A
pre-tax charge of $25.9 million was recorded of which $3.9 million, the
difference between fair value and net realizable value of the impaired
assets, resulted from the adoption of FAS 121. The $25.9 million charge
was comprised of the following: impairment on 16 units approved for
closure within one year by the Board of Directors on January 10, 1996,
($10.0 million); impairment on in-unit computer equipment ($0.8 million)
and write-offs resulting from management's decision to abandon an
information technology plan ($3.8 million) approved by the Board of
Directors on the same date; and impairment on units remaining open ($11.3
million).
The Board approved the closing of ten Ruby Tuesday, four
Mozzarella's American Cafe and two Tia's Tex-Mex restaurants based on
management's review of negative cash flow and operating loss units and
other considerations. The expected loss on the disposal of the long-
lived assets of these units was $10.0 million (net of an assumed salvage
value of $0.9 million). Included in this amount is $0.6 million which
represents the goodwill associated with two Tia's units to be closed.
Subsequently, a decision was made to keep two of the units open because
of operational improvements at those units. During fiscal 1997, the
remaining 14 units were closed.
Prior to the initiation of the Distribution, Morrison was
undertaking an information technology project intended, among other
things, to update or replace certain accounting and human resource
systems for all of Morrison. Upon initiation of the intended
Distribution, management commenced a project by project review of the
information technology plan. Upon completion of its review, management
decided to abandon certain projects in development, including the project
to update or replace certain accounting and human resource systems. In
connection therewith, the Company instituted a plan to dispose of certain
in-unit computer equipment and replace that equipment with computers more
technologically advanced. Accordingly, in fiscal 1996 the Company
recorded a charge of $3.8 million for the write-off of the information
technology projects and $0.8 million for the remaining carrying value of
certain in-unit computer equipment.
Negative cash flow and operating loss units not recommended for
closure were also reviewed for impairment. Management believed these
units might have been impaired based upon poor operating performance.
Accordingly, management estimated the undiscounted future cash flows to
be generated by these units and determined that certain of them would not
likely generate net cash flows in excess of carrying value. Based upon
third quarter fiscal 1996 operating and cash flow results, two additional
units were identified as impaired. Accordingly, the charge of $11.3
million was recorded to reduce the carrying value of the impaired assets
(including the two units identified during the third quarter) to their
estimated fair value, as determined by using discounted estimated future
cash flows. Future cash flows were estimated based on management
judgment. Thus, actual cash flows could vary from such estimates.
In addition to the write-down of fixed assets on the units to be
closed, the Company accrued charges not included above of $3.4 million
relating to the settlement of the related lease obligations. The
remaining cost accrued for lease settlements was $2.3 million and $1.8
million at June 6, 1998 and May 31, 1997 respectively.
Other charges of $1.8 million were also recorded during fiscal
1996. These charges consisted of estimated professional and other fees
incurred in connection with the Distribution ($1.3 million); severance
pay for staff reductions expected during the quarter ($0.2 million) and
miscellaneous other asset write-offs ($0.3 million). Professional fees
and severance pay approximating the amounts accrued were paid prior to
the end of fiscal 1996.
4. Franchising
During fiscal 1998, the Company entered into a series of agreements
with five franchise partners which provided, among other things, for the
sale of 46 units in Florida (29 units), Colorado (ten units) and Arizona
(seven units). These units are currently operating as Ruby Tuesday
restaurants under separate franchising agreements. In connection with the
sale of these units, the Company received an aggregate sales price of
$47.3 million of which $34.8 million was paid in cash. The remaining
$12.5 million was paid in the form of notes bearing interest at rates
ranging from 8-10% and due through 2013. The Company has recorded a
valuation allowance of $2.2 million for these notes. The sale of these
units, after consideration of the allowance, resulted in a minimal pre-
tax gain.
Concurrently with the sale of the 46 Ruby Tuesday units, the Company
also entered into development agreements with the franchise partners
whereby the franchise partners will open Ruby Tuesday restaurants in
their respective areas over the next five to nine years. Deferred
development fees associated with all franchisees including those referred
to above totaled $0.8 million as of June 6, 1998.
5. Long-Term Debt
Long-term debt consists of the following:
(In Thousands)
Fiscal Year
1998 1997
Revolving credit facility $ 15,000 $ 27,000
Term notes payable to banks 50,000 50,000
Other long-term debt 1,005 1,108
66,005 78,108
Less current maturities 110 102
$ 65,895 $ 78,006
Annual maturities of long-term debt at June 6, 1998 are as follows
(In Thousands):
1999 $ 110
2000 121
2001 65,132
2002 143
2003 155
Subsequent years 344
Total $ 66,005
The Company has a five-year credit facility with several banks which
allows the Company to borrow up to $100.0 million under various short-term
interest rate options. The $100.0 million credit facility is comprised of
a $50.0 million five-year interest only term note and a $50.0 million
five-year revolving credit facility. Commitment fees equal to 0.1875% per
annum are payable quarterly on the unused portion of the revolving credit
facility. At June 6, 1998, the Company had $15.0 million of borrowings
outstanding with various banks under the revolving credit facility at
interest rates approximating 6.11% per annum. Such borrowings (with
maturities up to 90 days) have been classified as long-term based on the
Company's ability and intent to refinance such borrowings on a long-term
basis under the revolving facility.
The credit facility contains certain restrictions on incurring
additional indebtedness and certain funded debt, net worth, and fixed
charge coverage requirements. At June 6, 1998, retained earnings in the
amount of $32.1 million were available for distribution under the debt
restrictions.
The Company has entered into three interest rate swap agreements with
notional amounts aggregating $75.0 million. The swap agreements fix the
interest rate on an equivalent amount of the Company's debt to rates
ranging from 5.73% to 6.03% for periods up to five years. The Company
terminated a previous interest rate swap agreement during fiscal 1996 and
received approximately $1.7 million in cash. The gain on that interest
rate swap agreement is being amortized to interest expense over the
previously remaining life of the swap agreement. The balance of the
unamortized interest was approximately $1.0 million and $1.4 million at
June 6, 1998 and May 31, 1997, respectively.
In addition, at June 6, 1998, the Company had committed lines of
credit amounting to $20.0 million and non-committed lines of credit
amounting to $15.0 million with several banks at various interest rates
approximating 5.89% and 6.14% at June 6, 1998 and May 31, 1997. All of
these lines are subject to periodic review by each bank and may be
canceled by the Company at any time. The Company utilized its lines of
credit to meet operational cash needs during fiscal year 1998.
Borrowings on these lines of credit were $16.2 and $0.5 million at June 6,
1998 and May 31, 1997, respectively.
Interest expense capitalized in connection with financing additions
to property and equipment amounted to approximately $0.9 and $1.2 million
for the years ended June 6, 1998 and May 31, 1997, respectively.
6. Leases
Various operations of the Company are conducted in leased premises.
Initial lease terms expire at various dates over the next 21 years and may
provide for escalation of rent during the lease term. Most of these
leases provide for additional contingent rents based upon sales volume and
contain options to renew (at adjusted rentals for some leases).
At June 6, 1998, the future minimum lease payments, including
guaranteed residual values, under operating leases for the next five years
and in the aggregate are as follows:
(In Thousands)
1999 $ 37,934
2000 36,304
2001 34,173
2002 52,165
2003 31,799
Subsequent years 192,813
Total minimum lease payments $ 385,188
Future minimum sub-lease payments to be received for the next five
years and in the aggregate under noncancelable sub-lease agreements are as
follows:
(In Thousands)
1999 $ 3,598
2000 3,339
2001 3,092
2002 2,847
2003 2,785
Subsequent years 19,695
Total minimum sub-lease payments $ 35,356
Rental expense pursuant to operating leases is summarized as follows:
(In Thousands)
1998 1997 1996
Minimum rent $36,288 $36,813 $33,930
Contingent rent 3,490 2,421 2,195
$39,778 $39,234 $36,125
During fiscal 1998, the Company entered into a $40.0 million master
operating lease agreement for the purpose of leasing new free-standing
units and a new Restaurant Support Center. An operating lease agreement
will be entered into for each facility providing for an initial lease term
of five years with two five-year renewal options. The lease will also
provide for substantial residual value guarantees and include purchase
options at the lessor's original cost of the properties. During 1998, the
Company entered into leases for 20 units (nine of which opened in 1998)
and the new Maryville, Tennessee Restaurant Support Center at an
aggregated original cost to the lessor of approximately $27.6 million.
Lease commitments applicable for such leases entered into are included in
the commitment amounts presented above.
7. Income Taxes
The components of income tax expense (benefit) are as follows:
(In Thousands)
1998 1997 1996
Current:
Federal $ 13,898 $ 7,953 $ 4,323
State 3,133 2,103 1,183
7,031 10,056 5,506
Deferred:
Federal (953) 3,167 (5,949)
State (127) 545 (1,208)
(1,080) 3,712 (7,157)
$ 15,951 $ 13,768 $ (1,651)
Deferred tax assets and liabilities are comprised of the following:
(In Thousands)
1998 1997
Deferred tax assets:
Employee benefits $ 8,336 $ 8,022
Insurance reserves 3,935 4,107
Escalating rents 4,601 4,398
Acquired net operating losses 2,193 2,202
Bad debt reserve 848
Restructuring and FAS 121 reserves 1,270 699
Deferred development fees 432
Deferred gain on sale leaseback of
Mobile, Alabama office building 305
Unit closing reserve 106 755
Other 1,453 834
Total deferred tax assets 23,479 21,017
Deferred tax liabilities:
Depreciation 26,686 27,569
Assets held for disposal 975
Prepaid deductions 998 741
Retirement plans 765 422
Other 1,277 1,449
Total deferred tax liabilities 30,701 30,181
Net deferred tax liability $ (7,222) $ (9,164)
At June 6, 1998, the Company had net operating loss carryforwards for
tax purposes of approximately $5.6 million as a result of the
acquisition of Tias, Inc., which expire through 2005. The Company's net
operating loss carryforwards are subject to an annual limitation due to
the change in ownership of the acquired company. Management does not
believe a valuation allowance is necessary.
A reconciliation from the statutory federal income tax expense
(benefit) to the reported income tax expense is as follows:
(In Thousands)
1998 1997 1996
Statutory federal income taxes $ 15,761 $ 13,585 $ (810)
State income taxes, net of
federal income tax benefit 1,954 1,721 (68)
Tax credits (1,146) (1,220) (1,349)
Other, net (618) (318) 576
$ 15,951 $ 13,768 $ (1,651)
The effective income tax rate (benefit) was 35.4%, 35.5%, and
(71.4)% in 1998, 1997, and 1996, respectively. The high effective tax
benefit rate for 1996 is attributable to the tax credits which were
available to the Company.
8. Employee Benefit Plans
Salary Deferral Plan - Under the Ruby Tuesday, Inc. Salary Deferral Plan,
each eligible employee may elect to make pre-tax contributions to a trust fund
in amounts ranging from 2% to 10% of their annual earnings. Employees
contributing a pre-tax contribution of at least 2% may elect to make after-tax
contributions not in excess of 10% of annual earnings. The Company
contribution to the Plan is based on the employee's pre-tax contribution and
years of service. The Company contributes 20% of the employee's pre-tax
contribution after three years of service, 30% after ten years of service and
40% after 20 years of service. The Company's contributions to the trust fund
approximated $0.2 million for each of 1998, 1997, and 1996.
Deferred Compensation Plan - The Company maintains the Ruby Tuesday, Inc.
Deferred Compensation Plan for certain selected employees. The provisions of
this Plan are similar to those of the Salary Deferral Plan except that, in
1998, the Plan was amended to allow for 100% deferral of annual earnings
including bonus. The Company does not provide a matching contribution on
pre-tax contributions in excess of the dollar limit under Section 402(g) of the
Internal Revenue Code. The Company's contributions under the Plan
approximated $0.1 million for each of 1998, 1997, and 1996. Company assets
earmarked to pay benefits under the Plan are held by a rabbi trust. Assets and
liabilities of a rabbi trust must be accounted for as if they are assets or
liabilities of the Company, therefore, all earnings and expenses are recorded
in the Company's financial statements. The Plan's assets and liabilities,
which approximated $13.6 million and $10.8 million in 1998 and 1997,
respectively, are included in Other Assets and Other Liabilities in the
Consolidated Balance Sheets, except for the investment in Ruby Tuesday common
stock and the related liability payable in Ruby Tuesday common stock which
are reflected in Shareholders' Equity in the Consolidated Balance Sheets.
Retirement Plan - The Company, along with MFC and MHC, sponsors the
Morrison Restaurants Inc. Retirement Plan. Effective December 31, 1987, the
Plan was amended so that no additional benefits will accrue and no new
participants will enter the Plan after that date. Participants receive
benefits based upon salary and length of service. Certain responsibilities
involving the administration of the Plan are jointly shared by each of the
three companies. No contribution was made in 1998, 1997, or 1996.
Executive Supplemental Pension Plan - Under the Ruby Tuesday, Inc.
Executive Supplemental Pension Plan, employees with an average annual
compensation of at least $120,000 and who have completed five years in a
qualifying position become eligible to earn supplemental retirement income
based upon salary and length of service, reduced by social security benefits
and amounts otherwise receivable under the Retirement Plan. Expenses under
the Plan approximated $0.9 million, $1.0 million, and $0.6 million for 1998,
1997, and 1996, respectively.
Management Retirement Plan - Under the Ruby Tuesday, Inc. Management
Retirement Plan, individuals actively employed by the Company as of June 1,
1989, or thereafter, who have 15 years of credited service and whose average
annual compensation equals or exceeds $40,000, become participants.
Participants will receive benefits based upon salary and length of service,
reduced by social security benefits and benefits payable under the Retirement
Plan. Expenses under the Plan approximated $0.2 million, $(0.7) million, and
$0.3 million in 1998, 1997, and 1996, respectively.
To provide a source for the payment of benefits under the Executive
Supplemental Pension Plan and the Management Retirement Plan, the Company owns
whole-life insurance contracts on some of the participants. The cash value of
these policies net of policy loans is $4.9 million at June 6, 1998. The
Company maintains a rabbi trust to hold the policies and death benefits as
they are received.
The following table details the components of pension expense, the funded
status and amounts recognized in the Company's Consolidated Financial
Statements for the Management Retirement Plan, the Executive Supplemental
Pension Plan, and the Retirement Plan. Amounts presented are in thousands.
<TABLE>
<CAPTION>
Assets Exceed Accumulated Benefits Exceed Assets-
Accumulated Benefits- Executive Supplemental Pension
Retirement Plan Plan and Management Retirement Plan
1998 1997 1996 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Components of pension expense (income):
Service cost......................... $ $ $ $ 123 $ 43 $ 96
Interest cost........................ 337 329 334 740 207 525
Actual return on plan assets......... (1,018) (661) (787)
Amortization and deferral............ 630 313 497 287 90 294
$ (51) $ (19) $ 44 $ 1,150 $ 340 $ 915
Plan assets at fair value............ $ 7,883 $ 4,730 $ 4,502 $ 0 $ 0 $ 0
Actuarial present value of
projected benefit obligations:
Accumulated benefit obligations:
Vested............................ 6,929 4,286 4,432 8,241 7,315 7,479
Nonvested......................... 1,017 109 63
Provision for future salary
increases........................ 1,638 1,964 1,960
Total projected benefit obligations... 6,929 4,286 4,432 10,896 9,388 9,502
Excess (deficit) of plan assets over
projected benefit obligations........ 954 444 70 (10,896) (9,388) (9,502)
Unrecognized net (gain) loss.......... (76) 318 607 1,843 703 235
Unrecognized prior service cost....... 502 671 840
Unrecognized net transition obligation 259 324 389 836 939 1,510
Additional minimum liability.......... (1,543) (643) (1,164)
Prepaid (accrued) pension cost........ $ 1,137 $ 1,086 $ 1,066 $(9,258) $(7,718) $ (8,081)
</TABLE>
Amounts recorded to recognize the minimum liability required for defined
benefit pension plans whose accumulated benefits exceed assets amounted to
$1.5 million in 1998 and $0.6 million in 1997. A corresponding amount was
recognized as an intangible asset to the extent of unrecognized prior service
cost and unrecognized transition obligation. At June 6, 1998, $0.8 million of
excess minimum liability resulted in a reduction of shareholders' equity, net
of income taxes, of $0.5 million. There was no corresponding reduction of
shareholders' equity in 1997.
The Retirement Plan's assets include common stock, fixed income
securities, short-term investments and cash. The weighted-average discount
rate for all three plans was 7.50%, 8.25%, and 7.75% for 1998, 1997, and
1996, respectively. The rate of increase in compensation levels for the
Executive Supplemental Pension Plan and Management Retirement Plan was 4%
for all three years. The expected long-term rate of return on plan assets
for the Retirement Plan was 10% for all three years.
9. Capital Stock, Options and Bonus Plans
Preferred Stock-Under its Certificate of Incorporation, the Company
is authorized to issue preferred stock with a par value of $0.01 in an
amount not to exceed 250,000 shares which may be divided into and issued
in designated series, with dividend rates, rights of conversion,
redemption, liquidation prices and other terms or conditions as
determined by the Board of Directors. No preferred shares have been
issued as of June 6, 1998.
The Ruby Tuesday, Inc. 1996 Stock Incentive Plan - The Ruby Tuesday,
Inc. 1996 Stock Incentive Plan is an amendment and restatement of the
Morrison Restaurants Inc. 1992 Stock Incentive Plan. A Committee,
appointed by the Board, administers the Plan on behalf of the Company and
has complete discretion to determine participants and the terms and
provisions of Stock Incentives, subject to the Plan. The Plan permits the
Committee to make awards of shares of common stock, awards of derivative
securities related to the value of the common stock, and certain cash
awards to eligible persons. These discretionary awards may be made on an
individual basis or pursuant to a program approved by the Committee for
the benefit of a group of eligible persons. All options awarded under the
Plan have been at the prevailing market value at the time of grant. At
June 6, 1998, the Company had reserved a total of 2,201,000 shares of
common stock for this Plan.
The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan
for Directors - The Ruby Tuesday, Inc. Stock Incentive and Deferred
Compensation Plan for Directors is a continuation of the similarly titled
1994 Morrison plan. Under this plan, non-employee directors have the
opportunity to defer the receipt of their retainer fees or to allocate
their retainer fees to the purchase of shares of the Company. The Plan
provides that the directors must use 60% of their retainer to purchase
shares of the Company if they have not attained a specified level of
ownership of shares of Company common stock. Each director purchasing
stock receives additional shares equal to 15% of the shares purchased and
three times the total shares in options which after six months are
exercisable for five years from the grant date. All options awarded under
the Plan have been at the prevailing market value at the time of grant. A
Committee, appointed by the Board, administers the Plan on behalf of the
Company. At June 6, 1998, the Company had reserved 180,000 shares of
common stock for the Plan.
The Ruby Tuesday, Inc. 1996 Non-Executive Stock Incentive Plan - The
Ruby Tuesday, Inc. 1996 Non-Executive Stock Incentive Plan is an amendment
and restatement of the similarly titled 1993 Morrison plan. A Committee,
appointed by the Board, administers the Plan on behalf of the Company and
has full authority in its discretion to determine the officers and key
employees to whom Stock Incentives are granted and the terms and
provisions of Stock Incentives, subject to the Plan. The Plan permits the
Committee to make awards of shares of common stock, awards of derivative
securities related to the value of the common stock, and certain cash
awards to eligible persons. These discretionary awards may be made on an
individual basis or pursuant to a program approved by the Committee for
the benefit of a group of eligible persons. All options awarded under the
Plan have been at the prevailing market value at the time of grant. At
June 6, 1998, the Company had reserved a total of 2,981,000 shares of
common stock for this Plan.
In March 1996, the number and exercise price of all outstanding
options were adjusted for the Distribution and the concurrent reverse one-
for-two split of the Company shares. In May 1998, the number and exercise
price of all outstanding options were adjusted for the stock dividend
declared by the Company to recordholders of Company common stock on May 8,
1998, pursuant to which one additional share was issued for every share
held.
In addition to the above plans, stock options are outstanding under a
terminated plan, the Ruby Tuesday, Inc. Stock Bonus and Non-Qualified
Stock Option Plan, which was effective from 1986 to 1992. Options to
purchase 411,000 shares remain outstanding under the terms of the Plan at
June 6, 1998.
The Company applies APB Opinion No. 25 and related interpretations
in accounting for its employee stock options. In contrast to the
intrinsic value based method employed by APB 25, Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation,"
("FAS 123") utilizes a fair value based method. FAS 123 requires the use
of option valuation models developed for estimating the fair value of
traded options which are fully transferable and have no vesting
restrictions. Option valuation models also utilize highly subjective
assumptions such as expected stock price volatility. Changes in the
assumptions can materially impact the fair value estimate and, in
management's opinion, do not necessarily provide a reliable single
measure of the fair value of its employee stock options. Since the
Company has elected to account for its employee stock options in
accordance with APB 25, the required pro forma disclosures as if the
option valuation models were used are presented below in accordance with
FAS 123.
All stock options are awarded at the prevailing market rate on the
date of grant; therefore, under the intrinsic value method employed by
APB 25, no compensation expense is recognized. For purposes of FAS 123
disclosure, the estimated fair value of the options is expensed over the
vesting period of the options. Fair value was estimated at the date of
grant using the Black-Scholes option pricing model with the following
weighted average assumptions for 1998, 1997, and 1996:
1998 1997 1996
Risk-free interest rate 5.75% 6.00% 6.00%
Expected dividend yield .00-.69% .00% .00%
Stock price volatility factor 0.412 0.373 0.373
Expected life of options (in years) 3-7 3-7 3-7
If the Company had adopted FAS 123 in accounting for its stock
options granted in fiscal years 1998, 1997 and 1996, its net income and
earnings per share would approximate the pro forma amounts below (in
thousands except for per share data):
1998 1997 1996
As Pro As Pro As Pro
Reported Forma Reported Forma Reported Forma
Net income (loss) $29,080 $26,194 $25,045 $22,331 $(2,884) $(4,671)
Earnings per share:
Basic $ 0.88 $ 0.79 $ 0.71 $ 0.63 $ (0.08) $ (0.13)
Diluted $ 0.84 $ 0.76 $ 0.70 $ 0.62 $ (0.08) $ (0.13)
The following table summarizes the activity in options under these
stock option plans:
(In Thousands Except Per-Share Data) Number of Shares Ubder Option
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
1998 Price 1997 Price 1996 Price
Beginning of year....... 5,526 $ 8.87 4,930 $ 8.74 5,390 $ 7.75
Adjustment due to the
Distribution and
reverse stock split.... (2,736) $ 7.42
Granted................. 518 $12.87 1,338 $ 8.90 2,680 $ 9.28
Exercised .............. (1,024) $ 8.76 (312) $ 5.44 (174) $ 5.07
Forfeited............... (226) $ 9.23 (430) $ 8.90 (230) $10.31
End of year............. 4,794 $ 9.31 5,526 $ 8.87 4,930 $ 8.74
Exercisable............. 1,533 $ 8.64 1,766 $ 8.51 1,616 $ 7.86
Outstanding options'
prices ................ $ 4.62-$15.28 $ 4.35-$15.29 $ 4.05-$15.29
Exercised options'
prices................. $ 4.62-$14.22 $ 4.05-$ 8.55 $ 3.81-$ 7.05
Granted options'
prices................. $10.75-$13.50 $ 8.07-$10.63 $ 6.81-$11.75
Weighted avg. fair value
of options granted
during the year........ $ 4.27 $ 3.30 $ 1.88
The weighted average remaining contractual life of the options
outstanding at June 6, 1998 was 3.03 years.
10. Commitments and Contingencies
At June 6, 1998, the Company was committed under letters of credit of
$7.1 million issued primarily in connection with its workers' compensation
and casualty insurance programs.
The Company is presently, and from time to time, subject to pending
claims and lawsuits 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 Company's
operations or consolidated financial position.
11. Subsequent Event
During May and June 1998, the Company entered into a series of
agreements with three franchisees. These agreements provide, among other
things, for the sale of four Florida, three Minnesota, and six in New
York. The closing of the sale of these units, expected to occur in the
first quarter of 1999, is subject to various conditions, including the
transfer of liquor licenses, third party consents and availability of
financing. Upon completion of the sale, the 13 units will be operated as
Ruby Tuesday restaurants under separate franchising agreements and the
Company will receive an aggregate purchase price of $16.5 million, of
which approximately $9.5 - $10.5 million will be paid in cash. The
remaining amount will be in the form of interest bearing notes due through
2009. The sale of these units, anticipated to close late in the first
quarter of fiscal 1999, is expected to result in a pre-tax gain. Fiscal
1998 revenues from these 13 units totaled $26.5 million, with operating
profits of $1.5 million.
The Company also entered into development agreements with the
franchisees whereby each of them will open a minimum of nine franchise
restaurants in their respective areas over the next five to six years.
For these development rights, fees totaling $0.3 million will be paid to
the Company upon the completion of certain financing arrangements.
<TABLE>
12. Supplemental Quarterly Financial Data (Unaudited)
Quarterly financial results for the years ended June 6, 1998 and May 31,
1997, are summarized below. All quarters are composed of 13 weeks, except for
the quarter ended June 6, 1998, which includes 14 weeks.
<CAPTION>
(In Thousands Except Per-Share Data)
For The Year Ended June 6, 1998:
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
Revenues $174,099 $170,283 $181,602 $185,436 $711,420
Gross profit* $ 33,460 $ 31,402 $ 38,596 $ 37,866 $141,324
Income before income taxes $ 9,854 $ 7,333 $ 14,187 $ 13,657 $ 45,031
Provision for income taxes 3,474 2,612 5,026 4,839 15,951
Net income $ 6,380 $ 4,721 $ 9,161 $ 8,818 $ 29,080
Earnings per share:
Basic $ 0.19 $ 0.14 $ 0.28 $ 0.27 $ 0.88
Diluted $ 0.18 $ 0.13 $ 0.27 $ 0.26 $ 0.84
(In Thousands Except Per-Share Data)
For The Year Ended May 31, 1997
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
Revenues $157,282 $156,318 $172,605 $169,202 $655,407
Gross profit* $ 28,261 $ 27,956 $ 34,807 $ 32,606 $123,630
Income before income taxes $ 8,509 $ 6,116 $ 12,771 $ 11,417 $ 38,813
Provision for income taxes 3,020 2,170 4,536 4,042 13,768
Net income $ 5,489 $ 3,946 $ 8,235 $ 7,375 $ 25,045
Earnings per share:
Basic $ 0.16 $ 0.11 $ 0.23 $ 0.21 $ 0.71
Diluted $ 0.15 $ 0.11 $ 0.23 $ 0.21 $ 0.70
* The Company defines gross profit as revenue less cost of merchandise,
payroll and related costs, and other operating costs and expenses.
</TABLE>
<TABLE>
Ruby Tuesday, Inc. common stock is publicly traded on the New York Stock
Exchange under the ticker symbol RI. The following table sets forth the
reported high and low prices of the common stock adjusted for the stock
dividend referred to in Note 9 of Notes to Consolidated Financial Statements
and cash dividends paid thereon for each quarter during fiscal 1998 and 1997.
<CAPTION>
Fiscal Year Ended June 6, 1998 Fiscal Year Ended May 31, 1997
Per Share Per Share
Cash Cash
Quarter High Low Dividends Quarter High Low Dividends
<S> <C> <C> <C> <S> <C> <C> <C>
First $13.91 $10.50 _ First $11.44 $ 9.69 _
Second $14.25 $12.63 _ Second $11.00 $ 7.69 _
Third $13.25 $12.10 $0.045 Third $ 9.50 $ 8.13 _
Fourth $17.78 $12.82 _ Fourth $10.88 $ 8.57 _
On June 30, 1998, the Company's Board of Directors declared a semi-annual
cash dividend of $0.045 per share payable on July 31, 1998, to shareholders of
record on July 10, 1998. As of July 30, 1998, these were approximately 6,220
holders of record of the Company's common stock.
</TABLE>
Report of Independent Auditors
Shareholders and Board of Directors
Ruby Tuesday, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of
Ruby Tuesday, Inc. and Subsidiaries as of June 6, 1998 and May 31, 1997,
and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three fiscal years in the period ended
June 6, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Ruby Tuesday, Inc. and Subsidiaries at June 6, 1998 and May 31, 1997,
and the consolidated results of their operations and their cash flows for
each of the three fiscal years in the period ended June 6, 1998, in
conformity with generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements, in
fiscal 1996, the Company changed its method of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed
of.
/s/ Ernst & Young LLP
Birmingham, Alabama
June 23, 1998
RUBY TUESDAY, INC. AND SUBSIDIARIES
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
(a) The Registrant has no parent.
(b) The Registrant's subsidiaries and their jurisdictions of each
organization are as follows (100% of voting securities of each
subsidiary owned by the Registrant):
Delaware:
Morrison International, Inc.
Texas:
Tias, Inc.
In addition to the subsidiaries listed above, the
Registrant has a minority ownership in several
operating subsidiaries and several wholly-owned and
minority interests in non-operating subsidiaries
created solely for the purpose of holding certain
licenses.
Exhibit 23 - Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-32697) pertaining to the Ruby Tuesday, Inc.
Deferred Compensation Plan, in the Registration Statement (Form S-8 No.
333-03165) pertaining to the Ruby Tuesday, Inc. Deferred Compensation
Plan , in the Registration Statement (Form S-8 No. 33-20585) pertaining
to the Ruby Tuesday, Inc. Salary Deferral Plan,
in the Registration Statement (Form S-8 No. 333-03153) pertaining to the
Ruby Tuesday, Inc. Salary Deferral Plan, in the Registration Statement
(Form S-8 No. 2-97120) pertaining to Ruby Tuesday, Inc. Long-Term
Incentive Plan, in the Registration Statement (Form S-8 No. 33-13593)
pertaining to the Ruby Tuesday, Inc. 1987 Stock Bonus and Non-Qualified
Stock Option Plan, in the Registration Statement (Form S-8 No. 33-46220)
pertaining to the Ruby Tuesday, Inc. Compensatory Non-Qualified Stock
Option Arrangements, in the Registration Statement (Form S-8 No. 33-
56452) pertaining to the
Ruby Tuesday, Inc. Stock Incentive and Compensation Plan for Directors,
Stock Incentive Plan and Non-Qualified Management Stock Option
Agreements, in the Registration Statement (Form S-8 No. 333-03155)
pertaining to the Ruby Tuesday, Inc. 1996 Stock Incentive Plan, in the
Registration Statement (Form S-8 No. 333-03157) pertaining to the Ruby
Tuesday, Inc. 1993 Non-Executive Stock Incentive Plan, in the
Registration Statement (Form S-8 No. 33-70490) pertaining to the Ruby
Tuesday, Inc. 1993 Non-Executive Stock Incentive Plan, in the
Registration Statement (Form S-8 No. 33-46218) pertaining to the Ruby
Tuesday, Inc. 1989 Non-Qualified Stock Option Plan, and in the
Registration Statement (Form S-3 No. 33-57159) of Ruby Tuesday, Inc., of
our report dated June 23, 1998, with respect to the consolidated
financial statements of Ruby Tuesday, Inc. incorporated by reference in
the Annual Report (Form 10-K) for the year ended June 6, 1998.
/s/ Ernst & Young LLP
Ernst & Young LLP
Birmingham, Alabama
August 31, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR THE YEAR ENDED
JUNE 6, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-06-1998
<PERIOD-END> JUN-06-1998
<CASH> 8,291
<SECURITIES> 0
<RECEIVABLES> 7,600
<ALLOWANCES> 0
<INVENTORY> 9,522
<CURRENT-ASSETS> 46,883
<PP&E> 480,475
<DEPRECIATION> 170,083
<TOTAL-ASSETS> 409,628
<CURRENT-LIABILITIES> 84,443
<BONDS> 65,895
0
0
<COMMON> 328
<OTHER-SE> 211,822
<TOTAL-LIABILITY-AND-EQUITY> 409,628
<SALES> 709,184
<TOTAL-REVENUES> 711,420
<CGS> 194,765
<TOTAL-COSTS> 414,850
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,780
<INCOME-PRETAX> 45,031
<INCOME-TAX> 15,951
<INCOME-CONTINUING> 29,080
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,080
<EPS-PRIMARY> $0.88
<EPS-DILUTED> $0.84
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR THE SIX MONTH PERIOD ENDED
NOVEMBER 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-06-1998
<PERIOD-END> NOV-29-1997
<CASH> 12,908
<SECURITIES> 0
<RECEIVABLES> 7,552
<ALLOWANCES> 0
<INVENTORY> 10,355
<CURRENT-ASSETS> 46,569
<PP&E> 497,462
<DEPRECIATION> 165,435
<TOTAL-ASSETS> 422,176
<CURRENT-LIABILITIES> 84,679
<BONDS> 80,456
0
0
<COMMON> 167
<OTHER-SE> 207,864
<TOTAL-LIABILITY-AND-EQUITY> 422,176
<SALES> 344,009
<TOTAL-REVENUES> 344,382
<CGS> 94,139
<TOTAL-COSTS> 205,706
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,928
<INCOME-PRETAX> 17,187
<INCOME-TAX> 6,086
<INCOME-CONTINUING> 11,101
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,101
<EPS-PRIMARY> $0.33
<EPS-DILUTED> $0.31
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR THE THREE MONTH
PERIOD ENDED AUGUST 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-06-1998
<PERIOD-END> AUG-30-1997
<CASH> 8,053
<SECURITIES> 0
<RECEIVABLES> 5,758
<ALLOWANCES> 0
<INVENTORY> 10,056
<CURRENT-ASSETS> 37,234
<PP&E> 526,890
<DEPRECIATION> 175,115
<TOTAL-ASSETS> 426,537
<CURRENT-LIABILITIES> 70,577
<BONDS> 90,479
0
0
<COMMON> 171
<OTHER-SE> 216,581
<TOTAL-LIABILITY-AND-EQUITY> 426,537
<SALES> 174,022
<TOTAL-REVENUES> 174,099
<CGS> 47,471
<TOTAL-COSTS> 103,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 994
<INCOME-PRETAX> 9,854
<INCOME-TAX> 3,474
<INCOME-CONTINUING> 6,380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,380
<EPS-PRIMARY> $0.19
<EPS-DILUTED> $0.18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR YEAR ENDED
MAY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> MAY-31-1997
<CASH> 7,608
<SECURITIES> 0
<RECEIVABLES> 4,621
<ALLOWANCES> 0
<INVENTORY> 9,650
<CURRENT-ASSETS> 35,492
<PP&E> 512,404
<DEPRECIATION> 165,640
<TOTAL-ASSETS> 418,871
<CURRENT-LIABILITIES> 69,064
<BONDS> 78,006
0
0
<COMMON> 177
<OTHER-SE> 223,463
<TOTAL-LIABILITY-AND-EQUITY> 418,871
<SALES> 654,464
<TOTAL-REVENUES> 655,407
<CGS> 177,835
<TOTAL-COSTS> 392,502
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,911
<INCOME-PRETAX> 38,813
<INCOME-TAX> 13,768
<INCOME-CONTINUING> 25,045
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,045
<EPS-PRIMARY> $0.71
<EPS-DILUTED> $0.70
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR THE SIX MONTH
PERIOD ENDED NOVEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> NOV-30-1996
<CASH> 9,255
<SECURITIES> 0
<RECEIVABLES> 3,541
<ALLOWANCES> 0
<INVENTORY> 9,897
<CURRENT-ASSETS> 35,509
<PP&E> 482,664
<DEPRECIATION> 147,205
<TOTAL-ASSETS> 406,259
<CURRENT-LIABILITIES> 82,235
<BONDS> 71,057
0
0
<COMMON> 178
<OTHER-SE> 209,402
<TOTAL-LIABILITY-AND-EQUITY> 406,259
<SALES> 313,289
<TOTAL-REVENUES> 313,600
<CGS> 85,265
<TOTAL-COSTS> 190,803
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,169
<INCOME-PRETAX> 14,625
<INCOME-TAX> 5,190
<INCOME-CONTINUING> 9,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,435
<EPS-PRIMARY> $0.27
<EPS-DILUTED> $0.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR THE THREE MONTH PERIOD
ENDED AUGUST 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 8,261
<SECURITIES> 0
<RECEIVABLES> 5,455
<ALLOWANCES> 0
<INVENTORY> 9,027
<CURRENT-ASSETS> 37,638
<PP&E> 463,844
<DEPRECIATION> 138,408
<TOTAL-ASSETS> 397,550
<CURRENT-LIABILITIES> 70,353
<BONDS> 81,083
0
0
<COMMON> 178
<OTHER-SE> 204,453
<TOTAL-LIABILITY-AND-EQUITY> 397,550
<SALES> 157,044
<TOTAL-REVENUES> 157,282
<CGS> 42,325
<TOTAL-COSTS> 95,823
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,142
<INCOME-PRETAX> 8,509
<INCOME-TAX> 3,020
<INCOME-CONTINUING> 5,489
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,489
<EPS-PRIMARY> $0.16
<EPS-DILUTED> $0.15
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RUBY TUESDAY, INC. AS OF AND FOR THE YEAR ENDED
JUNE 1, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-01-1996
<PERIOD-END> JUN-01-1996
<CASH> 7,139
<SECURITIES> 0
<RECEIVABLES> 2,040
<ALLOWANCES> 0
<INVENTORY> 8,681
<CURRENT-ASSETS> 33,258
<PP&E> 443,475
<DEPRECIATION> 129,937
<TOTAL-ASSETS> 381,116
<CURRENT-LIABILITIES> 66,591
<BONDS> 76,108
0
0
<COMMON> 176
<OTHER-SE> 197,167
<TOTAL-LIABILITY-AND-EQUITY> 381,116
<SALES> 618,803
<TOTAL-REVENUES> 620,134
<CGS> 170,352
<TOTAL-COSTS> 377,181
<OTHER-EXPENSES> 31,138
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,637
<INCOME-PRETAX> (2,313)
<INCOME-TAX> (1,651)
<INCOME-CONTINUING> (662)
<DISCONTINUED> (2,222)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,884)
<EPS-PRIMARY> $(0.08)
<EPS-DILUTED> $(0.08)
</TABLE>
