<PAGE> 1
SCHEDULE 13E-4
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
UNO RESTAURANT CORPORATION
(Name of Issuer)
UNO RESTAURANT CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
914900 10 5
(CUSIP Number of Class of Securities)
CRAIG S. MILLER, CHIEF EXECUTIVE OFFICER
UNO RESTAURANT CORPORATION
100 CHARLES PARK ROAD,
WEST ROXBURY, MASSACHUSETTS 02132 (617-323-9200)
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Steven R. London, Esq.
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, Massachusetts 02111
(617-856-8313)
June 12, 1997
(Date Tender Offer First Published, Sent or Given to Security Holders)
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CALCULATION OF FILING FEE:
TRANSACTION AMOUNT OF
VALUATION* $7,500,000.00 FILING FEE: $1,500.00
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* Based upon the purchase of 1,000,000 Shares of Common Stock, $.01 par value
(the maximum number of Shares offered to be purchased) at $7.50 per Share (the
maximum per Share purchase price which may be selected by the Company pursuant
to the tender offer).
Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
Amount Previously Paid: ________________
Form or Registration No.: _________________
Filing Party: ____________________________
Date Filed: _____________________________
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ITEM 1. SECURITY AND ISSUER.
(a) Name: Uno Restaurant Corporation
Address of Principal Executive Office: 100 Charles Park Road, West
Roxbury, MA 02132
(b) Title of Securities Being Sought: Common Stock, par value $0.01 per
share (the "Shares")
Amount outstanding on June 11, 1997: 12,166,773 Shares
Information with respect to the exact amount of securities being sought and the
consideration being offered therefor is set forth in "Number of Shares;
Proration" beginning on Page 7 in the Offer to Purchase (the "Offer to
Purchase"), filed as Exhibit (a)(1) hereto, which is incorporated herein by
reference. The executive officers, directors and affiliates of the Issuer have
advised the Issuer that they do not intend to tender any Shares pursuant to the
Offer.
(c) Information with respect to the principal market for and price range of the
Shares is set forth in "Price Range of Shares; Dividends" beginning on Page 14
in the Offer to Purchase, which is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) Information with respect to source and amount of funds to be used for the
purchase of Shares is set forth in "Source and Amount of Funds" beginning on
Page 16 in the Offer to Purchase, which is incorporated herein by reference.
(b)(1) A summary of each loan agreement or arrangement containing the identity
of the parties, the term, the collateral, the stated and effective interest
rates, and other material terms or conditions relative to such loan agreements
is set forth in "Source and Amount of Funds" beginning on Page 16 in the Offer
to Purchase, which is incorporated herein by reference.
(2) Other than as set forth in "Source and Amount of Funds" beginning on
Page 16 in the Offer to Purchase, which is incorporated herein by reference, no
formal plans or arrangements have been made to repay such borrowings under the
credit agreement described in "Source and Amount of Funds" in the Offer to
Purchase.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Information with respect to the purpose of the tender offer and planned
disposition of the securities and possible effects of the tender offer is set
forth in "Background and Purpose of the Offer; Certain Effects of the Offer" and
"Interest of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares" beginning on Pages 14 and 20, respectively, in the
Offer to Purchase, which are incorporated herein by reference. Other than as
indicated, there are no current plans or proposals that relate to or would
result in:
(a) The acquisition by any person of additional securities of the Issuer, or the
disposition of any securities of the Issuer;
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(b) An extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or any of
its subsidiaries;
(d) Any change in the present board of directors or management of the Issuer
including, but not limited to, any plans or proposals to change the number or
the term of directors, to fill any existing vacancy on the board or to change
any material term of the employment contract of any executive officer;
(e) Any material change in the present dividend rate or policy, or indebtedness
or capitalization of the Issuer;
(f) Any other material change in the Issuer's corporate structure or business;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Issuer by
any person;
(h) Causing a class of equity security of the Issuer to be delisted from a
national securities exchange, or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity security of the Issuer becoming eligible for termination
of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or
(j) The suspension of the Issuer's obligation to file reports pursuant to
Section 15(d) of the Securities Exchange Act of 1934, as amended.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Neither the Issuer nor any of its subsidiaries nor, to the knowledge of
the Issuer, any of its executive officers or directors or any associate of any
of the foregoing has engaged in any transactions involving the Shares during the
40 business days prior to the date hereof, except as is set forth in "Interest
of Directors and Executive Officers; Transactions and Arrangements Concerning
the Shares" beginning on Page 20 on Schedule A in the Offer to Purchase, which
is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
Neither the Issuer nor, to the knowledge of the Issuer, any of its
executive officers, directors, or affiliates is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Offer and the securities of the Issuer, except as set forth in "Fees and
Expenses" beginning on Page 23 in the Offer to Purchase, which is incorporated
herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Information with respect to persons employed, retained or to be
compensated by the Issuer to make solicitations or recommendations in connection
with the tender offer is set forth in "Fees and Expenses" beginning on Page 23
in the Offer to Purchase, which is incorporated herein by reference.
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ITEM 7. FINANCIAL INFORMATION.
(a)(1) See the information set forth on pages 35 through 53 of the Company's
Annual Report on Form 10-K for the year ended September 29, 1996, filed as
exhibit (g)(1) hereto, which pages are incorporated herein by reference.
(a)(2) See the information set forth on pages 3 through 6 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 30, 1997, filed as
Exhibit (g)(2) hereto, which pages are incorporated herein by reference.
(a)(3)-(4) See "Certain Information Concerning the Company" beginning on Page
17 in the Offer to Purchase, which is incorporated herein by reference.
(b)(1)-(3) See "Certain Information Concerning the Company" beginning on Page
17 in the Offer to Purchase, which is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) To the Issuer's knowledge, none of its executive officers or directors is a
party to any material contract, arrangement, understanding or relationship
between such person and the Issuer which is material to a decision by a
stockholder whether to tender or hold Shares in the tender offer.
(b) There are no applicable regulatory requirements which must be complied with
or approvals which must be obtained in connection with the tender offer.
(c) Not applicable.
(d) There are no material pending legal proceedings relating to the tender
offer.
(e) Not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith or incorporated by reference
herein to documents previously filed.
(a)(1) Form of Offer to Purchase dated June 12, 1997.
(2)Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3)Form of Notice of Guaranteed Delivery.
(4)Form of Letter dated June 12, 1997 from Montgomery Securities (Dealer
Manager) to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(5)Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6)Form of Letter dated June 12, 1997 from Aaron D. Spencer, Chairman,
and Craig S. Miller, Chief Executive Officer of the Issuer, to the
stockholders of the Issuer.
(7)Text of Press Release dated June 12, 1997.
(b) $50,000,000 Revolving Credit and Term Loan Agreement dated as of December 9,
1994 by and among Uno Restaurants, Inc., as Borrower, Uno Foods Inc., Pizzeria
Uno Corporation, URC Holding
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Company, Inc. and Uno Restaurant Corporation, as Guarantors, and Fleet Bank of
Massachusetts, N.A. as Agent (without exhibits) filed as Exhibit 10(p) to the
Company's Annual Report on From 10-K for the fiscal year ended October 2, 1994,
and First Amendment to Revolving Credit and Term Loan Agreement dated as of
January 30, 1995, and Second Amendment to Revolving Credit and Term Loan
Agreement dated as of November 7, 1995 filed as Exhibit 10(j) to the Company's
Annual Report on Form 10-K for the fiscal year ended October 1, 1995, and the
Third Amendment to Revolving Credit and Term Loan Agreement dated as of March
29, 1996 filed as Exhibit 10(j) to the Company's Annual Report on Form 10-K for
the fiscal year ended September 29, 1996.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 35 through 53 of the Company's Annual Report on Form 10-K for the
year ended September 29, 1996.
(g)(2) Pages 3 through 6 of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1997.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
UNO RESTAURANT CORPORATION
By: /s/ Craig S. Miller
----------------------------------------
Craig S. Miller, Chief Executive Officer
Dated: June 12, 1997
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EXHIBIT INDEX
DESCRIPTION OF EXHIBIT
(a)(1)Form of Offer to Purchase dated June 12, 1997.
(2)Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3)Form of Notice of Guaranteed Delivery.
(4)Letter dated June 12, 1997 from Montgomery Securities (Dealer
Manager) to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(5)Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6)Form of Letter dated June 12, 1997 from Craig S. Miller, President of the
Issuer, to the stockholders of the Issuer.
(7)Press Release dated June 12, 1997.
(b) $50,000,000 Revolving Credit and Term Loan Agreement dated as of December 9,
1994 by and among Uno Restaurants, Inc., as Borrower, Uno Foods Inc., Pizzeria
Uno Corporation, URC Holding Company, Inc. and Uno Restaurant Corporation, as
Guarantors, and Fleet Bank of Massachusetts, N.A. as Agent (without exhibits)
filed as Exhibit 10(p) to the Company's Annual Report on From 10-K for the
fiscal year ended October 2, 1994, and First Amendment to Revolving Credit and
Term Loan Agreement dated as of January 30, 1995, and Second Amendment to
Revolving Credit and Term Loan Agreement dated as of November 7, 1995 filed as
Exhibit 10(j) to the Company's Annual Report on Form 10-K for the fiscal year
ended October 1, 1995, and the Third Amendment to Revolving Credit and Term Loan
Agreement dated as of March 29, 1996 filed as Exhibit 10(j) to the Company's
Annual Report on Form 10-K for the fiscal year ended September 29, 1996
(previously filed with the Commission and incorporated by reference herein).
(g)(1) Pages 35 through 53 of the Company's Annual Report on Form 10-K for the
year ended September 29, 1996.
(g)(2) Pages 3 through 6 of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1997.
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<PAGE> 1
OFFER BY
UNO RESTAURANT CORPORATION
TO PURCHASE FOR CASH UP TO 1,000,000
SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $7.50
NOR LESS THAN $6.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
Uno Restaurant Corporation, a Delaware corporation (the "Company"), hereby
invites its stockholders to tender up to 1,000,000 shares (the "Shares") of its
Common Stock, $0.01 par value per share (the "Common Stock") to the Company at
prices, not in excess of $7.50 nor less than $6.00 per Share, specified by
tendering stockholders, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). The Company will, upon the terms and subject
to the conditions of the Offer, determine a single per Share price (not in
excess of $7.50 nor less than $6.00 per Share) (the "Purchase Price") that it
will pay for Shares properly tendered pursuant to the Offer, taking into account
the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will allow
it to buy 1,000,000 Shares (or such lesser number of Shares as are properly
tendered at or below the Purchase Price) pursuant to the Offer or such lesser
number of Shares as may be necessary in the discretion of the Company to
maintain at least 300 record holders of Shares after the completion of the
purchase by the Company pursuant to this Offer. Each stockholder who has
properly tendered and not withdrawn Shares at prices at or below the Purchase
Price will receive the Purchase Price, net to the stockholder in cash, for all
Shares purchased upon the terms and subject to the conditions of the Offer. In
the event that prior to 5:00 p.m., New York City time, on July 21, 1997, or such
later time and date to which the Offer may be extended by the Company, a greater
number of Shares are properly tendered and not withdrawn at or below the
Purchase Price than will be accepted for purchase by the Company, the Company
will accept Shares for purchase tendered at or below the Purchase Price on a pro
rata basis. All Shares not purchased pursuant to the Offer, including Shares
tendered at prices in excess of the Purchase Price and Shares not purchased
because of proration or conditional tenders, will be returned. The Company
reserves the right, in its sole discretion, to purchase more than 1,000,000
Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 5.
The Shares are traded on the New York Stock Exchange (the "NYSE") under the
symbol UNO. On June 11, 1997, the last full trading day prior to the
announcement of the Offer, the closing per Share sales price as reported on the
NYSE was $6.00. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES. SEE SECTION 6.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
------------------------
The Dealer Manager for the Offer is:
MONTGOMERY SECURITIES
The date of this Offer to Purchase is June 12, 1997.
<PAGE> 2
IMPORTANT
Any stockholder desiring to tender all or any portion of his Shares should
either (i) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and deliver it
and all other required documents to ChaseMellon Shareholder Services, L.L.C.
(the "Depositary") and either deliver the stock certificates for such Shares to
the Depositary or follow the procedure for book-entry delivery set forth in
Section 2, or (ii) request his broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for him. Any stockholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee should contact such person or institution if he desires to tender
such Shares.
Any stockholder who desires to tender Shares and whose certificates for
such Shares are not immediately available or who cannot comply with the
procedure for book-entry transfer by the expiration of the Offer must tender
such Shares by following the procedures for guaranteed delivery set forth in
Section 2.
TO EFFECT A VALID TENDER OF SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE
LETTER OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY
ARE TENDERING SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or Notice of Guaranteed Delivery
may be directed to ChaseMellon Shareholder Services, L.L.C. (the "Information
Agent") or the Dealer Manager at their respective addresses and the telephone
numbers set forth on the back cover of this Offer to Purchase.
2
<PAGE> 3
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SUMMARY
This general summary is provided for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details of this Offer to Purchase.
Number of Shares to be
Purchased.................. 1,000,000 Shares (or such lesser number of Shares
as are validly tendered), or such lesser number of
Shares as may be necessary in the discretion of the
Company to maintain at least 300 record holders of
Shares after the completion of the purchase by the
Company pursuant to this Offer. See Section 7.
Purchase Price............. The Company will determine a single per Share net
cash price, not greater than $7.50 nor less than
$6.00 per Share, that it will pay for Shares
validly tendered. The Company will select the
lowest Purchase Price that will allow it to buy
1,000,000 Shares (or such lesser number of Shares
as are validly tendered at prices not greater than
$7.50 nor less than $6.00 per Share) validly
tendered, or such lesser number of Shares as may be
necessary in the discretion of the Company to
maintain at least 300 record holders of Shares. See
Section 7. All Shares acquired in the Offer will be
acquired at the Purchase Price even if tendered
below the Purchase Price. Each stockholder desiring
to tender Shares must specify in the Letter of
Transmittal the minimum price (not greater than
$7.50 nor less than $6.00 per Share) at which such
stockholder is willing to have Shares purchased by
the Company. Stockholders wishing to maximize the
possibility that their Shares will be purchased at
the Purchase Price may check the box in the Letter
of Transmittal marked "Shares Tendered at Purchase
Price Determined by Dutch Auction." Checking this
box may result in a Purchase Price of the Shares so
tendered at the minimum price of $6.00.
Market Price of Shares..... On June 11, 1997, the last reported sale price of
the Shares on the NYSE Composite Tape was $6.00 per
Share.
How to Tender Shares....... See Section 2. Call the Information Agent or
consult your broker for assistance.
Brokerage Commissions...... None.
Stock Transfer Tax......... None, if payment is made to the registered holder.
Expiration and Proration
Dates...................... July 21, 1997 at 5:00 p.m., New York City time,
unless extended by the Company.
Payment Date............... As soon as practicable after the Expiration Date.
Position of the Company and
its Directors.............. Neither the Company nor its Board of Directors
makes any recommendation to any stockholder as to
whether to tender or refrain from tendering Shares.
Withdrawal Rights.......... Tendered Shares may be withdrawn at any time until
5:00 p.m., New York City time, on July 21, 1997,
unless the Offer is extended by the Company and,
unless previously purchased, after 5:00 p.m., New
York City time, on August 18, 1997. See Section 3.
Odd Lots................... No preference will be given to Shares tendered by
any stockholder owning beneficially fewer than 100
Shares in the aggregate. Such Shares will be
subject to proration along with all other validly
tendered Shares.
Further Developments
Regarding the Offer........ Call the Information Agent or consult your broker.
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3
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL.
IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
4
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
Introduction........................................................................... 6
The Offer.............................................................................. 7
1. Number of Shares; Proration..................................................... 7
2. Procedure for Tendering Shares.................................................. 9
3. Withdrawal Rights............................................................... 11
4. Acceptance for Payment of Shares and Payment of Purchase Price.................. 12
5. Certain Conditions of the Offer................................................. 13
6. Price Range of Shares; Dividends................................................ 14
7. Background and Purpose of the Offer; Certain Effects of the Offer............... 14
8. Source and Amount of Funds...................................................... 16
9. Certain Information Concerning the Company...................................... 17
10. Interest of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares........................................................... 20
11. Certain Legal Matters; Regulatory Approvals..................................... 20
12. Certain Federal Income Tax Consequences......................................... 20
13. Extension of the Offer; Termination; Amendments................................. 23
14. Fees and Expenses............................................................... 23
15. Miscellaneous................................................................... 24
</TABLE>
5
<PAGE> 6
To the Holders of Common Stock of Uno Restaurant Corporation:
INTRODUCTION
Uno Restaurant Corporation, a Delaware corporation (the "Company"), hereby
invites its stockholders to tender shares (the "Shares") of its Common Stock,
$0.01 par value per share (the "Common Stock"), to the Company at a price, not
in excess of $7.50 nor less than $6.00 per Share, specified by such
stockholders, upon the terms and subject to the conditions set forth in this
Offer to Purchase and the related Letter of Transmittal (which together
constitute the "Offer"). The Company will, upon the terms and subject to the
conditions of the Offer, determine a single per Share price (not in excess of
$7.50 nor less than $6.00 per Share) net to the Seller in cash (the "Purchase
Price") that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,000,000 Shares (or such lesser number of Shares as are
properly tendered at or below the Purchase Price) pursuant to the Offer or such
lesser number of Shares as may be necessary in the discretion of the Company to
maintain at least 300 record holders of Shares after the purchase by the Company
pursuant to this Offer. See Section 7. The Company also reserves the right, in
its sole discretion, to purchase more than 1,000,000 Shares pursuant to the
Offer. The Board of Directors of the Company has concluded that the purchase of
Shares pursuant to the Offer is a prudent use of the Company's financial
resources.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 5.
All stockholders who have properly tendered and not withdrawn their Shares
at prices at or below the Purchase Price will receive the Purchase Price, net to
the stockholder in cash, for all Shares purchased upon the terms and subject to
the conditions of the Offer, including the provisions relating to proration and
conditional tenders described herein. If, prior to the Expiration Date as
defined in Section 1, more than 1,000,000 Shares (or such greater or lesser
number of Shares as the Company may elect to purchase pursuant to the Offer) are
properly tendered at or below the Purchase Price and not withdrawn, the Company
will accept Shares for purchase on a pro rata basis from all stockholders who
properly tender Shares at or below the Purchase Price. If any stockholder
tenders Shares held by him and does not wish to have such Shares purchased
pursuant to the Offer subject to proration, such stockholder may tender Shares
subject to the condition that a designated number or none of such Shares be
purchased in the event of proration. See Sections 1 and 2. The Company will
return at its own expense all Shares not purchased under the Offer, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration or conditional tenders. Tendering stockholders
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 7 of the Letter of Transmittal, stock transfer taxes on the
purchase of Shares by the Company pursuant to the Offer. In addition, the
Company will pay all fees and expenses of the Dealer Manager, the Depositary and
the Information Agent in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
As of June 11, 1997, there were 12,166,773 Shares outstanding and 570,481
Shares issuable upon exercise of outstanding vested stock options under the
Company's stock option plans (the "Options"). The 1,000,000 Shares that the
Company is offering to purchase represent approximately 8.2% of the Shares
outstanding at that date (approximately 7.9% assuming the exercise of all
outstanding vested Options). In addition to the foregoing, 639,894 Shares are
issuable upon exercise of outstanding unvested options under the Company's stock
option plans, which options are eligible for vesting at various times through
February 26, 2002. In addition to the foregoing options, and in connection with
the Offer, the Board of Directors of the
6
<PAGE> 7
Company, subject to stockholder approval at the next annual meeting of
stockholders, granted senior management and key employees options to purchase
550,000 Shares at an exercise price of $8.00 per Share subject to a five year
vesting schedule based upon achievement of certain financial goals and
objectives, which vesting is subject to acceleration in the event of a change in
control of the Company. The vested options expire in 2007. The Board of
Directors intends to grant to senior management and key employees options to
purchase up to an additional 550,000 Shares upon similar terms and conditions as
the earlier options to purchase 550,000 Shares depending upon the total number
of Shares tendered and accepted by the Company pursuant to the Offer. However,
the decision to grant the additional options will depend upon a number of
factors, including the objective of the Board of Directors not to dilute
stockholders who do not tender their Shares in the Offer to any significant
extent compared with their status prior to the Offer.
The Shares are traded on the New York Stock Exchange (the "NYSE") under the
symbol UNO. On June 11, 1997, the last full trading day on the NYSE prior to the
announcement of the Offer, the closing per Share sales price was $6.00.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE
SECTION 6.
Any Shares acquired by the Company pursuant to the Offer will be cancelled
and will be returned to the status of authorized but unissued shares of Common
Stock. Such Shares will be available for reissuance by the Company without
further stockholder action for general or other corporate purposes, including
stock options (including the 1,100,000 options granted and to be granted
referred to above) and other employee benefit plans, stock splits or dividends,
acquisitions and the raising of additional capital for use in the Company's
business. Except for stock options and other employee benefit plans, the Company
has no current plans for any such uses of such shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment and purchase up to 1,000,000 Shares, or such lesser number of
Shares as are properly tendered at or below the Purchase Price at or prior to
the Expiration Date (as defined herein), and not withdrawn in accordance with
Section 3, or such lesser number of Shares as may be necessary in the discretion
of the Company to maintain at least 300 record holders of Shares after
completion of the purchase by the Company pursuant to this Offer. See Section 7.
The term "Expiration Date" means 5:00 p.m., New York City time, on July 21,
1997, unless the Company, in its sole discretion, shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall refer to the latest time and date at which the Offer, as so extended
by the Company, shall expire. For a description of the Company's right to extend
the period of time during which the Offer is open, and to delay, terminate or
amend the Offer, see Section 13. If the Offer is oversubscribed, Shares tendered
at or below the Purchase Price prior to the Expiration Date will be subject to
proration. The proration period also expires on the Expiration Date.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share Purchase Price that it will pay for Shares
properly tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by the tendering stockholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,000,000 Shares (or such lesser number of Shares as are properly tendered at or
below the Purchase Price) pursuant to the Offer or such lesser number of Shares
as may be necessary in the discretion of the Company to maintain at least 300
record holders of Shares after completion of the purchase by the Company
pursuant to this Offer. See Section 7. In addition, the Company reserves the
right, in its sole discretion, to purchase more than 1,000,000 Shares pursuant
to the Offer. See Section 13. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may purchase
pursuant to the Offer an additional amount of Shares not to exceed 2% of the
outstanding Shares without amending or extending the Offer.
If (i) the Company increases or decreases the price to be paid for Shares,
or the Company increases the number of Shares being sought and such increase in
the number of Shares being sought exceeds 2% of the
7
<PAGE> 8
outstanding Shares, or the Company decreases the number of Shares being sought
and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of such increase or decrease is first published, sent or given
in the manner described in Section 13, the Offer will be extended until the
expiration of such period of ten business days. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder desiring to tender Shares must specify the price, not in excess of
$7.50 nor less than $6.00 per Share, at which such stockholder is willing to
have Shares purchased by the Company. As promptly as practicable following the
Expiration Date, the Company will determine the Purchase Price (not in excess of
$7.50 nor less than $6.00 per Share) that will allow it to purchase up to
1,000,000 Shares properly tendered and not withdrawn by the Expiration Date. As
promptly as practicable thereafter, the Company will publicly announce the
Purchase Price, and upon the terms and subject to the conditions of the Offer
(including the proration provisions described herein), all stockholders who have
properly tendered and not withdrawn Shares at prices at or below the Purchase
Price will receive the Purchase Price for all Shares purchased. All Shares not
purchased pursuant to the Offer, including Shares tendered at prices in excess
of the Purchase Price and Shares not purchased because of proration or
conditional tenders, will be returned to the tendering stockholders at the
Company's expense as promptly as practicable following the Expiration Date.
If the number of Shares properly tendered by the Expiration Date at prices
at or below the Purchase Price, and not withdrawn, is less than or equal to
1,000,000 (or such lesser number of Shares as the Company may elect to purchase
as discussed in Section 7, or such greater number of Shares as the Company may
elect to purchase pursuant to this Offer) the Company will, upon the terms and
subject to the conditions of this Offer, purchase at the Purchase Price all
Shares so tendered.
If the number of Shares properly tendered by the Expiration Date at prices
at or below the Purchase Price, and not withdrawn, is greater than 1,000,000 (or
such lesser number of Shares as the Company may elect to purchase as discussed
in Section 7, or such greater number of Shares as the Company may elect to
purchase pursuant to the Offer), the Company will, upon the terms and subject to
the conditions of the Offer, purchase at the Purchase Price 1,000,000 Shares (or
such lesser or greater number of Shares) in the following order of priority: (i)
Shares unconditionally tendered at or below the Purchase Price by the Expiration
Date on a pro rata basis (with adjustments to avoid the purchase of fractional
Shares), and (ii) Shares conditionally tendered at or below the Purchase Price
by the Expiration Date selected by lot. See the discussion below for further
information relating to conditional tenders of Shares.
The Company reserves the right, but will not be obligated, to purchase all
Shares properly tendered and not withdrawn, at or below the Purchase Price, by
any stockholder who has so tendered all Shares owned beneficially or of record
and as a result of any proration would then own an aggregate of fewer than 100
Shares. In addition, the Company reserves the right, but will not be obligated,
to purchase in excess of 1,000,000 Shares pursuant to the Offer to avoid
proration.
As described in Section 12, the number of Shares that the Company will
purchase from a stockholder may affect the federal income tax consequences to
the stockholder of such purchase and therefore may be relevant to a
stockholder's decision whether to tender Shares. Because the order in which
Shares are purchased from a stockholder may also affect the federal income tax
consequences to the stockholder, stockholders may designate in the Letter of
Transmittal the order in which their Shares are to be purchased in the event of
proration. If any stockholder tenders Shares held by him and does not wish to
have such Shares subject to proration before purchase, such stockholder may
tender Shares subject to the condition that at least a designated minimum number
or none of such Shares be purchased. Any stockholder desiring to make such a
conditional tender should so indicate in the box captioned "Conditional Tender"
on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery. It is the tendering stockholder's responsibility to determine the
minimum number of Shares to be tendered. Stockholders should consult their tax
advisors with respect to the effects of proration of the Offer and the
advisability of making a conditional tender. See Section 12.
8
<PAGE> 9
If as a result of proration the number of Shares to be purchased from any
stockholder making a conditional tender is reduced below the minimum number
specified by such stockholder, such tender will automatically be regarded as
withdrawn, except as provided below, and all Shares tendered by such stockholder
will be returned as promptly as practicable after the Expiration Date at the
Company's expense. If so many conditional tenders are withdrawn that the total
number of Shares available for purchase by the Company falls below the number of
Shares that the Company has determined to purchase pursuant to the Offer, then,
to the extent feasible, the Company will select enough of such conditional
tenders, which would otherwise have been withdrawn, to enable the Company to
purchase such desired number of Shares. In selecting among such conditional
tenders, the Company will select by lot and will limit its purchase in each case
to the designated minimum number of Shares to be purchased.
2. PROCEDURE FOR TENDERING SHARES
PROPER TENDER OF SHARES. To validly tender Shares pursuant to the Offer,
either (i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and any other
documents required by the Letter of Transmittal must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase,
and either (a) certificates for the Shares to be tendered must be received by
the Depositary at such address or (b) such Shares must be tendered pursuant to
the procedures for book-entry transfer described below (and a confirmation of
such tender received by the Depositary), in each case by the Expiration Date, or
(ii) the guaranteed delivery procedure described below must be followed.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, EACH
STOCKHOLDER DESIRING TO TENDER SHARES PURSUANT TO THE OFFER MUST INDICATE, IN
THE BOX CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING
TENDERED" IN THE LETTER OF TRANSMITTAL, THE PRICE (IN MULTIPLES OF $0.125) AT
WHICH SUCH SHARES ARE BEING TENDERED. If a stockholder desires to tender Shares
in separate lots at a different price for each lot, such stockholder must
complete a separate Letter of Transmittal for each lot and price at which he is
tendering Shares. The same Shares cannot be tendered (unless properly withdrawn
previously in accordance with the terms of the Offer) at more than one price. IN
ORDER TO TENDER SHARES PROPERLY, A PRICE BOX, BUT ONLY ONE PRICE BOX, ON EACH
LETTER OF TRANSMITTAL MUST BE CHECKED. Stockholders wishing to maximize the
possibility that their Shares will be purchased at the Purchase Price may check
the box on the Letter of Transmittal marked "Shares Tendered at Purchase Price
Determined by Dutch Auction." Checking this box may result in a purchase of the
Shares so tendered at the minimum price of $6.00.
Stockholders desiring to make a conditional tender of their Shares must
complete the box captioned "Conditional Tender" in the Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
system of the Book-Entry Transfer Facility may make delivery of Shares by
causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and any other required
documents must, in any case, be received by the Depositary at the address set
forth on the back cover of this Offer to Purchase by the Expiration Date, or the
guaranteed delivery procedure described below must be complied with by the
tendering stockholder. Delivery of the Letter of Transmittal and any other
required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if the Letter of Transmittal is signed by the registered holder of
the Shares exactly as the name of the registered holder appears on the
certificate (which term, for purposes of this Section 2, includes any
participant in the Book-
9
<PAGE> 10
Entry Transfer Facility whose name appears on a security position listing as the
owner of the Shares) tendered therewith, and payment is to be made directly to
such registered holder, or if Shares are tendered for the account of a financial
institution that is a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program (each such entity, an "Eligible Institution").
In all other cases, all signatures on the Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If a certificate representing Shares is registered in the name of a
person other than the signatory of a Letter of Transmittal, or if payment is to
be made or Shares not purchased or tendered are to be issued to a person other
than the registered owner, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name of the
registered owner appears on the certificate with the signature on the
certificate or stock power guaranteed by an Eligible Institution.
METHOD OF DELIVERY. The method of delivery of Shares and all other
required documents is at the option and risk of the tendering stockholder. If
certificates for Shares are to be sent by mail, registered mail with return
receipt requested, properly insured, is recommended.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income
tax withholding equal to 31% of the gross payments made pursuant to the Offer,
each stockholder who does not otherwise establish an exemption from such
withholding must notify the Depositary of such stockholder's correct taxpayer
identification number (or certify that such taxpayer is awaiting a taxpayer
identification number) and provide certain other information by completing a
Substitute Form W-9 included in the Letter of Transmittal. Foreign stockholders
are required to submit a Form W-8 in order to avoid backup withholding.
EACH STOCKHOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO WHETHER SUCH
STOCKHOLDER IS SUBJECT TO OR EXEMPT FROM FEDERAL INCOME TAX WITHHOLDING.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and cannot deliver certificates for such Shares (or the procedures for
book-entry transfer cannot be completed on a timely basis) or time will not
permit all required documents to reach the Depositary by the Expiration Date,
such Shares may nevertheless be tendered if all of the following conditions are
met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Company
(indicating the price at which the Shares are being tendered) is
received by the Depositary (as provided below) by the Expiration
Date; and
(iii) the certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account
at the Book-Entry Transfer Facility), together with a properly
completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE
trading days after the date the Depositary receives such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of shares
to be accepted, the price to be paid therefor, the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of Shares determined by
it not to be in proper form or the acceptance for payment of or payment for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender of
Shares. No tender of Shares will be deemed to be properly made until all defects
and irregularities have been cured or waived. None of the Company, the Dealer
Manager, the
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<PAGE> 11
Information Agent, the Depository or any other person will be under any duty to
give notification of any defect or irregularity in tenders or incur any
liability for failure to give any such notice.
TENDER CONSTITUTES AN AGREEMENT. The proper tender of Shares pursuant to
any one of the procedures described above will constitute the tendering
stockholder's acceptance of the terms and conditions of the Offer and a binding
agreement between the tendering stockholder and the Company.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for a person, directly or
indirectly, to tender shares for such stockholder's own account unless, at the
time of the tender and at the end of the proration period, the person so
tendering (i) has a net long position equal to or greater than the amount of (a)
Shares tendered or (b) other securities immediately convertible into, or
exercisable or exchangeable for the amount of Shares tendered and will acquire
such Shares for tender by conversion, exercise or exchange of such other
securities, and (ii) will cause such Shares to be delivered in accordance with
the terms of the Offer. Rule 14e-4 promulgated under the Exchange Act provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The tender of Shares pursuant to any one of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer as well as his representation and warranty
that (A) such stockholder has a net long position in the Shares being tendered
within the meaning of Rule 14e-4 promulgated under the Exchange Act and (B) the
tender of such Shares complies with Rule 14e-4 promulgated under the Exchange
Act.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer will be irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company as provided in this Offer to Purchase, may
also be withdrawn after 5:00 p.m., New York City time, on August 18, 1997.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If the certificates have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering stockholder must submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Shares tendered by an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
2, the notice of withdrawal must specify the name and the number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the procedures of such facility. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by the Company, in its sole discretion, which determination shall be
final and binding. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person shall be obligated to give any notice of
any defects or irregularities in any notice of withdrawal and none of them shall
incur any liability for failure to give any such notice. Any Shares properly
withdrawn will thereafter be deemed not tendered for purposes of the Offer.
However, withdrawn Shares may be re-tendered prior to the Expiration Date by
again following any of the procedures described in Section 2.
If, as a result of proration, the number of Shares to be purchased from any
stockholder making a conditional tender is reduced below the minimum number
specified by such stockholder, such tender will automatically be regarded as
withdrawn.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 3 subject to Rule
13e-4(f)(5) under the Exchange Act which provides that the
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<PAGE> 12
issuer making the tender offer shall either pay the consideration offered, or
return the tendered securities, promptly after the termination or withdrawal of
the tender offer.
4. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer (including
proration), and promptly after the Expiration Date, the Company will determine a
single per Share Purchase Price (not in excess of $7.50 nor less than $6.00 per
Share) that it will pay for Shares properly tendered and not withdrawn, taking
into account the number of Shares tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will allow
it to buy up to 1,000,000 Shares, or such lesser number of Shares, as provided
in Section 1 and Section 7, as are properly tendered and not withdrawn at or
below the Purchase Price, as soon as practicable after the Expiration Date.
Following the determination of the Purchase Price, the Company will announce the
Purchase Price, and payment for Shares accepted for payment pursuant to the
Offer will be made promptly (subject to possible delay in the event of
proration) but only after timely receipt by the Depositary of certificates for
Shares (or of a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), a properly completed
and duly executed Letter of Transmittal (or manually executed facsimile thereof)
and any other required documents.
For purposes of the Offer, the Company will be deemed to have accepted for
payment, subject to proration, Shares tendered at or below the Purchase Price
and not withdrawn if, as and when the Company gives oral or written notice to
the Depositary of its acceptance of such Shares for payment pursuant to the
Offer. Payment for Shares to be purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price for such Shares with the Depositary,
which will act as agent for the tendering stockholders for the purpose of
receiving payment from the Company and transmitting such payments to tendering
stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any such proration until approximately five NYSE
trading days after the Expiration Date. Certificates for all Shares not
purchased, including all Shares tendered at prices in excess of the Purchase
Price and Shares not purchased due to proration or conditional tenders, will be
returned (or, in the case of Shares tendered by book-entry transfer, such Shares
will be credited to the account maintained within the Book-Entry Transfer
Facility by the participant therein who so delivered such Shares) as soon as
practicable after the Expiration Date or termination of the Offer without
expense to the tendering stockholder. Under no circumstances will interest be
paid by the Company by reason of any delay in paying for any Shares or
otherwise. In addition, if certain events occur, the Company may not be
obligated to purchase the Shares pursuant to the Offer. See Section 5.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if Shares not tendered or not accepted for purchase are to be
registered in the name of any person other than the registered owner, or if
tendered certificates are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered owner or such other person),
payable on account of the transfer to such person will be deducted from the
Purchase Price unless evidence satisfactory to the Company of the payment of
such taxes or exemption therefrom is submitted. See Instruction 7 of the Letter
of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN
THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO
REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO
SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 2.
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<PAGE> 13
5. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment or purchase or pay for any Shares tendered and
may terminate or amend the Offer or may postpone the acceptance for payment of,
or the payment for, Shares tendered, if at any time on or after June 12, 1997,
but on or before the Expiration Date, any of the following events shall have
occurred (or shall have been determined by the Company to have occurred) which,
in the Company's sole judgment in any such case and regardless of the
circumstances (including any action or omission to act by the Company), makes it
inadvisable to proceed with the Offer or with such acceptance for purchase or
payment:
(a) There shall have occurred (i) the commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (ii) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market, (iii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (iv) any
limitation by any governmental, regulatory or administrative authority or agency
or any other event that, in the sole judgment of the Company, might affect the
extension of credit by banks or other lending institutions, (v) a decline in the
last sales price of the Shares of more than 15% as reported on the NYSE measured
from the close of business on June 11, 1997, (vi) any change in the general
political, market, economic or financial conditions in the United States or
abroad that has or may have material adverse significance with respect to the
Company's business, operations or prospects or the trading in the Shares, or
(vii) any decline in either the Dow Jones Industrial Average or the Standard and
Poor's Index of 500 Industrial Companies of more than 15%, measured from the
close of business on June 11, 1997; or
(b) There shall have been threatened, instituted or pending any action or
proceeding by any government or governmental authority or regulatory or
administrative agency, domestic or foreign, or by any other person, domestic or
foreign, before any court or governmental authority or regulatory or
administrative agency, domestic or foreign, (i) challenging or seeking to make
illegal, or delay or otherwise directly or indirectly restrain or prohibit the
making of the Offer, the acceptance for payment of or payment for some or all of
the Shares by the Company or otherwise directly or indirectly relating in any
manner to or affecting the Offer, or (ii) that otherwise, in the sole judgment
of the Company, has or may have a material adverse effect on the business,
financial condition, income, operations or prospects of the Company or its
subsidiaries taken as a whole or has or may materially impair the contemplated
benefits of the Offer to the Company; or
(c) There shall have been any action threatened, pending or taken or
approval withheld or any statute, rule, regulation, judgment or order or
injunction proposed, sought, enacted, enforced, promulgated, amended, issued or
deemed applicable to the Offer or the Company or any of its subsidiaries by any
court, governmental authority or regulatory or administrative agency, domestic
or foreign, that, in the sole judgment of the Company might, directly or
indirectly, result in any of the consequences referred to in clauses (i) or (ii)
of paragraph (b) above; or
(d) A tender or exchange offer for some or all of the Shares (other than
the Offer) or a proposal with respect to a merger, consolidation or other
business combination with or involving the Company or any subsidiary shall have
been proposed to be made or shall have been made by another person; or
(e) Any entity, person or "group" (as that term is used in Section 13(d)(3)
of the Exchange Act) shall have acquired or proposed to acquire beneficial
ownership of more than 5% of the outstanding Shares, or any new group shall have
been formed which beneficially owns more than 5% of the outstanding Shares; or
(f) Any change or changes shall have occurred (or any development shall
have occurred involving any prospective change or changes) in the business,
assets, liabilities, condition (financial or otherwise), operations, results of
operations or prospects of the Company or its subsidiaries that, in the sole
judgment of the Company, have or may have material adverse significance with
respect to the Company or its subsidiaries.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in its sole discretion regardless of the circumstances
(including any action or inaction by the Company) giving rise to any such
conditions, or may be waived by the Company, in its sole discretion, in whole or
in part at any time. The failure by the Company at any time to exercise its
rights under any of the foregoing conditions shall
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<PAGE> 14
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular facts and other circumstances shall not be deemed a waiver
with respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right which may be asserted at any time or from time to time.
Any determination by the Company concerning the events described in this Section
shall be final and binding on all parties.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Company's Common Stock is traded on the NYSE under the ticker symbol
UNO. The following table sets forth the reported high and low sales prices for
the Common Stock for each quarter during fiscal 1997, 1996 and 1995, adjusted to
reflect a five-for-four stock split effected on February 28, 1995.
FISCAL YEAR ENDED OCTOBER 1, 1995
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
First Quarter.................................................... $11.10 $ 9.30
Second Quarter................................................... $12.80 $10.10
Third Quarter.................................................... $12.25 $10.25
Fourth Quarter................................................... $10.375 $ 7.75
</TABLE>
FISCAL YEAR ENDED SEPTEMBER 29, 1996
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
First Quarter.................................................... $ 8.75 $ 6.375
Second Quarter................................................... $ 8.125 $ 5.625
Third Quarter.................................................... $ 7.50 $ 6.50
Fourth Quarter................................................... $ 7.75 $ 5.625
</TABLE>
FISCAL YEAR ENDING SEPTEMBER 28, 1997
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
First Quarter.................................................... $ 7.875 $ 6.375
Second Quarter................................................... $ 7.375 $ 6.375
</TABLE>
The Company has never paid any cash dividends on its Common Stock and for
the foreseeable future intends to continue its policy of retaining earnings to
finance the development and growth of the Company. On June 11, 1997, the last
full trading day of the NYSE prior to the announcement of the Offer, the closing
per Share sales price for the Company on the NYSE Composite Tape was $6.00.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The Board of Directors of the Company has concluded that the purchase of
Shares pursuant to the Offer is a prudent use of the Company's financial
resources. The Offer provides stockholders who are considering the sale of all
or a portion of their Shares the opportunity to determine the price at which
they are willing to sell their Shares and, if any such Shares are purchased
pursuant to the Offer, to sell such Shares for cash at a price at or in excess
of current market prices at the date the Offer was announced without the usual
transaction costs associated with market sales. The Offer also allows
stockholders to sell a portion of their Shares while retaining a continuing
equity interest in the Company if they so desire. In addition, the stockholders
owning fewer than 100 shares whose Shares are purchased pursuant to the Offer
not only will avoid the payment of brokerage commissions but also will avoid any
applicable odd-lot discounts payable on a sale of their Shares in a NYSE
transaction. Stockholders who determine not to accept the Offer will realize a
proportionate increase in their equity interest in the Company if the Shares are
purchased pursuant to the Offer. However, as described in the Introduction and
below, the Company has granted senior management and key employees
14
<PAGE> 15
options to purchase 550,000 Shares and intends to grant senior management and
key employees options to purchase up to an additional 550,000 Shares. Assuming
such options were exercised, the equity interest of stockholders who determine
not to accept the Offer will be reduced approximately to the same percentage
interest in the Company as immediately prior to the Offer.
Shares acquired by the Company pursuant to the Offer will be cancelled and
will return to the status of authorized but unissued shares of Common Stock.
Such Shares will be available for reissuance by the Company without further
stockholder action for general or other corporate purposes, including stock
options (including the stock options referred to in the preceding paragraph and
in the Introduction) and other employee benefit plans, stock splits or
dividends, acquisitions, and the raising of additional capital for use in the
Company's business. Except for stock options and other employee benefit plans,
the Company has no current plans for any such uses of such shares.
As of June 11, 1997 the Company had issued and outstanding 12,166,773
Shares, and 570,481 Shares were issuable upon exercise of outstanding vested
Options. The 1,000,000 Shares that the Company is offering to purchase represent
approximately 8.2% of the Shares outstanding at that date (approximately 7.9%
assuming the exercise of all outstanding vested Options). In addition to the
foregoing, 639,894 Shares are issuable upon exercise of outstanding unvested
options under the Company's stock option plans, which options are eligible for
vesting at various times through February 26, 2002. In addition to the foregoing
options, and in connection with the Offer, the Board of Directors of the
Company, subject to stockholder approval at the next annual meeting of
stockholders, granted senior management and key employees options to purchase
550,000 Shares at an exercise price of $8.00 per Share subject to a five year
vesting schedule based upon achievement of certain financial goals and
objectives, which vesting is subject to acceleration in the event of a change in
control of the Company. The vested options expire in 2007. The Board of
Directors intends to grant to senior management and key employees options to
purchase up to an additional 550,000 Shares upon similar terms and conditions as
the earlier options to purchase 550,000 shares depending upon the total number
of Shares tendered and accepted by the Company pursuant to the Offer. However,
the decision to grant the additional options will depend upon a number of
factors, including the objective of the Board of Directors not to dilute
stockholders who do not tender their Shares in the Offer to any significant
extent compared with their status prior to the Offer. As of June 10, 1997, all
executive officers and directors of the Company as a group beneficially owned an
aggregate of 6,722,846 Shares (including Shares issuable upon the exercise of
outstanding vested Options), or approximately 53.5% of the outstanding Shares
(assuming the exercise of all outstanding vested Options) on such date. If the
Company purchases 1,000,000 Shares pursuant to the Offer and no executive
officer or director tenders Shares pursuant to the Offer, the Company's
executive officers and directors as a group would beneficially own approximately
58.1% of such outstanding Shares. The executive officers received 425,000 of the
options to purchase 550,000 Shares referred to above and may receive most, if
not all, of the options to purchase the additional 550,000 Shares referred to
above.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NEITHER
THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH
STOCKHOLDER'S SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND AT
WHAT PRICE OR PRICES.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that otherwise might trade publicly and may reduce the number of
stockholders. Nonetheless, it is anticipated that there still will be a
sufficient number of Shares outstanding and publicly traded following the Offer
to ensure a continued trading market in the Shares. Based upon published
guidelines, the Company does not believe that the purchase of Shares pursuant to
the Offer will cause the Company's remaining Shares to cease to be listed on the
NYSE. The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and to the Securities and Exchange Commission (the
15
<PAGE> 16
"Commission") and comply with the Commission's proxy rules in connection with
meetings of the Company's stockholders. The Company believes that the purchase
of Shares pursuant to the Offer will not result in the Shares becoming eligible
for deregistration under the Exchange Act. Section 12(g)(4) of the Exchange Act
provides that the Shares would become eligible for deregistration under the
Exchange Act if the number of holders of record of the Shares is reduced to less
than 300. Rule 13e-3 of the Exchange Act also provides certain disclosure and
other requirements if certain transactions or series of transactons have either
a reasonable likelihood or a purpose of causing, among other results, any class
of equity securities of an issuer to be held of record by less than 300 holders.
The Company currently has no plans or intention to cause the Shares to be
delisted from the NYSE or to become eligible for deregistration under the
Exchange Act. Therefore, as a consequence of these provisions under the Exchange
Act, the Company reserves the right in its sole discretion to reduce the number
of Shares purchased pursuant to the Offer to the extent necessary to maintain at
least 300 record holders of Shares after the completion of the purchase by the
Company pursuant to the Offer. As of June 10, 1997, the Company had 466 record
holders.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the repurchase of Shares pursuant to the Offer, the Shares will
continue to be margin securities for purposes of the Federal Reserve Board's
margin regulations.
Although the Company has no current plans to acquire additional Shares, the
Company may in the future purchase additional Shares in the open market, in
private transactions, through tender offers or otherwise. Any such purchases may
be on the same terms or on terms which are more or less favorable to
stockholders than the terms of the Offer. However, Rule 13e-4 of the Exchange
Act prohibits the Company and its affiliates from purchasing any Shares, other
than pursuant to the Offer, until at least ten business days after the
Expiration Date or termination of the Offer. Any possible future purchases by
the Company will depend on many factors, including the market price of the
Shares, the Company's business and financial positions, the results of the Offer
and general economic and market conditions.
8. SOURCE AND AMOUNT OF FUNDS
If the Company were to purchase 1,000,000 Shares pursuant to the Offer at
the maximum Purchase Price of $7.50 per Share, the Company expects that the
maximum aggregate cost of the Offer, including all fees and expenses applicable
to the Offer, would be approximately $7,800,000. Consummation of the Offer is
not conditioned upon the Company obtaining financing. The funds needed to
purchase the Shares will be derived from the Company's $50 million unsecured
revolving credit facility (the "Credit Facility") under the Revolving Credit and
Term Loan Agreement dated as of December 9, 1994, as amended through March 29,
1996 by and among the Company, Uno Foods Inc., Pizzeria Uno Corporation, and URC
Holding Company, Inc., as Guarantors, Uno Restaurants, Inc., as Borrower, and
Fleet Bank of Massachusetts, N.A., BankBoston, N.A. (formerly The First National
Bank of Boston), and Mellon Bank, N.A. As of June 2, 1997, the Company had
borrowed $32,390,000 under the Credit Facility. The Credit Facility will convert
to a three year term loan in December 1997. The Credit Facility provides the
Company the option of borrowing at either the prime rate plus from 0 to .50%, or
at 100-175 basis points above LIBOR. The Credit Facility contains covenants
which limit, among other things, the incurrence of additional indebtedness by
the Company, the creation of liens on the Company's assets, the making of
certain investments by the Company, mergers, consolidations and certain sales
and transfers of assets, the payment of dividends, certain changes in the
Company's capital structure and changes in control of the Company. The Credit
Facility also contains certain financial covenants relating to the financial
condition of the Company, including those relating to net worth, cash flow
coverage, leverage, profitability, capital expenditures and earnings. Provisions
under the Credit Facility are not considered restrictive to normal operations.
The Company has received a waiver of certain covenants under the Credit
Facility, subject to the Company's continued compliance with all of the other
terms of the Credit Facility, to permit the Company to conduct the Offer. The
Company intends to refinance the Credit Facility prior to its conversion into a
three year term loan in December 1997. There can be no assurances that the
Company will be successful in obtaining such refinancing within such schedule
upon terms acceptable to the Company.
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<PAGE> 17
9. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company owns and operates or franchises a total of 156 restaurants,
including 90 owned and 66 franchised casual dining, full-service restaurants
under the name "Pizzeria Uno...Chicago Bar & Grill." The Pizzeria Uno
restaurants offer a diverse, high-quality menu at moderate prices in a casual,
friendly atmosphere. The restaurants feature the Company's signature
Chicago-style deep-dish pizza and a selection of entrees, including thin crust
pizza, pasta, fajitas, ribs, steak and chicken, as well as a variety of
appetizers salads, sandwiches and desserts. The Company's restaurants average
approximately 6,200 square feet with seating for an average of approximately 180
guests. For the fiscal year ended September 29, 1996, Company-owned restaurants
averaged $1,846,000 in sales. Company-owned restaurants are located primarily in
major markets from New England to Virginia, as well as, Florida, Chicago and
Denver, and franchised restaurants are located throughout the United States.
The Company acquired the rights to the name "Pizzeria Uno" from the late
Ike Sewell, who opened the original Pizzeria Uno restaurant in Chicago, Illinois
in 1943 and is considered the originator of Chicago-style deep-dish pizza. The
Company opened its first Pizzeria Uno restaurant in 1979.
During the fiscal year ended September 29, 1996, the Company opened seven
full-service Company-owned restaurants. The Company decreased the level of new
unit expansion from fiscal 1995, when it opened 16 new full-services units. This
slower growth rate allowed the Company to complete a new prototype building
design, roll-out several new menu initiatives and to focus on operational
execution. Five full-service and one quick-service franchised restaurants opened
during the fiscal year ended September 29, 1996 and one full-service restaurant
closed. During the fiscal year ending September 28, 1997, the Company
anticipates opening up to eight Company-owned full-service restaurants and up to
seven franchised restaurants. The timing of these planned openings is subject to
various factors including locating satisfactory sites and negotiating leases and
franchise agreements.
During the past three years, the Company has implemented several strategic
initiatives intended to strengthen its position in casual dining and to
distinguish its restaurants from quick service pizza, pizza and pasta, and
full-service Italian restaurants. As part of this strategy, the Company enhanced
its kitchen capabilities, to include saute stations, grills and fryers, enabling
the Company to enhance the quality, breadth and appeal of its non-pizza menu
items. The Company also refined the name of its restaurants to "Pizzeria
Uno...Chicago Bar & Grill" to communicate its concept and broadened menu to
consumers, and upgraded the design and decor of its restaurants to be consistent
with its causal dining theme. Finally, the Company has been very aggressive in
its approach to product development, as the Company believes that by keeping its
menu offerings current, guest satisfaction and frequency will be enhanced.
The Company continues to expand its channels of distribution to capitalize
on the Pizzeria Uno brand name and the appeal of its signature Chicago-style
deep-dish pizza. Currently, the Company is distributing refrigerated and frozen
Chicago-style deep-dish pizza to hundreds of supermarkets and certain wholesale
price club stores, primarily in New England, for sale in their fresh deli
counters and frozen food sections. For the past several years, the Company has
also been supplying frozen Pizzeria Uno brand, Chicago-style deep-dish pizza to
American Airlines for service on its flights. The Company has introduced a
similar pizza product at Pizzeria Uno kiosks in 41 General Cinema theaters and
is in different phases of development with several nationally recognized hotel
chains.
The Company is a Delaware corporation whose principle executive offices are
located at 100 Charles Park Road, West Roxbury, Massachusetts 02132 and its
telephone number is 617-323-9200.
Summary Historical Financial Information. The following table sets forth
certain summary consolidated historical financial information of the Company and
its subsidiaries. The historical financial information at and for the fiscal
years ended September 29, 1996 and October 1, 1995 has been derived from the
Company's audited consolidated financial statements in the Company's Annual
Report on Form 10-K for the fiscal year ended September 29, 1996. The financial
information for the 26 weeks ended March 30, 1997 and March 31, 1996 has been
derived from the unaudited consolidated financial statements in the Company's
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<PAGE> 18
Quarterly Report on Form 10-Q for the quarter ended March 30, 1997. The
following historical financial information should be read in conjunction with
and is qualified in its entirety by reference to, such audited and unaudited
consolidated financial statements and their related notes and other financial
information. Copies of the foregoing reports may be obtained as described in
Section 15 of this Offer.
SUMMARY HISTORICAL FINANCIAL INFORMATION
(Amounts in thousands, except ratios and per share data)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
ENDED YEAR ENDED
--------------------- -----------------------------------------
MARCH 30, MARCH 31, SEPTEMBER 29, OCTOBER 1, OCTOBER 2,
1997 1996 1996 1995 1994
--------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Restaurant sales........................ $78,427 $74,372 $159,581 $146,100 $112,674
Consumer product sales.................. 4,316 4,439 8,351 8,477 7,418
Franchise income........................ 2,132 2,036 4,209 4,129 3,973
------- ------- -------- -------- --------
84,875 80,847 172,141 158,706 124,065
COSTS AND EXPENSES:
Cost of sales........................... 21,188 20,676 44,064 39,420 30,177
Labor and benefits...................... 26,193 25,069 51,868 47,377 36,935
Occupancy costs......................... 13,081 12,901 26,339 22,925 18,979
Other operating costs................... 7,861 7,382 15,890 13,583 10,751
General and administrative.............. 6,250 6,209 12,155 11,229 9,277
Depreciation and amortization........... 6,138 6,484 12,964 10,795 7,655
Asset impairment charge................. 3,937 3,937
------- ------- -------- -------- --------
80,711 82,658 167,217 145,329 113,774
------- ------- -------- -------- --------
OPERATING INCOME.......................... $ 4,164 $(1,811) $ 4,924 $ 13,377 $ 10,291
OTHER INCOME (EXPENSE):
Interest expense........................ (1,239) (1,119) (2,358) (1,924) (1,147)
Other income (expense).................. (37) (347) (123) (20) 302
------- ------- -------- -------- --------
Income before income taxes................ $ 2,888 $(3,277) $ 2,443 $ 11,433 $ 9,446
Provision for income taxes................ 981 (1,180) 757 4,230 3,690
------- ------- -------- -------- --------
NET INCOME................................ $ 1,907 $(2,097) $ 1,686 $ 7,203 $ 5,756
------- ------- -------- -------- --------
Weighted average shares outstanding....... 12,275 13,073 13,073 12,364 11,360
------- ------- -------- -------- --------
Earnings per share........................ $ 0.16 $ (0.16) $ 0.13 $ 0.58 $ 0.51
Ratio of earnings to fixed charges........ 3.09 1.85 1.54 2.52 2.28
------- ------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
MARCH 30, MARCH 31, SEPTEMBER 29, OCTOBER 1, OCTOBER 2,
1997 1996 1996 1995 1994
--------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital........................... (6,943) (7,891) (7,188) (7,615) (9,582)
Property, equipment and leasehold
improvements............................ 173,950 143,671 166,656 148,853 107,654
Total Assets.............................. 137,550 102,341 134,945 125,260 92,153
Long-term debt............................ 37,657 33,695 37,085 21,750 17,958
Stockholders' equity...................... 79,142 76,045 77,136 83,127 55,958
Book value per share...................... $ 6.49 $ 6.06 $ 6.32 $ 6.24 $ 4.93
</TABLE>
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<PAGE> 19
Pro Forma Financial Information. The following unaudited pro forma
consolidated financial information sets forth historical information as adjusted
to give affect to (i) the purchase of 1,000,000 Shares at $6.00 per Share and
(ii) the purchase of 1,000,000 Shares at $7.50 per share, utilizing proceeds
from the Company's Credit Facility to finance the purchases. The pro forma
adjustments assume that the purchases occurred for purposes of the consolidated
statements of income as of the first day of the period and for purposes of the
condensed consolidated balance sheet as of its date. See "Notes to Unaudited Pro
Forma Financial Information," below. The pro forma information does not purport
to be indicative of the results which may be obtained in the future or which
would actually have been obtained had the purchase of the Shares pursuant to the
Offer and the transactions incidental thereto been completed at the dates
indicated. The pro forma information should be read in conjunction with and is
qualified in its entirety by reference to, the audited and unaudited
consolidated financial statements and the accompanying and related notes set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended
September 29, 1996, and the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 30, 1997.
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
(Amounts in thousands, except ratios and per share data)
<TABLE>
<CAPTION>
1,000,000 SHARES AT $6.00 1,000,000 SHARES AT $7.50
PURCHASE PRICE PURCHASE PRICE
------------------------------- -------------------------------
26 WEEKS ENDED YEAR ENDED 26 WEEKS ENDED YEAR ENDED
MARCH 30, 1997 SEPT. 29, 1996 MARCH 30, 1997 SEPT. 29, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Operating Income......................... $ 4,164 $ 4,924 $ 4,164 $ 4,924
Interest Expense......................... (1,479) (2,838) (1,539) (2,958)
Other Income (Expense)................... (37) (123) (37) (123)
-------- -------- -------- --------
Income Before Taxes...................... $ 2,648 $ 1,963 $ 2,588 $ 1,843
Income Taxes............................. 899 608 879 571
-------- -------- -------- --------
Net Income............................... $ 1,749 $ 1,355 $ 1,709 $ 1,272
Weighted Average Shares Outstanding...... 11,275 12,073 11,275 12,073
Earnings Per Share....................... $ 0.16 $ 0.11 $ 0.15 $ 0.11
Ratio of Earnings to Fixed Charges....... 2.63 1.42 2.53 1.39
</TABLE>
<TABLE>
<CAPTION>
MARCH 30, 1997 SEPT. 29, 1996 MARCH 30, 1997 SEPT. 29, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Working Capital.......................... (6,943) (7,188) (6,943) (7,188)
Property, equipment and leasehold
improvements........................... 173,950 166,656 173,950 166,656
Total Assets............................. 137,550 134,945 137,550 134,945
Long Term Debt........................... 43,657 43,085 45,157 44,585
Shareholders Equity...................... 73,142 71,136 71,642 69,636
Book Value Per Share..................... $ 6.53 $ 6.35 $ 6.39 $ 6.22
</TABLE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The pro forma adjustments reflect:
(1) the increase in interest expense resulting from the borrowings
under the Company's revolving Credit Facility to finance the Share
repurchases. The additional interest expense has been calculated at the
assumed rate of 8%;
(2) the adjustment to the provision for income taxes to reflect the
increased interest expense utilizing the Company's effective income tax
rates of 34% and 31% for the 26 weeks ended March 30, 1997 and the fiscal
year ended September 29, 1996, respectively;
(3) the increase in long-term debt resulting from borrowings under the
Company's revolving Credit Facility to finance the Share repurchases; and
(4) the reduction in stockholders' equity resulting from the
repurchase and retirement of the Company's Common Stock.
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<PAGE> 20
10. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING THE SHARES
Except as set forth in Schedule A hereto, neither the Company, nor any
subsidiary of the Company, nor, to the Company's knowledge, any of the Company's
or any of its subsidiaries' executive officers or directors or associates of any
of the foregoing, has engaged in any transaction involving Shares during the
period of forty business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company, nor any
subsidiary of the Company, nor, to the Company's knowledge, any of its executive
officers or directors, or any of the executive officers or directors of its
subsidiaries, is a party to any contract, arrangement, understanding or
relationship relating, directly or indirectly, to the Offer with any other
person with respect to Shares. See Section 14. In connection with this Offer to
Purchase, the Company has granted options to purchase 550,000 shares to senior
management and key employees of the Company and intends to issue options to
purchase up to an additional 550,000 Shares depending upon the number of Shares
tendered and accepted by the Company pursuant to this Offer to Purchase. See
Introduction.
Except as set forth in this Offer to Purchase (see Introduction) none of
the Company or, to the Company's knowledge, its executive officers or directors
has current plans or proposals which relate to or would result in any
extraordinary corporate transaction involving the Company, such as a merger, a
reorganization, the sale or transfer of a material amount of its assets or the
assets of any of its subsidiaries (although the Company from time to time may
consider various acquisition or divestiture opportunities), any change in its
current Board of Directors or management, any material change in its current
dividend policy or indebtedness or capitalization, any other material change in
its business or corporate structure, any material change in its Amended and
Restated Certificate of Incorporation or Amended and Restated Bylaws, or causing
a class of its equity securities to become eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act, or the suspension
of the Company's obligation to file reports pursuant to Section 15(d) of the
Exchange Act, or any actions similar to any of the foregoing. The Company
intends to refinance its Credit Facility (see Section 8) and the Company is
currently exploring additional sources of commercial financing secured by real
estate for the purpose of funding the Company's growth strategy. See Section 9.
The terms of such financing have not yet been finalized and, although the
Company anticipates closing an acceptable financing within the next three
months, there can be no assurance that such financing will be obtained within
such schedule or upon terms acceptable to the Company.
11. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it may determine that it is required to delay the
acceptance for payment of, or payment for, Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares are subject to certain conditions. See Section 5.
12. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The discussion below provides certain Federal income tax consequences of a
sale of Shares pursuant to the Offer by a United States person (a United States
citizen or resident alien, a domestic corporation, a
20
<PAGE> 21
domestic partnership or a domestic trust or estate). Certain stockholders
(including insurance companies, tax-exempt organizations, financial institutions
or insurance companies, financial institutions or broker dealers, foreign
stockholders and stockholders who have acquired their Shares upon the exercise
of options or otherwise as compensation) may be subject to special rules not
discussed below. This discussion does not reflect any tax laws of any
jurisdiction other than the Federal income tax laws of the United States. Each
stockholder should consult his or her own tax advisor as to the particular tax
consequences to him of a sale of Shares pursuant to the Offer, including the
applicability and effect of any state, local, foreign or other tax laws.
The sale of Shares pursuant to the Offer will be a taxable transaction for
Federal income tax purposes. Under Section 302 of the Internal Revenue Code of
1986, as amended (the "Code"), a sale of Shares pursuant to the Offer will, as a
general rule, be treated as a "sale or exchange" if the sale of Shares (a) is
"substantially disproportionate" with respect to the stockholder, (b) results in
a "complete redemption" of all of the stock of the Company owned by the
stockholder or (c) is "not essentially equivalent to a dividend" with respect to
the stockholder. Each of these three provisions is discussed below.
The sale of Shares will be "substantially disproportionate" if the
percentage of the outstanding Shares actually and constructively owned by the
stockholder satisfies the following three requirements:
(i) after the sale, the stockholder owns less than 50% of the total
combined voting power of all classes of outstanding stock entitled to vote;
(ii) the stockholder's percentage of the total outstanding voting
stock immediately after the purchase is less than 80% of the stockholder's
percentage of the total outstanding voting stock immediately before the
purchase; and
(iii) the stockholder's percentage of outstanding common stock
(whether voting or non-voting) immediately after the purchase is less than
80% of the stockholder's percentage of outstanding common stock (whether
voting or non-voting) immediately before the purchase.
The sale of Shares will be deemed to result in a "complete redemption" if
either (a) all the Shares actually and constructively owned by the stockholder
are sold pursuant to the Offer or (b) all the Shares actually owned by the
stockholder are sold pursuant to the Offer and the stockholder is eligible to
waive (and effectively waives) constructive ownership of any other Shares under
procedures described in Section 302 of the Code.
The sale of Shares may be "not essentially equivalent to a dividend" if the
sale results in a "meaningful reduction" of the stockholder's proportionate
interest in the Company. Unlike the other tests, which are precise and
mathematical, whether the sale will be considered as "not essentially equivalent
to a dividend" depends on the particular stockholder's facts and circumstances.
Any stockholder intending to rely upon the "not essentially equivalent to a
dividend" test should consult his or her own tax advisor as to its application
in the stockholder's particular situation.
In determining whether any of the above tests are satisfied, a stockholder
must take into account not only Shares which are actually owned by the
stockholder, but also Shares which are constructively owned by the stockholder
within the meaning of Section 318 of the Code.
Under Section 318, a stockholder is deemed to own Shares actually owned,
and in some cases constructively owned, by certain related individuals and
entities. A stockholder is also deemed to own Shares which the stockholder has
the right to acquire by exercise of an option or conversion or exchange of a
security. An individual stockholder is considered to own Shares owned directly
or indirectly by or for his spouse and his children, grandchildren and parents.
In addition, a stockholder is considered to own a proportionate number of Shares
owned by trusts or estates in which the stockholder has a beneficial interest,
by partnerships in which the stockholder is a partner and by corporations in
which the stockholder owns directly or indirectly 50% or more in value of the
stock. Similarly, shares directly or indirectly owned by beneficiaries of
estates or trusts, by partners of partnerships and, under certain circumstances,
by stockholders of corporations may be considered owned by these entities.
21
<PAGE> 22
If any of the above tests under Section 302 of the Code is satisfied, the
stockholder will recognize a gain (or loss) in the amount by which the purchase
price received by the stockholder pursuant to the Offer is greater (or less)
than the stockholder's tax basis in the Shares sold. The recognized gain or loss
will be capital gain or loss if the Shares are held as a capital asset, and will
be long-term capital gain or loss if the Shares have been held as a capital
asset for longer than one year.
If none of the above tests under Section 302 of the Code are satisfied, the
stockholder may be treated as having received a dividend in the amount of the
cash received for the Shares sold pursuant to the Offer, to the extent that the
Company has earnings and profits from the current year or prior years (or both).
In the case of a dividend, the stockholder's tax basis in the Shares sold will
not reduce the amount of the dividend.
Proration of the Offer, pursuant to which fewer than all of the Shares
tendered may be purchased by the Company, could adversely affect a stockholder's
ability to satisfy the above tests under Section 302 of the Code. Under certain
circumstances, an increase in the number of Shares purchased by the Company
could also adversely affect a stockholder's ability to satisfy these tests. As
described above, the Company may increase the total number of Shares accepted by
up to 2% of the outstanding Shares without prior notice and without extending
the tender period. See Section 1 for information regarding proration and
conditional tenders and Section 3 for information concerning withdrawals.
Stockholders are urged to consult their tax advisors with respect to the effects
of proration or an increase in the number of Shares purchased by the Company and
with respect to the advisability of making a conditional tender or a withdrawal
of Shares.
A stockholder will be considered as having received a payment for Shares
tendered pursuant to the Offer at the time a payment is received by the
Depositary as agent for the stockholder.
In general, any amount received by an individual stockholder and treated as
a dividend will be subject to the federal tax rate applicable to the
stockholder's other income (i.e., a maximum of 39.6% at the time this discussion
was prepared), without any reduction for the stockholder's basis in the Shares.
Amounts received in excess of the corporation's earnings and profits will be
applied to reduce the stockholder's basis in his shares to zero, and thereafter
be treated as capital gains. The amount paid to an individual stockholder that
is treated as long term capital gain will be subject to the rate applicable to
their long term capital gains (a maximum of 28% at the time this discussion was
prepared), while other gains will be subject to the same rates as ordinary
income. In either case, a stockholder's capital gains is computed by reducing
the gross amount of the gain by his basis in the Shares redeemed. Capital
losses, if any, can be used to offset other capital gains that a stockholder may
have, and up to $3,000 of ordinary income.
Stockholders that are corporations will be subject to tax at the
corporation's regular tax rate on its capital gains (currently, a maximum rate
of 35%). The amount of the corporate stockholder's capital gains will be
computed by reducing the gross amount of the gain by the corporation's basis in
the Shares redeemed.
In general, any income which is treated as a dividend and which is received
by a stockholder that is a domestic corporation will be subject to tax at the
corporation's regular tax rate, but it will be eligible for the appropriate
dividends-received deduction under Section 243 of the Code (generally a 70%
deduction for corporations that own less than 20% of the distributing
corporation). This deduction is subject to applicable limitations, including
those relating to "debt-financed portfolio stock" under Section 246A of the Code
and the 46-day holding period requirement of Section 246 of the Code.
Any amount treated as a dividend to a corporate stockholder may constitute
an "extraordinary dividend" subject to the provisions of Section 1059 of the
Code. Under Section 1059 of the Code, a corporate stockholder must reduce the
tax basis of its stock (but not below zero) by the portion of any "extraordinary
dividend" which is deducted under the dividends received deduction and, if such
portion exceeds the stockholder's tax basis for the stock, must treat any such
excess as additional gain on the subsequent sale or other disposition of such
shares. Except as may otherwise be provided in regulations in the case of any
redemption of stock which is not pro rata as to all stockholders, any amount
treated as a dividend under the rules of Section 302 is treated as an
extraordinary dividend regardless of the stockholder's holding period or the
amount of the dividend. Corporate stockholders should consult their own tax
advisors, particularly as to the application of Section 1059 to the Offer.
The Depositary will be required to withhold 31% of the gross proceeds paid
to a stockholder or other payee pursuant to the Offer unless either (a) the
stockholder provides the stockholder's taxpayer identification
22
<PAGE> 23
number and certifies under penalties of perjury that such number is correct; (b)
the stockholder certifies that he is awaiting a taxpayer identification number;
or (c) an exception applies under applicable law and regulations. Therefore,
unless such an exception exists and is proved in a manner satisfactory to the
Company and the Depositary, each tendering stockholder should complete and sign
the Substitute Form W-9 included in the Letter of Transmittal, so as to provide
the information and certification necessary to avoid backup withholding.
13. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS
The Company expressly reserves the right, at any time or from time to time
before the Expiration Date, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. There can be no assurance, however, that
the Company will exercise its right to extend the Offer. During any such
extension, all Shares previously tendered and not accepted for payment or
withdrawn will remain subject to the Offer and may be accepted for payment by
the Company.
The Company also expressly reserves the right, in its sole discretion, (i)
to delay payment for any Shares not theretofore paid for, or to terminate the
Offer and not to accept for payment or pay for any Shares not theretofore
accepted for payment upon the occurrence of any of the conditions specified in
Section 5, or (ii) at any time or from time to time to amend the Offer in any
respect, including increasing or decreasing the number of Shares the Company may
purchase pursuant to the Offer.
Any such extension, delay, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Company may choose to make any public announcement, except
as provided by applicable law (including Rule 13e-4(e)(2) of the Exchange Act),
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act, which require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend upon
the facts and circumstances, including the relative materiality of such terms or
information. The Company confirms that its reservation of the right to delay
payment for Shares which it has accepted for payment is limited by Rule
13e-4(f)(5) under the Exchange Act, which requires that an issuer pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer. If (i) the Company increases or
decreases the price to be paid for Shares, or the Company increases the number
of Shares being sought and such increase in the number of Shares being sought
exceeds 2% of the outstanding Shares or the Company decreases the number of
Shares being sought and (ii) the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that notice of such increase or decrease is first
published, sent or given, the Offer will be extended until the expiration of
such period of ten business days.
14. FEES AND EXPENSES
Montgomery Securities ("Montgomery") has been retained by the Company to
act as Dealer Manager in connection with the Offer. Montgomery will receive a
fee for its services as Dealer Manager of $.10 for each Share purchased pursuant
to the Offer up to 1,000,000 Shares and $.07 for each Share in excess of
1,000,000 Shares purchased pursuant to the Offer, but in any event not less than
a total of $70,000. The Company has also agreed to reimburse Montgomery for
certain reasonable out-of-pocket expenses incurred in connection with the Offer,
including reasonable fees and disbursements of counsel, and to indemnify
Montgomery against certain liabilities, including certain liabilities under the
Federal securities laws.
The Company has retained ChaseMellon Shareholder Services, L.L.C. to act as
Information Agent and Depositary in connection with the Offer. The Information
Agent may contact holders of Shares by mail, telephone, telex, telegraph and
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners.
Neither the Information Agent nor
23
<PAGE> 24
the Depositary will make solicitations or recommendations in connection with the
Offer. ChaseMellon Shareholder Services, L.L.C., as Information Agent and the
Depositary, will receive reasonable and customary compensation for both
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the Federal securities laws.
The Company will not pay any fees or commissions to any broker or dealer or
any other person (other than the Dealer Manager, the Information Agent and the
Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Company for reasonable and necessary costs and expenses incurred by them
in forwarding materials to their customers.
15. MISCELLANEOUS
The Company is subject to the information requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy statements
certain information, as of particular dates, concerning the Company's directors
and officers, their compensation, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company. Such material and other information may be
inspected at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; and
also should be available for inspection and copying at the following regional
offices of the Commission: Northeast Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048 and Midwest Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained by mail, upon payment of the Commission's
customary charges, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
material also should be available for inspection at the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company has
filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4
(the "Schedule 13E-4") which contains additional information with respect to the
Offer. The Schedule 13E-4, including the exhibits and any amendments thereto,
may be examined, and copies may be obtained, at the same places and in the same
manner as is set forth above with respect to information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
UNO RESTAURANT CORPORATION
JUNE 12, 1997
24
<PAGE> 25
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING SHARES
The Company and any individual director or executive officer of the Company
named below engaged in the transactions set forth below since April 16, 1997:
<TABLE>
<CAPTION>
NUMBER PRICE
NAME DATE OF SHARES PER SHARE NATURE OF TRANSACTION
- ------------------ -------- ---------- ---------- --------------------------------------------
<S> <C> <C> <C> <C>
Company........... 4/16/97 16,000 $ 6.3125 Treasury Stock Repurchase
Company........... 4/18/97 11,200 $ 6.375 Treasury Stock Repurchase
Company........... 5/28/97 1,075 $ 6.125 Individual Option Exercise/Stock Repurchase
Company........... 5/28/97 1,075 $ 6.125 Individual Option Exercise/Stock Repurchase
Company........... 5/28/97 2,149 $ 6.125 Individual Option Exercise/Stock Repurchase
Company........... 6/4/97 4,883 $ 6.125 Individual Option Exercise/Stock Repurchase
Company........... 6/6/97 430 $ 6.00 Individual Option Exercise/Stock Repurchase
Company........... 6/10/97 16,288 $ 6.00 Individual Option Exercise/Stock Repurchase
Company........... 6/10/97 1,173 $ 6.00 Individual Option Exercise/Stock Repurchase
</TABLE>
25
<PAGE> 26
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 27
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 28
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each tendering stockholder of the Company or his
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below:
The Depositary is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
BY MAIL: BY HAND:
Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway -- 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
BY FACSIMILE TRANSMISSION: BY OVERNIGHT COURIER:
201-329-8936 Reorganization Department
Confirm Receipt of Notice of Guaranteed Delivery: 120 Broadway -- 13th Floor
201-296-4209 (or) 201-296-4381 New York, NY 10271
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Dealer Manager
or the Information Agent at their respective address and telephone number set
forth below. Stockholders may also contact their broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
BY MAIL: BY HAND:
Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway -- 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
BY FACSIMILE TRANSMISSION: BY OVERNIGHT COURIER:
201-329-8936 Reorganization Department
Confirm Receipt of Notice of Guaranteed Delivery: 120 Broadway -- 13th Floor
201-296-4209 (or) 201-296-4381 New York, NY 10271
</TABLE>
For information call: 888-224-2745
The Dealer Manager is:
MONTGOMERY SECURITIES
<TABLE>
<S> <C>
BY MAIL: BY HAND:
Corporate Services Corporate Services
600 Montgomery Street, 12th Floor 600 Montgomery Street, 12th Floor
San Francisco, CA 94111 San Francisco, CA 94111
BY FACSIMILE TRANSMISSION: BY OVERNIGHT COURIER:
415-249-5052 Corporate Services
600 Montgomery Street, 12th Floor
San Francisco, CA 94111
</TABLE>
For information call: 888-221-2656
<PAGE> 1
Letter of Transmittal
To Tender Shares of Common Stock of
UNO RESTAURANT CORPORATION
Pursuant to the Offer to Purchase dated June 12, 1997
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand:
REORGANIZATION DEPARTMENT REORGANIZATION DEPARTMENT
P.O. BOX 3301 120 BROADWAY -- 13TH FLOOR
SOUTH HACKENSACK, NJ 07606 NEW YORK, NY 10271
By Facsimile Transmission: By Overnight Courier:
(201) 329-8936 REORGANIZATION DEPARTMENT
CONFIRM RECEIPT: 120 BROADWAY -- 13TH FLOOR
(201) 296-4209 (OR) (201) 296-4381 NEW YORK, NY 10271
</TABLE>
For information call: 888-224-2745
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- ---------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON (ATTACH ADDITIONAL SIGNED
CERTIFICATE(S) LIST IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF NUMBER OF
CERTIFICATE SHARES REPRESENTED SHARES
NUMBER(S)(1) BY CERTIFICATE(S) TENDERED(2)
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
======================================================
Total Shares
- ---------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be purchased in the event
of proration.(3) (Attach additional signed list if necessary.) See Instruction 12.
lst: 2nd: 3rd: 4th: 5th:
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by stockholders tendering Shares by book-entry
transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by each Share certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
(3) If you do not designate an order, then in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary. See Instruction 4.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID
DELIVERY. DELIVERIES TO BOOK-ENTRY TRANSFER FACILITIES WILL NOT CONSTITUTE
VALID DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be used only (i) if certificates for
Shares (as defined below) are to be forwarded with it, or (ii) if a tender of
Shares is to be made by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company ("DTC") (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase.
Stockholders who cannot deliver their certificates for Shares and all other
documents which this Letter of Transmittal requires to the Depositary by the
Expiration Date (as defined in the Offer to Purchase) must tender their Shares
using the guaranteed delivery procedure set forth in Section 2 of the Offer to
Purchase. See Instruction 2.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:
-------------------------------
Book-Entry Transfer Facility: DTC
Account No.:
-------------------------------------------------
Transaction Code No.:
----------------------------------------
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
--------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------
Name of Institution that Guaranteed Delivery:
-------------------
If delivery is by book-entry transfer:
Name of Tendering Institution:
----------------------------------
Account No. at DTC:
---------------------------------------------
Transaction Code No.:
-------------------------------------------
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Uno Restaurant Corporation, a Delaware
corporation (the "Company"), the above-described shares of the Company's Common
Stock, $0.01 par value per share (the "Common Stock" or the Shares"), at the
price per Share indicated in this Letter of Transmittal, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Company's
Offer to Purchase, dated June 12, 1997 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which as it may
be amended or supplemented from time to time, together with the Offer to
Purchase, constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to all Shares tendered hereby or orders the registration of such
Shares tendered by book-entry transfer that are purchased pursuant to the Offer
to or upon the order of the Company and hereby irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares, with full power of substitution (such
power of attorney being an irrevocable power coupled with an interest), to:
(i) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by the Book-Entry Transfer
Facility, together, in either such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of, the Company upon
receipt by the Depositary, as the undersigned's agent, of the Purchase
Price (as defined below) with respect to such Shares;
(ii) present certificates for such Shares for cancellation and
transfer on the books of the Company; and
(iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(i) the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby;
(ii) when and to the extent the Company accepts the Shares for
payment, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all security interests, liens, restrictions,
charges, encumbrances, conditional sales agreements, or other obligations
relating to the sale or transfer thereof, and the same will not be subject
to any adverse claim;
(iii) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(v) the undersigned has read and agrees to all of the terms of this
Offer.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the undersigned, and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The names and addresses of the registered owners should be printed, if they
are not already printed above, as they appear on the certificates representing
Shares tendered hereby. The certificates, the number of Shares that the
undersigned wishes to tender and the purchase price at which such Shares are
being tendered should be indicated in the appropriate boxes.
3
<PAGE> 4
The undersigned understands that the Company will determine a single per
Share price (not in excess of $7.50 nor less than $6.00 per Share) that it will
pay for the Shares validly tendered and not withdrawn pursuant to the Offer (the
"Purchase Price"), taking into account the number of Shares so tendered and the
prices specified by tendering stockholders. The undersigned understands that the
Company will select the Purchase Price that will allow it to buy up to 1,000,000
Shares pursuant to the Offer (or such greater or lesser number of Shares as the
Company may determine in accordance with the terms and conditions of the Offer),
and that all Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including its
proration provisions, and that the Company will return all other Shares,
including Shares tendered and not withdrawn at prices greater than the Purchase
Price, Shares not purchased because of proration and Shares not purchased
because they were conditionally tendered.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for Shares tendered, or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby. The undersigned
understands that certificate(s) for any Shares not tendered or not purchased
will be returned to the undersigned at the address indicated above, unless
otherwise indicated under the Special Payment Instructions or Special Delivery
Instructions below. The undersigned recognizes that the Company has no
obligation, pursuant to the Special Payment Instructions, to transfer any
certificate for Shares from the name of their registered owner if the Company
does not accept for payment any of the Shares represented by such certificates
or tendered by such book-entry transfer.
The undersigned understands that he may condition his tender of Shares upon
the acceptance by the Company of a designated number of Shares tendered hereby,
as described in Section 1 of the Offer to Purchase. Such a conditional tender
may be made by completing the box under the heading "Conditional Tender." If
such box is not completed, the tender will be deemed to be unconditional.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
4
<PAGE> 5
The check for the Purchase Price for such of the tendered Shares as are
purchased will be issued to the order of the undersigned and mailed to the
address indicated above unless otherwise indicated under the Special Payment
Instructions or the Special Delivery Instructions below.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED.
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
SHARES TENDERED AT PURCHASE PRICE DETERMINED
BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having the Company purchase
all shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE
PRICE BOXES BELOW, the undersigned hereby tenders Shares at, and is willing
to accept, the Purchase Price resulting from the Dutch Auction tender
process. This action could result in receiving a price per Share as low as
$6.00 or as high as $7.50.
**CHECK EITHER THE BOX ABOVE OR CHECK ONE BOX BELOW**
<TABLE>
<S> <C> <C> <C> <C>
[ ] $6.00 [ ] $6.375 [ ] $6.75 [ ] $7.125 [ ] $7.50
[ ] $6.125 [ ] $6.50 [ ] $6.875 [ ] $7.25
[ ] $6.25 [ ] $6.625 [ ] $7.00 [ ] $7.375
</TABLE>
IF PORTIONS OF SHARE HOLDINGS ARE BEING TENDERED AT DIFFERENT PRICES, USE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED (SEE INSTRUCTION 5).
- -------------------------------------------------------------------------------
[ ] CONDITIONAL TENDER
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of Shares tendered hereby,
all as described in the Offer to Purchase, particularly in Sections 1 and 2
thereof. Unless at least such minimum number of Shares is purchased by the
Company pursuant to the terms of the Offer, none of the Shares tendered hereby
will be purchased. It is the tendering stockholder's responsibility to calculate
such minimum number of Shares, and each stockholder is urged to consult his own
tax advisor. Unless this box has been completed and a minimum specified, the
tender will be deemed unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
________ Shares
- -------------------------------------------------------------------------------
5
<PAGE> 6
- -------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 4, 6 and 8)
To be completed ONLY if certificates for Shares not tendered or not purchased
and/or the check for the purchase price of Shares purchased is to be issued in
the name of someone other than the undersigned.
Issue: [ ] check; [ ] certificate(s) to:
Name:
------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------
------------------------------------------------------
(Include Zip Code)
------------------------------------------------------
(Tax Identification or Social Security No.)
(Complete Substitute Form W-9 below)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4, 6 and 8)
To be completed ONLY if certificates for Shares not tendered or not purchased
and/or the check for the purchase price of Shares purchased is to be mailed to
someone other than the undersigned, or to the undersigned at an address other
than that shown above.
Mail: [ ] check; [ ] certificate(s) to:
Name:
------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------
------------------------------------------------------
(Include Zip Code)
------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCKHOLDER(S) SIGN HERE
(See Instructions 1 and 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Dated: , 1997
--------------------------------------------------------------------
Name(s):
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
(Tax Identification or Social Security Number(s)):
------------------------------
(Must be signed by registered owner(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered owner(s) by certificate(s) and documents transmitted with this
Letter of Transmittal. If signature is by attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting in
a fiduciary or representative capacity, please set forth the full title. See
Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 6)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Title:
--------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
-------------------------------------------------
Dated: , 1997
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signature. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the Shares
(which term, for purposes of this document, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Shares) tendered with this Letter of Transmittal and payment and
delivery are to be made directly to such owner and such owner has not completed
either the box entitled "Special Payment Instructions" or "Special Delivery
Instructions" above, or (b) such Shares are tendered for the account of a
financial institution that is a member of the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the New York Stock
Exchange, Inc. Medallion Signature Program (each being referred to as an
"Eligible Institution"). In all other cases, an Eligible Institution must
guarantee all signatures on this Letter of Transmittal. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be used either if certificates are
to be forwarded with it to the Depositary or if tenders are to be made pursuant
to the procedure for tender by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of Shares tendered by a book-entry transfer,
together in each case with a properly completed and duly executed Letter of
Transmittal or facsimile thereof, and any other documents required by this
Letter of Transmittal, should be mailed or delivered to the Depositary at the
appropriate address set forth herein and must be received by the Depositary by
the Expiration Date (as defined in the Offer to Purchase).
Stockholders whose certificates are not immediately available or who cannot
deliver certificates for Shares and all other required documents to the
Depositary by the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedure for book-entry transfer, may tender their
Shares by or through any Eligible Institution by properly completing (including
the price at which the Shares are being tendered) and duly executing and
delivering a Notice of Guaranteed Delivery (or facsimile of it) and by otherwise
complying with the guaranteed delivery procedure set forth in Section 2 of the
Offer to Purchase. Pursuant to such procedure, the certificates for all
physically tendered Shares, or book-entry confirmation, as the case may be, as
well as a properly completed and duly executed Letter of Transmittal and all
other documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange trading days after receipt by
the Depositary of such Notice of Guaranteed Delivery, all as provided in Section
2 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be validly tendered pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery by the
Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
The Company will not purchase any fractional Shares, nor will it accept any
alternative, conditional or contingent tenders except as specifically permitted
by Sections 1 and 2 of the Offer to Purchase. All tendering stockholders, by
execution of this Letter of Transmittal (or a facsimile of it), waive any right
to receive any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered." In such case, if
any tendered Shares are purchased, a new certificate for the remainder of the
Shares evidenced by the old certificate(s) will be issued and sent to the
registered holder, unless otherwise specified in the "Special Payment
Instructions" or "Special Delivery Instructions" boxes on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by the certificate(s) listed
7
<PAGE> 8
and delivered to the Depositary are deemed to have been tendered unless
otherwise indicated.
5. Indication of Price at Which Shares Are Being Tendered. For Shares to be
properly tendered, the stockholder must check the box indicating the price per
Share at which he is tendering Shares under "Price (In Dollars) Per Share at
Which Shares Are Being Tendered" on this Letter of Transmittal. ONLY ONE BOX MAY
BE CHECKED. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED, THERE IS
NO PROPER TENDER OF SHARES. A stockholder wishing to tender portions of his
Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he wishes to tender each such portion of his
Shares. The same Shares cannot be tendered (unless previously properly withdrawn
as provided in Section 3 of the Offer to Purchase) at more than one price.
Stockholders wishing to maximize the possibility that their Shares will be
purchased at the relevant Purchase Price may check the box on the Letter of
Transmittal marked "Shares Tendered at Purchase Price Determined by Dutch
Auction." Checking this box may result in a Purchase Price for the Shares so
tendered at the minimum price of $6.00.
6. Signatures On Letter of Transmittal, Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered owner(s)
of the Shares tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the certificate without any
change whatsoever.
(b) If the Shares are registered in the names or two or more joint
owners, each such owner must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles of it) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
owner(s) of the Shares listed and tendered hereby, no endorsements of
certificate(s) representing such Shares or separate stock powers are
required unless payment is to be made, or the certificates for Shares not
tendered or not purchased are to be issued, to a person other than the
registered owner(s). Signature(s) on such certificates or stock powers must
be guaranteed by an Eligible Institution. If this Letter of Transmittal is
signed by a person other than the registered owner of the certificate(s)
listed, however, the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of
the registered owner(s) appear(s) on the certificate, and signatures on
such certificate(s) or stock power(s) must be guaranteed by an Eligible
Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers
are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing
and must submit proper evidence satisfactory to the Company of their
authority so to act.
7. Stock Transfer Taxes. Except as provided in this Instruction, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay or cause to be paid any stock transfer taxes
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however:
(a) payment of the Purchase Price is to be made to any person(s) other
than the registered owner(s);
(b) Shares not tendered or not accepted for purchase (in the
circumstances permitted in the Offer) are to be registered in the name of
any person(s) other than the registered owner(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from the Purchase Price the amount of any stock
transfer taxes (whether imposed on the registered owner or such other person)
payable on account of the transfer to such person unless satisfactory evidence
of the payment of such taxes, or an exemption from them, is submitted.
8. Special Payment and Delivery Instructions. If certificates for Shares
not tendered or not purchased and/or checks are to be issued in the name of a
person other than the signer of the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the signer of
the Letter of Transmittal or to the signer at a different address,
8
<PAGE> 9
the captioned boxes "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed.
9. Irregularities. The Company will determine, in its sole discretion, all
questions as to the validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares and its determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders determined by it not to be in proper form or the
acceptance of or payment for which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
particular Shares, and the Company's interpretation of the terms of the Offer
(including these instructions) will be final and binding on all parties. No
tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Dealer Manager, the
Depositary, the Information Agent nor any other person is or will be obligated
to give notice of defects or irregularities in tenders, nor shall any of them
incur any liability for failure to give any such notice.
10. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent or the Dealer Manager at
their addresses and telephone numbers set forth at the end of the Letter of
Transmittal or from your local broker, dealer, commercial bank or trust company.
11. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct taxpayer identification number ("TIN") on
Substitute Form W-9, which is provided under "Important Tax Information" below.
Failure to provide the information on the form may subject the tendering
stockholder to 31% federal income tax withholding on the payments made to the
stockholder or other payee with respect to Shares purchased pursuant to the
Offer. The box in Part 2 of the form may be checked if the tendering stockholder
has not been issued a TIN and has applied for a TIN or intends to apply for a
TIN in the near future. If the box in Part 2 of the form is checked and the
Depositary is not provided with a TIN within sixty (60) days, the Depositary
will withhold 31% on all such payments thereafter until a TIN is provided to the
Depositary.
12. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, Stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
affect whether any capital gain or loss recognized on the Shares purchased is
long-term or short-term (depending on the holding period for the Shares
purchased) and the amount of gain or loss recognized for federal income tax
purposes. See Sections 1 and 12 of the Offer to Purchase.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT
(TOGETHER WITH CERTIFICATES FOR SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITORY ON OR BEFORE THE EXPIRATION DATE.
9
<PAGE> 10
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If the Depositary is not
provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depository is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on a payment made to a stockholder or other
payee with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of the stockholder's correct TIN by completing
the form below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
10
<PAGE> 11
PAYOR'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN AND CERTIFY BY SIGNING ----------------------------------
FORM W-9 AND DATING BELOW. Social Security Number
(SEE INSTRUCTION 12) OR
----------------------------------
Employer Identification Number
---------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- For Payee exempt from backup withholding: Exempt [ ]
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION NUMBER
("TIN")
---------------------------------------------------------------------------------------------
PART 3 -- Awaiting TIN [ ]
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATIONS -- Under penalties of perjury, I certify that: (1) the number
shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), (2) I am not subject to backup
withholding because (a) I am exempt from backup withholding; or (b) I have not
been notified by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of failure to report all interest or dividends
or (c) the IRS has notified me that I am no longer subject to backup
withholding, and (3) all other information provided on this form is true,
correct and complete. [ ]
- --------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out Item (2) in Part 2 above if
you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to
backup withholding, you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out Item
(2). If you are exempt from backup withholding, check the box in Part 2 above.
SIGNATURE
----------------------------------- DATE
-----------------------
Please fill in your name and address below.
------------------------------------------------------------------------------
Name
------------------------------------------------------------------------------
Address (number and street)
------------------------------------------------------------------------------
City, State and Zip Code
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECK THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a TIN to the appropriate IRS Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a taxpayer identification
number within sixty (60) days, 31% of all reportable payments made to me
thereafter will be withheld until I provide a number.
<TABLE>
<S> <C>
Signature Date
------------------------------------------ ---------------------
</TABLE>
- --------------------------------------------------------------------------------
The Information Agent is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
The Dealer Manager is:
MONTGOMERY SECURITIES
11
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security Numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer Identification Numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the type
of number to give the payer.
- ---------------------------------------------------------------
---------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(A)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(A)
4. Custodian account of a minor The minor(B)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(A)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(C)
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor- trustee(A)
savings trust account
(grantor is also trustee) The actual owner(A)
b. So-called trust account
that is not a legal or
valid trust under State
law
8. Sole proprietorship account The owner(D)
9. A valid trust, estate, or Legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(E)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
State or local government,
school district, or prison)
that receives agricultural
program payments
</TABLE>
- ---------------------------------------------------------------
---------------------------------------------------------------
(A) List first and circle the name of the person whose number you furnish.
(B) Circle the minor's name and furnish the minor's social security number.
(C) Circle the ward, minor's or incompetent person's name and furnish such
person's social security number.
(D) Show the name of the owner.
(E) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
1. Payees specifically exempted from backup withholding on ALL payments include
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under Section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof, a State, the
District of Columbia, a possession of the United States, or any subdivision or
instrumentality thereof. A foreign government, a political subdivision of a
foreign government, or any agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
2. Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1141.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
3. Payments of interest not generally subject to backup withholding including
the following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresi-
dent aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6045, and 6050A.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includable payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
UNO RESTAURANT CORPORATION
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to tender Shares
pursuant to the Offer (as defined below) if certificates for shares of Common
Stock, $0.01 par value per share (the "Common Stock" or the "Shares"), of the
Company, are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
documents required by the Letter of Transmittal to reach the Depositary by the
Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form
may be delivered by hand or transmitted by telegraph, telex, facsimile
transmission or letter to the Depositary. See Section 2 of the Offer to
Purchase.
TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C>
By Mail: By Hand:
REORGANIZATION DEPARTMENT REORGANIZATION DEPARTMENT
P.O. BOX 3301 120 BROADWAY -- 13TH FLOOR
SOUTH HACKENSACK, NJ 07606 NEW YORK, NY 10271
By Facsimile Transmission: By Overnight Courier:
(201) 329-8936 REORGANIZATION DEPARTMENT
CONFIRM RECEIPT OF NOTICE 120 BROADWAY -- 13TH FLOOR
OF GUARANTEED DELIVERY: NEW YORK, NY 10271
(201) 296-4209 (OR) (201) 296-4381
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID
DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Uno Restaurant Corporation, a Delaware
corporation, at the price per Share indicated below, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated June 12, 1997, (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares indicated below pursuant to the guaranteed
delivery procedure set forth in Section 2 of the Offer to Purchase.
- --------------------------------------------------------------------------------
Name(s) of Record Holder(s):
-----------------------------------------------------
-----------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
-------------------------------------------------------------------------
Area Code and Tel. No.:
----------------------------------------------------------
Signature(s):
---------------------------------------------------------------------
(SIGN HERE)
Account No.:
---------------------------------------------------------------------
Number of Shares:
----------------------------------------------------------------
Certificate Nos. (if available):
------------------------------------------------------
If Shares will be tendered by book-entry transfer, check the box
[ ] The Depository Trust Company
- --------------------------------------------------------------------------------
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS
CHECKED, THERE IS NO PROPER TENDER OF SHARES
- --------------------------------------------------------------------------------
SHARES TENDERED AT PURCHASE PRICE DETERMINED BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having the Company purchase
all the shares the undersigned is tendering (subject to the possibility of
proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE
PRICE BOXES BELOW, the undersigned hereby tenders Shares at, and is willing
to accept, the Purchase Price resulting from the Dutch Auction tender
process. This action could result in receiving a price per Share as low as
$6.00 or as high as $7.50.
***CHECK EITHER THE BOX ABOVE OR ONE BELOW***
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[ ] $6.00 [ ] $6.25 [ ] $6.50 [ ] $6.75 [ ] $7.00 [ ] $7.25 [ ] $7.50
[ ] $6.125 [ ] $6.375 [ ] $6.625 [ ] $6.875 [ ] $7.125 [ ] $7.375
</TABLE>
- --------------------------------------------------------------------------------
[ ] CONDITIONAL TENDER. UNLESS THIS BOX HAS BEEN COMPLETED AND A MINIMUM
SPECIFIED, THE TENDER WILL BE DEEMED UNCONDITIONAL
Minimum number of Shares that must be purchased, if any are
purchased: __________ Shares
(GUARANTEE ON PAGE 4)
3
<PAGE> 4
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., or a commercial bank
or trust company having an office or correspondent in the United States,
guarantees (a) that the above-named person(s) has a "net long position" in the
Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, and (b) the delivery to the
Depository, at one of its addresses set forth above, of the certificate(s)
representing the Shares tendered hereby, in proper form for transfer, or to
deliver to the Depositary such Shares pursuant to the procedure for book-entry
transfer, in either case with delivery of a properly completed and duly executed
Letter of Transmittal (or manually-signed facsimile thereof) and any other
required documents, all within three (3) New York Stock Exchange trading days
after the date hereof.
<TABLE>
<S> <C>
- ---------------------------------------- ------------------------------------------------
Name of Firm Authorized Signature
- ---------------------------------------- ------------------------------------------------
Address Title
- ---------------------------------------- ------------------------------------------------
Zip Code Name
- ---------------------------------------- ------------------------------------------------
Area Code and Tel. No. Date
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS FORM
SHARE CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL
The Institution which completes this form must communicate the guarantee to
the Depositary and must deliver the Letter of Transmittal and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Institution.
4
<PAGE> 1
MONTGOMERY SECURITIES
600 MONTGOMERY STREET
SAN FRANCISCO, CA 94111
To Brokers, Dealers, Commercial Banks,
Trust Companies and
Other Nominees:
We have been appointed by Uno Restaurant Corporation, a Delaware
corporation (the "Company"), to act as Dealer Manager in connection with its
offer to purchase for cash up to 1,000,000 shares of its Common Stock, $0.01 par
value per share (the "Common Stock"), (the "Common Stock" or the "Shares") at a
price (in multiples of $0.125), not in excess of $7.50 nor less than $6.00 per
Share, specified by the tendering stockholders, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated June 12, 1997, and in
the related Letter of Transmittal (which together constitute the "Offer"), and
we are enclosing herewith the material listed below relating to the Offer. The
Offer is not conditioned upon any minimum number of Shares being tendered. The
Offer is, however, subject to certain conditions. See Section 5 of the Offer to
Purchase.
Stockholders are invited to tender Shares at prices (not in excess of $7.50
nor less than $6.00 per Share), specified by such stockholders, upon the terms
and subject to the conditions of the Offer. The Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $7.50 nor less than $6.00 per Share) that it will pay for the
Shares properly tendered pursuant to the Offer (the "Purchase Price"), taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,000,000 Shares (or such lesser number of Shares as are
properly tendered at or below the Purchase Price) pursuant to the Offer or such
lesser number of Shares as may be necessary in the discretion of the Company to
maintain at least 300 record holders of Shares after the completion of the
purchase by the Company pursuant to the Offer. See Section 7 of the Offer to
Purchase. All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. The Company will return all other Shares, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration or conditional tenders. No preference will be
given to Shares tendered by any stockholder owning beneficially fewer than 100
Shares in the aggregate. See Section 1 of the Offer to Purchase.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. In connection with the Offer, enclosed for your
information and for forwarding to your clients for whom you hold Shares
registered in your name or in the name of your nominee, are copies of the
following documents:
1. Offer to Purchase, dated June 12, 1997;
2. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 Guidelines);
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer; and
5. Letter dated June 12, 1997, from Aaron D. Spencer, Chairman of the
Company and Craig S. Miller, Chief Executive Officer of the Company, to the
Company's stockholders.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
<PAGE> 2
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any other
persons for soliciting tenders of Shares pursuant to the Offer. The Company
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to the
beneficial owners of Shares held by you as a nominee or in a fiduciary capacity.
The Company will pay or cause to be paid all stock transfer taxes, if any, on
its purchase of Shares, except as otherwise provided in Instruction 7 of the
Letter of Transmittal.
As described in the Offer to Purchase, if more than 1,000,000 Shares (or
such lesser number of Shares as may be necessary in the discretion of the
Company to maintain at least 300 record holders of Shares after the completion
of the purchase by the Company pursuant to the Offer) have been properly
tendered at or below the Purchase Price and not withdrawn prior to the
Expiration Date, as defined in Section 1 of the Offer to Purchase, the Company
will accept Shares for purchase in the following order of priority: (i) Shares
unconditionally tendered at or below the Purchase Price by the Expiration Date
on a pro rata basis (with adjustments to avoid the purchase of fractional
Shares) and (ii) Shares conditionally tendered at or below the Purchase Price by
the Expiration Date selected by lot.
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Dealer Manager,
Montgomery Securities, telephone 1-888-221-2656 or to the Information Agent,
ChaseMellon Shareholder Services, L.L.C., telephone 888-224-2745.
Very truly yours,
Montgomery Securities
- --------------------------------------------------------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED HEREIN.
- --------------------------------------------------------------------------------
<PAGE> 1
UNO RESTAURANT CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
1,000,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF
$7.50 NOR LESS THAN $6.00 PER SHARE
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated June 12,
1997, and the related Letter of Transmittal (which together constitute the
"Offer"), in connection with the Offer by Uno Restaurant Corporation, a Delaware
corporation (the "Company"), to purchase for cash up to 1,000,000 Shares of its
Common Stock, $0.01 par value per share (the "Common Stock" or the "Shares") at
a price (in multiples of $0.125), not in excess of $7.50 nor less than $6.00 per
Share, and on the terms and subject to the conditions of the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not in excess of $7.50 nor less than
$6.00 per Share) that it will pay for the Shares properly tendered pursuant to
the Offer (the "Purchase Price") taking into account the number of Shares so
tendered and the prices specified by tendering stockholders. The Company will
select the lowest Purchase Price that will allow it to buy 1,000,000 Shares (or
such lesser number of Shares as are properly tendered at or below the Purchase
Price) pursuant to the Offer or such lesser number of Shares as may be necessary
in the discretion of the Company to maintain at least 300 record holders of
Shares after the completion of the purchase by the Company pursuant to the
Offer. All Shares properly tendered at prices at or below the Purchase Price and
not withdrawn will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. The Company will return all other Shares, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration or conditional tenders. See Section 1 of the
Offer to Purchase.
We are the owner of record of Shares held for your account. As such, a
tender of such Shares can be made only by us as the holders of record, and then
only pursuant to your instructions. We are sending you the Letter of Transmittal
for your information only; you cannot use it to tender Shares we hold for your
account.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices (in multiples of $0.125) not in
excess of $7.50 nor less than $6.00 per Share, as indicated in the attached
instruction form.
2. The Offer is not conditioned upon any minimum number of Shares
being tendered. The Offer is, however, subject to certain conditions. See
Section 5 of the Offer to Purchase.
3. The Offer, proration period and withdrawal rights will expire at
5:00 p.m., New York City time, on July 21, 1997, unless the Company extends
the Offer.
4. The Offer is for up to 1,000,000 Shares, constituting approximately
8.2% of the Shares outstanding as of June 11, 1997, or such lesser number
of Shares as may be necessary in the discretion of the Company to maintain
at least 300 record holders of Shares after the completion of the purchase
by the Company pursuant to the Offer.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
<PAGE> 2
6. If you are the beneficial owner of Shares that you do not want to
be subject to proration, if any, if purchased pursuant to the Offer, you
may direct us to tender such Shares on your behalf subject to the condition
that at least a designated minimum or none of such Shares be purchased, by
completing the box captioned "Conditional Tenders." It is the beneficial
owner's responsibility to determine the minimum number of Shares to be
tendered. BENEFICIAL OWNERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE EFFECTS OF PRORATION OF THE OFFER AND THE ADVISABILITY OF DIRECTING
US TO MAKE A CONDITIONAL OFFER.
7. Please instruct us clearly if you wish to tender some Shares at one
price and other Shares at another price. We must submit separate Letters of
Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the attached instruction form.
An envelope to return your instructions to us is enclosed. If you authorize us
to tender your Shares, we will tender all such Shares unless you specify
otherwise on the attached instruction form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MONDAY, JULY 21, 1997, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if by the Expiration
Date a greater number of Shares are properly tendered at or below the Purchase
Price than the Company will accept for purchase, the Company will accept Shares
for purchase at the Purchase Price in the following order of priority:
(a) first, all Shares properly and unconditionally tendered at or
below the Purchase Price by the Expiration Date on a pro rata basis (with
adjustments to avoid purchases of fractional Shares); and
(b) second, after purchase of all of the above Shares, Shares
conditionally tendered at or below the Purchase Price by the Expiration
Date selected by lot as is more fully described in the Offer to Purchase.
THE COMPANY IS NOT MAKING THE OFFER TO, NOR WILL THE COMPANY ACCEPT TENDERS
FROM OR ON BEHALF OF, OWNERS OF SHARES IN ANY JURISDICTION IN WHICH THE OFFER OR
ITS ACCEPTANCE WOULD VIOLATE THE SECURITIES, BLUE SKY OR OTHER LAWS OF SUCH
JURISDICTION. IN ANY JURISDICTION THE SECURITIES OR BLUE SKY LAWS OF WHICH
REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING
MADE ON THE COMPANY'S BEHALF BY A REGISTERED BROKER OR DEALER LICENSED UNDER THE
LAWS OF SUCH JURISDICTION.
2
<PAGE> 3
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF
NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHARES TENDERED AT PURCHASE PRICE DETERMINED BY DUTCH AUCTION
[ ] The undersigned wants to maximize the chance of having the Company
purchase all the Shares the undersigned is tendering, subject to the possibility
of pro ration. Accordingly, by checking this box INSTEAD OF ONE OF
THE PRICE BOXES BELOW, the undersigned hereby tenders Shares at,
and is willing to accept, the Purchase Price resulting from the Dutch Auction
tender process. This action could result in receiving a price per Share
as low as $6.00 or as high as $7.50.
</TABLE>
**CHECK EITHER THE BOX ABOVE OR CHECK ONE BOX BELOW**
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER
<TABLE>
<S> <C> <C> <C> <C>
[ ] $6.00 [ ] $6.375 [ ] $6.75 [ ] $7.125 [ ] $7.50
[ ] $6.125 [ ] $6.50 [ ] $6.875 [ ] $7.25
[ ] $6.25 [ ] $6.625 [ ] $7.00 [ ] $7.375
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CONDITIONAL TENDER
Unless this box has been completed and a minimum specified, the tender will be
deemed unconditional (See Sections 1 and 2 of the Offer to Purchase).
Minimum number of Shares that must be purchased, if any are purchased:
Shares
- ------------------
- --------------------------------------------------------------------------------
SIGNATURE BOX
Signature(s):
-----------------------------------------------------------------
Dated:
------------------------------------------------------------------------
Name(s) and Address(es) (Please Print):
---------------------------------------
- ------------------------------------------------------------------------------
Area Code and Telephone No.:
- ------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.:
-------------------------------
(Instructions on Page 4)
3
<PAGE> 4
Instructions
With Respect to Offer to Purchase for Cash
Up to 1,000,000 Shares of Common Stock
of
UNO RESTAURANT CORPORATION
At a Purchase Price Not In Excess Of
$7.50 Nor Less Than $6.00 Per Share
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated June 12, 1997, and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by Uno
Restaurant Corporation, a Delaware corporation (the "Company"), to purchase for
cash up to 1,000,000 Shares of its Common Stock, $0.01 par value per share (the
"Common Stock" or the "Shares") at a price (in multiples of $0.125), not in
excess of $7.50 nor less than $6.00 per Share, on the terms and subject to the
conditions of the Offer.
The Company will determine a single per Share price (not in excess of $7.50
nor less than $6.00 per Share) that it will pay for the Shares properly tendered
pursuant to the Offer (the "Purchase Price"), taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price that will allow it to buy
1,000,000 Shares (or such lesser number of Shares as are properly tendered at or
below the Purchase Price) pursuant to the Offer or such lesser number of Shares
as may be necessary in the discretion of the Company to maintain at least 300
record holders of Shares after the completion of the purchase by the Company
pursuant to the Offer.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below or, if no number is indicated, all Shares for the
account of the undersigned, at the price per Share indicated below, and subject
to the condition, if any, indicated in the box marked "Conditional Tender,"
above, upon the terms of the Offer. The Company will return Shares tendered at
prices greater than the Purchase Price, Shares not purchased because of
proration and Shares not purchased because they were conditionally tendered.
Aggregate number of Shares to be tendered by you for us:***
--------------------
- ---------------
*** Unless otherwise indicated, it will be assumed that all of the Shares held
for the account of the undersigned are to be tendered.
4
<PAGE> 1
[PIZZERIA UNO LOGO] Uno Restaurant Corporation, 100 Charles Park Road, West
Roxbury, MA 02132
617-323-9200
June 12, 1997
Dear Stockholder:
Uno Restaurant Corporation is offering to purchase up to 1,000,000 shares
of its Common Stock, $.01 par value per Share (the "Common Stock" or the
"Shares"), from its stockholders at a price not in excess of $7.50 nor less than
$6.00 per Share (the "Offer"). The Offer represents approximately 8.2% of the
currently outstanding Shares. The Offer and withdrawal rights will expire at
5:00 p.m., New York City time, on July 21, 1997, unless the Offer is extended.
The Board of Directors has concluded that the purchase of Shares pursuant
to the Offer is a prudent use of the Company's financial resources. The Offer
provides stockholders who are considering the sale of all or a portion of their
Shares the opportunity to determine the price at which they are willing to sell
their Shares and, if any such Shares are purchased pursuant to the Offer, to
sell such Shares for cash at a price equal to or in excess of current market
prices at the date the Offer was announced without the usual transaction costs
associated with market sales.
The Company is conducting the Offer through a procedure commonly referred
to as a "dutch auction," which allows you to select the price, within the range
of $6.00 to $7.50 per Share, at which you are willing to sell your Shares to the
Company. The Company will select the lowest purchase price that will allow it to
purchase up to 1,000,000 Shares and that same price will be paid for all Shares
purchased in the Offer.
All Shares properly tendered at or below the purchase price so selected
will be purchased at such purchase price in cash, subject to the terms and
conditions of the Offer, including proration in the event more Shares are
tendered at or below such purchase price than will be purchased by the Company.
All Shares not purchased pursuant to the Offer, including Shares tendered at
prices in excess of the purchase price and Shares not purchased because of
proration or conditional tenders, will be returned at the Company's expense.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES, AND, IF SO, HOW
MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
<PAGE> 2
The Offer is explained in greater detail in the enclosed Offer to Purchase
and Letter of Transmittal. We encourage you to read these documents carefully
before making any decision with respect to the Offer. If you have any questions
or requests for assistance or for additional copies of the Offer to Purchase and
the Letter of Transmittal, you may call the Information Agent for the Offer,
ChaseMellon Shareholder Services, L.L.C. at 888-224-2745.
Very truly yours,
/s/ Aaron D. Spencer
--------------------------------------
Aaron D. Spencer, Chairman
/s/ Craig S. Miller
--------------------------------------
Craig S. Miller, Chief Executive
Officer
<PAGE> 1
FORM OF PRESS RELEASE
UNO RESTAURANT CORPORATION
UNO RESTAURANT CORPORATION TO COMMENCE TENDER OFFER FOR UP TO 1,000,000 SHARES
OF ITS COMMON STOCK
BOSTON, MASSACHUSETTS -- JUNE 12, 1997 -- Uno Restaurant Corporation
(NYSE:UNO) (the "Company") announced today that it will commence a "dutch
auction" tender offer for up to 1,000,000 shares of its common stock,
representing approximately 8.2% of its currently outstanding shares. Under the
terms of the offer, the Company will invite stockholders to tender their shares
at prices specified by the tendering stockholders within a range of $6.00 to
$7.50 per share.
The tender offer will begin on June 12, 1997, and will expire at 5:00 p.m.,
New York City time, on July 21, 1997, unless extended by the Company.
Based upon the number of shares tendered and the prices specified by the
tendering stockholders, the Company will select a single per share purchase
price within the $6.00 to $7.50 price range to be paid for shares which have
been tendered at or below the selected price. If the offer is over-subscribed,
shares will be purchased first from shares unconditionally tendered at or below
the purchase price on a pro rata basis and then from shares unconditionally
tendered at or below the purchase price selected by lot. The Company reserves
the right to purchase more than 1,000,000 shares, and under certain
circumstances, less than 1,000,000 shares. The tender offer is not conditioned
on any minimum number of shares being tendered.
The Board of Directors of the Company is not making any recommendation to
stockholders as to whether they should tender any shares pursuant to the offer.
Montgomery Securities is acting as Dealer-Manager and ChaseMellon Shareholder
Services, L.L.C. is acting as Information Agent and Depositary in connection
with the tender offer.
Uno Restaurant Corporation currently operates 90 "Pizzeria Uno . . .
Chicago Bar & Grill" casual dining, full-service restaurants primarily from New
England to Virginia, as well as Florida, Chicago and Denver, and franchises 66
units in 19 states, the District of Columbia and Puerto Rico. The Company also
operates a consumer foods division, which supplies American Airlines, movie
theaters, hotels and hundreds of supermarkets in the Northeast with frozen
and refrigerated Pizzeria Uno brand products, as well as certain private label
products.
* * * * * *
For more information, contact: Bob Brown, Chief Financial Officer, Phone: (617)
323-9200 (ext. 221)
<PAGE> 1
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of December 9, 1994
By and among
UNO RESTAURANTS, INC.,
as Borrower
UNO FOODS INC.
PIZZERIA UNO CORPORATION
URC HOLDING COMPANY, INC. and
UNO RESTAURANT CORPORATION, as Guarantors
and
FLEET BANK OF MASSACHUSETTS, N.A., as Agent
and the Banks party hereto
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS..............................................................1
Section 1.1. Definitions..............................................................................1
Section 1.2. Accounting Terms........................................................................12
ARTICLE 2. THE CREDIT...................................................................................12
Section 2.1. The Loans...............................................................................12
Section 2.2. Notice and Manner of Borrowing or Conversion of Loans...................................13
Section 2.3. Interest on Advances....................................................................14
Section 2.4. Additional Payments.....................................................................15
Section 2.5. Computation of Interest, Etc............................................................15
Section 2.6. Duration of Interest Periods............................................................15
Section 2.7. Commitment Fee..........................................................................15
Section 2.8. Reduction and Termination by the Borrower...............................................16
Section 2.9. Increased Costs Etc.....................................................................16
Section 2.10. Ability of LIBOR Pricing Option; Changed Circumstances.................................17
Section 2.11. Use of Proceeds........................................................................18
Section 2.12. Guaranties.............................................................................18
ARTICLE 3. CONDITIONS OF THE ADVANCES...................................................................21
Section 3.1. Conditions to First Advance.............................................................21
Section 3.2. Conditions to All Advances..............................................................22
ARTICLE 4. PAYMENT AND REPAYMENT........................................................................22
Section 4.1. Mandatory Prepayment....................................................................22
Section 4.2. Voluntary Prepayment....................................................................22
Section 4.3. Payment and Interest Cutoff.............................................................23
Section 4.4. Payment or Other Actions on Non-Business Days...........................................23
Section 4.5. Method and Timing of Payments...........................................................23
Section 4.6. Sharing of Payments, Etc................................................................23
Section 4.7. Payments Not at End of Interest Period..................................................24
ARTICLE 5. REPRESENTATIONS AND WARRANTIES...............................................................25
Section 5.1. Corporate Existence, Good Standing, Etc.................................................25
Section 5.2. Principal Place of Business; Location of Records........................................25
Section 5.3. Qualification...........................................................................25
Section 5.4. Subsidiaries............................................................................25
Section 5.5. Corporate Power.........................................................................25
Section 5.6. Valid and Binding Obligations...........................................................26
Section 5.7. Other Agreements........................................................................26
Section 5.8. Payment of Taxes........................................................................27
Section 5.9. Financial Statements....................................................................27
Section 5.10. Other Materials Furnished..............................................................27
Section 5.11. Stock..................................................................................27
Section 5.12. Changes in Condition...................................................................28
Section 5.13. Assets, Licenses, Etc..................................................................28
Section 5.14. Litigation.............................................................................28
Section 5.15. Pension Plans..........................................................................29
Section 5.16. Outstanding Indebtedness...............................................................29
Section 5.17. Environmental Matters..................................................................29
Section 5.18. Foreign Trade Regulations..............................................................30
Section 5.19. Governmental Regulations...............................................................30
Section 5.20. Margin Stock...........................................................................30
ARTICLE 6. REPORTS......................................................................................31
Section 6.1. Interim Financial Statements and Reports................................................31
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 6.2. Annual Financial Statements.............................................................31
Section 6.3. Notice of Defaults......................................................................31
Section 6.4. Notice of Litigation....................................................................32
Section 6.5. Communications with Others..............................................................32
Section 6.6. Reportable Events.......................................................................32
Section 6.7. Annual Pension Reports..................................................................32
Section 6.8. Reports to other Creditors..............................................................33
Section 6.9. Management Letters......................................................................33
Section 6.10. Environmental Reports..................................................................33
Section 6.11. Senior Note Purchase Agreement.........................................................33
Section 6.12. Annual Projections.....................................................................34
Section 6.13. Miscellaneous..........................................................................34
FINANCIAL RESTRICTIONS..................................................................................34
Section 7.1. Consolidated Tangible Net Worth.........................................................34
Section 7.2. Cash Flow Coverage Ratio................................................................34
Section 7.3. Ratio of Consolidated Liabilities to Consolidated Tangible Net Worth....................35
Section 7.4. Profitability...........................................................................35
Section 7.5. Operating Cash Flow.....................................................................35
Section 7.6. Capital Expenditures....................................................................36
Section 7.7. Consolidated Leverage Ratio.............................................................36
Section 7.8. Consolidated Adjusted EBITDA............................................................36
ARTICLE 8. AFFIRMATIVE COVENANTS........................................................................37
Section 8.1. Existence and Business..................................................................37
Section 8.2. Taxes and Other Obligations.............................................................38
Section 8.3. Maintenance of Properties and Leases....................................................38
Section 8.4. Insurance...............................................................................38
Section 8.5. Records, Accounts and Places of Business................................................38
Section 8.6. Inspection..............................................................................39
Section 8.7. Change in Officers or Directors.........................................................39
Section 8.8. Maintenance of Accounts.................................................................39
Section 8.9. Access to Independent Public Accountants................................................39
ARTICLE 9. NEGATIVE COVENANTS...........................................................................39
Section 9.1. Restrictions on Indebtedness............................................................39
Section 9.2. Restriction on Liens....................................................................40
Section 9.3. Investments.............................................................................41
Section 9.4. Dispositions of Assets..................................................................42
Section 9.5. Assumptions, Guaranties, Etc. of Indebtedness of Other Persons..........................42
Section 9.6. Mergers, Etc............................................................................43
Section 9.7. Pension Reform Act......................................................................43
Section 9.8. Distributions...........................................................................43
Section 9.9. Sale and Leaseback......................................................................44
Section 9.10. Franchise Agreements...................................................................44
Section 9.11. Capital Structure......................................................................44
Section 9.12. Transactions with Affiliates...........................................................44
Section 9.13. New Subsidiaries.......................................................................45
Section 9.14. New Restaurants........................................................................45
ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES..............................................................45
Section 10.1. Events of Default......................................................................45
Section 10.2. Remedies...............................................................................47
Section 10.3. Setoff.................................................................................47
Section 10.4. Application of Proceeds................................................................47
ARTICLE 11. WAIVERS; CONSENTS; AMENDMENTS; REMEDIES.....................................................48
Section 11.1. Actions by Lenders.....................................................................48
</TABLE>
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<TABLE>
<S> <C>
Section 11.2. Actions by Borrower....................................................................49
ARTICLE 12. SUCCESSORS AND ASSIGNS......................................................................49
Section 12.1. General................................................................................49
Section 12.2. Assignments............................................................................49
Section 12.3. Participations.........................................................................50
ARTICLE 13. THE AGENT...................................................................................51
Section 13.1. Authorization and Action...............................................................51
Section 13.2. Agent's Reliance, Etc..................................................................52
Section 13.3. Fleet and Affiliates...................................................................52
Section 13.4. Bank Credit Decision...................................................................53
Section 13.5. Indemnification of Agent...............................................................53
Section 13.6. Successor Agent........................................................................53
Section 13.7. Amendment of Article 13................................................................54
ARTICLE 14. INDEMNIFICATION.............................................................................54
ARTICLE 15. MISCELLANEOUS...............................................................................55
Section 15.1. Survival of Representations............................................................55
Section 15.2. Governmental Regulation................................................................55
Section 15.3. Notices................................................................................55
Section 15.4. Merger.................................................................................55
Section 15.5. Governing Law..........................................................................56
Section 15.6. Counterparts...........................................................................56
Section 15.7. Bank Holidays..........................................................................56
Section 15.8. Expenses...............................................................................56
Section 15.9. Headings...............................................................................56
Section 15.10. Severability of Provisions............................................................56
Section 15.11. Nonliability of Lenders...............................................................57
Section 15.12. WAIVER OF JURY TRIAL..................................................................57
</TABLE>
iii
<PAGE> 5
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C Form of Opinion of Borrower's Counsel
Exhibit D Form of Notice Borrowing or Conversion
Exhibit E Form of Affiliate Guaranty Agreement
Exhibit F Form of Assignment and Assumption Agreement
Schedule 5.4 Schedule of Subsidiaries
Schedule 5.9 Schedule of Financial Statements
Schedule 5.8 Tax Matters
Schedule 5.10 Materials Furnished
Schedule 5.11 Schedule of Issued and Outstanding Stock
Schedule 5.12 Changes in Condition
Schedule 5.13(a) Schedule of Liens, Encumbrances, Indebtedness
and Capitalized Lease Obligations
Schedule 5.13(c) Restaurant Locations
Schedule 5.14 Litigation
Schedule 5.16 Indebtedness
Schedule 5.17 Environmental Matters
Schedule 8.4 Schedule of Insurance
Schedule 9.5 Guarantees
Schedule 9.10 The Franchise Program
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<PAGE> 6
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This REVOLVING CREDIT AND TERM LOAN AGREEMENT is entered into as of
December 9, 1994, by and among UNO RESTAURANTS, INC., a Massachusetts
corporation (the "Borrower"), UNO FOODS INC., a Massachusetts corporation
("UFI"), PIZZERIA UNO CORPORATION, a Delaware corporation ("PUC"), UNO
RESTAURANT CORPORATION, a Delaware corporation ("URC"), URC HOLDING COMPANY,
INC., a Delaware corporation ("UHC" and, together with UFI, PUC, URC and the
Borrower, hereinafter referred to collectively, as the "Loan Parties"), FLEET
BANK OF MASSACHUSETTS, N.A., a national banking association ("Fleet"), and FLEET
BANK OF MASSACHUSETTS, N.A., as Agent for the Banks referred to below (Fleet,
together with its successors and assigns in such capacity, the "Agent").
RECITALS
WHEREAS, URC holds all of the issued and outstanding capital stock of
UHC and UHC holds all of the issued and outstanding capital stock of each of
UFI, PUC and the Borrower; and
WHEREAS, the businesses of the Loan Parties are integrally related, and
the Borrower's access to capital is necessary to the conduct, promotion and
attainment of the business of all the other Loan Parties; and
WHEREAS, the Loan Parties have requested the Banks to establish a
credit facility with the Borrower to repay certain existing indebtedness of the
Borrower to Fleet, to provide funds for working capital, and to fund certain
advances to UFI and PUC; and
WHEREAS, the Banks have agreed, on the terms and conditions set forth
in this Agreement, to provide a credit facility to the Borrower for such
purposes.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Definitions
-----------
In addition to the terms defined elsewhere in this Agreement, unless
otherwise specifically provided herein, the following terms shall have the
following meanings for all purposes when used in this Agreement, and in any
note, certificate, report or other document made or delivered in connection with
this Agreement:
"Advance" shall mean any loan or extension of credit from the Banks to
the Borrower pursuant to Section 2. l(a) of this Agreement.
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"Affiliate" shall mean: (a) any present director or executive officer
of any of the Loan Parties or any Person owning, to the knowledge of any of the
Loan Parties, more than 5 % of the outstanding common stock of any of the Loan
Parties; and
(b) any Person that controls, is controlled by or is under common
control with such Person or any Affiliate of such Person. For purposes of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"AFFILIATE GUARANTORS" shall mean each of the Subsidiaries of the Loan
Parties (other than UHC, UFI, PUC and the Borrower) identified on Schedule 5.4
hereto as Affiliate Guarantors, and any future Subsidiary of the Loan Parties
which executes an Affiliate Guaranty Agreement pursuant to Section 9.13 hereof.
"AFFILIATE GUARANTY AGREEMENT(S)" shall mean the Guaranty Agreements in
the form of EXHIBIT E attached hereto, to be executed by each Affiliate
Guarantor in favor of the Agent, as the same may be amended and in effect from
time to time.
"AGENT" See Preamble.
"AGREEMENT" shall mean this Revolving Credit and Term Loan Agreement,
as amended or supplemented from time to time. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.
<TABLE>
"APPLICABLE COMMITMENT FEE PERCENTAGE" shall mean during each fiscal
quarter of the Borrower, the percentage set forth below opposite the
Consolidated Leverage Ratio in effect as of the end of the immediately preceding
fiscal quarter:
<CAPTION>
Consolidated Leverage Ratio
as of the Immediately Applicable Commitment
Preceding Fiscal Quarter Fee Percentage
- ------------------------ --------------
<S> <C>
Equal to or Greater than 1.75 : 1.0 .375%
Equal to or Greater than 1.0 : 1.0 and less than 1.75:1.0 .3125%
Less than 1.0: 1.0 .25%
</TABLE>
"APPLICABLE LIBOR RATE" shall mean the sum of (a) the LIBOR Rate, plus
(b) the Applicable Margin - LIBOR Rate as each is in effect from time to time.
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<PAGE> 8
<TABLE>
"APPLICABLE MARGIN - PRIME RATE" and "APPLICABLE MARGIN - LIBOR RATE"
shall mean during each fiscal quarter of the Borrower, the percentage set forth
opposite the Consolidated Leverage Ratio in effect as of the end of the
immediately preceding fiscal quarter:
<CAPTION>
Consolidated Leverage Ratio
as of the end of the Immediately Applicable Margin
Preceding Fiscal Quarter - Prime Rate - LIBOR RATE
- ------------------------ ------------ ------------
<S> <C> <C>
Equal to or Greater than 1.75 : 1.0 0.25% 1.50%
Equal to or Greater than 1.0 : 1.0 0.00% 1.25%
and Less than 1.75 : 1.0
Less than 1.0 : 1.0 0.00% 1.00%
</TABLE>
"APPLICABLE PRIME RATE" shall mean the sum of (a) the Prime Rate, plus
(b) the Applicable Margin - Prime Rate, as each is in effect from time to time.
"BANK AGREEMENT" shall mean this Agreement, the Notes, the Affiliate
Guaranty Agreements and any other present or future agreement from time to time
entered into between any of the Loan Parties or an Affiliate and the Agent or
the Banks arising out of this Agreement or which is stated to be a Bank
Agreement, each as from time to time amended or modified, and all statements,
reports and certificates delivered by a Loan Party or any such Affiliate to the
Agent or the Banks in connection therewith.
"BANKS" shall mean, Fleet and its successors and assigns.
"BANK OBLIGATIONS" shall mean all present and future obligations and
Indebtedness of the Loan Parties or any Subsidiary owing to the Agent or the
Banks under this Agreement or any other Bank Agreement, including, without
limitation, the obligations to pay the Indebtedness from time to time evidenced
by the Notes, and obligations to pay interest, commitment fees, balance
deficiency fees and charges from time to time owed under any Bank Agreement.
"BUSINESS DAY" shall mean (a) for all purposes other than as covered by
clause (b) below, a day on which Banks shall be open to conduct commercial
banking business in Boston, Massachusetts and New York, New York, and (b) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, LIBOR Rate Loans, any day that is a Business Day
described in clause (a) and that is also a day for trading by and between banks
in U.S. dollar deposits in the interbank Eurodollar market.
"CAPITAL EXPENDITURES" shall mean amounts paid or Indebtedness incurred
by any Person in connection with the purchase or lease by such Person of assets
that would be required to be capitalized and shown on the balance sheet of such
Person in accordance with GAAP, including, without limitation, the acquisition
(whether by purchase of stock or assets) of any restaurant; provided, however,
that Capital Expenditures shall not include lease obligations of URC and its
3
<PAGE> 9
Subsidiaries in respect of Company Restaurants that are treated as Capitalized
Leases on the consolidated financial statements of URC and its Subsidiaries.
"CAPITALIZED LEASE" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with generally
accepted accounting principles and Statement of Financial Accounting Standards
No. 13.
"CAPITALIZED LEASE OBLIGATIONS" shall mean the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with generally accepted accounting
principles and Statement of Financial Accounting Standards No. 13.
"CLOSING DATE" shall mean December 9, 1994.
"COMMITMENT" shall mean, as to any Bank, the product of (i) the Maximum
Credit Amount, times (ii) such Bank's Commitment Percentage.
"COMMITMENT FEE" shall have the meaning set forth in Section 2.7
hereof.
"COMMITMENT PERCENTAGE" shall mean, as to any Bank, the percentage
figure set forth below such Bank's name on an execution page hereof as its
Commitment Percentage.
"COMPANY RESTAURANT" shall mean a restaurant owned or leased and
operated by a Loan Party or any Subsidiary of a Loan Party.
"COMPLIANCE CERTIFICATE" shall mean a certificate in the form of
Exhibit B hereto and executed by the chief executive officer or chief financial
officer of the Borrower.
"CONSOLIDATED" AND "CONSOLIDATING", when used with reference to any
term, shall mean that term (or the terms "combined" and "combining", as the case
may be, in the case of partnerships, joint ventures and Affiliates that are not
Subsidiaries) as applied to the accounts of URC (or other specified Person) and
all of its Subsidiaries (or other specified Persons), or such of its
Subsidiaries as may be specified, consolidated (or combined) in accordance with
GAAP and with appropriate deductions for minority interests in Subsidiaries, as
required by GAAP.
"CONSOLIDATED CURRENT ASSETS" shall mean, at any date as of which the
amount thereof shall be determined, all assets of URC and its Subsidiaries which
should properly be classified as current, determined in accordance with GAAP
consistently applied.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at any date as of which
the amount thereof shall be determined, all liabilities of URC and its
Subsidiaries which should properly be classified as current in accordance with
GAAP consistently applied, including, without limitation, all fixed prepayments
of, and sinking fund payments with respect to, Indebtedness and all tax
liabilities of URC required to be paid within one year from the date of
determination.
"CONSOLIDATED ADJUSTED EBITDA" shall mean for any period, the sum of
(a) Consolidated EBIT, plus (b) the aggregate amount of consolidated
depreciation and amortization expense of
4
<PAGE> 10
URC and its Subsidiaries other than Excluded Amortization Expense, determined in
accordance with GAAP on a consolidated basis.
"CONSOLIDATED EBIT" shall mean for any period, the earnings of URC and
its Subsidiaries before interest expense and taxes, determined in accordance
with GAAP on a consolidated basis.
"CONSOLIDATED FUNDED INDEBTEDNESS" shall mean as at any date of
determination, all Indebtedness of URC and its Subsidiaries for borrowed money
(including, without limitation, Capitalized Lease Obligations) maturing more
than one year after the date of determination, and further including, without
limitation, all Indebtedness in respect of the Senior Notes (1990) and the
Advances.
"CONSOLIDATED LEVERAGE RATIO" shall mean, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness to (b)
Consolidated Adjusted EBITDA for the period of four fiscal quarters ending on
such date.
"CONSOLIDATED LIABILITIES" shall mean as at any date of determination,
the total of all liabilities of URC and its Subsidiaries outstanding on such
date, determined in accordance with GAAP on a consolidated basis.
"CONSOLIDATED MAINTENANCE CAPITAL EXPENDITURES" shall mean for any
period, all Capital Expenditures made or incurred by URC and its Subsidiaries,
other than Capital Expenditures made or incurred in connection with the
acquisition of Company Restaurants and the establishment of new Company
Restaurants.
"CONSOLIDATED NET INCOME" shall mean with reference to any period and
as to any Person, the net income (or deficit) of such Person and its
Subsidiaries for such period (determined on a consolidated basis), after
deducting all operating expenses, provisions for all taxes and reserves
(including reserves for deferred income taxes) and all other proper deductions,
all determined in accordance with GAAP on a consolidated basis, after
eliminating all intercompany transactions and after deducting portions of income
properly attributable to minority interests, if any, in the stock and surplus of
such Subsidiaries; provided that there shall be excluded (but only to the extent
otherwise included in net income for such period):
(a) the income (or deficit) of any entity accrued prior to the
date it becomes a Subsidiary of such Person or is merged into or consolidated
with such Person or a Subsidiary of such Person;
(b) the income (or deficit) of any entity (other than a
Subsidiary of such Person) in which such Person or any of its Subsidiaries has
an ownership interest, except to the extent that any such income has been
actually received by such Person or such Subsidiary in the form of dividends or
similar distributions;
(c) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at
5
<PAGE> 11
the time permitted by the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Subsidiary;
(d) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period;
(e) any aggregate net gain (but not any aggregate net loss)
reflected during such period arising from the sale, exchange or other
disposition of capital assets (such term to include all fixed assets, whether
tangible or intangible, all inventory sold in conjunction with the disposition
of fixed assets, and all securities);
(f) any write-up of any asset;
(g) any net gain from the collection of the proceeds of life
insurance policies;
(h) any gain arising from the acquisition of any securities of
URC or any of its Subsidiaries;
(i) any net income or gain (but not any net loss) reflected
during such period from any change in accounting, from any discontinued
operations or the disposition thereof, from any extraordinary events or from any
prior period adjustment;
(j) any deferred credit representing the excess of equity in
any Subsidiary of such Person at the date of acquisition over the cost of the
investment in such Subsidiary; and
(k) in the case of a successor to such Person by consolidation
or merger or as a transferee of its assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean the sum of the capital
stock (but excluding treasury stock and capital stock subscribed and unissued)
and surplus (including earned surplus, capital surplus and the balance of the
current profit and loss account not transferred to surplus) accounts of URC and
its Subsidiaries appearing on a consolidated balance sheet of URC and its
Subsidiaries (specifically including URI and its Subsidiaries) prepared in
accordance with GAAP as of the date of determination, after eliminating all
mounts properly attributable to minority interests, if any, in the stock and
surplus of Subsidiaries and after deducting therefrom (without duplication of
deductions):
(a) the net book amount of all assets, after deducting any
reserves applicable thereto, which would be treated as intangibles under GAAP,
including, without limitation, such items as good will, trademarks, trade names,
service marks, brand names, copyrights, patents and licenses, and rights with
respect to the foregoing, unamortized debt discount and expense, organizational
expenses and the excess of cost of purchased Subsidiaries over equity in the net
assets thereof at the date of acquisition;
6
<PAGE> 12
(b) any write-up in the book value of any asset on the books
of URC or any Subsidiary of URC resulting from a revaluation thereof subsequent
to October 2, 1994;
(c) the amounts, if any, at which any shares of stock of URC
or any Subsidiary of URC appear on the asset side of such balance sheet;
(d) all deferred charges (other than prepaid expenses); and
(e) the amounts at which any Investments (other than
Investments which are permitted by Section 9.3) appear on the asset side of such
balance sheet.
"CONSOLIDATED TOTAL DEBT SERVICE" shall mean for any period, the sum of
(a) the aggregate amount of consolidated interest expense of URC and its
Subsidiaries in respect of Indebtedness for borrowed money, calculated in
accordance with the applicable instrument to which such interest relates, plus
(b) the interest component of all Rental Obligations in respect of Capitalized
Leases, plus (c) payments of principal on long term Indebtedness for borrowed
money actually paid during such period, all as determined in accordance with
GAAP on a consolidated basis.
"DEFAULT" shall mean an Event of Default as defined in Section 10, or
an event or condition which with the passage of time or giving of notice, or
both, would become such an Event of Default.
"DISTRIBUTION" shall mean: (a) the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of the
Loan Parties, other than dividends payable solely in shares of common stock of
the corporation involved;(b) the purchase, redemption, or other acquisition or
retirement of any shares of any class of capital stock of the Loan Parties
directly or indirectly; (c) any other distribution on or in respect of any
shares of any class of capital stock of the Loan Parties; (d) any setting apart
or allocating any sum for the payment of any dividend or distribution, or for
the purchase, redemption or retirement of any shares of capital stock of the
Loan Parties; and (e) any payment of principal on or any retirement of
Subordinated Indebtedness.
"ENVIRONMENTAL LAW" shall mean any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, or any federal,
state, county or local statute, regulation, ordinance, order or decree relating
to public health, welfare, the environment, or to the extent they pertain to the
storage, handling, use or generation of hazardous substances in or at the
workplace, worker health or safety, whether now existing or hereafter enacted.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 10.1
hereof.
"EXCLUDED AMORTIZATION EXPENSE" shall mean all amortization expense of
URC and its Subsidiaries attributable to pre-opening costs of Company
Restaurants.
"FISCAL QUARTER END" shall mean the last day of any designated fiscal
quarter of URC and its Subsidiaries.
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<PAGE> 13
"FRANCHISEE" shall mean each Person who operates a pizza restaurant
pursuant to a franchise agreement with PUC or any of its Affiliates.
"GAAP" shall mean generally accepted accounting principles as set forth
from time to time in the opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements of the
Financial Accounting Standards Board or in such opinions and statements of such
other entities as shall be approved by a significant segment of the accounting
profession.
"Governmental Authority" shall mean any governmental or
quasi-governmental authority, whether executive, legislative, judicial,
administrative or other, or any combination thereof, including, without
limitation, any federal, state or local government or governmental or
quasi-governmental agency, board, body, branch, bureau, commission, corporation,
court, department, instrumentality or other political unit or subdivision or
other entity of any of the foregoing, whether domestic or foreign.
"GUARANTY" OR "GUARANTEE" OR "GUARANTIES" shall include any arrangement
whereby a Person is or becomes liable in respect of any Indebtedness or other
obligation of another and any other arrangement whereby credit is extended to
another obligor on the basis of any promise of a guarantor, whether that promise
is expressed in terms of an obligation to pay the Indebtedness of such obligor,
or to purchase or lease assets under circumstances that would enable such
obligor to discharge one or more of its obligations, or to maintain the capital,
the working capital, solvency or general financial condition of such obligor,
whether or not such arrangement is listed in the balance sheet of the guarantor
or referred to in a footnote thereto.
"GUARANTEED OBLIGATIONS" shall have the meaning set forth in Section
2.12(a).
"GUARANTORS" shall mean each of UFI, PUC, URC and UHC, and their
respective successors and assigns.
"INDEBTEDNESS" shall mean, as to any Person, all obligations,
contingent and otherwise, which in accordance with GAAP consistently applied
should be classified upon such Person's balance sheet as liabilities, but in any
event including liabilities secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or acquired by such
Person whether or not the liability secured thereby shall have been assumed,
letters of credit open for account, obligations under acceptance facilities,
Capitalized Lease Obligations and all obligations on account of Guaranties,
endorsements and any other contingent obligations in respect of the Indebtedness
of others whether or not reflected on such balance sheet or in a footnote
thereto.
"INTEREST PERIOD" shall mean with respect to any LIBOR Rate Loan, the
period commencing on the date of such LIBOR Rate Loan and ending one, two or
three months thereafter, as the Borrower may request as provided in Section 2.2
hereof, provided, that:
8
<PAGE> 14
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c) below) that would otherwise end on a day that
is not a Business Day shall be extended to the next succeeding Business Day;
(b) any Interest Period that would otherwise end after
December 31, 2000 shall end on December 31, 2000; and
(c) notwithstanding clause (b) above, no Interest Period shall
have a duration of less than 30 days, and if any Interest Period applicable to
LIBOR Rate Advances would be for a shorter period, such Interest Period shall
not be available hereunder.
"INVESTMENT" shall mean: (a) any stock, evidence of Indebtedness or
other security of another Person; (b) any loan, advance, contribution to
capital, extension of credit (except for current trade and customer accounts
receivable for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms) to another
Person; (c) any purchase of (i) stock or other securities of another Person or
(ii) any business or undertaking of another Person (whether by purchase of
assets or securities), or any commitment or option to make any such purchase if,
in the case of an option, the aggregate consideration paid for such option was
in excess of $100; or (d) any other investment, and whether existing on the date
of this Agreement or thereafter made. The term "Investment" shall not include
(i) ordinary advances to employees for travel and similar expenses, to a maximum
aggregate amount of $75,000, and (ii) the acquisition (whether by purchase of
stock or assets) of any restaurant that becomes a Company Restaurant.
"LIBOR PRICING OPTION" shall mean the option granted to the Borrower
pursuant to Section 2.2 to have interest on all or a portion of the Loans
computed on the basis of the Applicable LIBOR Rate for an applicable Interest
Period.
"LIBOR RATE" shall mean for any Interest Period for any LIBOR Rate
Loan, the quotient of (a) the rate of interest determined by the Bank, at about
11:00 a.m. (Boston, Massachusetts time) on the LIBOR Rate Fixing Day as being
the rate at which deposits in U.S. dollars are offered to it by first-class
banks in the London interbank market for deposit for such Interest Period in
amounts comparable to the aggregate principal amount of LIBOR Rate Loans to
which such Interest Period relates, divided by (b) the difference between one
(1) minus the Reserve Requirement (expressed as a decimal) applicable to that
Interest Period. The LIBOR Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Requirement.
"LIBOR RATE FIXING DAY" shall mean, in the case of a LIBOR Rate Loan,
the second Business Day preceding the Business Day on which an Interest Period
begins.
"LIBOR RATE LOAN" means any Loan hereunder upon which interest will
accrue on the basis of a formula including as a component thereof the LIBOR
Rate. The expiration date of any LIBOR Rate Loan shall mean the last day of the
Interest Period applicable to such LIBOR Rate Loan.
9
<PAGE> 15
"LOAN" shall mean any loan made by the Banks to the Borrower pursuant
to Article 2 of this Agreement.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, assets, properties, prospects or condition, financial or otherwise, of
(a) the Borrower, URC or PUC, or Co) URC and its Subsidiaries taken as a whole.
"MAXIMUM CREDIT AMOUNT" shall mean as of any date of determination, the
lesser of (a) $50,000,000 or (b) the amount to which the Maximum Credit Amount
may have been reduced pursuant to Section 2.8; provided that if the obligation
of the Banks to make further Advances is terminated pursuant to Article 10, the
Maximum Credit Amount as of any date of determination thereafter shall be deemed
to be $0.
"1994 FINANCIAL STATEMENTS" shall mean the Consolidated Balance Sheet
of URC and its Subsidiaries as of October 2, 1994 and the related Consolidated
Statements of Income, Shareholders' Equity and Cash Flow for the year then ended
and notes to such financial statements.
"NOTES" shall mean the Notes executed by the Borrower in favor of each
Bank in the amount of such Bank's Commitment, substantially in the form of
Exhibit A hereto.
"OPERATING CASH FLOW" shall mean with reference to any period and with
respect to each Company Restaurant, (a) operating revenues for such Company
Restaurant for such period, MINUS (b) operating expenses for such Company
Restaurant for such period, PLUS (c) the sum of depreciation and amortization
expense and deferred rental expense attributable to assets located at such
Company Restaurant for such period, all as determined in accordance with GAAP
consistently applied, plus (d) free rent and rent increases over the terms of
leases calculated using the straight line method.
"PENSION PLAN" shall mean an employee benefit plan or other plan
maintained for the employees of the Borrower or any of the Loan Parties or any
Subsidiary as described in Section 4021(a) of Title IV of the Pension Reform
Act.
"PENSION REFORM ACT" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, association, estate, joint stock company, trust, organization,
business, or a government or agency or political subdivision thereof.
"PRIME RATE" shall mean the rate of interest from time to time
announced and made effective by the Agent as its "Prime Rate," it being
understood that such rate is a reference rate, not necessarily the lowest, which
serves as the basis upon which effective rates of interest are calculated for
obligations making reference thereto.
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<PAGE> 16
"PRIME RATE LOAN" shall mean any Loan hereunder upon which interest
will accrue on the basis of a formula including as a component thereof the Prime
Rate.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation or official interpretation of such Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"RENTAL OBLIGATIONS" shall mean with reference to any period, the
aggregate amount of all minimum or guaranteed net rentals for which URC and its
Subsidiaries are directly or indirectly liable (as lessee or as guarantor or
other surety) under all leases in effect at any time during such period,
including all amounts for which any Person was so liable during such period
accrued prior to the date such Person becomes a Subsidiary or was merged or
consolidated with URC or any of its Subsidiaries.
"REPORTABLE EVENT" shall mean an event reportable to the Pension
Benefit Guaranty Corporation under Section 4043 of Title IV of the Pension
Reform Act.
"REQUIRED BANKS" shall mean Banks having made at least 51% of the
aggregate principal amount of the Loans outstanding, or, if no Loans shall be
outstanding, Banks holding at least 51% of the aggregate Commitments; provided,
however, that if at any time one Bank holds more than 51% of the outstanding
Loans or Commitments, "Required Banks" shall mean two or more Banks holding at
least 51% of the outstanding Loans or Commitments.
"RESERVE REQUIREMENT" shall mean the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed under Regulation D on the Banks against "Euro-currency
Liabilities" as defined in said Regulation D.
"REVOLVING CREDIT TERMINATION DATE" shall mean December 31, 1997.
"SENIOR NOTES (1990)" shall mean the $10,000,000 10.22% Joint and
Several Senior Notes due June 1, 1996 of URC and the Borrower issued under the
Senior Note Purchase Agreement.
"SENIOR NOTE PURCHASE AGREEMENT" shall mean the Note Purchase Agreement
dated as of June 1, 1990 among URC, the Borrower and the purchasers of the
Senior Notes (1990), as amended.
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of the Borrower
which is subordinated to the Indebtedness of the Borrower hereunder, under the
Notes and to all other Bank Obligations, on terms and conditions approved in
writing by the Required Banks.
"SUBSIDIARY" shall mean any Person of which URC or other specified
parent shall now or hereafter at the time own, directly or indirectly through
one or more Subsidiaries or otherwise, sufficient voting stock (or 'other
beneficial interest) to entitle it to elect at least a majority of the board of
directors or trustees or similar managing body.
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<PAGE> 17
"TERM LOAN" shall mean the loan made to the Borrower by the Banks
pursuant to Section 2.1 (b) of this Agreement.
Section 1.2. Accounting Terms.
-----------------
All accounting terms used and not defined in this Agreement shall be
construed in accordance with GAAP consistently applied, and all financial data
required to be delivered hereunder shall be prepared in accordance with such
principles.
ARTICLE 2. THE CREDIT
Section 2.1. The Loans.
----------
(a) Subject to the terms and conditions of this Agreement and
so long as there exists no Default, at any time prior to the Revolving Credit
Termination Date, the Banks shall severally make such Advances to the Borrower
as the Borrower may from time to time request by notice to the Agent in
accordance with Section 2.2; provided that no Advance shall exceed an amount
determined by subtracting (i) the aggregate outstanding balance of all Advances
theretofore made by the Banks from (ii) the Maximum Credit Amount; and provided
further, that the aggregate outstanding Advances of any Bank shall at no time
exceed the amount of such Bank's Commitment.
Subject to the foregoing limitations and the provisions of Section 4.1
and 4.7 below, the Borrower may borrow, repay and reborrow from the date of this
Agreement to the Revolving Credit Termination Date; provided that the Agent and
the Banks shall have the absolute right to refuse to make any Advances for so
long as there exists any Default or any other condition which would, upon the
making of such Advance, constitute a Default. Any Advances not repaid by the
Revolving Credit Termination Date shall be due and payable on the Revolving
Credit Termination Date.
(b) Subject to the terms and conditions of this Agreement and
provided that there exists no Default, on the Revolving Credit Termination Date
the Banks will severally lend to the Borrower a term loan that shall not exceed,
in the aggregate principal amount, the lesser of (i) the Maximum Credit Amount,
and (ii) the aggregate principal balance of all Advances then outstanding (the
"Term Loan"); provided, that the aggregate amount of the Term Loan made by any
Bank shall not exceed the amount of such Bank's Commitment.
The Term Loan shall be payable in eleven (11) equal quarterly
installments on the last day of each January, April, July and October of each
year, commencing April 30, 1998, and a final payment of all outstanding
principal, all accrued but unpaid interest, and any other amounts outstanding,
due and payable on December 31, 2000.
(c) The Loans shall be evidenced by the Notes payable to the
order of each Bank. Each Note shall be in the original principal amount of the
applicable Bank's Commitment, shall be dated on or before the date of the first
Loan, shall have the blanks therein appropriately completed, and shall have a
final maturity of December 31, 2000. Each Bank shall, and is hereby
12
<PAGE> 18
irrevocably authorized by the Borrower to, enter on the schedule forming a part
of its Note or otherwise in its records appropriate notations evidencing the
date and the amount of each Loan made by such Bank and the date and amount of
each payment of principal made by the Borrower with respect thereto; and in the
absence of manifest error, such notations shall constitute conclusive evidence
thereof. Each Bank is hereby irrevocably authorized by the Borrower to attach to
and make a part of its Note a continuation of any such schedule as and when
required. No failure on the part of a Bank to make any notation as provided in
this subsection (c) shall in any way affect any Loan or the rights or
obligations of the Bank or the Borrower with respect thereto.
Section 2.2. Notice and Manner of Borrowing or Conversion of Loans.
------------------------------------------------------
(a) Whenever the Borrower desires to obtain or continue a Loan
hereunder or to convert an outstanding Loan into a Loan of another type provided
for in this Agreement, the Borrower shall notify the Agent (which notice shall
be irrevocable) by telephone, telecopy, telex or cable received no later than
(i) 12:30 p.m. Boston time on the date on which the requested Loan is to be made
or continued as or converted to a Prime Rate Loan, and (ii) 12:30 p.m. Boston
time on the date two (2) Business Days before the day on which the requested
Loan is to be made or continued as or converted to a LIBOR Rate Loan. Each such
notice shall be made to the Agent by an individual purporting to be the
Chairman, President, Senior Vice President-Finance or Controller of the Borrower
(or such other duly authorized representative of the Borrower identified to the
Agent in writing), and shall specify (A) the effective date of each Loan or
portion thereof to be continued or converted (which must be a Business Day), (B)
the amount of such Loan (which must be a minimum of $100,000 for a Prime Rate
Loan and $500,000 and in increments of $100,000 for a LIBOR Rate Loan), (C) the
interest rate option to be applicable thereto, and (D) the duration of the
applicable Interest Period, if any (subject to the provisions of 'the definition
of Interest Period and Section 2.6). Each such notification (a "Notice of
Borrowing or Conversion") shall be immediately followed by a written
confirmation thereof by the Borrower in substantially the form of Exhibit D
attached hereto, provided that if such written confirmation differs in any
material respect from the action taken by the Agent, the records of the Agent
shall control absent manifest error.
The Agent shall give the Banks notice of each Notice of Borrowing or
Conversion in accordance with the Agent's customary practice. The Borrower
agrees to indemnify and hold the Agent and the Banks harmless for any action,
including the making of any Loan hereunder, or loss or expense, taken or
incurred by the Agent or the Banks in good faith reliance upon any such request.
(b) Subject to the terms and conditions of this Agreement, so
long as the Agent shall have provided the Banks with notice of each Notice of
Borrowing or Conversion prior to 2:00 p.m. on the date of the Agent's receipt of
such notice, each Bank shall make available by 3:00 p.m. on the effective date
of the requested Loan, at the office of the Agent specified in Section 15.3, in
immediately available funds, such Bank's Commitment Percentage of each Loan.
After the Agent's receipt of such funds and upon fulfillment of the applicable
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<PAGE> 19
conditions set forth in Article III hereof, the Agent will credit such funds to
the Borrower's demand deposit account with the Agent.
(c) Unless the Agent shall have received notice from a Bank
prior to the date of any Loan that such Bank will not make available to the
Agent such Bank's Commitment Percentage of such Loan, the Agent may assume that
such Bank has made such funds available to the Agent on the date of such Loan in
accordance with and as provided in this Section 2.2, and the Agent may, in
reliance upon such assumption (but shall have no obligation to) make available
on such date a corresponding amount to the Borrower. If and to the extent any
Bank shall not have made its Commitment Percentage of any Loan available to the
Agent and the Agent shall have made available a corresponding amount to the
Borrower, such Bank agrees to pay to the Agent forthwith on demand, and the
Borrower agrees to repay to the Agent within two (2) Business Days after demand
(but only after demand for payment has first been made to such Bank and such
Bank has failed to make such payment), an amount equal to such corresponding
amount together with interest thereon for each day from the date the Agent shall
have made such amount available to the Borrower until the date such amount is
paid or repaid to the Agent, at an interest rate equal to the interest rate
applicable to such Loans. If such Bank shall pay to the Agent such corresponding
amount, such amount so paid shall constitute such Bank's Loan for purposes of
this Agreement. If the Borrower makes a repayment required by the foregoing
provisions of this Section 2.2(c) and thereafter the applicable Bank or Banks
make the payments to the Agent required by this Section 2.2(c), the Agent shall
promptly refund the amount of the Borrower's payment.
(d) The failure of any Bank to make any Loan shall not relieve
any other Bank of its obligation, if any, hereunder to make its Commitment
Percentage of such Loan on the date of such Loan, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be made by
such other Bank.
(e) Notwithstanding the foregoing provisions of this Section
2.2, no notice of borrowing or minimum borrowing amounts shall be required for
any Advance which is made in accordance with "target balance" services provided
by the Agent, and each such Advance shall, unless otherwise agreed by the Agent
and the Borrower, be a Prime Rate Loan.
Section 2.3. Interest on Advances.
---------------------
Subject to the provisions of Section 2.4, the Borrower shall pay
interest on the unpaid balance of each Prime Rate Loan from time to time
outstanding at a per annum rate equal to the Applicable Prime Rate, and shall
pay interest on each LIBOR Rate Loan at a rate per annum equal to the Applicable
LIBOR Rate. Interest on Prime Rate Loans shall be payable in arrears on the last
day of each January, April, July and October, commencing January 31, 1995, and
continuing until all of the Indebtedness of the Borrower to the Banks hereunder
shall have been fully paid. Interest on LIBOR Rate Loan shall be paid for the
applicable Interest Period on the last day thereof and when such LIBOR Rate Loan
is due (whether at maturity, by reason of acceleration or otherwise) and, if
such Interest Period is longer than three months, at intervals of three months
after the first day thereof.
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<PAGE> 20
Section 2.4. Additional Payments.
--------------------
During the continuance of any Event of Default, the Borrower shall, on
demand, pay to the Banks interest on the unpaid principal balance of the Loan
and, to the extent permitted by law, on any overdue installments of interest, at
a rate per annum equal to the applicable interest rate on Loans hereunder plus
two percent(2%).
Section 2.5. Computation of Interest, Etc.
-----------------------------
Interest hereunder and under the Notes shall be computed on the basis
of a 360-day year for the number of days actually elapsed. Any increase or
decrease in the interest rate on the Notes resulting from a change in the Prime
Rate shall be effective immediately from the date of such change. No interest
payment or interest rate charged hereunder shall exceed the maximum rate
authorized from time to time by applicable law. The outstanding amount of the
Loans as reflected on the Agent's and the Banks' records from time to time shall
be considered correct and binding on the Loan Parties (absent manifest error)
unless within thirty (30) days after receipt of any notice by the Agent or any
Bank of such outstanding amount, the Loan Parties notify the Agent or such Bank
to the contrary.
Section 2.6. Duration of Interest Periods.
-----------------------------
(a) Subject to the provisions of the definition of Interest
Period, the duration of each Interest Period applicable to a Loan shall be as
specified in the applicable Notice of Borrowing or Conversion. The Borrower
shall have the option to elect a subsequent Interest Period to be applicable to
such Loan by delivering to the Agent a Notice of Borrowing or Conversion
evidencing such election received no later than 10:00 a.m. Boston time on the
date one (1) Business Day before the end Of the then applicable Interest Period
if such Loan is to be continued as or converted to a Prime Rate Loan and two (2)
Business Days before the end of the then applicable Interest Period if such Loan
is to be continued as or convened to a LIBOR Rate Loan.
(b) If the Agent does not receive a notice of election of
duration of an Interest Period for a LIBOR Rate Loan pursuant to subsection (a)
above within the applicable time limits specified therein, or if, when such
notice must be given, a Default exists, the Borrower shall be deemed to have
elected to convert such Loan in whole into a Prime Rate Loan on the last day of
the then current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, the Borrower may not select
an Interest Period that would end, but for the provisions of the definition of
Interest Period, after the final scheduled maturity date of the Term Loan.
Section 2.7. Commitment Fee.
---------------
For the period from the Closing Date of this Agreement to the Revolving
Credit Termination Date, the Borrower shall pay to the Agent, for the ratable
account of the Banks, a commitment fee (the "Commitment Fee") calculated at the
Applicable Commitment Fee
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<PAGE> 21
Percentage on the difference between the Maximum Credit Amount and the daily
average principal amount of the Advances outstanding from time to time. The
commitment fee shall be payable quarterly in arrears on the last day of each
January, April, July and October, commencing January 31, 1995.
Section 2.8. Reduction and Termination by the Borrower.
------------------------------------------
Subject to the provisions of Section 4.7 hereof with respect to LIBOR
Rate Loans, the Borrower may, at its option, at any time and from time to time
prior to the Revolving Credit Termination Date, reduce in pan (in integral
multiples of $500,000) or terminate in whole the unused portion of the Maximum
Credit Amount on not less than five (5) Business Days' notice to the Agent by
telephone, telecopy, telex or cable, in each case confirmed immediately in
writing. After any such termination, the Borrower may not reinstate the portion
terminated.
Section 2.9. Increased Costs Etc.
--------------------
(a) Anything here in to the contrary notwithstanding, if any
changes in present or future applicable law (which term "applicable law", as
used in this Agreement, includes statutes and rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time heretofore or hereafter made upon or otherwise issued
to the Banks by any central bank or other fiscal, monetary or other authority,
whether or not having the force of law), including without limitation any change
according to a prescribed schedule of increasing requirements, whether or not
known or in effect as of the date hereof, shall (i) subject any Bank to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Agreement or the payment to any Bank of any amounts due to it
hereunder, or (ii) materially change the basis of taxation of payments to the
Banks of the principal of or the interest on the Loans or any other amounts
payable to the Banks hereunder, or (iii) impose or increase or render applicable
any special or supplemental deposit or reserve or similar requirements or
assessment against assets held by, or deposits in or for the account of, or any
liabilities of, or loans by an office of any Bank in respect of the transactions
contemplated herein, or (iv) impose on any Bank any other condition or
requirement with respect to this Agreement or any Loan, and the result of any of
the foregoing is (A) to increase the cost to any Bank of making, funding or
maintaining all or any part of the Loans, or (B) to reduce the amount of
principal, interest or other amount payable to any Bank hereunder, or (C) to
require any Bank to make any payment or to forego any interest or other sum
payable hereunder, the amount of which payment or foregone interest or other sum
is calculated by reference to the gross amount of any sum receivable or deemed
received by such Bank from the Borrower hereunder, then, and in each such case
not otherwise provided for hereunder, the Borrower will upon demand made by such
Bank promptly following the Bank's receipt of notice pertaining to such matters
accompanied by calculations thereof in reasonable detail, pay to such Bank such
additional amounts as will be sufficient to compensate such Bank for such
additional cost, reduction, payment or foregone interest or other sum; provided
that the foregoing provisions of this sentence shall not apply in the case of
any
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<PAGE> 22
additional cost, reduction, payment or foregone interest or other sum resulting
from any taxes charged upon or by reference to the overall net income, profits
or gains of the Bank.
(b) Anything herein to the contrary notwithstanding, if, after
the date hereof, any Bank shall have determined that any applicable law, rule,
regulation, guideline, directive or request (whether or not having force of
law), including, without limitation, any change according to a prescribed
schedule of increasing requirements, whether now existing or hereafter in
effect, regarding capital requirements for banks or bank holding companies
generally, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by such Bank
with any of the foregoing, either imposes a requirement upon the Bank to
allocate additional capital resources or increases the Bank's requirement to
allocate capital resources or the Bank's commitment to make, or to the Bank's
maintenance of, Loans hereunder, which has or would have the effect of reducing
the return on such Bank's capital to a level below that which such Bank could
have achieved (taking into consideration the Bank's then existing policies with
respect to capital adequacy and assuming full utilization of the Bank's capital)
but for such applicability, change, interpretation, administration or
compliance, by any amount deemed by such Bank to be material, such Bank shall
promptly after its determination of such occurrence give notice thereof to the
Borrower. In such event, commencing on the date of such notice (but not earlier
than the effective date of any such applicability, change, interpretation,
administration or compliance), the fees payable hereunder to such Bank shall
increase by an amount which will, in such Bank's reasonable determination,
evidenced by calculations in reasonable detail furnished to the Borrower,
compensate the Bank for such reduction, the Bank's determination of such amount
to be conclusive and binding upon the Loan Parties, absent manifest error. In
determining such amount, the Bank may use any reasonable methods of averaging,
allocating or attributing such reduction among its customers.
Section 2.10. ABILITY OF LIBOR PRICING OPTION; CHANGED
CIRCUMSTANCES.
In the event that:
(a) on any date on which the LIBOR Rate would otherwise be
set, the Agent shall have determined in good faith (which determination shall be
final and conclusive) that adequate and fair means do not exist for ascertaining
the LIBOR Rate; or
(b) at any time the Agent shall have determined in good faith
(which determination shall be final and conclusive and which determination may
not be based solely upon a change in the LIBOR Rate) that:
(i) the implementation of the LIBOR Pricing Option has been made
impracticable or unlawful by (A) the occurrence of a
contingency that materially and adversely affects the London
interbank market, or (B) compliance by the Agent in good faith
with any applicable law or governmental regulation, guideline
or order or interpretation or change thereof by any
governmental authority charged with the interpretation or
administration thereof or with any request or
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<PAGE> 23
directive of any such governmental authority (whether or not
having the force of law); or
(ii) the LIBOR Rate shall no longer represent the effective cost to
the Banks for U.S. dollar deposits in the London interbank
market for deposits in which they regularly participate;
then, and in such event, the Agent shall forthwith so notify the Borrower and
the Banks thereof (the "Changed Circumstances Notice"). Until the Agent notifies
the Borrower that the circumstances giving rise to such notice no longer apply,
the obligation of the Agent and the Banks to allow election by the Borrower of a
LIBOR Pricing Option shall be suspended. If at the time the Agent provides a
Changed Circumstances Notice to the Borrower, the Borrower has previously given
the Agent a Notice of Borrowing or Conversion electing a LIBOR Rate Loan, but
such LIBOR Pricing Option has not yet gone into effect, such Notice of Borrowing
or Conversion shall automatically be deemed to be a request for a Prime Rate
Loan. Upon such date as shall be specified in the Changed Circumstance Notice
(which shall not be earlier than the date such notice is given) all outstanding
LIBOR Rate Loans shall automatically convert to Prime Rate Loans and, in the
event of an occurrence of the type specified in Section 2.10(b), the Borrower
shall pay any amounts required to be paid pursuant to Section 4.7. The Agent
shall notify the Borrower and the Banks at such time as the circumstances giving
rise to the Changed Circumstances Notice no longer apply.
Section 2.11. Use of Proceeds.
----------------
The proceeds of the initial Advance shall be used by the Borrower
exclusively to repay all existing Indebtedness of the Borrower to Fleet. The
proceeds of all subsequent Advances shall be used by the Borrower for general
working capital and ordinary corporate purposes, including the addition of new
restaurants to be owned by URI or any of its Subsidiaries and to fund advances
to UFI and PUC to be used for their respective general working capital and
ordinary corporate purposes as and to the extent permitted hereunder. None of
the Borrower, UFI or PUC will, directly or indirectly, use any part of such
proceeds for the purpose of purchasing or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or to extend credit to any Person for the purpose of purchasing or carrying any
such margin stock, or to purchase or lease any real property for use other than
in connection with the conduct of the business in which they are engaged on the
date of this Agreement.
Section 2.12. Guaranties.
-----------
(a) GUARANTIES OF BANK OBLIGATIONS. For value received and
hereby acknowledged and as an inducement to the Banks to make the Loans
available to the Borrower, each of the Guarantors hereby unconditionally
guaranties to the Agent and the Banks (i) the full and punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all Bank
Obligations of the Borrower, and (ii) the performance and observance by the
Borrower of all of its obligations under this Agreement and each other Bank
Agreement and all agreements,
18
<PAGE> 24
warranties and covenants applicable to the Borrower in this Agreement and all
other applicable Bank Agreements (collectively, the "Guarantied Obligations").
(b) GUARANTIES ABSOLUTE. Each of the Guarantors hereby
guaranties that the Guarantied Obligations will be paid strictly in accordance
with the terms of any instruments evidencing such Guarantied Obligations,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or any Bank
with respect thereto. The liability of each of the Guarantors under this
Guaranty with regard to the Guarantied Obligations shall, to the extent
permitted by law, be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of
this Agreement or any other Bank Agreement
with respect to any other Loan Party;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or
any of the Guarantied Obligations or any
other amendment or waiver of or any consent
to departure from any of the terms of any
Bank Agreement;
(iii) any exchange, release or non-perfection of a
lien on any collateral for the Guarantied
Obligations, or any release or amendment or
waiver of or consent to departure from any
other guaranty for all or any part of the
Guarantied Obligations;
(iv) any change in ownership of any of the Loan
Parties;
(v) any acceptance of any partial payment(s)
from the Borrower; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a
discharge of, any of the Loan Parties in
respect of the Guarantied Obligations.
The Guaranties set forth in this Section 2.12 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Guarantied Obligations is rescinded or must otherwise be returned by
the Agent or any Bank upon the insolvency, bankruptcy or reorganization of any
of the Loan Parties, or otherwise, all as though such payment had not been made.
(c) EFFECTIVENESS, ENFORCEMENT. The Guaranties set forth in
this Section 2.12 shall be effective and shall be deemed to be made as of the
date of this Agreement. No invalidity, irregularity or unenforceability by
reason of any bankruptcy or similar law, or any law or order of any government
or agency thereof purporting to reduce, amend or otherwise affect any liability
of any of the Loan Parties, and no defect in or insufficiency or want of powers
of any of the Loan Parties or irregular or improperly recorded exercise thereof,
shall impair, affect, be a defense to or claim against these Guaranties. These
Guaranties are continuing Guaranties and shall (i) survive any termination of
this Agreement, and (ii) remain in full force and effect until payment
19
<PAGE> 25
in full of, and performance of all Guarantied Obligations and all other amounts
payable under these Guaranties. These Guaranties are made for the benefit of the
Agent and the Banks and their respective successors and assigns, and may be
enforced from time to time as often as occasion therefor may arise and without
requirement on the part of the Agent or any Bank first to exercise any rights
against the Borrower or the Affiliate Guarantors or to exhaust any remedies
available to them against the Borrower or the Affiliate Guarantors or to resort
to any other source or means of obtaining payment of any of the Guarantied
Obligations or to elect any other remedy.
(d) WAIVER. To the extent permitted by law, each of the
Guarantors hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guarantied Obligations and these
Guaranties and any requirement that the Agent or the Banks protect, secure,
perfect or otherwise take action to ensure any security interest or lien on any
property subject thereto (if any) or exhaust any right or take any action
against any other Guarantors, any Affiliate Guarantor, or any other Person or
any collateral for the Guarantied Obligations. Each of the Guarantors also
irrevocably waives, to the fullest extent permitted by law, all defenses which
at any time may be available to it in respect of the Guarantied Obligations by
virtue of any statute of limitation, valuation, stay, moratorium law or other
similar law now or hereafter in effect.
(e) SUBORDINATION; SUBROGATION RIGHTS. Until the payment and
performance in full of all Bank Obligations: (i) none of the Guarantors shall
exercise any rights against the Borrower or any other Guarantor arising as a
result of payment by such Guarantor under these Guaranties; (ii) none of the
Guarantors will prove any claim in competition with the Agent or the Banks in
respect of any payment hereunder in bankruptcy or insolvency proceedings of any
nature; (iii) none of the Guarantors will claim any set-off or counterclaim
against the Borrower or any other Guarantor in respect of any liability of such
Guarantor to the Borrower or such other Guarantor; and (iv) each Guarantor
hereby waives any benefit of and any right to participate in collateral which
may be held by' the Agent or the Banks (if any). The payment of any amounts due
with respect to any Indebtedness of the Borrower or any other Loan Party now or
hereafter held by any of the Guarantors (the "Affiliate Subordinated
Indebtedness") is hereby subordinated to the prior payment in full of the Bank
Obligations in the manner set forth in this paragraph. The Borrower and each of
the Guarantors agrees that after the occurrence of any Default, neither the
Borrower nor any other Loan Party shall, directly or indirectly, make any
payment on account of the Affiliate Subordinated Indebtedness, or demand, sue
for, or otherwise attempt to collect any such Affiliate Subordinated
Indebtedness until the Guarantied Obligations shall have been paid in full. If,
notwithstanding the foregoing sentence, any Guarantor shall, after the
occurrence of any Default, collect or receive any amounts in respect of such
Affiliate Subordinated Indebtedness, such amounts shall be collected and
received by such Guarantor as trustee for the Agent and the Banks and shall be
paid over to the Agent on account of the Guarantied Obligations without
affecting in any manner the liability of such Guarantor under the other
provisions of its Guaranty.
(f) LIABILITY OF LOAN PARTIES; ADDITIONAL GUARANTIES. The
Guaranties established under this Section 2.12 are unlimited as to each
Guarantor, and each Guarantor shall be jointly and severally liable with each
other and with any other guarantor of the Bank
20
<PAGE> 26
Obligations, in respect of the Guarantied Obligations. These Guaranties shall be
separate and in addition to any and all other Guaranties of the Guarantied
Obligations, including, without limitation, the Affiliate Guaranty Agreements.
ARTICLE 3. CONDITIONS OF THE ADVANCES
Section 3.1. Conditions to First Advance.
----------------------------
The Banks' obligations to make the first Advance shall be subject to
compliance by the Loan Panics with their respective agreements contained in this
Agreement, and to the condition precedent that the Banks shall have received
each of the following, in form and substance satisfactory to the Banks and the
Agent's counsel or in the form attached hereto as an Exhibit, as the case may
be:
(a) the Notes duly executed by the Borrower in favor of each
Bank;
(b) the Affiliate Guaranty Agreement duly executed by each of
the Affiliate Guarantors;
(c) copies of the resolutions of the Board of Directors of
each of the Loan Parties and each of the Affiliate Guarantors authorizing the
execution, delivery and performance of this Agreement, the Notes, the Affiliate
Guaranty Agreement, and the other Bank Agreements to which each of them is a
party, certified by the Secretary or an Assistant Secretary (or Clerk or
Assistant Clerk) of each such corporation (which certificate shall state that
such resolutions are in full force and effect);
(d) a certificate of the Secretary or an Assistant Secretary
(or Clerk or Assistant Clerk) of each of the Loan Parties and each of the
Affiliate Guarantors certifying the name and signatures of the officers of each
such corporation authorized to sign this Agreement, the Notes, the Affiliate
Guaranty Agreement, and the other Bank Agreements to which each such corporation
is a party and the other documents to be delivered by the Loan Parties
hereunder;
(e) certificates of legal existence or good standing for each
of the Loan Parties and each of the Affiliate Guarantors issued by the
appropriate Delaware, Massachusetts and other governmental authorities;
(f) the opinion of Messrs. Brown, Rudnick, Freed & Gesmer,
counsel to the Loan Parties and the Affiliate Guarantors, dated the date of
execution of this Agreement, in substantially the form of EXHIBIT C hereto;
(g) a certificate of duly authorized officers of each of the
Loan Parties, dated the date of execution of this Agreement, to the effect that
(i) the representations and warranties of the Loan Parties herein and in all
other Bank Agreements are true and correct as of the date hereof, (ii) all
conditions precedent on the pan of each of the Loan Parties to the execution and
delivery hereof and of all other Bank Agreements have been satisfied, and (iii)
upon execution
21
<PAGE> 27
and delivery of this Agreement and all other Bank Agreements no Default will
exist hereunder or thereunder; and
(h) such other documents, certificates and opinions as the
Agent or any Bank may reasonably request.
Section 3.2. Conditions to All Advances.
---------------------------
The Banks' obligation to make any Loan pursuant to this Agreement shall
be subject to compliance by each of the Loan Parties with its respective
agreements contained in this Agreement and each other Bank Agreement, and to the
satisfaction, at or before the making of each Loan, of all of the following
conditions precedent:
(a) The representations and warranties here in and those made
by or on behalf of the Loan Parties and the Affiliate Guarantors in any other
Bank Agreement shall be correct in all material respects as of the date on which
any Loan is made, with the same effect as if made at and as of such time (except
as to transactions permitted hereunder and except that the references in Article
5 to the 1994 Financial Statements shall be deemed to refer to the most recent
annual financial statements furnished to the Banks pursuant to Section 6.2
hereof);
(b) On the date of any Loan hereunder, there shall exist no
Default; and
(c) The making of the requested Loan shall not be prohibited
by any law or governmental order or regulation applicable to the Banks, the
Agent or the Borrower and all necessary consents, approvals and authorizations
of any Person (other than the Banks) for any such Loan shall have been obtained.
The request by the Borrower for each Loan, and the acceptance by the
Borrower of each such Loan, shall be deemed a representation and warranty by the
Borrower that the conditions specified above in this Section 3.2 have been
satisfied.
ARTICLE 4. PAYMENT AND REPAYMENT
Section 4.1. Mandatory Prepayment.
---------------------
If at any time the Maximum Credit Amount shall be less than the
aggregate outstanding principal balance of the Loans made hereunder, the
Borrower shall immediately repay to the Agent for the account of the Banks an
amount equal to said difference.
Section 4.2. Voluntary Prepayment.
---------------------
The Borrower may make prepayments to the Agent for the account of the
Banks of any outstanding principal amount of the Loans which are Prime Rate
Loans at any time prior to 12:30 p.m. (Boston, Massachusetts time) on any
Business Day without premium or penalty. The Borrower may make prepayments to
the Agent for the account of the Banks of any outstanding principal amount of
Loan which are LIBOR Rate Loan at any time prior to 12:30 p.m. (Boston,
22
<PAGE> 28
Massachusetts time) on any Business Day, subject, however, to the premiums and
penalties set forth in Section 4.7.
Section 4.3. Payment and Interest Cutoff.
----------------------------
Notice of each prepayment pursuant to Section 4.2 shall be given to the
Agent (i) in the case of prepayment of Prime Rate Loan, not later than 12:00
noon (Boston, Massachusetts time) on the date of payment, and (ii) in the case
of prepayment of LIBOR Rate Loans on any day other than the last day of the
Interest Period applicable thereto, not later than 12:00 noon (Boston,
Massachusetts time) one Business Day prior to the proposed date of payment, and,
in each case, shall specify the total principal amount of the Loans to be paid
on such date. Notice of prepayment having been given in compliance with this
Section 4.3, the amount specified to be prepaid shall become due and payable on
the date specified for prepayment and from and after said date (unless the
Borrower shall default in the payment thereof) interest thereon shall cease to
accrue. Unpaid interest on the principal amount of any Loan so prepaid accrued
to the date of prepayment shall be due on the date of prepayment.
Section 4.4. Payment or Other Actions on Non-business Days.
----------------------------------------------
Whenever any payment to be made hereunder shall be stated to be due on
a day other than a Business Day such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or Commitment Fees, as the
case may be. In the case of any other action the last day for performance of
which shall be a day other than a Business Day, the date for performance shall
be extended to the next succeeding Business Day.
Section 4.5. Method and Timing of Payments.
------------------------------
(a) All payments required to be made pursuant to the
provisions of this Agreement and any other Bank Agreement, and all prepayments
pursuant to Section 4.1, may be charged by the Agent against the Borrower's
accounts with the Agent, for the account of the respective Banks in proportion
to their respective Commitment Percentages hereunder. Each Loan Party hereby
authorizes the Agent and the Banks, without notice to the Loan Parties, to
charge against any account of the Loan Parties with the Agent or such Bank an
amount equal to the accrued interest, principal and other amounts from time to
time due and payable to the Agent and the Banks hereunder and under all other
Bank Agreements.
(b) The Borrower shall make each payment to be made by it
hereunder not later than 12:30 p.m. (Boston time) on the day when due in lawful
money of the United States to the Agent at its address set forth in Section 13.2
in immediately available funds. The Agent will, after its receipt thereof,
distribute like funds relating to the payment of principal, interest or any
other amounts payable hereunder ratably to the Banks. Any payment made by the
Borrower to the Agent under this Agreement or under the Notes in the manner
provided in this Agreement shall be deemed to be a payment to each of the
respective Banks.
Section 4.6. Sharing of Payments, Etc.
-------------------------
23
<PAGE> 29
If any Bank shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of the
Loans in excess of its ratable share of payments in respect thereof, such Bank
shall forthwith purchase from each other Bank such participations in the Loans
held by such other Banks as shall be necessary to cause such purchasing Bank to
share the excess payment ratably with each other Bank; PROVIDED, HOWEVER, that
if all or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and each Bank
shall repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share (according
to the proportion of (i) the amount of such Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 4.6 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of Borrower in the amount of such participation.
Section 4.7. Payments Not at End of Interest Period.
---------------------------------------
If the Borrower for any reason makes any payment of principal with
respect to any LIBOR Rate Loan on any day other than the last day of the
Interest Period applicable to such LIBOR Rate Loan, including without limitation
by reason of acceleration, or fails to borrow a LIBOR Rate Loan after electing a
LIBOR Pricing Option with respect thereto pursuant to Section 2.2(a) or 2.6, the
Borrower shall pay to the Agent, for the account of the Banks, an amount
computed pursuant to the following formula:
L = (R-T)xPxD
----------
360
L = amount payable to the Agent
R = interest rate on such LIBOR Rate Loan
T = effective interest rate per annum at which
any readily marketable bond or other
obligation of the United States, selected in
the Agent's sole discretion, maturing on or
near the last day of the then applicable
Interest Period of such LIBOR Rate Loan and
in approximately the same amount as such
LIBOR Rate Loan can be purchased by the
Agent on the day of such payment of
principal or failure to borrow
P = the amount of principal prepaid or the
amount of the requested LIBOR Rate Loan
D = the number of days remaining in the
Interest Period as of the date of such
payment or the number of days of the
requested Interest Period
24
<PAGE> 30
The Borrower shall pay such amount upon presentation by the Agent of a statement
setting forth the amount and the Agent's calculation thereof pursuant hereto,
which statement shall be deemed true and correct absent manifest error.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and make the
Loan as contemplated hereby, the Loan Parties hereby make the following
representations and warranties:
Section 5.1. Corporate Existence, Good Standing, Etc.
----------------------------------------
URC and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized, and has corporate power to own its properties and conduct
its business as now conducted and as proposed to be conducted by it. Each of the
Loan Parties has the corporate power to enter into and perform this Agreement
and all other Bank Agreements to which each of them is a party, and, in the case
of the Borrower, to execute and deliver the Notes. Each Subsidiary has the
corporate power to enter into and perform each Bank Agreement to which it is a
party. Certified copies of the charter documents and By-Laws of each of the Loan
Parties and each Affiliate Guarantor have been delivered to the Agent and are
true, accurate and complete as of the date hereof.
Section 5.2. Principal Place of Business; Location of Records.
-------------------------------------------------
The principal place of business of the Borrower and each other Loan
Party is located at 100 Charles Park Road, West Roxbury, MA 02132. All of the
books and records or true and complete copies thereof relating to the accounts
and contracts of the Borrower and each Loan Party are and will be kept at such
location.
Section 5.3. Qualification.
--------------
URC and each of its Subsidiaries is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where its
ownership or leasing of properties or the conduct of its business requires it to
be qualified, except where the failure to be so qualified would not have a
Material Adverse Effect.
Section 5.4. Subsidiaries.
-------------
URC's Subsidiaries and their respective jurisdiction of incorporation
are listed in SCHEDULE 5.4, and all of the issued and outstanding capital stock
of each such Subsidiary is owned by URC, UHC or the Borrower, as listed in
SCHEDULE 5.11.
Section 5.5. Corporate Power.
----------------
The execution, delivery and performance of this Agreement, the Notes
and all other Bank Agreements and other documents delivered by the Loan Parties
or any Subsidiary to the Bank, and the incurrence of Indebtedness to the Bank
hereunder or thereunder:
25
<PAGE> 31
(a) are within the corporate powers of each Loan Party and
each Subsidiary Guarantor, as the case may be, having been duly authorized by
its Board of Directors or other similar governing body, and, if required by law,
by its charter documents or by its By-Laws, by its stockholders;
(b) do not require any approval or consent of, or filing with,
any governmental agency or other Person (or such approvals and consents have
been obtained and delivered to the Agent) and are not in contravention of law or
the terms of the charter documents or By-Laws of any Loan Party or any
Subsidiary Guarantor or any amendment thereof; and
(c) do not
(i) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any
other agreement, lease or instrument to which any
Loan Party or any Subsidiary Guarantor is a party or
by which any Loan Party or any Subsidiary Guarantor
or any of their respective properties are bound or
affected, which gives any Person the fight
(immediately or upon the giving of notice, the
passage of time, or otherwise) to accelerate any
material amount of Indebtedness or terminate any
material right of URC or any Subsidiary,
(ii) result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature
on any property now owned or hereafter acquired by
any Loan Party or any Subsidiary Guarantor, except as
provided in the Bank Agreements, or
(iii) result in a violation of or default under any law,
rule, regulation, order, writ, judgment, injunction,
decree, determination or award, now in effect having
applicability to any Loan Party or any Subsidiary
Guarantor, or to any of their respective properties.
Section 5.6. Valid and Binding Obligations.
------------------------------
This Agreement, the Notes, and all the other Bank Agreements executed
in connection herewith and therewith constitute, the valid and binding
obligations of the Loan Parties and their Subsidiaries party thereto, as the
case may be, enforceable in accordance with their respective terms, except as
the enforceability thereof may be subject to bankruptcy, insolvency, moratorium
and other laws affecting the rights and remedies of creditors and secured
parties and to the exercise of judicial discretion in accordance with general
equitable principles.
Section 5.7. Other Agreements.
-----------------
Except for the agreements, leases and instruments listed under Pan IV,
Item 14(a)(3) of the URC Annual Report on Form 10-K for the fiscal year ended
October 2, 1994, neither URC
26
<PAGE> 32
nor any of its Subsidiaries is a party to any indenture, loan or credit
agreement, or any lease or other agreement or instrument, or subject to any
charter or corporate restriction, which is likely to have a Material Adverse
Effect or a material adverse effect on the ability of URC or any such Subsidiary
to carry out any of the provisions of this Agreement, the Notes or any of the
Bank Agreements executed in connection herewith and therewith.
Section 5.8. Payment of Taxes.
-----------------
URC and each of its Subsidiaries has filed all tax returns which are
required to be filed by them and have paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to said returns or
to assessments received. All federal tax returns of URC and its Subsidiaries
through their fiscal year ended in 1992 have been audited by the Internal
Revenue Service are not subject to such audit by virtue of the expiration of the
applicable period of limitation, and except as described in SCHEDULE 5.8, the
results of such audits are fully reflected in the balance sheet contained in the
1994 Financial Statements. URC knows of no material additional assessments since
such date for which adequate reserves appearing in the balance sheet contained
in the 1994 Financial Statements have not been established. URC and its
Subsidiaries have made adequate provisions for all current taxes, and in the
opinion of URC, except as described in SCHEDULE 5.8. there will not be any
additional assessments for any fiscal periods prior to and including that which
ended on the date of said balance sheet in excess of the amounts reserved
therefor.
Section 5.9. Financial Statements.
---------------------
All balance sheets, statements and other financial information
furnished to the Banks in connection with this Agreement and the transactions
contemplated hereby (each of which is listed on SCHEDULE 5.9), including,
without limitation, the 1994 Financial Statements, have been prepared in
accordance with GAAP consistently applied throughout the periods involved and
present fairly the consolidated financial condition of URC and its Subsidiaries
and all such information so furnished is true, correct and complete.
Section 5.10. Other Materials Furnished.
--------------------------
All material written information, exhibits, memoranda or reports
furnished by or on behalf of URC or its Subsidiaries to the Banks in connection
with the negotiation of this Agreement is set forth in SCHEDULE 5.10. None of
such materials contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
Section 5.11. Stock.
------
There are presently issued by URC and its Subsidiaries and outstanding
the shares of capital stock indicated on SCHEDULE 5.11. URC and its Subsidiaries
have received the consideration for which such stock was authorized to be issued
and have otherwise complied with all legal requirements relating to the
authorization and issuance of shares of stock and all
27
<PAGE> 33
such shares have been duly authorized,' validly issued and are fully paid and
non-assessable. URC and its Subsidiaries have no other capital stock of any
class outstanding.
Section 5.12. Changes in Condition.
---------------------
Except as set forth in SCHEDULE 5.12, since the date of the latest
balance sheet listed on SCHEDULE 5.9, there has been no material adverse change
in the business or assets or in the condition, financial or otherwise, of URC
and its Subsidiaries taken as a whole, and neither URC nor any such Subsidiary
has entered into any transaction outside of the ordinary course of business
which is material to URC, or to URC and its Subsidiaries taken as a whole.
Except as set forth in SCHEDULE 5.12, neither URC nor any of its Subsidiaries
has any known contingent liabilities which are not referred to in such balance
sheet and which are material to URC and its Subsidiaries taken as a whole.
Section 5.13. Assets, Licenses, Etc.
----------------------
(a) URC and its Subsidiaries have good and marketable title to, or
valid leasehold interests in, all of their assets, real and personal, including
the assets carried on its books and reflected in the latest balance sheet listed
on SCHEDULE 5.9, subject to no liens, charges or encumbrances, except for (i)
liens, charges and encumbrances described in SCHEDULE 5.13(a) or permitted by
Section 9.2 hereof, and (ii) assets sold, abandoned or otherwise disposed of in
the ordinary course of business.
(b) URC and its Subsidiaries possess all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, or rights thereto, necessary to
conduct their business substantially as now conducted and as presently proposed
to be conducted. URC has provided the Agent with a list of its and its
Subsidiaries patents, trademarks, tradenames and material franchises (the
"Material Rights"). URC and its Subsidiaries have no obligation to compensate
any third party for the use of the Material Rights, and to the best knowledge of
the Loan Parties, URC and its Subsidiaries are not in violation of any valid
rights of others with respect to any of the foregoing.
(c) As of the date of this Agreement, the location of each Company
Restaurant, the location of each restaurant operated by a Franchisee, the month
and year each such restaurant opened, the name and address of each Franchisee,
and the date each became a Franchisee, are set forth on SCHEDULE 5.13(c) hereto.
Section 5.14. Litigation.
-----------
Except as described on SCHEDULE 5.14 hereto, there is no litigation, at
law or in equity, or any proceeding before any federal, state, provincial or
municipal board or other governmental or administrative agency pending or, to
the knowledge of URC, threatened, which involves a material risk of any judgment
or liability not fully covered by insurance and which, if adversely determined,
would result in a Material Adverse Effect, and no judgment, decree, or order of
any federal, state, provincial or municipal court, board or other governmental
or administrative
28
<PAGE> 34
agency has been issued against URC or any of its Subsidiaries which has or may
have a Material Adverse Effect.
Section 5.15. Pension Plans.
--------------
As of the date hereof, URC and its Subsidiaries have no Pension Plan
subject to the minimum funding or termination insurance provisions of the
Pension Reform Act.
Section 5.16. Outstanding Indebtedness.
-------------------------
The outstanding amount of Indebtedness for borrowed money, including
Capitalized Lease Obligations, of URC and its Subsidiaries as of the date
hereof, is correctly set forth in SCHEDULE 5.16 hereto or permitted hereunder,
and said Schedule correctly lists the credit agreements, guaranties, leases and
other instruments pursuant to which such Indebtedness has been incurred and all
security interests securing such Indebtedness.
Section 5.17. Environmental Matters.
----------------------
Except as set forth in SCHEDULE 5.17 hereto.
(a) None of URC, any of its Subsidiaries or any operator of
any of their respective properties is in violation, or, to the Loan Parties'
knowledge, is in alleged violation, of any Environmental Law, which violation
would have a Material Adverse Effect.
(b) Neither URC nor any of its Subsidiaries has received
written notice from any third party, including without limitation any federal,
state, county, or local governmental authority, (i) that it has been identified
as a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as mended ("CERCLA") or any
equivalent state law, with respect to any site or location; (ii) that any
hazardous waste, as defined in 42 U.S.C. ss. 6903(5), any hazardous substances,
as defined in 42 U.S.C. ss. 9601(14), any pollutant or contaminant, as defined
in 42 U.S.C. ss. 9601(33), or any toxic substance, oil or hazardous materials or
other chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which it has generated, transported or disposed of, has been found
at any site at which a federal, state, county, or local agency or other third
party has conducted or has ordered URC, any Subsidiary or another third party or
parties (E.G. a committee of potentially responsible parties) to conduct a
remedial investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any claim,
action, cause of action, complaint (contingent or otherwise) or legal or
administrative proceeding arising out of any actual or alleged release or
threatened release of Hazardous Substances. For purposes of this Agreement,
"release" means any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping of Hazardous Substances into the environment.
(c) To the best of each Loan Party's knowledge: (i) URC, each
of its Subsidiaries and each operator of any real property owned or operated by
URC or any Subsidiary is in compliance, in all material respects, with all
provisions of the Environmental Laws relating
29
<PAGE> 35
to the handling, manufacturing, processing, generation, storage or disposal of
any Hazardous Substances; (ii) no portion of property owned, operated or
controlled by URC or any Subsidiary has been used for the handling,
manufacturing, processing, generation, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws; (iii) there
have been no releases or threatened releases of Hazardous Substances on, upon,
into or from any property owned, operated or controlled by URC or any of its
Subsidiaries, which releases could have a Material Adverse Effect; (iv) there
have been no releases of Hazardous Substances on, upon, from or into any real
property in the vicinity of the real properties owned, operated or controlled by
URC or any of its Subsidiaries which, through soil or groundwater contamination,
may have come to be located on the properties of URC or any Subsidiary, which
releases could have a Material Adverse Effect; (v) there were no releases of
Hazardous Substances on, upon, from or into any real property formerly but no
longer owned, operated or controlled by URC or its Subsidiaries at the time of
such ownership, operation or control, which releases could have a Material
Adverse Effect; .
(d) None of the properties of URC or any of its Subsidiaries
is or shall be subject to any applicable environmental cleanup responsibility
law or environmental restrictive transfer law or regulation by virtue of the
transactions set forth herein and contemplated hereby.
Section 5.18. Foreign Trade Regulations.
--------------------------
Neither URC nor any of its Subsidiaries is (a) a person included within
the definition of "designated foreign country" or "national" of a "designated
foreign country" in Executive Order No. 8389, as amended, in Executive Order No.
9193, as amended, in the Foreign Assets Control Regulations (31 C.F.R., Chapter
V, Pan 500, as amended), in the Cuban Assets Control Regulations of the United
States Treasury Department (31 C.F.R., Chapter V, Part 515, as amended) or in
the Regulations of the Office of Alien Property, Department of Justice (8
C.F.R., Chapter II, Part 507, as amended) or within the meanings of any of the
said orders or regulations, or of any regulations, interpretations, or rulings
issued thereunder, or in violation of said Orders or regulations or of any
regulations, interpretations or rulings issued thereunder; or (b) an entity
listed in Section 520.101 of the Foreign Funds Control Regulations (31 C.F.R.,
Chapter V, Part 520, as amended).
Section 5.19. Governmental Regulations.
-------------------------
None of URC, any of its Subsidiaries or any corporation controlling URC
or under common control with URC is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940, or is a common carrier under the Interstate Commerce Act,
or is subject to any statute or regulation which regulates the incurring by URC
of indebtedness for borrowed money, including statutes or regulations relating
to common or contract carriers or to the sale of electricity, gas, steam, water,
telephone or telegraph or other public utility services.
Section 5.20. Margin Stock
------------
30
<PAGE> 36
Neither URC nor any of its Subsidiaries owns any "margin stock" within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder, nor is URC or
any such Subsidiary engaged principally or as one of its important activities in
extending credit which is used for the purpose of purchasing or carrying margin
stock. None of the Advances will be used, directly or indirectly, to purchase or
carry any such "margin stock".
ARTICLE 6. REPORTS
Section 6.1. Interim Financial Statements and Reports.
-----------------------------------------
(a) As soon as available, and in any event within forty-five
(45) days after the end of the first three fiscal quarters of each fiscal year
of URC, URC shall furnish the Agent and the Banks with (i) consolidated and
consolidating balance sheets of URC and its Subsidiaries as of the end of such
quarter and consolidated and consolidating statements of income and cash flow of
URC and its Subsidiaries for such quarter and for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
prepared in accordance with GAAP consistently applied (subject to the absence of
footnotes and ordinary year end adjustments), and (ii) a Compliance Certificate.
(b) As soon as available, and in any event within forty-five
(45) days after the end of each fiscal quarter of URC, URC shall furnish the
Agent and the Banks with statements of operations and cash flow for such fiscal
quarter for each pizzeria restaurant location operated by URC and its
Subsidiaries, such statements to be prepared in reasonable detail, in accordance
with GAAP consistently applied and on a restaurant by restaurant basis.
Section 6.2. Annual Financial Statements.
----------------------------
As soon as available, but in any event within ninety (90) days after
the end of each fiscal year of URC, URC shall furnish to the Agent and the Banks
(i) a consolidated balance sheet of URC and its Subsidiaries as of the end of
such fiscal year and consolidated statements of income, shareholders' equity and
cash flow of URC and its Subsidiaries for such fiscal year, in each case
reported on by Ernst & Young or other independent certified public accountants
of recognized national standing, which report shall express, without reliance
upon others, a positive opinion regarding the fairness of the presentation of
such financial statements in accordance with GAAP consistently applied, said
report to be without qualification, except in cases of unresolved litigation and
accounting changes with which such accountants concur, and (ii) a Compliance
Certificate.
Section 6.3. Notice of Defaults.
-------------------
As soon as possible, and in any event within five (5) days after the
occurrence of each Default, the Loan Parties shall furnish the Agent and the
Banks with the statement of their
31
<PAGE> 37
respective chief executive officer or chief financial officer setting forth
details of such Default and the action which the Loan Parties have taken or
propose to take with respect thereto.
Section 6.4. Notice Of Litigation.
---------------------
Promptly after the 'commencement thereof, the Loan Parties shall
furnish the Agent and the Banks written notice of all actions, suits and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, to which URC or any of
its Subsidiaries is a party or directly affecting any of their respective
properties, which, if adversely determined, would have a Material Adverse
Effect.
Section 6.5. Communications with Others.
---------------------------
At all times that the stock of URC is traded publicly, URC shall
furnish the Agent and the Banks with copies of all regular, periodic and special
reports and all registration statements which URC files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or with any national or regional securities exchange.
Section 6.6. Reportable Events.
------------------
At any time that URC or any Subsidiary has a Pension Plan, the Loan
Parties shall furnish to the Agent and the Banks, as soon as possible, but in
any event within thirty (30) days after any Loan Party knows or has reason to
know that any Reportable Event with respect to any Pension Plan has occurred,
the statement of its chief executive officer or chief financial officer setting
forth the details of such Reportable Event and the action which URC or any
Subsidiary has taken or proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event to the Pension Benefit Guaranty
Corporation.
Section 6.7. Annual Pension Reports.
-----------------------
At any time that URC or any Subsidiary has a Pension Plan, the Loan
Parties shall furnish to the Agent and the Banks, promptly after the filing
thereof with the Secretary of Labor or the Pension Benefit Guaranty Corporation,
copies of each annual report which is filed with respect to each Pension Plan
for each plan year, including:
(a) a statement of assets and liabilities of such Pension Plan
as of the end of such plan year and statements of changes in fund balance and in
financial position, or a statement of changes in net assets available for plan
benefits, for such plan year;
(b) an opinion of Ernst & Young (or other independent
certified public accountants of recognized standing) relating to such Pension
Plan to the extent that any such opinion for the Pension Plan is required by
law; and
(c) an actuarial statement of such Pension Plan applicable to
such plan year, together with an opinion of an enrolled actuary of recognized
standing, to the extent that any such statement and/or opinion for the Pension
Plan is required by law.
32
<PAGE> 38
Section 6.8. Reports to other Creditors.
---------------------------
Promptly after filing the same, each Loan Party shall furnish to the Agent
and the Banks copies of any compliance certificate and other information
furnished to any other holder of the securities (including debt obligations) of
URC or any Subsidiary pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Agent and
the Banks pursuant to any other provision of this Agreement.
Section 6.9. Management Letters.
-------------------
Promptly after the receipt thereof, URC shall furnish to the Agent and the
Banks copies of any written recommendations concerning the management, finances,
financial controls, or operations of URC and its Subsidiaries received from
URC's independent public accountants.
Section 6.10. Environmental Reports.
----------------------
The Loan Parties shall provide the Agent and the Banks: (a) not later than
ten (10) days after written notice thereof, notice of any enforcement actions,
or, to the knowledge of the Loan Parties, threatened enforcement actions
affecting the Loan Parties or any Subsidiary by any Governmental Authority
related to Environmental Laws; (b) copies, promptly after they are received, of
all orders, notices of responsibility, notices of violation, notices of
enforcement actions, and assessments, and other written communications
pertaining to any such orders, notices, claims and assessments received by the
Loan Parties or any Subsidiary from any Governmental Agency; (c) not later than
seven (7) days after written notice thereof, notice of any civil claims or
threatened civil claims affecting the Loan Parties or any Subsidiary by any
third party alleging any violation of Environmental Laws; (d) copies of all
cleanup plans, site assessment reports, response plans, remedial proposals, or
other submissions of the Loan Parties or any Subsidiary, other third party
(e.g., committee of potentially responsible parties at a Superfund site), or any
combination of same, submitted to a Governmental Agency in response to any
communication referenced in subsections (a) and Co) herein as soon as possible
and in any event within five (5) Business Days after their submission to such
Governmental Agency; and (e) from time to time, on request of the Agent,
evidence satisfactory to the Agent of URC's and its Subsidiaries' insurance
coverage, if any, for any environmental liabilities.
Section 6.11. Senior Note Purchase Agreement.
-------------------------------
(a) As soon as available and in any event within forty-five (45) days
after the end of each fiscal quarter of the Borrower, the Borrower shall furnish
the Agent and the Banks with a certificate executed by the chief executive
officer or chief financial officer of the Borrower setting forth in reasonable
detail a calculation of the financial test described in Section 10. l(d)(i) of
the Senior Note Purchase Agreement, as of the end of such fiscal monthly period.
(b) The Loan Parties shall notify the Agent in advance of any
modification, amendment or waiver of any of the provisions of the Senior Note
Purchase Agreement and, promptly upon execution thereof, shall furnish to the
Agent and the Banks copies of any such modifications, amendments or waivers. As
soon as possible, and in any event within five (5)
33
<PAGE> 39
Business Days after the occurrence of a default under the Senior Note Purchase
Agreement, the Loan Parties shall furnish the Agent and the Banks with the
statement of their respective chief executive officer or chief financial officer
setting forth details of such default and the action which the Loan Parties have
taken or propose to take with respect thereto.
Section 6.12. Annual Projections.
-------------------
Within 90 days after the end of each fiscal year of URC and its
Subsidiaries, the Borrower shall furnish to the Agent and the Banks consolidated
financial projections for URC and its Subsidiaries for the then current fiscal
year in form consistent with the Long Range Plan dated October 20, 1994
previously delivered by the Borrower to the Agent.
Section 6.13. Miscellaneous.
--------------
The Loan Parties shall provide the Agent and the Banks with such other
information as the Agent or any Bank may from time to time reasonably request
respecting the business, properties, condition or operations, financial or
otherwise, of URC and its Subsidiaries.
ARTICLE 7. FINANCIAL RESTRICTIONS
On and after the date hereof, until all of the Bank Obligations shall have
been paid in full and the Banks shall have no commitments to lend hereunder, the
Loan Parties shall observe the following covenants:
Section 7.1. Consolidated Tangible Net Worth.
--------------------------------
URC will at all times maintain Consolidated Tangible Net Worth in an amount
not less than the sum of (i) $52,264,000, PLUS (ii) 50 % of the sum of
Consolidated Net Income (0 % in the case of a deficit) for each fiscal quarter
ending after October 2, 1994, PLUS (iii) 100% of the net proceeds received by
URC in connection with any offering of its capital stock.
Section 7.2. Cash Flow Coverage Ratio.
-------------------------
URC and its Subsidiaries shall maintain a ratio of Consolidated Adjusted
EBITDA to the sum of (i) Consolidated Total Debt Service, PLUS (ii) Consolidated
Maintenance Capital Expenditures, PLUS (iii) all cash dividends paid by URC on
its capital stock, PLUS (iv) all taxes paid by URC and its Subsidiaries in cash,
for each four fiscal quarter period ending during the periods indicated below,
of not less than the ratio set forth opposite each such period:
<TABLE>
<CAPTION>
Date/Period Ratio
- ----------- -----
<S> <C>
Closing Date through the date preceding 1.45:1.0
Second Fiscal Quarter End 1995
</TABLE>
34
<PAGE> 40
<TABLE>
<S> <C>
Second Fiscal Quarter End 1995 1.70:1.0
through the date preceding
Second Fiscal Quarter End 1996
Second Fiscal Quarter End 1996 1.80:1.0
through the date preceding Second
Fiscal Quarter End 1997
Second Fiscal Quarter End 1997 2.00:1.0
through the date preceding
Third Fiscal Quarter End 1998
Third Fiscal Quarter End 1998 1.75:1.0
through the date preceding
First Fiscal Quarter 1999
First Fiscal Quarter End 1999 1.75:1.0
Through the date preceding
First Fiscal Quarter 1999
First Fiscal Quarter End 1999 1.40:1.0
through the date preceding
Fourth Fiscal Quarter End 2000
Fourth Fiscal Quarter End 1.60:1.0
2000 and thereafter
</TABLE>
Section 7.3. Ratio of Consolidated Liabilities to Consolidated Tangible Net
--------------------------------------------------------------
Worth.
------
URC shall at all times maintain a ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth of not more than 1.35 to 1.0.
Section 7.4. Profitability.
--------------
URC shall earn Consolidated Net Income in each fiscal quarter of not less
than $1.
Section 7.5. Operating Cash Flow.
--------------------
For each four fiscal quarter period, commencing with the period ending
January 1, 1995, total Operating Cash Flow for all Company Restaurants having
negative Operating Cash Flow shall not exceed 2 % of total Operating Cash Flow
of all Company Restaurants for each such period. For purposes of calculating
total Operating Cash Flow there shall be excluded from all such calculations
Operating Cash Flow for any Company Restaurant(s) which have been in operation
less than two full fiscal quarters. Operating Cash Flow for any new Company
Restaurant in operation for more than two full fiscal quarters shall be
determined (i) for the initial
35
<PAGE> 41
four quarter period including such new Company Restaurant's third full fiscal
quarter of operation, by annualizing Operating Cash Flow for such Company
Restaurant for such third quarter, (ii) for the initial four quarter period
including such new Company Restaurant's third and fourth full fiscal quarters of
operation, by annualizing Operating Cash Flow for such Company Restaurant for
such third and fourth quarters, and (iii) for any four quarter period
thereafter, by reference to the four fiscal quarters of operation of such new
Company Restaurant then ended.
Section 7.6. Capital Expenditures.
---------------------
URC and its Subsidiaries shall not make or incur consolidated Capital
Expenditures in excess of the amounts set forth below during each fiscal year
indicated:
<TABLE>
<CAPTION>
Maximum Consolidated
Fiscal Year Capital Expenditures
- ----------- --------------------
<C> <C>
1995 $39,000,000
1996 42,000,000
1997 45,500,000
1998 and each fiscal year thereafter 57,000,000
</TABLE>
Section 7.7. Consolidated Leverage Ratio.
---------------------------
URC and its Subsidiaries shall at all times during the periods set forth
below maintain a Consolidated Leverage Ratio of not more than the ratio set
forth opposite each such period:
<TABLE>
<CAPTION>
Date/Period Ratio
- ----------- -----
<S> <C>
Closing Date through the date preceding 1.55:1.0
Second Fiscal Quarter End 1995
Second Fiscal Quarter End 1995 through the date 1.95:1.0
preceding Fourth Fiscal Quarter End 1995
Fourth Fiscal Quarter End 1995 through the date 1.75:1.0
preceding First Fiscal Quarter End 1997
First Fiscal Quarter End 1997 and thereafter 1.50:1.0
</TABLE>
Section 7.8. Consolidated Adjusted EBITDA.
-----------------------------
URC and its Subsidiaries' Consolidated Adjusted EBITDA for each four fiscal
quarter period ending during the periods indicated below shall not be less than
the amount set forth opposite each such period:
36
<PAGE> 42
<TABLE>
<CAPTION>
Period Consolidated Adjusted EBITDA
- ------ ----------------------------
<S> <C>
Closing Date through the date preceding Second $17,400,000
Fiscal Quarter End 1995
Second Fiscal Quarter End 1995 through the 18,000,000
date preceding Fourth Fiscal Quarter End 1995
Fourth Fiscal Quarter End 1995 through the 20,000,000
date preceding Second Fiscal Quarter End 1996
Second Fiscal Quarter End through the 21,600,000
date preceding Fourth Quarter End 1996
Fourth Fiscal Quarter End 1996 through the 24,900,000
date preceding Second Fiscal Quarter End 1997
Second Fiscal Quarter End 1997 through the 26,700,000
date preceding Fourth Fiscal Quarter End 1997
Fourth Fiscal Quarter End 1997 through the 32,300,000
date preceding Second Fisccal Quarter End 1998
Second Fiscal Quarter End 1998 through the 34,600,000
date preceding FourQuarter End 1998
Fourth Fiscal Quarter End 1998 and thereafter 41,400,000
</TABLE>
ARTICLE 8. AFFIRMATIVE COVENANTS
On and after the date hereof, until all of the Bank Obligations shall have
been paid in full and the Banks shall have no commitment hereunder, each Loan
Party covenants that it and each of its Subsidiaries will comply with the
following covenants and provisions:
Section 8.1. Existence and Business.
-----------------------
URC and each of its Subsidiaries will (a) preserve and maintain its
corporate existence and qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is required, except where the
failure so to qualify would not have a Material Adverse Effect, (b) maintain and
preserve in full force and effect all material rights, licenses, patents and
franchises, reasonably necessary or advisable to the conduct of its business,
(c) comply with all valid and applicable statutes, rules and regulations
necessary for the conduct of business, except where the failure so to comply
would not have a Material Adverse Effect, and (d) engage only in the businesses
which it is conducting on the date of this Agreement.
37
<PAGE> 43
Section 8.2. Taxes and Other Obligations.
----------------------------
URC and each of its Subsidiaries (a) will pay and discharge, or cause to be
paid and discharged, at or prior to the time the same shall become due and
payable all material taxes, assessments and other governmental charges, imposed
upon it and its properties, sales and activities, or upon the income or profits
therefrom, as well as the claims for labor, materials, or supplies which if
unpaid might by law become a lien or charge upon any of its properties, and (b)
will promptly pay or cause to be paid when due, or in conformance with customary
trade terms, all lease obligations, trade debt and all other Indebtedness
incident to its operations; provided, however, that URC and any Subsidiary may
contest any such charges or claims in good faith so long as (i) an adequate
reserve therefor has been established and is maintained if and as required by
generally accepted accounting principles and (ii) no action to foreclose any
lien with respect thereto has been commenced. URC and each of its Subsidiaries
shall cause all applicable tax returns and all amounts due thereunder to be
filed and paid, as the case may be, in order to maintain its good standing with
the Internal Revenue Service, state and local and foreign tax authorities.
Section 8.3. Maintenance of Properties and Leases.
-------------------------------------
URC and each of its Subsidiaries shall maintain, keep and preserve all of
its properties (tangible and intangible) in good repair and working order,
ordinary wear and tear excepted. URC and each of its Subsidiaries shall replace
and improve its properties as necessary for the conduct of its business. URC and
each of its Subsidiaries shall comply in all material respects with all leases
naming it as lessee if non-compliance therewith would have a Material Adverse
Effect.
Section 8.4. Insurance.
----------
URC and each of its Subsidiaries (a) will keep its principal assets which
are of an insurable character insured by financially sound and reputable
insurers against loss or damage by fire, explosion or hazards, by extended
coverage in an amount not less than 80% of the insurable value of the property
insured, and (b) will maintain with financially sound and reputable insurers
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner as requested by the Agent, and in any event as
customary for companies in similar businesses similarly situated; PROVIDED,
HOWEVER, that URC and its Subsidiaries may effect workmen's compensation
insurance or similar coverage with respect to operations in any particular state
or other jurisdiction through an insurance fund operated by such state or
jurisdiction and may also be a self-insurer with respect to workmen's
compensation and with respect to group medical benefits under any medical
benefit plan. On request of the Agent from time to time, the Loan Parties will
render to the Agent a statement in reasonable detail as to all insurance
coverage required by this Section. A description of the material elements of
insurance coverage of URC and its Subsidiaries as of the date hereof is set
forth on SCHEDULE 8.4.
Section 8.5. Records, Accounts and Places of Business.
-----------------------------------------
38
<PAGE> 44
URC and each of its Subsidiaries shall maintain comprehensive and accurate
records and accounts, including reserves, in accordance with generally accepted
accounting principles consistently applied. URC and each of its Subsidiaries
will promptly notify the Agent of (a) any changes in the places of business of
URC and its Subsidiaries and (b) any additional places of business which may
arise hereafter.
Section 8.6. Inspection.
-----------
At any reasonable time and from time to time, the Loan Parties shall permit
the Agent, the Banks and any of their agents or representatives to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of, the Loan Parties and their Subsidiaries and to discuss the
affairs, finances and accounts of the Loan Parties and their Subsidiaries with
any of their respective officers or directors and with their independent
accountants.
Section 8.7. Change in Officers or Directors.
--------------------------------
URC will promptly notify the Agent in writing if there occurs any change in
the present senior officers or directors of any of the Loan Parties.
Section 8.8. Maintenance of Accounts.
------------------------
The Loan Parties shall maintain the Agent as their principal depository for
their operating, concentration and disbursement accounts. The Borrower and the
Affiliate Guarantors may maintain depository accounts with other banks for
operation of Company Restaurants, provided that all excess funds maintained in
such accounts shall be deposited with the Agent within two (2) Business Days
after deposit in such accounts.
Section 8.9. Access to Independent Public Accountants.
-----------------------------------------
At any reasonable time and from time to time, URC shall provide the Agent,
the Banks and any of their agents or representatives access to the independent
public accountants of URC to discuss URC's financial condition, including,
without limitation any recommendations of such independent public accountants
concerning the management, finances, financial controls or operations of URC and
its Subsidiaries.
ARTICLE 9. NEGATIVE COVENANTS
On and after the date hereof, until all of the Bank Obligations shall have
been paid in full and the Banks shall have no commitment to lend hereunder, each
Loan Party covenants that neither it nor any of its Subsidiaries will:
Section 9.1. Restrictions on Indebtedness.
-----------------------------
Create, incur, suffer or permit to exist, or assume or guarantee, either
directly or indirectly, or otherwise become or remain liable with respect to,
any Indebtedness, except the following:
39
<PAGE> 45
(a) Indebtedness of URC and its Subsidiaries referred to in SCHEDULE
5.13;
(b) Indebtedness on account of Consolidated Current Liabilities (other
than for money borrowed) incurred in the normal and ordinary course of business;
(c) Indebtedness in respect of (i) taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the extent
that payment thereof shall not at the time be required to be made in accordance
with the provisions of Section 8.2 hereof, (ii) judgments or awards which have
been in force for less than the applicable appeal period so long as execution is
not levied thereunder or in respect of which URC or any Subsidiary shall at the
time in good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review, and (iii) endorsements made in connection with the deposit of
items for credit or collection in the ordinary course of business;
(d) Subordinated Indebtedness;
(e) Guarantees permitted under Section 9.5;
(f) other Indebtedness, so long as on the date URC or any Subsidiary
becomes liable with respect to such other Indebtedness and immediately after
giving effect thereto and to the concurrent retirement of any other
Indebtedness, there shall be no Default hereunder; and
(g) Indebtedness to the Agent and Banks hereunder and under the Notes
and the other Bank Agreements.
Section 9.2. Restriction on Liens.
---------------------
Create or incur or suffer to be created or incurred or to exist any
encumbrance, mortgage, pledge, lien, charge or other security interest of any
kind upon any of its property or assets of any character, whether now owned or
hereafter acquired, or transfer any of such property or assets for the purposes
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors, or acquire or
agree or have an option to acquire any property or assets upon conditional sale
or other title retention agreement, device or arrangement (including Capitalized
Leases) or suffer to exist for a period of more than 30 days after the same
shall have been incurred any Indebtedness against it which if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors, or sell, assign, pledge or otherwise
transfer for security any of its accounts, contract fights, general intangibles,
or chattel paper (as those terms are defined in the Massachusetts Uniform
Commercial Code) with or without recourse; PROVIDED, HOWEVER, that the Loan
Parties and any Subsidiary may create or incur or suffer to be created or
incurred or to exist:
(a) Existing liens and security interests described in SCHEDULE 5.13
securing presently outstanding Indebtedness permitted by Section 9.1(a);
40
<PAGE> 46
(b) Purchase money security interests (which term shall include
mortgages, conditional sale contracts, Capitalized Leases and all other title
retention or deferred purchase devices) to secure the purchase price of property
acquired hereafter by any Loan Party or Subsidiary, or to secure Indebtedness
incurred solely for the purpose of financing such acquisitions; PROVIDED,
HOWEVER. that no such purchase money security interests shall extend to or cover
any property other than the property the purchase price of which is secured by
it, and that the principal amount of Indebtedness (whether or not assumed) with
respect to each item of property subject to such a security interest shall not
exceed the fair value of such item on the date of its acquisition;
(c) Deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or other
social security; liens in respect of judgments or awards to the extent such
judgments or awards are permitted as Indebtedness by the provisions of Section
9.1(c); and liens for taxes, assessments or governmental charges or levies and
liens to secure claims for labor, material or supplies to the extent that
payment thereof shall not at the time be required to be made in accordance with
Section 8.2;
(d) Encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which do not
materially detract from the value of such property or impair its use in the
business of the owner or lessee;
(e) Liens (other than judgments and awards) created by or resulting
from any litigation or legal proceeding, provided the execution or other
enforcement thereof is effectively stayed and the claims secured thereby are
being actively contested in good faith by appropriate proceedings; and
(f) Liens arising by operation of law to secure landlords, lessors or
renters under leases or rental agreements made in the ordinary course of
business and confined to the premises or property rented.
Nothing contained in this Section 9.2 shall permit any Loan Party or
any Subsidiary to incur any Indebtedness or take any other action or permit to
exist any other condition to exist which would be in contravention of any other
provision of this Agreement.
Section 9.3. Investments.
------------
Have outstanding or hold or acquire or make or commit itself to acquire or
make any Investment except the following:
(a) Investments having a maturity of less than one year from the date
thereof in: (i) obligations of the Banks; (ii) obligations of the United States
of America or any agency or instrumentality thereof; (iii) repurchase agreements
involving securities described in clauses (i) and (ii) with the Banks; and (iv)
commercial paper which is rated not less than prime-one or A-1 or their
equivalents by Moody's Investor Service, Inc. or Standard & Poor's Corporation,
respectively, or their successors;
41
<PAGE> 47
(b) readily marketable preferred stock commonly referred to as either
"auction rate preferred stock" or "money market preferred stock" having on its
date of acquisition a rating of either A- or higher from Standard & Poor's
Corporation or A-3 or higher from Moody's Investors Service, Inc.;
(c) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof (i) maturing within one year from the date of
acquisition thereof (PROVIDED that there shall be no maximum maturity
restriction with respect to so-called "variable rate demand notes" whose
interest rate is adjusted at least annually to reflect market changes such that
the adjusted interest rate parallels the interest rate assumptions underlying
the initial interest rate of such obligations), and (ii) having on its date of
acquisition a rating of either A- or higher from Standard & Poor's Corporation
or A-3 or higher from Moody's Investors Service, Inc.;
(d) Existing Investments of the Loan Parties in their Subsidiaries;
(e) Investments consisting of intercompany advances between the
Borrower and UFI; PROVIDED, HOWEVER, that at no time shall the net "due from"
account on the books of the Borrower exceed $3,500,000 with respect to UFI;
(f) Investments in Subsidiaries which are Affiliate Guarantors; and
(g) Investments consisting of loans provided to employees of URC and
its Subsidiaries in an aggregate amount outstanding at any one time not in
excess of $75,000.
Section 9.4. Dispositions of Assets.
-----------------------
Sell, lease or otherwise dispose of any assets except for (a) the sale,
lease or other disposition of inventory or other property (not including
receivables) in the ordinary course of business, and (b) so long as no Default
has occurred and continues to exist hereunder or would occur after giving effect
to such sale, the sale by the Borrower and its Subsidiaries of the assets or
stock of Subsidiaries permitted to be sold pursuant to Section 10.8 or 10.9 of
the Senior Note Purchase Agreement, as such Agreement is in effect on the date
of this Agreement.
Section 9.5. Assumptions, Guaranties, Etc. of Indebtedness of Other
Persons. ------------------------------------------------------
- --------
Assume, guarantee, endorse or otherwise be or become directly or
contingently liable (including, without limitation, by way of agreement,
contingent or otherwise, to purchase, provide funds for payment, supply funds to
or otherwise invest in any Person or otherwise assure the creditors of any such
Person against loss) in connection with any Indebtedness of any other Person;
except the following:
(a) Guaranties existing on the date of this Agreement and described in
SCHEDULE 9.5, and additional Guarantees of Indebtedness of Franchisees incurred
in the ordinary course of business, provided that the maximum amount of
Indebtedness to which all Guarantees under this Subsection 9.5(a) relate does
not exceed, in the aggregate, $4,500,000;
42
<PAGE> 48
(b) Guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(c) Guaranties in favor of the Agent for the account of the Banks; and
(d) Guaranties of Indebtedness or Rental Obligations of its
Subsidiaries.
Section 9.6. Mergers, Etc.
-------------
Enter into any merger or consolidation with or acquire all or substantially
all of the assets of any Person, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to any Person,
except that:
(a) URC and its Subsidiaries may acquire new restaurants (whether
through the purchase of stock or assets), so long as no Default has occurred and
continues to exist hereunder or would, after giving effect to such acquisition,
occur;
(b) URC and its Subsidiaries may engage in transactions permitted
under Section 9.4 hereof; and
(c) So long as no Default has occurred and continues to exist
hereunder or would, after giving effect to such transaction, occur, (i) UFI, PUC
and any Subsidiary of the Borrower may consolidate with or merge into the
Borrower or any other wholly-owned Subsidiary of the Borrower so long as in any
merger involving the Borrower, the Borrower shall be the surviving corporation,
and (ii) the Borrower and any Subsidiary of the Borrower may acquire all or
substantially all of the assets of any other Subsidiary of the Borrower, and
(iii) UFI, PUC and any Subsidiary of the Borrower may sell, assign, lease or
otherwise dispose of all or substantially all of its assets to the Borrower or
any other wholly-owned Subsidiary of the Borrower.
Section 9.7. Pension Reform Act.
-------------------
At any time while URC or any of its Subsidiaries has a Pension Plan, permit
any accumulated funding deficiency to occur with respect to any Pension Plan or
other employee benefit plans established or maintained by URC or any such
Subsidiary or to which contributions are made by URC or any such Subsidiary (the
"Plans"), and which are subject to the Pension ,Reform Act and the rules and
regulations thereunder or to Section 412 of the Internal Revenue Code of 1986,
as amended (the "Code"), and at all times comply in all material respects with
the provisions of the Pension Reform Act and Code which are applicable to the
Plans. The Loan Parties will not permit any condition to exist which would
permit the Pension Benefit Guaranty Corporation to cause the termination of any
Pension Plan under circumstances which would cause the lien provided for in
Section 4068 of the Pension Reform Act to attach to the assets of URC or any of
its Subsidiaries.
Section 9.8. Distributions.
--------------
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Make any Distribution or make any other payment on account of the purchase,
acquisition, redemption, or other retirement of any shares of stock, whether now
or hereafter outstanding, except the following:
(a) Any Subsidiary may make Distributions to its corporate parent
which is a wholly-owned subsidiary of URC.
(b) So long as no Default has occurred and continues to exist or
would, after giving effect to the payment of such Distribution occur, URC may
make cash Distributions, provided that the aggregate amount of such
Distributions payable in any four fiscal quarter period shall not exceed
thirty-five percent (35 %) of Consolidated Net Income of URC and its
Subsidiaries for such period.
Section 9.9. Sale and Leaseback.
-------------------
Sell or transfer any of its properties with the intention of taking back a
lease of the same property or leasing other property for substantially the same
use as the property being sold or transferred.
Section 9.10. Franchise Agreements.
---------------------
URC's and its Subsidiary's franchise program as now conducted and as
presently proposed to be conducted is described in SCHEDULE 9.10 attached hereto
(the "Franchise Program"). URC will not, and will not permit any of its
Subsidiaries to, without the prior written consent of the Required Banks (which
shall not be unreasonably withheld, delayed or conditioned), (a) reduce or agree
to reduce the continuing monthly royalties payable by Franchisees, or (b) reduce
or agree to reduce the amounts required to be contributed to an advertising
cooperative fund or spent on local advertising and public relations by
Franchisees, or (c) make any other generally applicable changes to the Franchise
Program, except to the extent any such reduction or change would not have a
Material Adverse Effect.
Section 9.11. Capital Structure.
------------------
URC will not change its capital structure, or suffer or permit any
circumstances to exist in which less than thirty-three percent (33 %) of the
outstanding shares of common stock of URC is owned of record or beneficially by
Aaron D. Spencer; nor will URC permit any of its Subsidiaries to suffer or
permit any circumstance to exist in which any Subsidiary is not wholly-owned,
directly or indirectly, by URC. For purposes of the preceding sentence, shares
not owned of record by Aaron D. Spencer shall be deemed to be owned beneficially
by him only if he possesses the sole power to exercise all voting rights
associated with such shares, whether as trustee or otherwise.
Section 9.12. Transactions with Affiliates.
-----------------------------
URC will not, and will not cause or permit any of its Subsidiaries to,
enter into any transaction, including, without limitation, the purchase, sale or
exchange of any property, or the
44
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rendering of any service, with any present Affiliate, except in the ordinary
course of and pursuant to the reasonable requirements of its business and upon
fair and reasonable terms no less favorable to it than would be obtained in a
comparable arms length transaction with any Person not an Affiliate.
Section 9.13. New Subsidiaries.
-----------------
URC and its Subsidiaries shall not establish or acquire any new
Subsidiaries unless, immediately upon such establishment or acquisition, such
new Subsidiary executes and delivers to the Bank a guaranty of the Bank
Obligations in substantially the form of the Affiliate Guaranty Agreement, and
shall deliver such proof of corporate action, incumbency of officers, opinions
of counsel and other documents as the Agent shall reasonably request.
Section 9.14. New Restaurants.
----------------
URC and its Subsidiaries shall not establish or acquire in any fiscal year
more than three (3) restaurants which do not utilize the "Pizzeria Uno" concept.
ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default.
------------------
Each of the following events shall be deemed to be Events of Default
hereunder:
(a) The Borrower shall fail to make any payment in respect of (i) the
principal of any of the Bank Obligations as the same shall become due, whether
at the stated payment dates or by acceleration or otherwise, or (ii) interest or
commitment fees on or in respect of any of the Bank Obligations as the same
shall become due, and such failure shall continue for a period of five (5) days;
(b) The Loan Parties shall fail to perform or observe any of the
terms, covenants, conditions or provisions of Articles 6, 7 or 9 hereof;
(c) The Loan Parties shall fail to perform or observe any other
covenant, agreement or provision to be performed or observed by URC under this
Agreement or any other Bank Agreement, and such failure shall not be rectified
or cured within thirty (30) days after the earlier of (i) notice by the Agent to
the Borrower of such failure, or (ii) the date on which the Borrower knows or
reasonably should know of such default;
(d) Any representation or warranty of the Loan Parties herein or in
any other Bank Agreement or any amendment to any thereof shall have been
materially false or misleading at the time made or intended to be effective;
(e) Any Loan Party or any Subsidiary shall fail to make any payment on
account of Indebtedness for money borrowed by such Loan Party or Subsidiary of
which the total amount outstanding is in excess of $250,000, when such payment
is due (whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) or shall fail to perform or
45
<PAGE> 51
observe any provision of any agreement or instrument relating to such
Indebtedness, and such failure shall permit the holder thereof to accelerate
such Indebtedness;
(f) Any Loan Party or any Subsidiary shall be involved in financial
difficulties as evidenced:
(1) by its commencement of a voluntary case under Title 11 of the
United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a voluntary case;
(2) by its filing an answer or other pleading admitting or failing
to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking,
consenting to or acquiescing in the relief therein provided, or by its
failing to controvert timely the material allegations of any such
petition;
(3) by the entry of an order for relief in any involuntary case
commenced under said Title 11;
(4) by its seeking relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors generally, or by its consenting
to or acquiescing in such relief;
(5) by the entry of an order by a court of competent jurisdiction
(1) by finding it to be bankrupt or insolvent, (2) ordering or
approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors generally, or (3) assuming
custody of, or appointing a receiver or other custodian for all or a
substantial part of its property and such order shall not be vacated
or stayed on appeal or otherwise' stayed within 60 days;
(6) by the filing of a petition against any Loan Party or any
Subsidiary under said Title 11 which shall not be vacated within 60
days; or
(7) by its making an assignment for the benefit of, or entering
into a composition with, its creditors generally, or appointing or
consenting to the appointment of a receiver or other custodian for all
or a substantial part of its property.
(g) There shall have occurred a judgment against any Loan Party or any
Subsidiary in any court (i) for an amount in excess of $1,000,000 not covered by
insurance and from which no appeal has been taken or with respect to which all
appeal periods have expired, or (ii) which shall have a Material Adverse Effect;
46
<PAGE> 52
(h) Aaron D. Spencer shall cease to serve actively as a director and
full-time employee of URC, whether by reason of death, disability, resignation,
action by the Board of Directors, or otherwise, and such default shall remain
uncured or unwaived for a period of sixty days or more; or
(i) Any "Event of Default" under any other Bank Agreement shall have
occurred.
Section 10.2. Remedies.
---------
Upon the occurrence of an Event of Default, in each and every case, the
Agent and the Banks may proceed to protect and enforce their rights by suit in
equity, action at law and/or other appropriate proceeding either for specific
performance of any covenant or condition contained in this Agreement or any
other Bank Agreement or in any instrument delivered to the Agent or the Banks
pursuant hereto or thereto, or in aid of the exercise of any power granted in
this Agreement, any Bank Agreement or any such instrument, and (unless there
shall have occurred an Event of Default under Section 10.1(f), in which case the
unpaid balance of Bank Obligations shall automatically become due and payable)
the Agent may, at the direction of the Required Banks, by notice in writing to
the Borrower declare (a) the obligations of the Banks to make Advances to be
terminated, whereupon such obligations shall be terminated, and (b) declare all
or any part of the unpaid balance of the Bank Obligations then outstanding to be
forthwith due and payable, whereupon such unpaid balance or part thereof shall
become so due and payable without presentation, protest or further demand or
notice of any kind, all of which are hereby expressly waived. In such event, the
Agent and the Banks may proceed to enforce payment of such balance or pan
thereof in such manner as they may elect.
Section 10.3. Setoff.
-------
In addition to, and without limitation of, any rights of the Agent or the
Banks under applicable law, upon the occurrence of an Event of Default, any
Indebtedness from the Agent or any Bank to the Borrower or any Guarantor
(including all account balances, whether provisional or final and whether or not
collected or available) may be offset and applied toward the payment of the Bank
Obligations then due and owing to the Banks. The Borrower agrees that any holder
of a participation in a loan may, to the fullest extent permitted by law,
exercise all its rights of payment with respect to such participation as if such
holder were the direct creditor of the Borrower in the amount of the
participation.
Section 10.4. Application of Proceeds.
------------------------
In the event that following the occurrence and during the continuance of
any Event of Default, the Agent or any Bank receives any monies on account of
the Bank Obligations from the Borrower, any Guarantor, Affiliate Guarantor, from
the proceeds of set-off or otherwise, such monies shall be distributed for
application as follows:
(a) FIRST, to the payment of or the reimbursement of the Agent or any
Bank for or in respect of all costs, expenses, disbursements and losses incurred
or sustained by the Agent
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<PAGE> 53
or such Bank in connection with the collection of such monies by the Agent, or
in connection with the exercise, protection or enforcement by the Agent or such
Bank of any of the rights, remedies, powers and privileges of the Agent or such
Bank and/or the Banks under this Agreement or any other Bank Agreements;
(b) SECOND, to the payment of all interest, including interest on
overdue amounts, and late charges, then due and payable with respect to the
Loans;
(c) THIRD, to the payment of the outstanding principal balance of the
Commitments, allocated among the Banks in proportion to their respective
Commitment Percentages;
(d) FOURTH, to any other outstanding Bank Obligations, allocated among
the Banks in proportion to their respective interests in such Bank Obligations;
and
(e) FIFTH, the excess, if any, shall be returned to the Borrower or to
such other Persons as are entitled thereto.
ARTICLE 11. WAIVERS; CONSENTS; AMENDMENTS; REMEDIES
Section 11.1. Actions by Lenders.
-------------------
Except as otherwise expressly set forth in any particular provision of this
Agreement, any consent or approval required or permitted by this Agreement or in
any other Bank Agreement to be given by the Banks, including under Section 11.2,
may be given, and any term or condition of this Agreement or of any Bank
Agreement may be amended, and the performance or observance by the Loan Parties
or any Affiliate Guarantor of any term of this Agreement or any other Bank
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Required Banks; PROVIDED, HOWEVER, that without the written consent of all of
the Banks:
(a) no reduction of any principal of or interest rates on or
Commitment Fees relating to the Commitments or the Loans shall be made;
(b) no extension or postponement of the stated time of payment of the
principal amount of, interest on, Commitment Fees, or any other fee relating to
the Commitments or the Loans shall be made;
(c) no increase in the amount, or extension of the term, of the
Commitments beyond those provided for hereunder and no extension of the
Revolving Credit Termination Date or the scheduled maturity of the Term Loan
shall be made;
(d) no change in the definition of "Required Banks" shall be made;
(e) no release of any Loan Party or all or substantially all of the
Affiliate Guarantors from its or their obligations to make payment of the
principal amount of interest on,
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<PAGE> 54
Commitment Fees, or any other mount relating to the Commitments or the Loans
shall be made; and
(f) no change in the language of this Section 11.1 shall be made.
Section 11.2. Actions by Borrower.
--------------------
No delay or omission on the Agent's or the Banks' part in exercising their
rights and remedies against the Borrower or any other interested party shall
constitute a waiver. A breach by the Loan Parties of their obligations under
this Agreement may be waived only by a written waiver executed by the Agent,
acting with the consent of the Required Banks. The waiver of a Loan Party's
breach in one or more instances shall not constitute or otherwise be an implicit
waiver of subsequent breaches. To the extent permitted by applicable law, each
Loan Party hereby agrees to waive, and does hereby absolutely and irrevocably
waive (a) all presentments, demands for performance, notices of nonperformance,
protests, notices of protest and notices of dishonor in connection with any of
the Indebtedness evidenced by the Notes, (b) any requirement of diligence or
promptness on the Agent's or on the Banks' part in the enforcement of their
rights under the provisions of this Agreement or any Bank Agreement, and (c) any
and all notices of every kind and description which may be required to be given
by any statute or rule of law with respect to its liability (i) under this
Agreement or in respect of the Indebtedness evidenced by the Notes or any other
Bank Obligation or (ii) under any other Bank Agreement. No course of dealing
between the Loan Parties, the Agent and the Banks shall operate as a waiver of
any of the Agent's or the Banks' rights under this Agreement or any Bank
Agreement or with respect to any of the Bank Obligations. This Agreement shall
be amended only by a written instrument executed by the Borrower and the
Required Banks making explicit reference to this Agreement. The Agent's and the
Banks' rights and remedies under this Agreement and under all subsequent
agreements between or among the Borrower and the Agent and/or the Banks shall be
cumulative and any rights and remedies expressly set forth herein shall be in
addition to, and not in limitation of, any other rights and remedies which may
be applicable to the Agent and the Banks in law or at equity.
ARTICLE 12. SUCCESSORS AND ASSIGNS
Section 12.1. General.
--------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, except that (a) no
Loan Party may assign its rights or obligations under this Agreement without the
prior written consent of the Required Banks, and (b) each Bank may assign its
rights in this Agreement only as set forth below in this Article 12.
Section 12.2. Assignments.
------------
(a) ASSIGNMENTS. In compliance with applicable laws with respect to
such assignment and with the prior written consent of the Agent and the Borrower
(which consent will not be unreasonably withheld), a Bank may assign to one or
more financial institutions (each a "Successor Bank") a proportionate part of
its rights and obligations in connection with this
49
<PAGE> 55
Agreement, its Note and the related Bank Agreements, and each such Successor
Bank shall assume such rights and obligations pursuant to an Assignment and
Assumption Agreement duly executed by such Successor Bank and such Bank, and
acknowledged and consented to by the Agent and the Borrower, substantially in
the form of EXHIBIT F attached hereto. Any assignment under this Section 12.2(a)
shall be in a minimum amount of $10,000,000. In connection with any assignment
under this Section 12.2(a) there shall be paid to the Agent an administrative
processing fee in the amount of $2,500.
(b) ASSIGNMENT PROCEDURES. In the event of an assignment under Section
12.2(a), upon execution and delivery of such an Assignment and Assumption
Agreement at least five (5) Business Days prior to the proposed assignment date,
and payment by such Successor Bank to the assignor making such assignment of an
amount equal to the purchase price agreed between such Bank and such Successor
Bank, such Successor Bank shall become party to this Agreement as a signatory
hereto and shall have all the rights and obligations of a Bank under this
Agreement and the other Bank Agreements with an interest therein as set forth in
such assignment, and such assignor making such assignment shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any such
assignment, the assignor, the Successor Bank and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Successor Bank and a replacement Note is issued to the assignor in principal
amounts reflecting their respective revised interests.
(c) REGISTER. The Agent shall maintain a register (the "Register") for
the recordation of (i) the names and addresses of the Successor Banks which
assume rights and obligations pursuant to an assignment hereunder, (ii) the
interests of each Bank, and (iii) the amounts of the Loans owing to each Bank
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the Banks may treat
each Person whose name is registered therein for all purposes as a party to this
Agreement. The Register shall be available for inspection by the Borrower or any
Bank at any reasonable time and from time to time upon reasonable prior notice.
(d) FURTHER ASSURANCES. The Borrower shall sign such documents and
take such other actions from time to time reasonably requested by the Agent or a
Bank to enable any assignee to share in the benefits and rights created by the
Bank Agreements.
(e) ASSIGNMENTS TO FEDERAL RESERVE BANK AND AFFILIATES. Any Bank at
any time may assign all or any portion of its rights under this Agreement and
its Note to a Federal Reserve Bank. No such assignment shall release the
assignor Bank from its obligations hereunder. Any Bank may at any time assign
all or a portion of its rights under this Agreement and its Note, in a minimum
amount of $500,000, to any affiliate of such Bank which is wholly-owned by the
same bank holding company parent.
Section 12.3. Participations.
---------------
Any Bank may at any time grant or offer to grant to one or more financial
institutions ("Credit Participants") participating interests in its rights and
obligations in this Agreement, its
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<PAGE> 56
Notes and the related Bank Agreements, and each such Credit Participant shall
acquire such participation subject to the terms set forth below.
(a) AMOUNT. Each such participation shall be in a minimum amount of
$50,000,000.
(b) PROCEDURE. Each Bank granting such participation shall comply with
all applicable laws with respect to such transfer and shall remain responsible
for the performance of its obligations hereunder and under the other Bank
Agreements and shall retain the sole right and responsibility to exercise its
rights and to enforce the obligations of the Borrower hereunder and under the
other Bank Agreements, including the right to consent to any amendment,
modification or waiver of any provision of any Bank Agreement, except for the
matters referred to in Section 11.1 requiring the consent of all Banks, which
may require consent of each Credit Participant.
(c) DEALING WITH BANKS. The Borrower shall continue to deal solely and
directly with the Banks in connection with their rights and obligations under
this Agreement and the other Bank Agreements.
(d) RIGHTS OF CREDIT PARTICIPANTS. The Borrower agrees that each
Credit Participant shall, to the extent provided in its participation
instrument, be entitled to the benefits of Sections 2.5, 2.9, 2.10, 15.7,
Article 14, and the setoff rights in Section 10.3 with respect to its
participating interest; provided, however, that no Credit Participant shall be
entitled to receive any greater payment under such Sections than the Bank
granting such participation would have been entitled to receive with respect to
the interests transferred.
(e) AFFILIATES. Notwithstanding the provisions of Section 12.3(a), a
Bank may at any time grant participations in its rights and obligations herein
to its affiliates in minimum amounts of $500,000; provided, however, that in the
event of such grant, all other provisions of this Section 12.3 shall apply.
(f) NOTICE. Prior to any such participation, other than a
participation to an affiliate of a Bank, a Bank granting such participation
shall notify the Agent and the Borrower.
ARTICLE 13. THE AGENT
Section 13.1. Authorization and Action.
------------------------
Each Bank hereby appoints and authorizes the Agent to take such action
on its behalf and to exercise such powers under this Agreement and the other
Bank Agreements as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement and the other Bank
Agreements (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Banks, and such instructions shall be binding upon all Banks; PROVIDED,
HOWEVER, that the Agent shall not be required to take any action which exposes
the Agent to
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<PAGE> 57
liability or which is contrary to this Agreement or the other Bank Agreements or
applicable law. Subject to the foregoing provisions and to the other provisions
of this Article 13, the Agent shall, on behalf of the Banks: (i) execute any
documents on behalf of the Banks providing collateral for or guarantees of the
Bank Obligations; (ii) hold and apply any collateral for the Bank Obligations,
and the proceeds thereof, at any time received by it, in accordance with the
provisions of this Agreement and the other Bank Agreements; (iii) exercise any
and all rights, powers and remedies of the Banks under this Agreement or any of
the other Bank Agreements, including the giving of any consent or waiver or the
entering into of any amendment, subject to the provisions of Section 11.1; (iv)
at the direction of the Banks, execute, deliver and file UCC financing
statements, mortgages, deeds of trust, lease assignments and such other
agreements in respect of any collateral for the Bank Obligations, and possess
instruments included in the collateral on behalf of the Banks; and' (v) in the
event of acceleration of the Borrower's Indebtedness hereunder, act at the
direction of the Banks to exercise the rights of the Banks hereunder and under
the other Bank Agreements.
Section 13.2. Agent's Reliance, Etc.
----------------------
Neither the Agent nor any of its directors, officers, agents or employees
shall be liable to the Banks for any action taken or omitted to be taken by it
or them under or in connection with this Agreement or the other Bank Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form required
under Article 12 hereof; (ii) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representations to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with this
Agreement or the other Bank Agreements; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or the other Bank Agreements on the
part of the Loan Parties or any other Person or to inspect the property
(including the books and records) of the Loan Parties or any other Person; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Bank Agreements or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of this Agreement
or the other Bank Agreements by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
Section 13.3. Fleet and Affiliates.
---------------------
With respect to its Commitment hereunder, Fleet shall have the same rights
and powers under this Agreement and the other Bank Agreements as any other Bank
and may exercise the same as though it were not the Agent; and the term "Bank"
or "Bank(s)" shall, unless otherwise expressly indicated, include Fleet in its
individual capacity. Fleet and its Affiliates may lend
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money to, and generally engage in any kind of business with, the Loan Parties,
any of their Subsidiaries and any Person who may do business with or own
securities of the Loan Parties or any such Subsidiary, all as if Fleet were not
the Agent and without any duty to account therefor to the Banks.
Section 13.4. Bank Credit Decision.
---------------------
Each Bank acknowledges that it has, independently and without reliance upon
the Agent or any other Bank and based on the financial statements referred to in
Section 5.9 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
Section 13.5. Indemnification of Agent.
-------------------------
Each Bank agrees to indemnify the Agent (to the extent that the Agent is
not reimbursed by the Loan Parties), ratably according to its Commitment
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other Bank Agreement or any action taken or omitted by the
Agent in such capacity under this Agreement; PROVIDED that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Bank Agreement,
to the extent that the Agent is not reimbursed for such expenses by the
Borrower.
Section 13.6. Successor Agent.
----------------
Except as provided below, the Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower. Upon any such resignation,
the Banks shall have the right to appoint a successor Agent which shall be
reasonably acceptable to the Borrower. If no successor Agent shall have been so
appointed by the Banks (other than the resigning Agent), and shall have accepted
such appointment, within thirty (30) days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank or financial
institution organized under the laws of the United States of America or of any
state thereof and having a combined capital and surplus of at least $50,000,000
and which shall be reasonably acceptable to the Borrower. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of
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the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement and the other Bank Agreements. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
13 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Bank Agreements.
Section 13.7. Amendment of Article 13.
------------------------
The Borrower hereby agrees that the foregoing provisions of this Article 13
constitute an agreement among the Agent and the Banks (and the Agent and the
Banks acknowledge that except for the provisions of Section 13.6, the Borrower
is not a party to or bound by such foregoing provisions) and that any and all of
the provisions of this Article 13 may be amended at any time by the Banks
without the consent or approval of, or notice to, the Borrower (other than the
requirement of notice to the Borrower of the resignation of the Agent).
ARTICLE 14. INDEMNIFICATION
Without limitation of any other obligation or liability of the Loan Parties
or right or remedy of the Agent or the Banks contained herein, each Loan Party,
jointly and severally, hereby covenants and agrees to indemnify and hold the
Agent, the Banks, and their respective shareholders, directors, agents,
officers, partners, subsidiaries and affiliates, harmless from and against any
and all damages, losses (other than loss of profit), settlement payments,
obligations, liabilities, claims, including, without limitation, claims for
finder's or broker's fees, actions or causes of action, and reasonable costs and
expenses incurred, suffered, sustained or required to be paid by an indemnified
party in each case by reason of or resulting from any claim relating to the
transactions contemplated hereby other than any such claims which arise or are
marred solely as a result of the Agent's or any Bank's gross negligence or
willful misconduct. Promptly upon receipt by any indemnified party hereunder of
notice of the commencement of any action against such indemnified party for
which a claim is to be made against the Loan Parties hereunder, such indemnified
party shall notify the Borrower in writing of the commencement thereof, although
the failure to provide such notice shall not affect the indemnification rights
of any such indemnified party hereunder to the extent such indemnified party
demonstrates to the reasonable satisfaction of the Loan Parties that such
failure to provide notice does not prejudice the Loan Parties in the defense of
such claim. The Loan Parties shall have the right, at their option upon notice
to the indemnified parties, to defend any such matter at their own expense and
with their own counsel, except as provided below, which counsel must be
reasonably acceptable to the indemnified parties. The indemnified parties shall
cooperate with the Loan Parties in the defense of such matter. The indemnified
parties shall have the right to employ separate counsel and to participate in
the defense of such matter at their own expense. In the event that (a) the
employment of separate counsel by an indemnified party has been authorized in
writing by the Loan Parties, Co) the Loan Parties have failed to assume the
defense of such matter or (c) the named parties to any such action (including
impleaded parties) include any indemnified party who has been advised by counsel
that there may be one or more legal defenses available to it or prospective
bases for liability against it, which conflict with those available to or
against the Loan Parties, then the Loan Parties shall not have the right to
assume the defense of such matter
54
<PAGE> 60
with respect to such indemnified party. The Loan Parties shall not be liable for
any compromise or settlement of any such matter effected without the Borrower's
written consent, which consent may not be unreasonably delayed. The Loan Parties
shall not compromise or settle any such matter against an indemnified party
without the written consent of the indemnified party, which consent may not be
unreasonably withheld or delayed.
ARTICLE 15. MISCELLANEOUS
Section 15.1. Survival of Representations.
----------------------------
All representations and warranties of the Loan Parties contained in this
Agreement shall survive the execution of this Agreement and the delivery of the
Notes and the making of the Loans herein contemplated.
Section 15.2. Governmental Regulation.
------------------------
Anything contained in this Agreement to the contrary notwithstanding,
neither the Agent nor any Bank shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
Section 15.3. Notices.
--------
All notices and other communications made or required to be given pursuant
to this Agreement shall be in writing and shall be mailed by United States mail,
postage prepaid, or sent by nationally-recognized overnight carrier service,
addressed as follows:
(a) If to the Agent, at 75 State Street, Mail Stop MABOFO4H Boston, MA
02109, Attention: Barrie K. King, Vice President, or at such other address(es)
or to the attention of such other Person as the Agent shall from time to time
designate in writing to URC and the Banks;
(b) If to any Bank, at the address set forth below such Bank's name
on an execution page to this Agreement, or at such other address(es) or to the
attention of such other Person as such Bank shall from time to time designate in
writing to URC and the Agent;
(c) If to the Loan Parties, c/o URC, at 100 Charles Park Road, West
Roxbury, MA 02132, Attention: President and Chief Financial Officer, or at such
other address(es) or to the attention of such other Person as URC shall from
time to time designate in writing to the Agent and the Banks.
Any notice so addressed and mailed by registered or certified mail shall be
deemed to have been given five (5) days after deposit in the United States mail.
Any notice so addressed and sent by nationally recognized overnight courier
service shall be deemed to have been given one (1) day after delivery to such
courier service.
Section 15.4. Merger.
-------
55
<PAGE> 61
This Agreement and the documents and other materials contemplated hereby
constitute the entire agreement of the Loan Parties, the Agent and the Banks and
express their entire understanding with respect to credit advanced or to be
advanced by the Banks to the Loan Parties.
Section 15.5. Governing Law.
--------------
This Agreement shall be governed by and construed and enforced under the
laws of The Commonwealth of Massachusetts.
Section 15.6. Counterparts.
-------------
This Agreement and amendments to it may be executed in several
counterparts, each of which shall be an original. The several counterparts shall
constitute a single Agreement.
Section 15.7. Bank Holidays.
--------------
Whenever any payment to be made under this Agreement shall become due on a
day which is not a Business Day, such payment may be made on the next succeeding
Business Day on which the Bank is open, and such extension shall be included in
computing the interest in connection with such payment.
Section 15.8. Expenses.
---------
The Loan Parties, jointly and severally, agree to pay on demand, all the
reasonable expenses incurred by the Agent in preparing, executing, delivering
and administering this Agreement and related instruments and documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
the Agent's special counsel, Goodwin, Procter & Hoar. The Loan Parties also
agree to pay on demand, all reasonable out-of-pocket expenses incurred by the
Agent and the Banks, including, without limitation, legal and accounting fees,
in connection with the collection of amounts upon the occurrence of an Event of
Default described in Article 10 hereof, the revision, protection or enforcement
of any of the Banks' rights against the Loan Parties under this Agreement, the
Notes, and the other Bank Agreements, and the administration of special problems
that may arise under this Agreement or any other Bank Agreement. The Loan
Parties also agree to pay all stamp and other taxes in connection with the
execution and delivery of this Agreement and related instruments and documents.
Section 15.9. Headings.
---------
Section headings in this Agreement are for convenience of reference only,
and shall not govern the interpretation of any of the provisions of this
Agreement.
Section 15.10. Severability of Provisions.
---------------------------
Any provision in any Bank Agreement that is held to be inoperative,
unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforceability, or
56
<PAGE> 62
validity of that provision in any other jurisdiction, and to this end the
provisions of all Bank Agreements are declared to be severable.
Section 15.11. Nonliability of Lenders.
------------------------
The relationship between the Loan Parties and the Agent and the Banks shall
be solely that of borrower and lender. Neither the Agent nor any Bank shall have
any fiduciary responsibilities to the Loan Parties. The Agent and the Bank
undertake no responsibility to the Loan Parties to review or inform the Loan
Parties of any matter in connection with any phase of the Loan Parties' business
or operations.
Section 15.12. WAIVER OF JURY TRIAL.
---------------------
THE AGENT, THE BANKS AND THE LOAN PARTIES AGREE THAT NONE OF THEM NOR ANY
ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER ACTION BASED UPON OR ARISING OUT OF, THIS AGREEMENT,
THE NOTES, ANY BANK AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE AGENT, THE BANKS AND THE LOAN PARTIES, AND THESE PROVISIONS
SHALL BE SUBJECT TO NO EXCEPTIONS. NONE OF THE AGENT, THE BANKS OR ANY OF THE
LOAN PARTIES HAS AGREED WITH OR REPRESENTED TO ANOTHER THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
57
<PAGE> 63
IN WITNESS WHEREOF, the Loan Parties, the Agent and the Banks have caused
this Revolving Credit and Term Loan Agreement to be executed by their duly
authorized officers as of the date set forth above.
UNO RESTAURANT CORPORATION
By:
----------------------------
Name: Robert M. Brown
Title: Senior Vice President
URC HOLDING COMPANY, INC.
By:
----------------------------
Name: Robert M. Brown
Title: Senior Vice President
UNO RESTAURANTS, INC.
By:
----------------------------
Name: Robert M. Brown
Title: Senior Vice President
UNO FOODS INC.
By:
----------------------------
Name: Robert M. Brown
Title: Senior Vice President
PIZZERIA UNO CORPORATOPM
By:
----------------------------
Name: Robert M. Brown
Title: Senior Vice President
58
<PAGE> 64
FLEET BANK OF MASSACHUSETTS, N.A.,
as Agent
By:
----------------------------
Name: Robert M. Brown
Title: Senior Vice President
Address: 75 State Street
Mail Stop MABOF044
Boston, Massachusetts 02109
Attn: Barrie K. King., Vice President
Telefax: (617) 346-1837
Commitment Percentage: 100%
59
<PAGE> 65
FIRST AMENDMENT TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This FIRST AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT is entered into
as of January 30, 1995, by and among UNO RESTAURANTS, INC., a Massachusetts
corporation (the "Borrower"), UNO FOODS INC., a Massachusetts corporation
("UFI"), PIZZERIA UNO CORPORATION, a Delaware corporation ("PUC"), UNO
RESTAURANT CORPORATION, a Delaware corporation ("URC"), URC HOLDING COMPANY,
INC., a Delaware corporation ("UHC" and, together with UFI, PUC, URC and the
Borrower, hereinafter referred to collectively, as the "Loan Parties"), FLEET
BANK OF MASSACHUSETTS, N.A., a national banking association ("Fleet"), THE FIRST
NATIONAL BANK OF BOSTON, a national banking association ("FNBB") and MELLON
BANK, N.A., a national banking association ("Mellon"), and FLEET BANK OF
MASSACHUSETTS, N.A., as Agent for the Banks referred to below (Fleet, together
with its successors and assigns in such capacity, the "Agent").
RECITALS
--------
WHEREAS, the Loan Parties, the Agent and the Banks have entered into that
certain Revolving Credit and Term Loan Agreement dated as of December 9, 1994
(as amended and in effect from time to time, the "Credit Agreement"); and
WHEREAS, the Loan Parties, the Agent and the Banks desire to amend
certain provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereby agree as follows:
Section 1. Amendments to Credit Agreement.
------------------------------
1.1. Section 1.1 of the Credit Agreement is hereby amended, as of the
date of this Amendment, by deleting the definition "Banks" appearing therein in
its entirety and substituting therefor the following:
"BANKS" shall mean, Fleet, FNBB, Mellon, and their respective
successors and assigns."
1.2. Section 1.1 of the Credit Agreement is hereby further amended, as
of the date of this Amendment, by adding thereto the following new defined term,
such term to be inserted in the appropriate alphabetical order:
"FEDERAL FUNDS RATE" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so
<PAGE> 66
published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the
Agent."
1.3. Section 1.2 of the Credit Agreement is hereby amended, as of the
date of this Amendment, by deleting such Section in its entirety and
substituting therefor the following:
"Section 1.2. ACCOUNTING TERMS. All accounting terms used and not
defined in this Agreement shall be construed in accordance with GAAP
consistently applied, and all financial data required to be delivered
hereunder shall be prepared in accordance with such principles. If any
changes in accounting principles are hereafter occasioned by promulgation
of rules, regulations, pronouncements or opinions by or are otherwise
required by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), and any of such changes results in a
change in the method of calculation of, or affect the results of
calculation of, any of the financial covenants, standards or terms found
herein, then the parties hereto agree to enter into and diligently pursue
negotiations in order to amend such financial covenants, standards or
terms so as to reflect fairly and equitably such changes, with the
desired result that the criteria for evaluating the financial condition
and results of operations of URC and its Subsidiaries shall be the same
after such changes as if such changes had not been made. If the parties
are unable to agree upon the amendments to any such financial covenants,
standards or terms, the parties agree to submit any remaining disputes to
an independent third-party accounting firm (having no substantial
relationship with any party) of national recognition selected by such
parties for a determination of the appropriate amendments to such
financial covenant, standard or term, which determination shall be
binding upon the parties."
1.4. Section 2.2 of the Credit Agreement is hereby amended, as of the
date of this Amendment, by deleting paragraph (e) of such Section in its
entirety and substituting therefor the following:
"(e) Notwithstanding the foregoing provisions of this Section 2.2, the
Borrower shall not be required to provide notice to the Agent of Advances
which are made in accordance with "target balance" services provided by
the Agent (each, a "Target Balance Advance"), and the minimum borrowing
amounts established under Section 2.2(a) shall not apply to such Target
Balance Advances. All Target Balance Advances shall be Prime Rate Loans
unless otherwise agreed by the Borrower, the Agent and the other Banks.
The Agent shall, to the extent practicable, notify each Bank on the date
of any Target Balance Advance of such Bank's Commitment Percentage of
such Advance. Provided that the Agent has notified the Banks prior to
3:00 p.m. on the date of such Target Balance Advance, each Bank shall
make available to the Agent before the close of business on such date, at
the office of the Agent specified in Section 15.3, in immediately
available funds, such Bank's Commitment Percentage of the Target Balance
Advance. In the event the Agent shall provide such notice after 3:00 p.m.
but before the close of business on the date of any Target Balance
Advance, the Banks shall furnish to the Agent their respective Commitment
Percentages of such Target Balance Advance prior to 11:00
2
<PAGE> 67
a.m. on the following Business Day, together with one days' interest
thereon calculated at the Federal Funds Rate (it being understood that as
between the Borrower and the Banks, interest shall commence to accrue on
the date of funding any Target Balance Advance on the full amount so
funded, notwithstanding the timing of funding by the Banks to the
Agent).
1.5. Section 2.12 of the Credit Agreement is hereby amended, as of the
date of this Amendment, by adding thereto a new paragraph (g) as follows:
"(g) To the extent that any applicable law (including but not
limited to applicable laws pertaining to fraudulent conveyance or
fraudulent transfer) would render the full amount of any Loan Party's
obligations under this Section 2.12 invalid or unenforceable, such Loan
Party's obligations hereunder shall be limited to the maximum amount
which does not result in such invalidity or unenforceability."
1.6. Section 3.2 of the Credit Agreement is hereby amended, as of the
date of this Amendment, by deleting such Section in its entirety and
substituting therefor the following:
"Section 3.2. CONDITIONS TO ALL ADVANCES. The Banks' obligation to
make any Loan pursuant to this Agreement, or to continue any Loan as, or
convert any Loan to, a LIBOR Rate Loan, shall be subject to compliance by
each of the Loan Parties with its respective agreements contained in this
Agreement and each other Bank Agreement, and to the satisfaction, at or
before the making, continuation or conversion of such Loan, of all of the
following conditions precedent:
(a) The representations and warranties herein and those
made by or on behalf of the Loan Parties and the Affiliate Guarantors in
any other Bank Agreement shall be correct in all material respects as of
the date on which any Loan is made, with the same effect as if made at
and as of such time (except as to transactions permitted hereunder and
except that the references in Article 5 to the 1994 Financial Statements
shall be deemed to refer to the most recent annual financial statements
furnished to the Banks pursuant to Section 6.2 hereof);
(b) On the date of making, continuing or converting any
Loan as described above, there shall exist no Default; and
(c) The making, continuation or conversion of the
requested Loan as described above, shall not be prohibited by any law or
governmental order or regulation applicable to the Banks, the Agent or
the Borrower and all necessary consents, approvals and authorizations of
any Person (other than the Banks) for any such Loan shall have been
obtained.
The request by the Borrower for the making, continuation or
conversion of each Loan as provided above, and the acceptance by the
Borrower of each such Loan, shall be deemed a representation and warranty
by the Borrower that the conditions specified above in this Section 3.2
have been satisfied."
3
<PAGE> 68
1.7. Section 9.1 of the Credit Agreement is hereby amended, as of the
date of this Amendment, by deleting paragraph (f) thereof in its entirety and
substituting therefor the following:
"(f) other Indebtedness in an aggregate amount not to exceed
$5,000,000 at any time, so long as on the date URC or any Subsidiary
becomes liable with respect to such other Indebtedness and immediately
after giving effect thereto, and to the concurrent retirement of any
other Indebtedness, there shall be no Default hereunder; and"
1.8. Section 9.2 of the Credit Agreement is hereby amended, as of the
date of this Amendment, as follows: (i) by deleting the word "and" appearing at
the end of paragraph (e) of such Section; (ii) by deleting the period appearing
at the end of paragraph (f) of such Section and substituting therefor the phrase
"; and"; and (iii) by adding thereto a new paragraph (g) as follows:
"(g) Liens in favor of the Agent for the benefit of the Banks
securing the Bank Obligations."
1.9. Section 9.4 of the Credit Agreement is hereby amended as of the
date of this Amendment, by deleting the reference to Section 10.9 of the Senior
Note Purchase Agreement appearing therein and substituting therefor reference to
Section 10.9(a) of the Senior Note Purchase Agreement.
Section 2. EFFECTIVENESS OF AMENDMENT. This Amendment shall become
effective as of the date hereof upon receipt by the Agent of a counterpart
hereof executed by the Required Banks and each of the parties hereto.
Section 3. LOAN PARTIES' REPRESENTATIONS AND WARRANTIES. In order to
induce the Agent and the Banks to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, the Loan Parties hereby
represent, warrant and agree that (a) all representations and warranties
contained in Article 5 of the Credit Agreement are true, correct and complete in
all material respects on and as of the date hereof to the same extent as though
made on and as of this date, except to the extent that such representations and
warranties specifically relate to an earlier date, in which event they are true,
correct and complete in all material respects as of such earlier date; and (b)
no event has occurred and is continuing or will result from the consummation of
the transactions contemplated by this Amendment which would constitute a Default
or an Event of Default.
Section 4. Miscellaneous.
-------------
4.1 Reference to and Effect on the Credit Agreement and the other Loan
Documents.
(a) On and after the date of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference in
the Bank Agreements to the "Credit
4
<PAGE> 69
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement, as
amended by this Amendment;
(b) Except as specifically amended by this Amendment, the
Credit Agreement and the other Bank Agreements shall remain in full force and
effect and are hereby ratified and confirmed; and
(c) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provisions of, or operate as a waiver of any right, power or remedy of Agent or
any Bank under, the Credit Agreement or any of the other Bank Agreements.
4.2 FEES AND EXPENSES. The Loan Parties acknowledges that all costs,
fees and expenses incurred by the Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of the Loan Parties.
4.3 EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument.
4.4 HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purposes or be given any substantive
effect.
4.5 APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO BE MADE
UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
IN WITNESS WHEREOF, the Loan Parties, the Agent and the Banks have caused
this Amendment to be executed by their duly authorized officers as of the date
set forth above.
UNO RESTAURANT CORPORATION
By:
-------------------------------------
Name: Robert M. Brown
Title: Senior Vice President
URC HOLDING COMPANY, INC.
By:
-------------------------------------
Name: Robert M. Brown
Title: Senior Vice President
5
<PAGE> 70
UNO RESTAURANTS, INC.
By:
-------------------------------------
Name: Robert M. Brown
Title: Senior Vice President
UNO FOODS INC.
By:
-------------------------------------
Name: Robert M. Brown
Title: Senior Vice President
PIZZERIA UNO CORPORATION
By:
-------------------------------------
Name: Robert M. Brown
Title: Senior Vice President
FLEET BANK OF MASSACHUSETTS, N.A., as
Agent
By:
-------------------------------------
Name: Barrie K. King
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By:
-------------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
-------------------------------------
Name:
Title:
FLEET BANK OF MASSACHUSETTS, N.A
By:
-------------------------------------
Name: Barrie K. King
Title: Vice President
<PAGE> 71
------------------------------------------------------------------------
SECOND AMENDMENT TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of November 7, 1995
Among
UNO RESTAURANTS, INC.,
as Borrower
UNO FOODS, INC.,
PIZZERIA UNO CORPORATION,
URC HOLDING COMPANY, INC.
and
UNO RESTAURANT CORPORATION,
As Guarantors
and
FLEET BANK OF MASSACHUSETTS, N.A.
THE FIRST NATIONAL BANK OF BOSTON
and
MELLON BANK, N.A.
as the Banks
and
FLEET BANK OF MASSACHUSETTS, N.A.
as Agent
------------------------------------------------------------------------
<PAGE> 72
SECOND AMENDMENT TO REVOLVING CREDIT AND TERM LOAN
AGREEMENT
This SECOND AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT is
entered into as of November 7, 1995 by and between UNO RESTAURANTS, INC., a
Massachusetts corporation (the "Borrower"), UNO FOODS, INC., a Massachusetts
corporation ("UFI"), PIZZERIA UNO CORPORATION, a Delaware corporation (`PUC")
UNO RESTAURANT CORPORATION, a Delaware corporation ("URC"), URC HOLDING COMPANY,
INC. ("UHC" and together with UFI, PUC, URC and the Borrower, hereinafter
referred to collectively as the "Loan Parties"), FLEET BANK OF MASSACHUSETTS,
N.A., a national banking association, THE FIRST NATIONAL BANK OF BOSTON, N.A., a
national banking association, and MELLON BANK, N.A., a national banking
association, as Banks, and FLEET BANK OF MASSACHUSETTS, N.A. a national banking
association, as Agent (the "Agent").
Recitals
--------
The Loan Parties, the Banks and the Agent are parties to a Revolving Credit
and Term Loan Agreement dated as of December 9, 1994, as amended (the "Credit
Agreement") and desire to amend the Credit Agreement in various respects. All
capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Credit Agreement.
NOW THEREFORE, subject to the satisfaction of the conditions to
effectiveness specified in Section 5, the Loan Parties, the Banks and the Agent
hereby amend the Credit Agreement, as follows:
Section 1. DEFINITIONS. Section 1.1 of the Credit Agreement is hereby
amended by adding a new definition of "Permitted Stock Repurchase" in
alphabetical order, as follows:
"PERMITTED STOCK REPURCHASE" shall mean the repurchase by URC of
shares of its common stock from time to time during the period from October
30, 1995 through April 25, 1996 in an aggregate amount required in order to
complete the stock repurchases authorized by resolutions adopted by the
Board of Directors of URC on October 26, 1995 and at prices not exceeding
the price approved by the Board of Directors therein.
Section 2. AMENDMENT OF COVENANTS. Article 7 of the Credit Agreement is
hereby amended by deleting Sections 7.1 and 7.3 in their entirety and
substituting the following therefor, respectively:
-2-
<PAGE> 73
Section 7.1 CONSOLIDATED TANGIBLE NET WORTH. URC will at all times
maintain Consolidated Tangible Net Worth in an amount not less than the sum
of (i) $52,264,000, PLUS (ii) 50% of the sum of Consolidated Net Income (0%
in the case of a deficit) for each fiscal quarter ending after October 2,
1994 PLUS (iii) 100% of the net proceeds received by URC in connection with
any offering of its capital stock LESS (iv) the amounts expended by URC on
the Permitted Stock Repurchase.
Section 7.3 RATIO OF CONSOLIDATED LIABILITIES TO CONSOLIDATED TANGIBLE
NET WORTH. URC shall at all times maintain a ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth of not more than 1.0 to 1.0.
Section 3. WAIVER OF COVENANT DEFAULT. The Banks hereby waive the failure
of the Loan Parties to satisfy the requirements of Section 7.6 of the Credit
Agreement for the fiscal year ended September 30, 1995 as a result of URC and
its Subsidiaries incurring capital expenditures of greater than $39,000,000 for
such fiscal year; provided that for such fiscal year URC and its Subsidiaries
shall not have made or required consolidated Capital Expenditures in excess of
$40,200,000.
Section 4. AMENDMENT OF EXHIBIT B. EXHIBIT B to the Credit Agreement is
hereby deleted in its entirety and the new EXHIBIT B attached hereto is
submitted therefor.
Section 5. EFFECTIVENESS; CONDITIONS TO EFFECTIVENESS. This Second
Amendment to Revolving Credit and Term Loan Agreement shall become effective as
of October 31, 1995 upon execution hereof by the parties hereto and satisfaction
of the following conditions:
(a) OFFICERS' CERTIFICATE. The Loan Parties shall have delivered to
the Agent an Officers' Certificate in the form of EXHIBIT A hereto.
(b) ACKNOWLEDGMENT OF AFFILIATE GUARANTORS. The Loan Parties shall
have delivered to the Agent an Acknowledgment of Affiliate Guarantors in
the form of EXHIBIT C hereto.
Section 6. REPRESENTATIONS AND WARRANTIES: NO DEFAULT. The Loan Parties
hereby confirm to the Banks the representations and warranties of the Loan
Parties set forth in Article 5 of the Credit Agreement (as amended hereby) as of
the date hereof, as if set forth herein in full. The Loan Parties hereby certify
that, after giving effect hereto, no Default exists under the Credit Agreement.
Section 7. MISCELLANEOUS. The Loan Parties, jointly and severally, agree to
pay on demand all the Agent's reasonable expenses in preparing, executing and
delivering this Second Amendment to Revolving Credit and Term Loan Agreement,
and all related instruments and documents, including, without limitation, the
reasonable fees and out-of-pocket expenses of the Agent's special counsel,
Goodwin, Procter & Hoar. This Second Amendment to Revolving Credit and Term Loan
Agreement shall be a Bank Agreement
-3-
<PAGE> 74
and shall be governed by and construed and enforced under the laws of The
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Loan Parties, the Banks and the Agent have caused
this Second Amendment to Revolving Credit and Term Loan Agreement to be executed
by their duly authorized officers as of the date first set forth above.
UNO RESTAURANTS, INC.
By: ___________________________
Name: Robert M. Brown,
Title: Senior Vice President
UNO FOODS, INC.
By: ___________________________
Name: Robert M. Brown,
Title: Senior Vice President
PIZZERIA UNO CORPORATION
By: ___________________________
Name: Robert M. Brown,
Title: Senior Vice President
URC HOLDING COMPANY, INC.
By: ___________________________
Name: Robert M. Brown,
Title: Senior Vice President
UNO RESTAURANT CORPORATION
By: ___________________________
Name: Robert M. Brown,
Title: Senior Vice President
<PAGE> 75
FLEET BANK OF MASSACHUSETTS, N.A.
By: ___________________________
Name: Barrie K. King
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: ___________________________
Name: Timothy G. Clifford
Title: Vice President
MELLON BANK, N.A.
By: ___________________________
Name: Joseph T. McDonald, Jr.
Title: Vice President
FLEET BANK OF MASSACHUSETTS, N.A. as Agent
By: ___________________________
Name: Barrie K. King
Title: Vice President
<PAGE> 76
THIRD AMENDMENT TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of March 29, 1996
Among
UNO RESTAURANTS, INC.,
As Borrower
UNO FOODS, INC.,
PIZZERIA UNO CORPORATION,
URC HOLDING COMPANY, INC.
and
UNO RESTAURANT CORPORATION,
as Guarantors
and
FLEET BANK OF MASSACHUSETTS, N.A.,
THE FIRST NATIONAL BANK OF BOSTON
and
MELLON BANK, N.A.,
As the Banks
and
FLEET BANK OF MASSACHUSETTS, N.A.,
As Agent
<PAGE> 77
THIRD AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
This THIRD AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT is
entered into as of March 29, 1996 by and between UNO RESTAURANTS, INC., a
Massachusetts Corporation (the "Borrower:), UNO FOODS, INC., a Massachusetts
Corporation ("UFI"), PIZZERIA UNO CORPORATION, a Delaware Corporation ("PUC"),
Uno Restaurant Ccorporation, a Delaware corporation ("URC"), URC Holding
Company, Inc. ("UHC") and, together with UFI, PUC, URC and the Borrower,
hereinafter referred to collectively as the "Loan Parties"), FLEET BANK OF
MASSACHUSETTS, N.A., a national banking association, THE FIRST NATIONAL BANK OF
BOSTON, a national banking association, and MELLON BANK, N.A., a national
banking association, as Banks (the "Banks"), and FLEET BANK OF MASSACHUSETTS,
N.A., a national banking association, as Agent (the "Agent").
Recitals
The Loan Parties, the Banks and the Agent are parties to a Revolving
Credit and Term Loan Agreement dated as of December 9, 1994, as amended (the
"Credit Agreement") and desire to amend the Credit Agreement in various
respects. All capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Credit Agreement.
NOW, THEREFORE, subject to the satisfaction of the conditions to
effectiveness specified in Section 7, the Loan Parties, the Banks and the Agent
hereby amend the Credit Agreement, as follows:
Section 1. Definitions. Section 1.1 of the Credit Agreement is hereby
amended by deleting the definitions "Applicable Margin - Prime Rate,"
"Applicable Margin - LIBOR Rate" and "Consolidated EBIT" in their entirety and
substituting the following therefore, in alphabetical order:
"Applicable Margin - Prime Rate" and "Applicable Margin -
LIBOR Rate" shall mean during each fiscal quarter of the Borrower, the
percentage set forth opposite the Consolidated Leverage Ratio in effect
as of the end of the immediately preceding fiscal quarter:
<PAGE> 78
<TABLE>
<CAPTION>
Consolidated Leverage Ratio
as of the end of the Immediately Applicate Margin
Preceding Fiscal Quarter -Prime Rate -LIBOR Rate
------------------------ ----------- -----------
<S> <C> <C> <C>
Equal to or Greater than 2.00 : 1.0 0.50% 1.75%
Equal to or Greater than 1.75 : 1.0 0.25% 1.50%
and less than 2.00 : 1.0
Equal to or Greater than 1.0 : 1.0 0.00% 1.25%
And Less than 1.75 : 1.0
Less than 1.0 : 1.0 0.00% 1.00%
</TABLE>
"Consolidated EBIT" shall mean for any period, the earnings of
URC and its Subsidiaries before interest expense and taxes, determined
in accordance with GAAP on a consolidated basis; provided that any
charge against the earnings of URC and its Subsidiaries required to be
taken in accordance with the requirements of Statement of Financial
Accounting Standards No. 121 (Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of) for the
fiscal quarter ending March 31, 1996 shall be excluded for purposes of
determining Consolidated EBIT for that fiscal quarter.
Section 2. Amendment of Covenants. Article 7 of the Credit Agreement is
hereby amended by deleting Sections 7.2, 7.4, 7.6 and 7.8 in their entirety and
substituting the following therefore, respectively:
Section 7.2. Cash Flow Coverage Ratio. URC and its
Subsidiaries shall maintain a ratio of Consolidated Adjusted EBITDA to
the sum of (i) Consolidated Total Debt Service, plus (ii) Consolidated
Maintenance Capital Expenditures, plus (iii) all cash dividends paid by
URC on its capital stock, plus (iv) all taxes paid by URC and its
Subsidiaries in cash, for each four fiscal quarter period ending during
the periods indicated below, of not less than the ratio set forth
opposite each such period:
<PAGE> 79
<TABLE>
<CAPTION>
Date/Period Ratio
----------- -----
<S> <C>
Second Fiscal Quarter End 1996 1.60:1.0
through the date preceding Third
Fiscal Quarter End 1996
Third Fiscal Quarter End 1996 1.55:1.0
through the date preceding
Fiscal Year End 1996
Fiscal Year End 1996 through the 1.60:1.0
date preceding First Fiscal Quarter
End 1997
First Fiscal Quarter End 1997 1.70:1.0
through the date preceding Third
Fiscal Quarter End 1997
Third Fiscal Quarter End 1997 2.00:1.0
through the date preceding
Third Fiscal Quarter End 1998
Third Fiscal Quarter End 1998 1.75:1.0
through the date preceding
Fiscal year End 1998
Fiscal Year End 1998 1.25:1.0
through the date preceding
First Fiscal Quarter End 1999
First Fiscal Quarter End 1999 1.10:1.0
and thereafter
</TABLE>
Section 7.4 Profitability. URC shall earn Consolidated Net Income (a)
for the fiscal quarter ending March 31, 1996 of not less than ($2,800,000) and
(b) for each fiscal quarter thereafter of not less than $1.
Section 7.6 Capital Expenditures. URC and its Subsidiaries shall not
make or incur consolidated Capital Expenditures in excess of the amounts set
forth below during each fiscal year indicated:
<PAGE> 80
<TABLE>
<CAPTION>
Maximum Consolidated
Fiscal Year Capital Expenditures
----------- --------------------
<S> <C> <C>
1996 $30,000,000
1997 and each fiscal year thereafter 20,000,000
</TABLE>
Section 7.7 Consolidated Leverage Ratio. URC and its Subsidiaries
shall, at all times, during the periods set forth below maintain a Consolidated
Leverage Ratio of not more than the ratio set forth opposite each such period:
<TABLE>
<CAPTION>
Date/Period Ratio
----------- -----
<S> <C>
Second Fiscal Quarter End 1996 through the 2.00:1.0
date preceding Third Fiscal Quarter End 1996
Third Fiscal Quarter End 1996 through the 2.15:1.0
date preceding Second Fiscal Quarter End 1997
Second Fiscal quarter End 1997 through the 2.00:1.0
date preceding Fiscal Year End 1997
Fiscal year End 1997 through the date 1.75:1.0
Preceding First Fiscal Quarter End 1998
First Fiscal Quarter End 1998 and thereafter 1.50:1.0
</TABLE>
Section 7.8 Consolidated Adjust EBITDA. URC and its Subsidiaries'
Consolidated Adjusted EBITDA for each four fiscal quarter period ending during
the periods indicted below shall not be less than the amount set forth opposite
each such period:
<TABLE>
<CAPTION>
Period Consolidated Adjusted EBITDA
------ ----------------------------
<S> <C>
Second Fiscal Quarter End 1996 through the $19,500,000
date preceding Third Fiscal Quarter End 1996
Third Fiscal Quarter End 1996 through the date 19,000,000
preceding First Fiscal Quarter End 1997
First Fiscal Quarter End 1997 through the 20,000,000
date preceding Second Fiscal Quarter End 1997
Second Fiscal Quarter End 1977 through the 21,000,000
date preceding Third Fiscal Quarter End 1997
</TABLE>
<PAGE> 81
<TABLE>
<CAPTION>
<S> <C>
Third Fiscal Quarter End 1997 through the 22,000,000
date preceding Fiscal Year End 1997
Fiscal Year End 1997 through the date 23,000,000
preceding Fiscal Year End 1998
Fiscal year End 1998 through the date 25,000,000
preceding First Fiscal Quarter End 1999
First Fiscal Quarter End 1999 through the 27,500,000
date preceding First Fiscal Quarter End 2000
First Fiscal Quarter End 2000 and thereafter 30,000,000
</TABLE>
Section 3. Amendment of Negative Covenants. (a) Section 9.1 of the
Credit Agreement is hereby amended as follows: (i) by deleting the word "and"
appearing at the end of paragraph (f) of such section; (ii) by deleting the
period appearing at the end of paragraph (g) of such section and substituting
the phrase ":and"; and (iii) by adding thereto a new paragraph (h) as follows:
"(h) With the prior written consent of the Agent,
Indebtedness secured by mortgage liens on real property owned
by the Loan Parties or any Subsidiary permited under Section
9.2(h); provided that (i) the aggregate amount of such
Indebtedness shall not exceed $5,000,000; (ii) such
Indebtedness shall provided for principal amortization not in
excess of principal amortization based on a "mortgage style"
debt service of level monthly or quarterly payments over a
term of not less than ten years; (iii) other than the
principal amortization described in clause (ii), no other
principal payments of any kind, whether scheduled or
voluntary, may be made on any such Indebtedness prior to
December 31, 2000; (iv) the terms, conditions and covenants
governing such Indebtedness shall be no more restrictive than
the terms, conditions and covenants contained in the Credit
Agreement; and (v) as of the date such Indebtedness is
incurred and after giving effect thereto and to the concurrent
retirement of any other Indebtedness there shall be no Default
hereunder."
(b) Section 9.2 of the Credit Agreement is hereby amended as follows:
(i) by deleting the word "and" appearing at the end of paragraph (f) of such
section; (ii) by deleting the period appearing at the end of paragraph (g) of
such section and substituting the phrase ";and"; and (iii) by adding thereto a
new paragraph (h) as follows:
"(h) Mortgage liens on real property owned by the
Loan Parties or any Subsidiary securing Indebtedness permited
under Section 9.1(h)."
Section 4. Amendment Fee. Upon the Execution and delivery of this Third
Amendent to Revolving Credit and Term Loan Agreement, the Borrowers and the
Guarantors
<PAGE> 82
jointly and severally shall pay to the Agent for the ratable benefit of the
Banks a fee of $62,500.
Section 5. Waiver of Cigna Investments, Inc. Cross-Default. The Banks
hereby waive the default under Section 10.1 of the Credit Agreement caused by
the failure of the Borrower and URC to satisfy the requirements of Section 10.6
of the Senior Note Purchase Agreement.
Section 6. Amendment of Exhibit B. Exhibit B to the Credit Agreement is
hereby deleted in its entirety and the new Exhibit B atached hereto is
substituted therefor.
Section 7. Effectiveness: Conditions to Effectiveness. This Third
Amendment to Revolving Credit and Term Loan Agreement shall become effective as
of March 29, 1996 upon execution hereof by the parties hereto and satisfaction
of the following conditions:
(a) Officers' Certificate. The Loan Parties shall have
delivered to the Agent an Officers' Certificate in the form of Exhibit
A hereto.
(b) Acknowledgment of Affliate Guarantors. The Loan Parties
shall have delivered to the Agent an Acknowledgment of Affiliate
Guarantors in the form of Exhibit C hereto.
(c) Waiver By Cigna Investments, Inc. of Default. The Loan
Parties shall have delivered to the Agent evidence of the waiver by
Cigna Investments, Inc. on behalf of the holders of the Senior Notes
(1990) of all outstanding defaults under the Senior Note Purchase
Agreement.
Section 8. Representations and Warranties: No Default. The Loan Parties
hereby confirm to the Banks the representations and warranties of the Loan
Parties set forth in Article 5 of the Credit Agreement (as amended hereby) as of
the date hereof, as if set forth herein in full, except to the extent that such
representations and warranties specifically relate to an earlier date, in which
event they are true, correct and complete in all material respects as of such
earlier date. The Loan Partities hereby certify that, after giving effect
hereto, no Default exists under the Credit Agreement and that, after receipt of
the waiver letter described in Section 7(c) of this Third Amendment to Revolving
Credit and Term Loan Agreement, no Default exists under the Senior Note Purchase
Agreement.
Section 9. Miscellaneous. The Loan Parties, jointly and severally,
agree to pay on demand all the Agent's reasonable expenses in preparing,
executing and delivering this Third Amendment to Revolving Credit and Term Loan
Agreement, and all related instruments and documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of the Agent's
special counsel, Goodwin, Procter & Hoar. This Third Amendment to Revolving
Credit and Term Loan Agreement shall be a Bank Agreement and shall be governed
by and construed and enforced under the laws of The Commonwealth of
Massachusetts.
<PAGE> 83
IN WITNESS WHEREOF, the Loan Parties, the Banks and the Agent have
caused this Third Amendment to Revolving Credit and Term Loan Agreement to be
executed by their duly authorized officers as of the date first set forth above.
UNO RESTAURANTS, INC.
By:_____________________________________
Name: Robert M. Brown
Title: Senior Vice President
UNO FOODS, INC.
By:_____________________________________
Name: Robert M. Brown
Title: Senior Vice President
PIZZERIA UNO CORPORATION
By:_____________________________________
Name: Robert M. Brown
Title: Senior Vice President
URC HOLDING COMPANY, INC.
By:_____________________________________
Name: Robert M. Brown
Title: Senior Vice President
UNO RESTAURANT CORPORATION
By:_____________________________________
Name: Robert M. Brown
Title: Senior Vice President
<PAGE> 84
FLEET BANK OF MASSACHUSETTS, N.A.
By:_____________________________________
Name: Mary M. Barcus
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By:_____________________________________
Name:Timothy G. Clifford
Title: Vice President
MELLON BANK, N.A.
By:_____________________________________
Name: Robert H. Summersgill
Title: First Vice President
FLEET BANK OF MASSACHUSETTS, N.A. as
Agent
By:_____________________________________
Name: Mary M. Barcus
Title: Vice President
<PAGE> 1
Report of Independent Auditors
The Board of Directors
Uno Restaurant Corporation
We have audited the accompanying consolidated balance sheets of Uno Restaurant
Corporation and subsidiaries (the Company) as of September 29, 1996 and October
1, 1995, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended September
29, 1996. 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 Uno Restaurant
Corporation and subsidiaries at September 29, 1996 and October 1, 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 29, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in fiscal year
1996, the Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of."
November 1, 1996
35
<PAGE> 2
Uno Restaurant Corporation and Subsidiaries
<TABLE>
Consolidated Balance Sheets
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
---------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,828 $ 1,305
Royalties receivables 710 725
Consumer product receivable 322 567
Inventory 2,333 2,226
Deferred pre-opening costs 470 1,253
Prepaid expenses and other assets 2,267 2,221
----------------------------
Total current assets 7,930 8,297
Property, equipment and leasehold
improvements, net 120,510 112,498
Deferred income taxes 3,613 1,151
Liquor licenses and other assets 2,892 3,314
----------------------------
$134,945 $125,260
============================
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
-----------------------------
(Dollar amounts in thousands,
except share data)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,009 $ 6,238
Accrued expenses 5,163 3,913
Accrued compensation and taxes 2,187 2,231
Income taxes payable 1,581 126
Current portions of long-term debt and
capital lease obligations 178 3,404
-----------------------------
Total current liabilities 15,118 15,912
Long-term debt, net of current portion 37,085 21,750
Capital lease obligations, net of current portion 1,056 749
Other liabilities 4,550 3,722
Commitments and contingencies
Shareholders' equity:
Preferred Stock, $1.00 par value, 1,000,000
shares authorized, no shares issued or
outstanding
Common Stock, $.01 par value, 25,000,000
shares authorized, 13,697,526 shares in
1996 and 13,682,270 shares in 1995 issued 137 137
Additional paid-in capital 53,509 53,433
Retained earnings 34,143 32,457
-----------------------------
87,789 86,027
Treasury Stock (1,500,000 shares in 1996 and
358,100 shares in 1995, at cost) (10,653) (2,900)
-----------------------------
Total shareholders' equity 77,136 83,127
-----------------------------
$134,945 $125,260
=============================
</TABLE>
See accompanying notes.
36
<PAGE> 3
Uno Restaurant Corporation and Subsidiaries
<TABLE>
Consolidated Statements of Income
<CAPTION>
YEAR ENDED
-------------------------------------------------
SEPTEMBER 29 OCTOBER 1 OCTOBER 2
1996 1995 1994
-------------------------------------------------
(Amounts in thousands, except
per share data)
<S> <C> <C> <C>
Revenues:
Restaurant sales $159,581 $146,100 $112,674
Consumer product sales 8,351 8,477 7,418
Franchise income 4,209 4,129 3,973
-------------------------------------------------
172,141 158,706 124,065
Costs and expenses:
Cost of food and beverages 44,064 39,420 30,177
Labor and benefits 51,868 47,377 36,935
Occupancy costs 26,339 22,925 18,979
Other operating costs 15,890 13,583 10,751
General and administrative 12,155 11,229 9,277
Depreciation and amortization 12,964 10,795 7,655
Asset impairment charge 3,937
-------------------------------------------------
167,217 145,329 113,774
-------------------------------------------------
Operating income 4,924 13,377 10,291
Other income (expense):
Interest expense (2,358) (1,924) (1,147)
Other income (expense) (123) (20) 302
-------------------------------------------------
(2,481) (1,944) (845)
-------------------------------------------------
Income before income taxes 2,443 11,433 9,446
Provision for income taxes 757 4,230 3,690
-------------------------------------------------
Net income $ 1,686 $ 7,203 $ 5,756
=================================================
Earnings per common share $ .13 $ .58 $ .51
=================================================
Weighted-average number of common shares 12,756 12,364 11,360
=================================================
</TABLE>
See accompanying notes.
37
<PAGE> 4
Uno Restaurant Corporation and Subsidiaries
<TABLE>
Consolidated Statements of Shareholders' Equity
<CAPTION>
COMMON STOCK ADDITIONAL
----------------------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
--------------------------------------------------------------------------------------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at October 3, 1993 8,976 $ 90 $29,787 $19,498 $49,375
Net income 5,756 5,756
Exercise of stock options 96 1 712 713
Tax benefit from exercise of
nonqualified stock options 114 114
--------------------------------------------------------------------------------------
Balance at October 2, 1994 9,072 91 30,613 25,254 55,958
Net income 7,203 7,203
Five-for-four stock split 2,275 23 (23)
Sale of Common Stock, net of offering
costs 2,300 23 22,541 22,564
Exercise of stock options 35 226 226
Purchase of Treasury Stock $ (2,900) (2,900)
Tax benefit from exercise of
nonqualified stock options 76 76
--------------------------------------------------------------------------------------
Balance at October 1, 1995 13,682 137 53,433 32,457 (2,900) 83,127
Net income 1,686 1,686
Exercise of stock options 16 63 63
Purchase of Treasury Stock (7,753) (7,753)
Tax benefit from exercise of
nonqualified stock options 13 13
--------------------------------------------------------------------------------------
Balance at September 29, 1996 13,698 $137 $53,509 $34,143 $(10,653) $77,136
======================================================================================
</TABLE>
See accompanying notes.
38
<PAGE> 5
5
Uno Restaurant Corporation and Subsidiaries
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
YEAR ENDED
-------------------------------------------------
SEPTEMBER 29 OCTOBER 1 OCTOBER 2
1996 1995 1994
-------------------------------------------------
OPERATING ACTIVITIES (In thousands)
<S> <C> <C> <C>
Net income $ 1,686 $ 7,203 $ 5,756
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,064 10,896 7,765
Deferred income taxes (2,462) 291 547
Provision for deferred rent 688 637 462
(Gain) loss on disposal of equipment 19 (28) (321)
Asset impairment charge 3,937
Changes in operating assets and liabilities, net of
effects from business acquisitions:
Royalties receivable 15 (172) (77)
Inventory (107) (482) (429)
Prepaid expenses and other assets (783) (3,736) (960)
Accounts payable and other liabilities 1,037 2,055 1,948
Income taxes payable 1,455 (528) (229)
-------------------------------------------------
Net cash provided by operating activities 18,549 16,136 14,462
INVESTING ACTIVITIES
Additions to property, equipment and leasehold
improvements (22,909) (39,864) (22,170)
Proceeds from sale of fixed assets 144 42 2,529
Purchase of business, net of cash acquired (316) (4,800)
-------------------------------------------------
Net cash used in investing activities (22,765) (40,138) (24,441)
FINANCING ACTIVITIES
Proceeds from revolving line of credit 53,103 60,950 39,895
Principal payments on debt and capital lease
obligations (40,687) (56,570) (30,780)
Issuance of Common Stock 22,564
Purchase of Treasury Stock (7,753) (2,900)
Exercise of stock options 76 302 827
-------------------------------------------------
Net cash provided by financing activities 4,739 24,346 9,942
-------------------------------------------------
Increase (decrease) in cash 523 344 (37)
Cash at beginning of year 1,305 961 998
-------------------------------------------------
Cash at end of year $ 1,828 $ 1,305 $ 961
=================================================
</TABLE>
See accompanying notes.
39
<PAGE> 6
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements
September 29, 1996, October 1, 1995
and October 2, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Company owns and operates 86 Pizzeria Uno casual dining, full-service
restaurants primarily from New England to Virginia, as well as, Florida, Chicago
and Denver, and franchises 63 units in 19 states, the District of Columbia,
Puerto Rico and Canada. The Company also operates two Bay Street seafood
restaurants, a Mexican restaurant in Chicago, several take-out and quick-serve
Uno units in test, and a refrigerated and frozen consumer foods division. The
consumer foods business supplies American Airlines, movie theaters and
supermarket and wholesale club chains in the Northeast with both frozen and
refrigerated Pizzeria Uno brand products, as well as certain private label
products.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Uno Restaurant
Corporation and its wholly-owned subsidiaries (the Company). All intercompany
accounts and transactions have been eliminated in consolidation.
FISCAL YEAR
The Company's fiscal year ends on the close of business on the Sunday closest to
September 30 in each year.
INVENTORY
Inventory, which consists of food, beverages and store supplies, is stated at
the lower of cost (first-in, first-out method) or market.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements are recorded at cost. The Company
provides for depreciation of buildings and equipment over their estimated useful
lives using the straight-line method. Leasehold improvements are amortized over
the shorter of their estimated useful lives or the term of the lease using the
straight-line method.
40
<PAGE> 7
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION--FRANCHISE FEES
The Company defers franchise fees until the franchisee opens the restaurant and
all services have been substantially performed; at that time, the entire amount
of the fee is recorded as income. Royalty income is recorded as earned based on
rates provided by the respective franchise agreements. Expenses related to
franchise activities amounted to approximately $3,409,000, $1,889,000 and
$1,427,000 in fiscal years 1996, 1995 and 1994, respectively.
<TABLE>
A summary of full-service franchise unit activity is as follows:
<CAPTION>
YEAR ENDED
------------------------------------------
SEPTEMBER 29 OCTOBER 1 OCTOBER 2
1996 1995 1994
------------------------------------------
<S> <C> <C> <C>
Units operating at beginning of year 59 59 58
Units opened 5 5 5
Units closed (1) (5) (1)
Units converted to Company-owned units (3)
------------------------------------------
Units operating at end of year 63 59 59
==========================================
</TABLE>
PRE-OPENING COSTS
Pre-opening costs consist principally of labor costs associated with the hiring
and training of operating personnel and food and beverage costs. These costs are
deferred until the restaurants open and are amortized over 12 months from that
point using the straight-line method.
INCOME TAXES
Deferred income taxes are determined utilizing the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
41
<PAGE> 8
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER COMMON SHARE
Earnings per common share amounts are calculated based upon the weighted-average
number of shares outstanding, giving effect to the dilutive effect of stock
options. Average shares outstanding and all per share amounts included in the
accompanying consolidated financial statements and notes thereto are based on
the increased number of shares, giving retroactive effect to the five-for-four
stock split in fiscal year 1995.
STOCK-BASED EMPLOYEE COMPENSATION
During October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123). FAS 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. FAS 123 defines a fair
value-based method of accounting for an employee stock option or similar equity
instrument. FAS 123 allows an entity to continue to measure compensation cost
for those plans using the intrinsic value-based method of accounting prescribed
by APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company
intends to continue to measure compensation cost following the principals of APB
Opinion No. 25 and will therefore be required to present pro forma disclosures
of net income and earnings per share as if the fair value-based method has been
applied beginning in fiscal 1997.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and costs
and expenses during the reporting period. Actual results could differ from those
estimates.
42
<PAGE> 9
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. IMPAIRMENT OF LONG-LIVED ASSETS
The Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (FAS 121), in the second quarter of fiscal 1996. A pre-tax
charge of $3.9 million was recorded to adjust the carrying value of those assets
identified as impaired. The charge consisted of $1 million for three Uno Pizza
Takerys, $1.6 million for one full-service Uno restaurant and $1.3 million for
certain assets of three Bay Street restaurants. The assets written down include
the Bay Street trademark and leasehold improvements and equipment of the
aforementioned stores. Based upon first quarter operating and cash flow results,
management believed that these units would likely continue to generate cash flow
losses and therefore reduced the carrying value of the impaired assets to fair
market value.
3. BUSINESS ACQUISITIONS AND DISPOSITIONS
In December 1994, the Company completed an agreement with Bay Street
Restaurants, Inc. to purchase the net assets of three restaurants located in
Illinois, New Jersey and Pennsylvania. This acquisition was accounted for under
the purchase method of accounting. The results of operations of the acquired
company prior to the dates of acquisition would not have a material impact on
the consolidated results of operations in fiscal years 1995 and 1994.
During 1995, the Company assigned its leasehold interest in its Fairview
Heights, Illinois restaurant to an unaffiliated party in exchange for the
leasehold interest in that unaffiliated party's restaurant located in Orlando,
Florida. The Company recorded the transaction at fair market value and wrote off
the net book value of equipment no longer usable.
On November 8, 1993, the Company sold to a franchisee for $2,500,000 a Pizzeria
Uno restaurant in Lake Buena Vista, Florida and recorded a gain of $312,000,
which was included in other income in fiscal year 1994.
43
<PAGE> 10
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
<TABLE>
Property, equipment and leasehold improvements consist of the following:
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
-----------------------------
(In thousands)
<S> <C> <C>
Land $ 14,796 $ 11,093
Buildings 22,037 18,056
Equipment 45,690 42,430
Leasehold improvements 82,013 74,011
Construction in progress 2,120 3,263
-----------------------------
166,656 148,853
Less allowances for depreciation and amortization 46,146 36,355
-----------------------------
$120,510 $112,498
=============================
</TABLE>
5. RELATED-PARTY TRANSACTIONS
The Company leases three buildings from its principal shareholder for a
restaurant and for corporate office space. Rent expense in the amount of
approximately $446,000 was charged to operations in each of the fiscal years
presented. The Company believes that the terms of these leases approximate fair
rental value.
The Company's President and his brother own and operate three franchised
restaurants. Additionally, the Chairman of the Company owns a 50% interest in a
franchised pizza takery, and one of the directors of the Company has a
partnership interest in a franchised restaurant. These franchisees pay royalties
to the Company under standard franchise agreements, with the exception of the
pizza takery, which is being operated as a test concept and, as a result, is not
currently being charged royalties.
6. LEASES
The Company conducts the majority of its operations in leased facilities, which
are accounted for as capital or operating leases. The leases typically provide
for a base rent plus real estate taxes, insurance and other expenses, plus
additional contingent rent based upon revenues of the restaurant. Contingent
rent amounted to $956,000, $1,017,000 and
44
<PAGE> 11
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. LEASES (CONTINUED)
<TABLE>
$981,000 in fiscal years 1996, 1995 and 1994, respectively. At September 29,
1996, the minimum rental commitments under all noncancelable capital and
operating leases with initial or remaining terms of more than one year are as
follows:
<CAPTION>
CAPITAL OPERATING
FISCAL YEAR LEASES LEASES
- ----------- ------------------------------
(In thousands)
<C> <C> <C>
1997 $ 260 $ 9,256
1998 260 9,215
1999 260 9,024
2000 223 8,938
2001 75 9,009
Thereafter 1,251 83,768
------------------------------
2,329 $129,210
Less amount representing interest 1,095 ===========
-------------
Present value of net minimum lease payments 1,234
Less current portion of obligation under capital leases 178
-------------
Long-term obligation under capital leases $1,056
=============
</TABLE>
<TABLE>
Total expenses for all leases were as follows:
<CAPTION>
CAPITAL
CAPITAL LEASE LEASE ASSET OPERATING LEASE
FISCAL YEAR INTEREST AMORTIZATION RENTALS
- ----------- ------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
1996 $84 $118 $13,061
1995 63 71 11,509
1994 51 58 10,193
</TABLE>
Certain operating lease agreements contain free rent inducements and scheduled
rent increases which are being amortized over the terms of the agreements,
ranging from 15 to 20 years, using the straight-line method. The deferred rent
liability, included in other liabilities, amounted to $3,984,000 at September
29, 1996 and $3,296,000 at October 1, 1995.
45
<PAGE> 12
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. FINANCING ARRANGEMENTS
<TABLE>
Long-term debt consists of the following:
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
----------------------------
(In thousands)
<S> <C> <C>
Revolving credit and note agreement $37,085 $21,750
10.22% senior notes payable to Cigna Insurance
Company 3,333
----------------------------
37,085 25,083
Less current portion 3,333
----------------------------
$37,085 $21,750
============================
</TABLE>
The Company has a $50,000,000 unsecured revolving line of credit which converts
to a three-year term loan in December 1997. The Company is entitled to borrow,
at its discretion, amounts which accrue interest at variable rates based on
either the LIBOR or prime rate. At September 29, 1996, interest on outstanding
borrowings ranged from 6.95% to 8.50%. A commitment fee of approximately .36% is
accrued on unused borrowings under the credit agreement. The note agreements
contain certain financial and operating covenants, including maintenance of
certain levels of net worth and income.
In October 1995, the Company entered into a five-year interest rate swap
agreement to convert a portion of its floating rate debt to a fixed-rate basis,
thereby reducing the potential impact of interest rate increases on future
income. The notional amount of this interest rate swap agreement was $20 million
and the fixed swap rate was 6.04%. The differential to be paid or received is
accrued as interest rates change and recognized as an adjustment to interest
expense related to the debt. The Company estimates that the fair market value of
its interest rate swap at September 29, 1996 is $286,000 based upon information
provided by the other party to the swap.
The Company made cash payments of interest of $2,845,000, $2,445,000 and
$1,465,000 during fiscal years 1996, 1995 and 1994, respectively. The Company
capitalized interest during the construction period of newly constructed
restaurants amounting to $290,000 in fiscal year 1996, $509,000 in fiscal year
1995 and $228,000 in fiscal year 1994 and included those amounts in leasehold
improvements.
46
<PAGE> 13
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. FINANCING ARRANGEMENTS (CONTINUED)
The Company has an outstanding letter of credit in the amount of $137,500 at
September 29, 1996, which expires in December 1996. The Company provides certain
limited lease financing to qualified franchisees through an agreement with an
unaffiliated finance company. The Company's maximum guarantee under the
agreement was $1,196,000 at September 29, 1996. The Company has also guaranteed
up to a maximum of $412,000 of future lease payments in the event of default by
specific franchisees.
8. COMMON STOCK TRANSACTIONS
On November 15, 1994, the Board of Directors of the Company declared a
five-for-four stock split payable to shareholders on February 28, 1995. In the
third quarter of fiscal 1995, the Company issued 2.3 million shares of common
stock in exchange for $22.6 million raised through a secondary common stock
offering.
In July 1995, the Board of Directors authorized the purchase of up to 500,000
shares of the Company's common stock, of which 358,100 shares were purchased in
fiscal 1995. In October 1995, the Board of Directors increased its authorization
to purchase up to 1.5 million shares of the Company's stock, of which the
balance of 1,141,900 shares were purchased in fiscal 1996.
9. PREPAID EXPENSES AND OTHER ASSETS
<TABLE>
Prepaid expenses and other current assets consist of the following:
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
------------------------------
(In thousands)
<S> <C> <C>
Prepaid insurance $ 422 $ 821
Prepaid rent 328 359
Product rebates receivable 342 154
Prepaid operating costs 213 233
Other accounts receivable 962 654
------------------------------
$2,267 $2,221
==============================
</TABLE>
47
<PAGE> 14
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. ACCRUED EXPENSES
<TABLE>
Accrued expenses consist of the following:
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
--------------------------------
(In thousands)
<S> <C> <C>
Accrued rent $1,379 $1,290
Accrued insurance 962 778
Accrued utilities 768 616
Accrued vacation 489 330
Other 1,565 899
--------------------------------
$5,163 $3,913
================================
</TABLE>
11. EMPLOYEE BENEFIT PLANS
The Company maintains a 401(k) Savings and Employee Stock Ownership Retirement
Plan (the Plan) for all of its eligible employees. The Plan is maintained in
accordance with the provisions of Section 401(k) of the Internal Revenue Code
and allows all employees with at least six months of service to make annual
tax-deferred voluntary contributions up to 15% of their salary. Under the Plan,
the Company matches a specified percentage of the employees contributions,
subject to certain limitations, and makes annual discretionary contributions of
the Company's Common Stock. Total contributions made to the plans were $161,000,
$153,000 and $110,000 in fiscal years 1996, 1995 and 1994, respectively.
The Company sponsors a Deferred Compensation Plan which allows officers to defer
up to 20% of their annual compensation. These assets are placed in a "rabbi
trust" and are presented as assets of the Company in the accompanying balance
sheet as they are available to the general creditors of the Company in the event
of the Company's insolvency. The related liability of $566,000 at September 29,
1996 and $426,000 at October 1, 1995 is included in other liabilities in the
accompanying balance sheet. Deferred compensation expense in the amounts of
$140,000 and $173,000 were recorded in fiscal years 1996 and 1995, respectively.
48
<PAGE> 15
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. INCOME TAXES
<TABLE>
Deferred taxes are attributable to the following temporary differences:
<CAPTION>
SEPTEMBER 29 OCTOBER 1
1996 1995
------------------------------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Deferred rent $1,604 $1,337
Asset impairment charge 1,123
Accrued expenses 715 204
Franchise fees 148 100
Depreciation 123 38
Other 261 267
------------------------------
Total deferred tax assets 3,974 1,946
Deferred tax liabilities:
Deferred pre-opening costs 243 484
Prepaid insurance 55 232
Royalty fee 63 79
------------------------------
Total deferred tax liabilities 361 795
------------------------------
Net deferred tax assets $3,613 $1,151
==============================
</TABLE>
49
<PAGE> 16
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. INCOME TAXES (CONTINUED)
<TABLE>
The provision (credit) for income taxes consisted of the following:
<CAPTION>
YEAR ENDED
-------------------------------------------------
SEPTEMBER 29 OCTOBER 1 OCTOBER 2
1996 1995 1994
-------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 2,532 $3,098 $2,536
State 687 841 607
-------------------------------------------------
3,219 3,939 3,143
Deferred:
Federal (1,995) 228 243
State (467) 63 304
-------------------------------------------------
(2,462) 291 547
-------------------------------------------------
Income tax expense $ 757 $4,230 $3,690
=================================================
</TABLE>
<TABLE>
A reconciliation of the effective tax rates with the federal statutory rates is
as follows:
<CAPTION>
YEAR ENDED
-------------------------------------------------
SEPTEMBER 29 OCTOBER 1 OCTOBER 2
1996 1995 1994
-------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.1% 34.0%
State income taxes, net of federal income tax benefit 5.0 4.9 6.0
Tax credits (9.8) (2.6) (1.8)
Other 1.8 .6 .9
-------------------------------------------------
Effective income tax rate 31.0% 37.0% 39.1%
=================================================
</TABLE>
50
<PAGE> 17
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. INCOME TAXES (CONTINUED)
The Company made income tax payments of $2,416,000, $3,667,000 and $3,779,000
during fiscal years 1996, 1995 and 1994, respectively.
13. STOCK OPTION PLANS
The 1987 Employee Stock Option Plan (the Plan) provides for up to 1,875,000
shares of common stock issuable upon exercise of options granted under the Plan.
Options may be granted at an exercise price not less than fair market value on
the date of grant. All options vest at a rate of 20% per year beginning one year
after the date of grant, with the exception of 93,750 and 62,500 options granted
to the President and Chairman of the Company, respectively, which vest
immediately at the date of grant. All options terminate ten years after the date
of grant, with the exception of the 175,000 options granted to the Chairman,
which terminate five years after the date of grant. Options outstanding at
October 1, 1995 are nonqualified stock options.
The 1989 and 1993 Non-Qualified Stock Option Plans for Non-Employee Directors
(the Directors' Plans) provide for up to 101,563 shares of Common Stock issuable
upon exercise of options granted under the Directors' Plans. The 1989 and 1993
Directors' Plans terminate on November 10, 1999 and August 17, 2002,
respectively, but such termination shall not affect the validity of options
granted prior to the dates of termination. Options are to be granted at an
exercise price equal to the fair market value of the shares of Common Stock at
the date of grant. Options granted under the Directors' Plans may be exercised
commencing one year after the date of grant and ending ten years from the date
of grant.
51
<PAGE> 18
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. STOCK OPTION PLANS (CONTINUED)
<TABLE>
Information regarding the Company's stock option plans, updated to reflect the
five-for-four stock split in fiscal 1995, is summarized below:
<CAPTION>
YEAR ENDED
-----------------------------------------------
SEPTEMBER 29 OCTOBER 1 OCTOBER 2
1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C>
Options outstanding at beginning of period 1,200,287 1,043,735 960,483
Granted 295,508 277,489 257,298
Exercised (at $4.07 to $6.50 per share) (15,256) (41,400) (120,101)
Canceled (191,291) (79,537) (53,945)
-----------------------------------------------
Options outstanding at close of period 1,289,248 1,200,287 1,043,735
===============================================
Option price range during $4.07 $4.07 $4.07
fiscal year TO $11.80 to $11.80 to $11.40
Options exercisable at close of period 612,526 538,932 430,249
Options available for grant at close of period 377,279 481,496 679,448
</TABLE>
<TABLE>
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------
DECEMBER 31 MARCH 31 JUNE 30 SEPTEMBER 29
1995 1996 1996 1996
-----------------------------------------------------------------
(Amounts in thousands, except per share information.)
<S> <C> <C> <C> <C>
Revenues $40,560 $40,287 $44,694 $46,600
Gross profit (1) 7,754 7,268 9,417 10,574
Operating income (loss) 1,472 (3,525) 2,963 4,014
Income before income taxes 852 (4,129) 2,308 3,412
Net income (loss) 545 (2,642) 1,477 2,306
Income (loss) per common share .04 (.21) .12 .19
</TABLE>
52
<PAGE> 19
Uno Restaurant Corporation and Subsidiaries
Notes to Consolidated Financial Statements (continued)
<TABLE>
14. QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------
JANUARY 1 APRIL 2 JULY 2 OCTOBER 1
1995 1995 1995 1995
--------------------------------------------------------------
(Amounts in thousands, except per share information.)
<S> <C> <C> <C> <C>
Revenues $35,976 $37,151 $41,536 $44,043
Gross profit (1) 7,773 7,771 9,466 10,519
Operating income 2,786 2,555 3,527 4,509
Income before income taxes 2,415 1,972 2,940 4,106
Net income 1,520 1,243 1,852 2,588
Earnings per common share .13 .11 .15 .19
<FN>
(1) Restaurant and consumer product sales, less cost of food and beverages,
labor and benefits, occupancy and other operating expenses, excluding
advertising expenses.
</TABLE>
53
<PAGE> 1
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
March 30, Sept. 29,
1997 1996
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 466 $ 1,828
Royalties receivable 580 710
Consumer product receivable 498 322
Inventory 2,264 2,333
Deferred pre-opening costs 540 470
Prepaid expenses and other assets 3,661 2,267
-------- --------
TOTAL CURRENT ASSETS 8,009 7,930
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Land 14,959 14,796
Buildings 22,211 22,037
Leasehold improvements 86,189 82,014
Equipment 47,474 45,690
Construction in progress 3,117 2,119
-------- --------
173,950 166,656
Less allowance for depreciation and amortization 51,705 46,146
-------- --------
122,245 120,510
OTHER ASSETS
Deferred income taxes 4,338 3,613
Royalty fee 283 324
Liquor licenses and other assets 2,675 2,568
-------- --------
$137,550 $134,945
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,303 $ 6,009
Accrued expenses 6,275 5,163
Accrued compensation and taxes 2,521 2,187
Income taxes payable 494 1,581
Current portion of long-term debt and capital
lease obligations 359 178
-------- --------
TOTAL CURRENT LIABILITIES 14,952 15,118
Long-term debt, net of current portion 37,657 37,085
Capital lease obligations, net of current portion 964 1,056
Other liabilities 4,835 4,550
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized, none issued
Common Stock, $.01 par value, 25,000,000 shares authorized,
13,722,673 and 13,697,526 shares issued and outstanding
in Fiscal Years 1997 and 1996, respectively 137 137
Additional paid-in capital 53,626 53,509
Retained earnings 36,050 34,143
-------- --------
89,813 87,789
Treasury Stock (1,519,800 and 1,500,000 shares at cost, in
Fiscal Years 1997 and 1996, respectively) (10,671) (10,653)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 79,142 77,136
-------- --------
$137,550 $134,945
======== ========
</TABLE>
3
<PAGE> 2
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------- ----------------------
March 30, March 31, March 30, March 31,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Restaurant sales $39,460 $37,003 $78,427 $74,372
Consumer product sales 2,154 2,253 4,316 4,439
Franchise income 1,097 1,031 2,132 2,036
------- ------- ------- -------
42,711 40,287 84,875 80,847
COSTS AND EXPENSES
Cost of sales 10,485 10,380 21,188 20,676
Labor and benefits 13,294 12,582 26,193 25,069
Occupancy 6,507 6,495 13,081 12,901
Other operating costs 4,260 3,807 7,861 7,382
General and administrative 3,140 3,167 6,250 6,209
Depreciation and amortization 3,126 3,201 6,138 6,484
Asset impairment charge 3,937 3,937
------- ------- ------- -------
40,812 43,569 80,711 82,658
------- ------- ------- -------
OPERATING INCOME 1,899 (3,282) 4,164 (1,811)
OTHER INCOME (EXPENSE) (666) (847) (1,276) (1,466)
------- ------- ------- -------
Income before income taxes 1,233 (4,129) 2,888 (3,277)
Provision for income taxes 418 (1,487) 981 (1,180)
------- ------- ------- -------
NET INCOME $ 815 $(2,642) $ 1,907 ($2,097)
======= ======= ======= =======
EARNINGS PER COMMON SHARE $.07 ($.21) $.16 ($.16)
======= ======= ======= =======
Weighted average shares outstanding 12,271 12,831 12,275 13,073
======= ======= ======= =======
</TABLE>
4
<PAGE> 3
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Twenty-six Weeks Ended
March 30, March 31,
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 1,907 $ (2,097)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,190 6,534
Deferred income taxes (725) (2,478)
Provision for deferred rent 285 347
(Gain)\Loss on disposal of equipment (13) 286
Asset impairment charge 3,937
Changes in operating assets and liabilities, net
of effects from business acquisitions:
Royalties\consumer product receivables 130 (336)
Inventory 69 (30)
Prepaid expenses and other assets (2,174) (2,224)
Accounts payable and other liabilities 683 1,695
Income taxes payable (1,087) 128
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,265 5,762
INVESTMENT ACTIVITIES
Additions to property, equipment and
leasehold improvements (8,488) (13,206)
Proceeds from sale of fixed assets 1,101 131
-------- --------
(7,387) (13,075)
NET CASH USED FOR INVESTING ACTIVITIES
FINANCING ACTIVITIES
Proceeds from revolving credit agreement 32,809 29,358
Principal payments on revolving credit agreement
and capital lease obligations (32,148) (16,913)
Purchase of Treasury Stock (18) (5,034)
Exercise of stock options 117 49
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 760 7,460
-------- --------
INCREASE (DECREASE) IN CASH (1,362) 147
CASH AT BEGINNING OF PERIOD 1,828 1,305
-------- --------
CASH AT END OF PERIOD $ 466 $ 1,452
======== ========
</TABLE>
5
<PAGE> 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with instructions to Form 10-Q and, therefore, do not
include all information and footnotes normally included in financial statements
prepared in conformity with generally accepted accounting principles. They
should be read in conjunction with the financial statements of the company for
the fiscal year ended September 29, 1996.
The accompanying financial statements include all adjustments (consisting
only of normal recurring accruals) that management considers necessary for a
fair presentation of its financial position and results of operations for the
interim periods presented.
6
