<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LOGAN'S ROADHOUSE, INC.
(Exact Name of Registrant as Specified in Its Charter)
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TENNESSEE 62-1602074
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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565 MARRIOTT DRIVE, SUITE 490
NASHVILLE, TENNESSEE 37214
(615) 885-9056
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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EDWIN W. MOATS, JR.
LOGAN'S ROADHOUSE, INC.
565 MARRIOTT DRIVE, SUITE 490
NASHVILLE, TENNESSEE 37214
(615) 885-9056
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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Copies of communications to:
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J. CHASE COLE, ESQ. F. MITCHELL WALKER, JR., ESQ.
WALLER LANSDEN DORTCH & DAVIS, PLLC BASS, BERRY & SIMS PLC
2100 NASHVILLE CITY CENTER 2700 FIRST AMERICAN CENTER
511 UNION STREET NASHVILLE, TENNESSEE 37238-2700
NASHVILLE, TENNESSEE 37219-1760 (615) 742-6200
(615) 244-6380
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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Common Stock, $.01 par
value........................ 1,150,000 $24.25 $27,887,500 $8,451
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(1) Includes 150,000 shares of Common Stock which the Underwriters have the
option to purchase from the Company and the Selling Shareholder solely to
cover over-allotments, if any.
(2) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee and is based on the average of the high and
low prices of the Common Stock as reported on The Nasdaq Stock Market's
National Market on June 24, 1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 27, 1997
PROSPECTUS
1,000,000 SHARES
[LOGAN'S ROADHOUSE LOGO]
COMMON STOCK
All of the shares of Common Stock offered hereby are being sold by Logan's
Roadhouse, Inc. (the "Company"). The Common Stock is traded on The Nasdaq Stock
Market's National Market (the "Nasdaq National Market") under the symbol "RDHS."
On June 25, 1997, the last reported sale price for the Common Stock on the
Nasdaq National Market was $24.50 per share. See "Price Range of Common Stock."
SEE "RISK FACTORS" APPEARING ON PAGES 6 THROUGH 9 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share................................ $ $ $
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Total(3)................................. $ $ $
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(1) The Company and a selling shareholder (the "Selling Shareholder") have
agreed to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting estimated expenses of $250,000 payable by the Company.
(3) The Company and the Selling Shareholder have granted the Underwriters a
30-day over-allotment option to purchase up to 100,000 and 50,000
additional shares of Common Stock, respectively, on the same terms and
conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $ , the total
Underwriting Discount will be $ , the total Proceeds to Company
will be $ and the Proceeds to Selling Shareholder will be
$ . See "Principal and Selling Shareholders" and "Underwriting."
---------------------
The shares of Common Stock are offered, subject to receipt and acceptance
by the several Underwriters, to prior sale and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about July , 1997.
---------------------
J.C. BRADFORD & CO. EQUITABLE SECURITIES CORPORATION
July , 1997
<PAGE> 3
Omitted Graphic and Image Material
The following graphic and image material is omitted from the form of
the prospectus filed electronically:
1. A map of certain states in the Southeast and Midwest setting forth the
location of each Company-owned and franchised Logan's Roadhouse restaurant in
operation or under construction.
2. Photographs depicting the exterior and the interior decor and selected
menu items of a typical Logan's Roadhouse restaurant.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZATION AND SHORT-COVERING TRANSACTIONS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
(IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and Financial Statements and
related Notes thereto appearing elsewhere or incorporated by reference in this
Prospectus. All references in this Prospectus to share and per share data have
been adjusted to reflect a three-for-two stock split effected in the form of a
stock dividend in June 1996. Unless otherwise indicated, the information in this
Prospectus does not give effect to the exercise of the Underwriters' over-
allotment option. See "Underwriting." Unless the context requires otherwise, all
references to the "Company" in this Prospectus include Logan's Roadhouse, Inc.
and Logan's Partnership. As used herein, "1994," "1995" and "1996" refer to the
Company's fiscal years ended December 25, 1994, December 31, 1995 and December
29, 1996, respectively.
THE COMPANY
Logan's Roadhouse, Inc. ("Logan's Roadhouse" or the "Company") operates 22
Company-owned Logan's Roadhouse(R) restaurants and franchises two Logan's
Roadhouse restaurants, all of which feature steaks, ribs, chicken and seafood
dishes in a distinctive atmosphere reminiscent of an American roadhouse. The
Logan's Roadhouse concept is designed to appeal to a broad range of customers by
offering generous portions of moderately-priced, high quality food in a very
casual, relaxed dining environment that is lively and entertaining. The
restaurants are open seven days a week for lunch and dinner and offer full bar
service. The Logan's Roadhouse menu is designed to appeal to a wide variety of
tastes, emphasizing extra-aged, hand-cut USDA choice steaks and signature dishes
such as fried green tomatoes, baked sweet potatoes and made-from-scratch yeast
rolls. Prices range from $3.95 to $7.50 for lunch items and from $7.50 to $16.95
for dinner entrees. The average check per customer, including beverages, was
$8.72 for lunch and $11.91 for dinner in the first quarter ended April 20, 1997.
The lively, country "honky-tonk" atmosphere of Logan's Roadhouse
restaurants is designed to appeal to families, couples, single adults and
business persons. The Company's spacious restaurants are constructed of
rough-hewn cedar siding in combination with bands of corrugated metal outlined
in double-striped, red neon. The interiors are decorated with hand-painted
murals depicting typical scenes from American roadhouses of the 1940s and 1950s,
concrete and wooden planked floors and neon signs and feature Wurlitzer(TM)
jukeboxes playing contemporary country hits. The restaurants also feature a
display cooking grill and an old-fashioned meat counter displaying steaks, ribs,
seafood and salads, and include a spacious, comfortable bar area with a
large-screen television. While dining or waiting for a table, guests may eat
roasted in-shell peanuts and toss the shells on the floor, and watch as cooks
prepare steaks and other entrees on gas-fired mesquite grills.
The Company's strategy is to build sales volumes by appealing to a wide
segment of the population, including both traditional casual dining customers
and, because the menu includes many items at lower price points, the
value-driven customer. As part of its strategy to provide a relaxed atmosphere
and maximize sales volume, management has designed the prototype Logan's
Roadhouse restaurant to be larger than many casual dining restaurants, with
approximately 7,800 square feet and seating for approximately 290 guests
(including 45 bar seats). The cost of developing the Company's prototype
restaurant is estimated to range from $2.0 million to $2.6 million. Average
sales in 1996 for the nine restaurants open for a full year were approximately
$3.6 million.
The Company believes that selecting quality restaurant sites in its target
markets will be critical to the Company's success. The Company's target markets,
primarily in the Southeast and Midwest, are mid-sized metropolitan markets with
attractive demographics and smaller markets where the appeal of the Company's
concept, together with fewer competing casual dining restaurants, provides an
attractive opportunity for the Company. The Company's site selection strategy
within each market is to locate its restaurants near retail, office and
entertainment centers and, in certain markets, colleges and universities, or
other areas that management believes are significant generators of potential
customers at both lunch and dinner. See "Business -- Growth Strategy."
3
<PAGE> 5
The first Logan's Roadhouse restaurant opened in 1991 in Lexington,
Kentucky and was acquired by the Company in 1992. The Company has opened 21
additional Logan's Roadhouse restaurants in Alabama, Georgia, Indiana, Kentucky,
Tennessee and West Virginia, including six in 1996 and seven thus far in 1997,
and franchised two Logan's Roadhouse restaurants in Oklahoma. The Company's net
restaurant sales have grown from $8.8 million in fiscal 1993, its first full
year of operation, to $41.0 million in 1996, a 167.0% compounded annual growth
rate. In addition, net earnings have increased from $358,000 in fiscal 1993 (pro
forma) to $4.1 million in 1996, a 226.4% compounded annual growth rate. The
Company plans to open one or two additional Company-owned restaurants, one of
which is under construction, and expects that one additional franchised
restaurant will be opened during the remainder of 1997. See "Risk
Factors -- Expansion Risks; Need for Additional Financing." The Company plans to
continue to consider franchising opportunities on a limited basis in areas which
are not in the Company's immediate expansion plans. See "Risk Factors --
Franchising" and "Business -- Franchising."
The Company was incorporated in Tennessee in March 1995 in connection with
its initial public offering, which occurred on July 26, 1995 (the "IPO"). Prior
to the IPO, the Company's operations were conducted through Logan's Partnership
(the "Predecessor"), a Tennessee general partnership formed to acquire the
original Logan's Roadhouse restaurant in Lexington, Kentucky. The Company
acquired the partnership interests of the Predecessor immediately prior to the
IPO (the "Reorganization"). The Company's principal executive offices are
located at 565 Marriott Drive, Suite 490, Nashville, Tennessee 37214 and its
telephone number is (615) 885-9056.
THE OFFERING
Common Stock offered by the
Company.......................... 1,000,000 shares
Common Stock to be outstanding
after the offering............... 7,016,659 shares(1)
Use of proceeds.................. To finance the development of additional
restaurants and improvements at existing
restaurants. See "Use of Proceeds."
Nasdaq National Market symbol.... RDHS
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(1) Excludes 493,127 shares of Common Stock issuable upon the exercise of stock
options granted under the Company's stock option plans.
4
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SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND RESTAURANT OPERATING DATA)
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FISCAL YEARS(1) FIRST QUARTER ENDED(2)
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1994 1995 1996 APRIL 21, 1996 APRIL 20, 1997
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<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net restaurant sales....................... $15,005 $27,900 $41,044 $10,905 $17,896
Cost of restaurant sales................... 12,471 23,044 32,718 8,756 14,378
General and administrative expenses........ 777 1,728 2,449 745 1,076
Income from operations..................... 1,757 3,129 5,877 1,404 2,443
Net earnings(3)............................ 1,043 1,905 4,149 858 1,619
Net earnings per share(3).................. $ 0.34 $ 0.50 $ 0.71 $ 0.17 $ 0.26
Weighted average shares outstanding(4)..... 3,068 3,834 5,826 4,968 6,264
RESTAURANT OPERATING DATA:
Average weekly sales per restaurant(5)..... $70,776 $72,468 $67,618 $69,460 $64,608
Same store sales increase (decrease)(6).... 6.2% 3.8% (0.4)% (0.2)% 0.6%
Restaurant margin(7)....................... 16.9% 17.4% 20.3% 19.7% 19.7%
Company-owned restaurants open at end of
period................................... 5 9 15 10 20
Franchised restaurants open at end of
period................................... -- -- 2 -- 2
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APRIL 20, 1997
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AS
ACTUAL ADJUSTED(8)
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BALANCE SHEET DATA:
Working capital............................................. $ 2,357 $25,198
Total assets................................................ 47,757 70,598
Total shareholders' equity.................................. 41,646 64,487
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(1) The financial statement data for 1994 included herein are those of the
Predecessor, and the financial statement data for 1995 include the
operations of the Predecessor for the period December 26, 1994 through July
25, 1995 and the operations of the Company for the period July 26, 1995
through December 31, 1995. The assets and liabilities transferred from the
Predecessor to the Company were at the amounts recorded in the accounts of
the Predecessor. For accounting purposes, the Company has adopted a 52/53
week fiscal year ending on the last Sunday in December.
(2) For accounting purposes, the first quarter consists of 16 weeks, with the
second, third and fourth quarters each consisting of 12 weeks (13 weeks in
the fourth quarter of 1995 because it was a 53-week year).
(3) Prior to the IPO on July 25, 1995, the Predecessor operated the Company's
restaurants as a general partnership and was not subject to corporate income
taxes. Pro forma adjustments have been made to earnings for 1995 and prior
years to give effect to federal and state income taxes as though the Company
had been subject to corporate income taxes for the periods presented.
(4) Shares outstanding give effect to the Reorganization as if it occurred as of
the beginning of 1994. See "Business -- History and Reorganization."
(5) Calculated by dividing total sales of all restaurants open during the period
by the aggregate number of weeks all restaurants were open during such
period.
(6) Reflects the percentage increase in sales of restaurants open throughout the
compared periods. For quarterly financial reporting purposes, a new
restaurant enters the same store sales calculation at the beginning of the
first fiscal quarter following the restaurant's first 15 months of
operation.
(7) Reflects net restaurant sales less cost of restaurant sales as a percentage
of net restaurant sales.
(8) Adjusted to reflect the sale by the Company of the 1,000,000 shares of
Common Stock offered hereby at an assumed offering price of $24.50 per share
and application of the estimated net proceeds therefrom. See "Use of
Proceeds."
5
<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating an investment in the Common
Stock offered hereby. This discussion also identifies important cautionary
factors that could cause the Company's actual results to differ materially from
those projected in forward-looking statements of the Company made by, or on
behalf of, the Company. In particular, the Company's forward-looking statements,
including those regarding the opening of additional restaurants, the adequacy of
the Company's capital resources, the supply and cost of produce and beef and
other statements regarding trends relating to various revenue and expense items,
could be affected by a number of risks and uncertainties including those
described below. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
EXPANSION RISKS; NEED FOR ADDITIONAL FINANCING
The Company intends to use substantially all of the proceeds of this
offering to develop and open additional Logan's Roadhouse restaurants. The
Company's continued growth depends on its ability to locate and open new
restaurants and to operate such restaurants profitably. Some of the Company's
new restaurants may be opened in geographic markets in which the Company has
limited or no previous operating experience. The Company's ability to expand the
number of its restaurants will depend on a number of factors, including the
selection and availability of quality restaurant sites, the negotiation of
acceptable lease or purchase terms, the securing of required governmental
permits and approvals, the adequate supervision of construction, the hiring,
training and retaining of skilled management and other personnel, the
availability of adequate financing and other factors, many of which are beyond
the control of the Company. The hiring and retention of management and other
personnel may be difficult given the low unemployment rates in the areas in
which the Company intends to operate. There can be no assurance that the Company
will be successful in opening the number of restaurants anticipated in a timely
manner. Furthermore, there can be no assurance that the Company's new
restaurants will generate sales revenue or profit margins consistent with those
of the Company's existing restaurants, or that these new restaurants will be
operated profitably.
In pursuing its growth strategy, the Company may incur, from time to time,
short-term and long-term bank indebtedness and may issue, in public or private
transactions, its equity and debt securities, the availability and terms of
which will depend upon market and other conditions. There can be no assurance
that such additional financing will be available on terms acceptable to the
Company. If the Company incurs substantial indebtedness after this offering and
becomes highly leveraged, the Company's ability to obtain additional financing
for working capital, capital expenditures or other purposes could be impaired
and a substantial portion of the Company's cash flow from operations could be
used to cover debt service, limiting the Company's ability to withstand
competitive pressures and economic downturns and increasing the risk of
acceleration of maturity, default and loss of security pursuant to the terms of
such indebtedness. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
SMALL RESTAURANT BASE
The Company currently operates 22 Logan's Roadhouse restaurants, ten of
which have been open for less than one year. Consequently, the sales and
earnings achieved to date by these Logan's Roadhouse restaurants may not be
indicative of future operating results. Moreover, because of the relatively
small number of restaurants currently operated by the Company, poor operating
results at a small number of restaurants could negatively affect the
profitability of the entire Company. An unsuccessful new restaurant or
unexpected difficulties encountered during expansion could have a greater
adverse effect on the Company's results of operations than would be the case in
a restaurant company with more restaurants. In addition, the Company leases
eight of its restaurants. Each lease agreement provides that the lessor may
terminate the lease if the Company defaults in payment of any rent or taxes,
breaches any covenants or agreements or is adjudicated bankrupt. Termination of
any of the Company's leases pursuant to such terms could adversely affect the
Company's results of operations.
6
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LIMITED OPERATING HISTORY
The first Logan's Roadhouse restaurant opened in 1991 and was acquired by
the Company in 1992. Consequently, the Company has a limited operating history
upon which investors may evaluate its performance. In view of its limited
operating history, the Company remains susceptible to a variety of business
risks. Failure to continue to upgrade operating and financial controls and
systems or unexpected difficulties encountered during expansion could adversely
affect the Company's business, financial condition and results of operations.
Although the Company believes that its systems and controls are adequate to
address its current needs, there can be no assurance that such systems and
controls will be adequate to sustain future growth.
GEOGRAPHIC CONCENTRATION OF COMPANY-OWNED RESTAURANTS
The Company's existing restaurants are located in Alabama, Georgia,
Indiana, Kentucky, Tennessee and West Virginia, and the Company plans to expand
in the Southeast, Midwest and Mid-Atlantic. As a result, the Company's results
of operations may be materially affected by the economies of these states and
other geographic regions in which the Company locates restaurants. There can be
no assurance that the Company will be able to operate restaurants profitably in
new markets. See "Business -- Properties."
CHANGES IN FOOD AND OTHER COSTS; SUPPLY RISKS
The profitability of the Company is significantly dependent on its ability
to anticipate and react to changes in food, labor, employee benefits and similar
costs over which the Company has no control. Specifically, the Company also is
dependent on frequent deliveries of produce and fresh beef, with the cost of
fresh beef representing approximately 12% of the Company's net food sales in
1996. As a result, the Company is subject to the risk of possible shortages or
interruptions in supply caused by adverse weather or other conditions which
could adversely affect the availability and cost of such items. While in the
past management has been able to anticipate and react to changing costs through
its purchasing practices or menu price adjustments without a material adverse
effect on profitability, there can be no assurance that it will be able to do so
in the future. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
COMPETITION
Competition in the restaurant industry is intense. Logan's Roadhouse
restaurants compete with mid-priced, full-service, casual dining restaurants
primarily on the basis of quality, atmosphere, location and value. Moreover,
other restaurants operate with concepts that compete for the same casual dining
customers as the Company, with the number of casual dining restaurants
emphasizing steaks substantially increasing in recent years. In addition to
existing traditional steakhouse restaurants, the Company expects to face
competition from new entries into the steakhouse segment of the restaurant
industry. The Company also competes with other restaurants and retail
establishments for quality sites.
Many of the Company's competitors are well established and have
substantially greater financial, marketing and other resources than the Company.
Regional and national restaurant companies recently have expanded their
operations in the current and anticipated market areas of the Company. There can
be no assurance that the expansion of these well-financed chains in these market
areas will not adversely affect the Company's results of operations. See
"Business -- Competition."
RESTAURANT INDUSTRY RISKS
The restaurant business is affected by changes in consumer tastes,
national, regional and local economic conditions, demographic trends, traffic
patterns and the type, number and location of competing restaurants. In
addition, factors such as inflation, increased food, labor and employee benefit
costs and the availability of an experienced management and hourly employees
also may adversely affect the restaurant industry in general and the Company's
restaurants in particular.
7
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DEPENDENCE ON SENIOR MANAGEMENT
The development of the Company's business has been and will continue to be
highly dependent upon the Company's President and Chief Executive Officer, Edwin
W. Moats, Jr., its Vice President of Development, Ralph W. McCracken, its Vice
President of Finance and Chief Financial Officer, David J. McDaniel, and its
Vice President of Operations, George S. Waltman. The loss of the services of any
one of the Company's four executive officers could have a material adverse
effect upon the Company's business and development. See "Management."
GOVERNMENT REGULATION
The restaurant industry is subject to extensive state and local government
regulation relating to the sale of food and alcoholic beverages, and health,
fire and building codes. Termination of the liquor license for any Logan's
Roadhouse restaurant would adversely affect the revenues for the restaurant.
Restaurant operating costs also are affected by other government actions that
are beyond the Company's control, including increases in the minimum hourly wage
requirements, workers' compensation insurance rates and unemployment and other
taxes. Difficulties or failure in obtaining required licensing or other
regulatory approvals could delay or prevent the opening of a new Logan's
Roadhouse restaurant. The suspension of, or inability to retain or renew, a
license also could interrupt and adversely affect the operations at an existing
restaurant. See "Business -- Government Regulation."
FRANCHISING
In January 1996 and March 1997, respectively, the Company entered into
agreements with each of L.W. Group, Inc. ("L.W. Group"), a corporation
controlled by David K. Wachtel, Jr., a principal shareholder of the Company, and
CMAC Incorporated ("CMAC"), a corporation controlled by Charles F. McWhorter,
Jr., a principal shareholder of the Company (L.W. Group and CMAC are
collectively referred to herein as the "Franchisees"), in connection with the
franchising of Logan's Roadhouse restaurants in select market areas not in the
Company's immediate expansion plans. Pursuant to the terms of such agreements,
L.W. Group obtained the exclusive right to develop Logan's Roadhouse restaurants
within certain counties of Arkansas, Oklahoma and Texas until December 31, 2000,
and CMAC obtained the exclusive right to develop Logan's Roadhouse restaurants
within the states of North Carolina and South Carolina and Augusta, Georgia
until March 31, 2002. Each agreement is subject to automatic renewal for an
additional five-year term upon the satisfaction of certain conditions.
Management also is considering other franchising opportunities on a limited
basis in areas which are not in the Company's immediate expansion plans and has
had preliminary discussions with third parties that could result in the
franchising of additional Logan's Roadhouse restaurants. See
"Business -- Franchising." The success of the Company, therefore, may be
dependent, in part, upon the successful operation of the Logan's Roadhouse
restaurants to be developed by franchisees, including the Franchisees. Any
occurrence that creates adverse publicity involving a Logan's Roadhouse
restaurant may have an adverse effect upon the Company regardless of whether
such event involves a Company-owned or a franchised restaurant.
VOLATILITY OF MARKET PRICE
From time to time after this offering, there may be significant volatility
in the market price of the Common Stock. The Company believes that the current
market price of its Common Stock reflects expectations that the Company will be
able to continue to operate its restaurants profitably and to develop new
restaurants at a significant rate and operate them profitably. If the Company is
unable to operate its restaurants as profitably and develop restaurants at a
pace that reflects the expectations of the market, investors could sell shares
of the Common Stock at or after the time that it becomes apparent that such
expectations may not be realized, resulting in a decrease in the market price of
the Common Stock.
In addition to the operating results of the Company, changes in earnings
estimated by analysts, changes in general conditions in the economy or the
financial markets or other developments affecting the Company or its industry
could cause the market price of the Common Stock to fluctuate substantially. In
recent years the
8
<PAGE> 10
stock market has experienced extreme price and volume fluctuations. This
volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
See "Price Range of Common Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
7,016,659 shares of Common Stock (7,116,659 shares if the Underwriters'
over-allotment option is exercised in full), and an additional 493,127 shares of
Common Stock reserved for issuance upon the exercise of options granted under
the Company's stock option plans. All of the shares of Common Stock to be
outstanding after completion of this offering will be freely tradeable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except for those held by "affiliates" (as defined in the
Securities Act) of the Company, which will be subject to the resale limitations
of Rule 144 under the Securities Act. The Company, its executive officers and
directors and the Selling Shareholder, who beneficially own in the aggregate
510,462 shares of Common Stock, have agreed not to sell or otherwise dispose of
shares of Common Stock for 90 days after the date of this Prospectus without the
prior approval of the Underwriters. Following this offering, sales of
substantial amounts of Common Stock in the public market pursuant to Rule 144 or
otherwise, and the potential of such sales, could adversely affect the
prevailing market price of the Common Stock and impair the Company's ability to
raise additional capital through the sale of equity securities. See
"Underwriting."
9
<PAGE> 11
PRICE RANGE OF COMMON STOCK
The Company completed its IPO on July 26, 1995 at a price per share of
$9.00 (adjusted to reflect the Company's three-for-two stock split effected in
June 1996). Since such time, the Common Stock has traded on the Nasdaq National
Market under the symbol "RDHS." The following table sets forth the range of high
and low sales prices for the Common Stock for the periods indicated, as reported
by the Nasdaq National Market.
<TABLE>
<CAPTION>
1995 HIGH LOW
- ---- ------ ------
<S> <C> <C>
Third Quarter (beginning July 26, 1995)..................... $12.17 $10.33
Fourth Quarter.............................................. 12.50 9.50
1996
First Quarter............................................... 19.17 11.00
Second Quarter.............................................. 23.50 16.50
Third Quarter............................................... 24.00 15.50
Fourth Quarter.............................................. 23.50 17.00
1997
First Quarter............................................... 28.00 18.00
Second Quarter (through June 25, 1997)...................... 25.75 14.25
</TABLE>
On June 25, 1997, the last reported sale price for the Common Stock on the
Nasdaq National Market was $24.50 per share. The Company estimates that as of
June 1, 1997, there were approximately 125 holders of record of the Common
Stock.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
hereby are estimated to be approximately $22.8 million ($25.2 million if the
Underwriters' over-allotment option is exercised in full), after deduction of
the underwriting discount and estimated offering expenses payable by the Company
based upon an assumed offering price of $24.50 per share.
The Company plans to use the net proceeds, together with cash on hand and
cash from operations, to fund the development of additional Logan's Roadhouse
restaurants and to maintain and improve existing restaurants. The cost of
developing the Company's prototype Logan's Roadhouse restaurant is estimated to
range from $2.0 million to $2.6 million, including $900,000 for building costs,
$400,000 for equipment costs and $175,000 for preopening costs. Land acquisition
costs, including site preparation, are the most variable development costs and
are estimated to range between $500,000 and $1.1 million. The cost of
development for a new restaurant will not include land acquisition costs if the
property is leased rather than purchased. The Company plans to open 12 to 15
additional Logan's Roadhouse restaurants during the remainder of 1997 and 1998,
depending on the availability of quality sites, the hiring and training of
sufficiently skilled management and other personnel and other factors. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Until utilized for the above purposes, the Company intends to invest the
net proceeds of the offering in marketable income-producing investments,
including investment-grade U.S. government, municipal and corporate obligations,
money market funds and other interest-bearing securities.
10
<PAGE> 12
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company as of April 20, 1997 and as adjusted to reflect the receipt of
proceeds from the sale by the Company of the 1,000,000 shares of Common Stock
offered hereby at an assumed offering price of $24.50 per share, and the
application of the estimated net proceeds therefrom as described in "Use of
Proceeds."
<TABLE>
<CAPTION>
APRIL 20, 1997
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt and capital lease
obligations............................................... $ -- $ --
======= =======
Long-term debt, less current portion........................ $ -- $ --
Shareholders' equity:
Preferred Stock, $0.01 par value, 5,000,000 shares
authorized, no shares outstanding...................... -- --
Common Stock, $0.01 par value, 15,000,000 shares
authorized, 6,016,659 shares issued and outstanding;
7,016,659 shares issued and outstanding, as
adjusted(1)............................................ 60 70
Additional paid-in capital................................ 35,098 57,929
Retained earnings......................................... 6,488 6,488
------- -------
Total shareholders' equity........................ 41,646 64,487
------- -------
Total capitalization.............................. $41,646 $64,487
======= =======
</TABLE>
- ---------------
(1) Excludes 493,127 shares of Common Stock issuable upon the exercise of stock
options granted under the Company's stock option plans.
11
<PAGE> 13
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected financial data of the Company and
Predecessor as of and for the fiscal years ended December 26, 1993, December 25,
1994, December 31, 1995 and December 29, 1996 and for the 16 weeks (first
quarter) ended April 21, 1996 and April 20, 1997. The statement of earnings data
for the 16 weeks ended April 21, 1996 and April 20, 1997 and the balance sheet
data as of April 21, 1996 and April 20, 1997 are derived from unaudited
financial statements which, in the opinion of management, include all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of financial condition and the results of operations. Operating
results for the 16 weeks ended April 20, 1997 are not necessarily indicative of
the results that may be expected for the fiscal year ending December 28, 1997.
The financial data for 1993, 1994, and in 1995 through July 25, 1995 included
herein are those of the Predecessor. The financial data since July 26, 1995
included herein are those of the Company. The assets and liabilities transferred
from the Predecessor to the Company were at the amounts recorded in the accounts
of the Predecessor. The following data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere herein and the Company's Financial Statements
and the related Notes thereto incorporated herein by reference.
<TABLE>
<CAPTION>
FISCAL YEARS(1) FIRST QUARTER ENDED(2)
------------------------------------ -------------------------------
1993 1994 1995 1996 APRIL 21, 1996 APRIL 20, 1997
------ ------- ------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net restaurant sales.................... $8,810 $15,005 $27,900 $41,044 $10,905 $17,896
Cost of restaurant sales:
Food and beverage..................... 3,269 5,336 9,953 13,662 3,596 5,860
Labor and benefits.................... 2,476 4,060 7,506 11,212 3,008 4,960
Occupancy and other costs............. 1,701 2,691 4,594 5,974 1,673 2,607
Depreciation and amortization......... 266 384 990 1,870 479 950
General and administrative expenses..... 454 777 1,728 2,449 745 1,076
------ ------- ------- ------- ------- -------
Total costs and expenses............ 8,166 13,248 24,771 35,167 9,501 15,453
------ ------- ------- ------- ------- -------
Income from operations.......... 644 1,757 3,129 5,877 1,404 2,443
Other income (expense):
Interest, net......................... (95) (142) (178) 309 (63) 60
Franchise income...................... -- -- -- 125 -- 46
------ ------- ------- ------- ------- -------
(95) (142) (178) 434 (63) 106
------ ------- ------- ------- ------- -------
Earnings before income
taxes(3)...................... 549 1,615 2,951 6,311 1,341 2,549
Income tax expense(3)................... 191 572 1,046 2,162 483 930
------ ------- ------- ------- ------- -------
Net earnings(3)................. $ 358 $ 1,043 $ 1,905 $ 4,149 $ 858 $ 1,619
====== ======= ======= ======= ======= =======
Net earnings per share(3)............... $ 0.11 $ 0.34 $ 0.50 $ 0.71 $ 0.17 $ 0.26
====== ======= ======= ======= ======= =======
Weighted average shares
outstanding(4)........................ 3,068 3,068 3,834 5,826 4,968 6,264
BALANCE SHEET DATA:
Total assets............................ $1,350 $ 4,036 $19,869 $45,459 $39,338 $47,757
Long-term obligation, less current
portion............................... 168 283 1,418 -- -- --
Capitalized lease obligations, less
current portion....................... 437 704 522 -- -- --
Total partners' equity (deficit) or
shareholders' equity.................. (79) 817 15,055 40,002 36,673 41,646
</TABLE>
- ---------------
(1) For accounting purposes, the Company has adopted a 52/53 week fiscal year
ending on the last Sunday in December.
(2) For accounting purposes, the first quarter consists of 16 weeks, with the
second, third and fourth quarters each consisting of 12 weeks (13 weeks in
the fourth quarter of 1995 because it was a 53-week year).
(3) Prior to the IPO on July 25, 1995, the Predecessor operated the Company's
restaurants as a general partnership and was not subject to corporate income
taxes. Pro forma adjustments have been made to earnings for 1995 and prior
years to give effect to federal and state income taxes as though the Company
had been subject to corporate income taxes for the periods presented.
(4) Shares outstanding give effect to the Reorganization as if it occurred as of
the beginning of 1993. See "Business -- History and Reorganization."
12
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
At the time of the Company's IPO in July 1995, the Company had eight
restaurants in operation located primarily in middle Tennessee. The Company
completed its second public offering of Common Stock in April 1996 at which time
it operated ten restaurants. The Company has continued its expansion strategy
and currently operates 22 restaurants located in Alabama, Georgia, Indiana,
Kentucky, Tennessee and West Virginia and franchises two restaurants in
Oklahoma.
Net restaurant sales includes a combination of food and beverage sales and
are net of applicable state and city sales taxes. For restaurants open the full
fiscal year of 1996, approximately 31% of net restaurant sales occurred in the
first quarter (16 weeks) compared to a range of 22% to 23% of net restaurant
sales in each of the other three quarters (the second, third and fourth quarters
each consisting of 12 weeks). For a discussion of seasonality, see "Quarterly
Financial and Restaurant Operating Data."
From inception through July 25, 1995, the Predecessor was a partnership
and, accordingly, incurred no federal or state income tax liability. The
discussion of financial condition and results of operations included in the
paragraphs that follow reflect a pro forma adjustment for federal and state
taxes that would have been recorded during these periods if the Predecessor had
been subject to corporate income taxes for the periods presented.
The following section should be read in conjunction with "Summary Financial
and Operating Data" and "Selected Financial Data" included elsewhere herein and
the Company's Financial Statements and the related Notes thereto incorporated by
reference herein.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to net
restaurant sales of certain income statement data, for the periods indicated.
<TABLE>
<CAPTION>
FIRST QUARTER
FISCAL YEARS (16 WEEKS) ENDED
--------------------- -------------------------------
1994 1995 1996 APRIL 21, 1996 APRIL 20, 1997
----- ----- ----- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net restaurant sales................. 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of restaurant sales:
Food and beverage.................. 35.6 35.7 33.3 33.0 32.7
Labor and benefits................. 27.1 26.8 27.3 27.6 27.7
Occupancy and other costs.......... 17.9 16.5 14.6 15.3 14.6
Depreciation and amortization...... 2.5 3.6 4.5 4.4 5.3
General and administrative
expenses........................... 5.2 6.2 6.0 6.8 6.0
----- ----- ----- ----- -----
Total costs and expenses... 88.3 88.8 85.7 87.1 86.3
----- ----- ----- ----- -----
Income from operations..... 11.7 11.2 14.3 12.9 13.7
Other income (expense):
Interest, net...................... (0.9) (0.6) 0.8 (0.6) 0.3
Franchise income................... -- -- 0.3 -- 0.2
----- ----- ----- ----- -----
Earnings before income
taxes.................... 10.8 10.6 15.4 12.3 14.2
Income tax expense (pro forma for
1994 and 1995)..................... 3.8 3.8 5.3 4.4 5.2
----- ----- ----- ----- -----
Net earnings (pro forma for
1994 and 1995)........... 7.0% 6.8% 10.1% 7.9% 9.0%
===== ===== ===== ===== =====
</TABLE>
13
<PAGE> 15
Sixteen Weeks Ended April 20, 1997 Compared to Sixteen Weeks Ended April 21,
1996
Net restaurant sales increased $7.0 million or 64.1% to $17.9 million
during the first quarter of 1997 from $10.9 million during the first quarter of
1996. The Company had 20 restaurants in operation at April 20, 1997 compared to
ten at April 21, 1996. The 64.1% growth in sales is primarily attributable to
the opening of ten new restaurants since the first quarter of 1996. Same store
sales increased 0.6% during the first quarter of 1997, primarily as a result of
a 1.5% menu price increase that was implemented on February 1, 1997. Alcoholic
beverage sales accounted for 11.7% and 12.5% of net restaurant sales for the
first quarters of 1997 and 1996, respectively. Management attributes the
decrease to an overall increase in the Company's lunch sales and a relative
decrease in liquor sales as a percentage of alcoholic beverage sales.
Food and beverage costs as a percentage of net restaurant sales decreased
to 32.7% during the first quarter of 1997 from 33.0% during the first quarter of
1996. Management attributes the overall 0.3% decline primarily to lower produce
prices. In addition, increases in other food and beverage items were partially
offset by the aforementioned 1.5% menu price increase. The prices of the
Company's commodities (beef, pork, chicken, seafood and produce) are subject to
seasonal fluctuations. Accordingly, food cost results for the first quarter of
1997 may not necessarily be indicative of results to be expected for the year.
The Company has historically experienced higher food costs during the spring
(second quarter) and summer (third quarter) time periods.
Labor and benefits increased $2.0 million or 64.9% to $5.0 million during
the first quarter of 1997 from $3.0 million during the first quarter of 1996,
primarily as a result of having 20 restaurants in operation during the first
quarter of 1997 compared to ten during the first quarter of 1996. Labor and
benefits, expressed as a percentage of net restaurant sales, increased slightly
to 27.7% during the first quarter of 1997 from 27.6% during the first quarter of
1996. This increase is primarily attributable to the opening of five new
restaurants during the first quarter of 1997 (equivalent to 2.3 restaurants in
terms of restaurant weeks) compared to one new restaurant during the first
quarter of 1996 and the associated high labor costs normally incurred.
Generally, when a new restaurant opens, management budgets and incurs labor
costs approximately 15% higher than normal to accommodate the initial increased
business and to ensure a high level of food quality and service to its
customers. As the new staff gains experience over a 30 to 60 day post-opening
period, labor schedules are gradually adjusted to provide maximum efficiency
with existing sales volume.
Occupancy and other costs increased $900,000 or 55.8% to $2.6 million
during the first quarter of 1997 from $1.7 million during the first quarter of
1996, primarily as a result of operating with a larger restaurant base during
the first quarter of 1997. As a percentage of net sales, occupancy and other
costs declined 0.7% to 14.6% during the first quarter of 1997 from 15.3% during
the first quarter of 1996. This decline is primarily attributable to advertising
expenses which were higher during the first quarter of 1996 than the normally
budgeted 2.0% of net sales. Various production and media costs accounted for the
increase in advertising expenses.
Depreciation and amortization expense increased $471,000 or 98.5% to
$950,000 during the first quarter of 1997 from $479,000 during the first quarter
of 1996. As a percentage of net sales, depreciation and amortization expense
represented 5.3% and 4.4% for the first quarters of 1997 and 1996, respectively.
The increase is primarily the result of the opening of ten new restaurants since
the first quarter of 1996. Although the Company prefers to own rather than lease
its restaurant facilities, the Company will continue to lease properties in
certain locations.
General and administrative expenses increased $331,000 or 44.5% to $1.1
million during the first quarter of 1997 from $745,000 during the first quarter
of 1996. As a percentage of net restaurant sales, general and administrative
expenses declined to 6.0% during the first quarter of 1997 from 6.8% during the
first quarter of 1996. The dollar increase is primarily attributable to the
addition of management and staff personnel in the areas of finance, accounting,
human resources, operations, training and real estate reflecting the increased
level of organizational support necessary to support the Company's growing
restaurant base. Because of the Company's expansion plans and the expected
increase in net sales as a result thereof, management expects these expenses to
continue to increase during 1997 in absolute dollars, but to decline slightly as
a percentage of net sales. For a discussion of factors affecting the Company's
plans to open additional restaurants, see "Liquidity and Capital Resources."
14
<PAGE> 16
Net interest income (interest income minus interest expense) from cash and
cash equivalents amounted to $60,000 during the first quarter of 1997 as
compared to $64,000 of net interest expense last year. On April 10, 1996, the
Company completed a second public offering of Common Stock with net proceeds
amounting to approximately $20.8 million. From the net proceeds, the Company
repaid all of the then outstanding debt. Accordingly, since the latter date, the
Company has incurred no interest expense and generated interest income from its
various taxable and non-taxable investments.
During the first quarter of 1997, royalty fees of $46,000 were received
from the two franchised restaurants.
The effective tax rates for the first quarters of 1997 and 1996 were 36.5%
and 36.0%, respectively. The increase in the first quarter 1997 tax rate to
36.5% is primarily attributable to an expected decrease in tax-exempt interest
income during 1997.
As a result of the factors discussed above, net earnings in the first
quarter of 1997 increased 88.6% to $1.6 million or 9.0% of net sales from
$858,000 or 7.9% of net sales in the first quarter of 1996. Earnings per share
increased $0.09 or 52.9% in the first quarter of 1997 to $0.26 from $0.17 in the
first quarter of 1996 with a 26.1% increase in shares of Common Stock
outstanding.
Fiscal Year Ended December 29, 1996 Compared to Fiscal Year Ended December 23,
1995
Net restaurant sales increased $13.1 million or 47.1% to $41.0 million in
1996 from $27.9 million in 1995. The Company had 15 restaurants in operation
during 1996 compared to nine in 1995. The 47.1% growth in sales is attributable
to the opening of six new restaurants in 1996. Same store sales declined
slightly by 0.4% during 1996, primarily as a result of one unit experiencing
increased competition. There were no menu price increases implemented during
1996. Alcoholic beverage sales accounted for 11.9% and 12.9% of net restaurant
sales for 1996 and 1995, respectively. Management attributes the decrease in
alcoholic beverage sales as a percentage of net restaurant sales to an increase
in the Company's lunch sales and a relative decrease in liquor sales.
Food and beverage costs as a percentage of net restaurant sales decreased
to 33.3% in 1996 from 35.7% in 1995. Management attributes the overall 2.4%
decline to lower beef and produce prices and the switch to a new food
distributor in late November 1995. In addition, increases in other food and
beverage items were partially offset by a 3.0% menu price increase in November
1995. The prices of the Company's commodities (beef, pork, chicken, seafood and
produce) are subject to seasonal fluctuations. Accordingly, food cost results
for 1996 may not be indicative of results to be expected in future years.
Labor and benefits increased $3.7 million or 49.4% to $11.2 million in 1996
from $7.5 million in 1995, primarily as a result of having 15 restaurants in
operation in 1996 compared to nine in 1995. Labor and benefits, expressed as a
percentage of net restaurant sales, increased to 27.3% in 1996 from 26.8% in
1995. This increase is primarily attributable to the opening of six new
restaurants during 1996 and the associated high labor costs normally incurred.
Occupancy and other costs increased $1.4 million or 30.1% to $6.0 million
in 1996 from $4.6 million in 1995, primarily as a result of operating with a
larger restaurant base in 1996. As a percentage of net sales, occupancy and
other costs declined 1.9% to 14.6% in 1996 from 16.5% in 1995. In connection
with the Company's IPO in July 1995, the Company purchased for $6.1 million all
of the real property and improvements on three of its restaurant sites and all
of the improvements on two of its restaurant sites. Such real property and
improvements previously had been leased. Accordingly, rent expense has
significantly declined since July 1995.
Depreciation and amortization expense increased $879,000 or 88.7% to $1.9
million in 1996 from $990,000 in 1995. As a percentage of net sales,
depreciation and amortization expense represented 4.5% and 3.6%, respectively,
for 1996 and 1995. The increase is primarily the result of the aforementioned
purchase of five leased facilities and of increased depreciation and
amortization resulting from the opening of six new restaurants during 1996.
15
<PAGE> 17
General and administrative expenses increased $721,000 or 41.8% to $2.4
million in 1996 from $1.7 million in 1995. As a percentage of net restaurant
sales, general and administrative expenses declined slightly to 6.0% in 1996
from 6.2% in 1995. Because of the Company's expansion plans, management expects
these expenses to continue to increase during 1997 in absolute dollars, but to
decline slightly as a percentage of net restaurant sales.
Net interest income (interest income minus interest expense) from cash and
cash equivalents amounted to $308,000 in 1996 as compared to $178,000 of net
interest expense in 1995. On April 10, 1996, the Company completed a second
public offering of Common Stock, with net proceeds amounting to approximately
$20.8 million. From the net proceeds, the Company repaid all of the then
outstanding debt. Accordingly, since the latter date, the Company has incurred
no interest expense and generated interest income from its various taxable and
non-taxable investments.
In connection with the openings of the Company's two franchised
restaurants, the Company recognized as income the initial non-refundable $60,000
franchise fee collected. In addition, total royalty fees of $65,000 were
received during the year from both franchised restaurants.
The effective tax rates for 1996 and 1995 (on a pro forma basis) were 34.3%
and 35.4%, respectively. The reduction in the 1996 tax rate to 34.3% is
attributable to the impact of tax-free interest income being generated from
certain non-taxable investments.
From inception through July 25, 1995, the Company was a partnership and
accordingly incurred no federal or state income tax liability. Included in
operating results for 1995 is a pro forma adjustment that provides for statutory
federal and state tax rates then in effect as though the Company had been
subject to corporate income taxes for the period indicated.
As a result of the factors discussed above, net earnings in 1996 increased
117.8% to $4.1 million or 10.1% of net sales from $1.9 million or 6.8% of net
sales in 1995. Earnings per share increased $0.21 or 42.0% in 1996 to $0.71 from
$0.50 in 1995 with a 52.0% increase in weighted average shares of Common Stock
outstanding.
Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended December 25,
1994
Net restaurant sales increased $12.9 million or 85.9% from $15.0 million in
1994 to $27.9 million in 1995. The Company had nine restaurants in operation
during 1995 compared to five in 1994. The 85.9% growth in sales is primarily
attributable to the opening of four new restaurants and to a 3.8% increase in
same store sales in 1995 over the comparable period in 1994. This increase
resulted from higher customer counts and menu price increases of 2.2% and 3.0%
in April 1994 and late November 1995, respectively. Alcoholic beverage sales
accounted for 13.8% and 12.9% of net restaurant sales for 1994 and 1995,
respectively. Management attributes the decrease in alcoholic beverage sales as
a percentage of net restaurant sales to an increase in the Company's lunch sales
and a relative decrease in liquor sales.
Food and beverage costs as a percentage of net restaurant sales increased
slightly from 35.6% in 1994 to 35.7% in 1995. Although the prices of the
Company's commodities (beef, pork, chicken, seafood and produce) are subject to
seasonal fluctuations, these prices have remained fairly stable during 1994 and
1995. Increases in costs were partially offset by menu price increases of 2.2%
in April 1994 and 3.0% in late November 1995.
Labor and benefits increased $3.4 million or 84.9% from $4.1 million in
1994 to $7.5 million in 1995, primarily as a result of having nine restaurants
in operation in 1995 compared to five in 1994. Labor and benefits, expressed as
a percentage of net restaurant sales, declined from 27.1% in 1994 to 26.8% in
1995. This decline is primarily the result of improved operating efficiency
resulting from operating with higher average unit sales volume.
Occupancy and other costs increased $1.9 million or 70.7% from $2.7 million
in 1994 to $4.6 million in 1995, primarily as a result of operating with a
larger restaurant base in 1995. As a percentage of net sales, occupancy and
other costs declined 1.4% from 17.9% in 1994 to 16.5% in 1995. In connection
with the IPO in July 1995, the Company purchased for $6.1 million all of the
real property and improvements on three of its
16
<PAGE> 18
restaurant sites and all of the improvements on two of its restaurant sites.
Such real property and improvements previously had been leased. Accordingly,
rent expense has significantly declined since July 1995. The decline of 1.4% is
primarily the result of increased average unit sales volume on relatively fixed
expenses which generally do not vary with sales.
Depreciation and amortization expense increased $606,000 or 157.8% from
$384,000 in 1994 to $990,000 in 1995. As a percentage of net sales, depreciation
and amortization expense represented 2.5% and 3.6%, respectively, for 1994 and
1995. The increase is primarily the result of the aforementioned purchase of
five leased facilities and of increased depreciation and amortization resulting
from the opening of four new restaurants during 1995.
General and administrative expenses increased $951,000 or 122.4% from
$777,000 in 1994 to $1.7 million in 1995. As a percentage of net restaurant
sales, general and administrative expenses increased from 5.2% in 1994 to 6.2%
in 1995. This increase is primarily attributable to the Company significantly
expanding its management and staff personnel in the areas of finance,
accounting, human resources, operations, training and real estate during the
latter part of 1994 and in 1995 reflecting the increased level of organizational
support necessary to support the Company's growing restaurant base. In addition,
in 1995 the Company incurred certain additional costs associated with operating
as a public company. Because of the Company's expansion plans, management
expects these expenses to continue to increase during 1996 in absolute dollars,
but to decline slightly as a percentage of net restaurant sales.
Net interest expense increased $36,000 or 25.0% from $142,000 in 1994 to
$178,000 in 1995. This increase is primarily the result of growth in the number
of restaurants in operation and the incremental financing costs associated with
such growth. The Company also generated $76,000 of interest income from
short-term investments of the net proceeds from the IPO to offset this increase.
As a percentage of sales, this category has remained approximately the same for
the comparable periods, amounting to 0.9% and 0.6% in 1994 and 1995,
respectively.
Pro forma income taxes reflect statutory federal and state tax rates then
in effect as though the Company had been subject to corporate income taxes for
the entire periods indicated. The effective tax rates were 35.4% for both 1994
and 1995.
Pro forma net earnings increased from $1.0 million in 1994 to $1.9 million
in 1995, an increase of 82.7%.
IMPACT OF INFLATION
The impact of inflation on the cost of food, labor, equipment, land and
construction costs could affect the Company's operations. A majority of the
Company's employees are paid hourly rates related to federal and state minimum
wage laws. In addition, most of the Company's leases require the Company to pay
taxes, insurance, maintenance, repairs and utility costs, and these costs are
subject to inflationary pressures. The Company may attempt to offset the effect
of inflation through periodic menu price increases, economies of scale in
purchasing and cost controls and efficiencies at existing restaurants.
Management believes that inflation has had no significant impact on costs during
the last two years, primarily because the largest single item of expense, food
costs, has remained relatively stable during this period.
17
<PAGE> 19
QUARTERLY FINANCIAL AND RESTAURANT OPERATING DATA
The following is a summary of certain unaudited quarterly results of
operations for each of the last three fiscal years and the 16 weeks ended April
20, 1997. For financial reporting purposes, the first quarter consists of 16
weeks, with the second, third and fourth quarters each consisting of 12 weeks
(13 weeks in the fourth quarter of 1995 because it was a 53-week year):
<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER TOTAL
------------- -------------- ------------- -------------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 25, 1994:
Net restaurant sales.............. $ 3,172 $3,441 $ 4,218 $ 4,174 $15,005
Pro forma net earnings............ $ 206 $ 257 $ 344 $ 236 $ 1,043
Pro forma net earnings per
share........................... $ 0.07 $ 0.09 $ 0.11 $ 0.08 $ 0.34
Restaurants in operation, end of
quarter......................... 3 4 5 5 5
FISCAL YEAR ENDED DECEMBER 31, 1995:
Net restaurant sales.............. $ 6,857 $6,400 $ 6,891 $ 7,752 $27,900
Net earnings (pro forma for first
and second quarters)............ $ 420 $ 350 $ 530 $ 605 $ 1,905
Net earnings per share (pro forma
for first and second
quarters)....................... $ 0.14 $ 0.11 $ 0.12 $ 0.13 $ 0.50
Restaurants in operation, end of
quarter......................... 6 8 8 9 9
FISCAL YEAR ENDED DECEMBER 29, 1996:
Net restaurant sales.............. $10,905 $9,077 $10,139 $10,923 $41,044
Net earnings...................... $ 858 $ 981 $ 1,091 $ 1,219 $ 4,149
Net earnings per share............ $ 0.17 $ 0.16 $ 0.18 $ 0.20 $ 0.71
Restaurants in operation, end of
quarter......................... 10 12 14 15 15
FISCAL YEAR ENDING DECEMBER 28, 1997:
Net restaurant sales.............. $17,896
Net earnings...................... $ 1,619
Net earnings per share............ $ 0.26
Restaurants in operation, end of
quarter......................... 20
</TABLE>
Management believes there is a small degree of seasonality to the business,
with average weekly sales being slightly lower in the winter months. Because the
Company's first fiscal quarter consists of sixteen weeks, however, the effect of
such seasonality is not necessarily reflected in the Company's quarterly
financial results of operations.
LIQUIDITY AND CAPITAL RESOURCES
On April 10, 1996, the Company completed a second public offering of Common
Stock. Proceeds to the Company (after underwriting discounts and expenses)
amounted to approximately $20.8 million, of which approximately $2.3 million was
used to repay outstanding indebtedness and the remaining proceeds, together with
cash on hand, cash flow from operations and lease financing, was used for new
restaurants. The Company's ability to expand the number of its restaurants will
depend on a number of factors, including the selection and availability of
quality restaurant sites, the negotiation of acceptable lease or purchase terms,
the securing of required governmental permits and approvals, the adequate
supervision of construction, the hiring, training and retaining of skilled
management and other personnel, the availability of adequate financing and other
factors, many of which are beyond the control of the Company. The hiring and
retention of management and other personnel may be difficult given the low
unemployment rates in the areas in which the Company intends to operate. There
can be no assurance that the Company will be successful in opening the number of
restaurants anticipated in a timely manner. Furthermore, there can be no
assurance that the Company's new
18
<PAGE> 20
restaurants will generate sales revenue or profit margins consistent with those
of the Company's existing restaurants, or that these new restaurants will be
operated profitably.
The Company's principal capital needs arise from the development of new
restaurants, and to a lesser extent, maintenance and improvement of its existing
facilities. Prior to the IPO, the principal sources of capital to fund these
expenditures were internally generated cash flow, bank borrowings and lease
financing. The following table provides certain information regarding the
Company's sources and uses of capital for the three years presented.
<TABLE>
<CAPTION>
FIRST QUARTER
FISCAL YEARS (16 WEEKS)
---------------------------- ENDED
1994 1995 1996 APRIL 20, 1997
------ ------- ------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flow from operations................ $2,195 $ 3,011 $ 7,302 $2,266
Capital expenditures..................... (2,047) (13,886) (18,146) (6,652)
Net proceeds from equity offerings....... -- 13,048 20,773 --
Net borrowings (repayments).............. 806 529 (2,579) --
</TABLE>
Since inception, the Company's single largest use of funds has been for
capital expenditures consisting of land, building, equipment and preopening
costs associated with its restaurant expansion program. The substantial growth
of the Company over the period has not required significant additional working
capital. Sales are predominantly cash and the business does not require the
maintenance of significant receivables or inventories. In addition, it is common
within the restaurant industry to receive trade credit on the purchase of food,
beverage and supplies, thereby reducing the need for incremental working capital
to support sales increases.
The Company has a $2.5 million revolving credit facility with First
American National Bank (the "Credit Facility"). As of the date hereof, there
were no borrowings outstanding under the Credit Facility. The Credit Facility
imposes restrictions on the Company with respect to the maintenance of certain
financial ratios, the incurrence of indebtedness, the sale of assets, mergers,
capital expenditures and the payment of dividends.
The Company prefers to own its restaurant facilities when possible rather
than lease. The cost of developing the Company's prototype Logan's Roadhouse
restaurant is estimated to range from $2.0 million to $2.6 million, including
$900,000 for building costs, $400,000 for equipment costs and $175,000 for
preopening costs. Land acquisition costs, including site preparation, are the
most variable development costs and are estimated to range between $500,000 and
$1.1 million. The cost of development for a new restaurant will not include land
acquisition costs if the property is leased rather than purchased. The Company
plans to open one or two Logan's Roadhouse restaurants during the remainder of
1997, depending on the availability of quality sites, the hiring and training of
sufficiently skilled management and other personnel and other factors.
Capital expenditures and preopening costs for the remainder of 1997 and
1998 are estimated to range from $28.6 million to $33.2 million for the
development of 16 to 18 new restaurants of which one or two are expected to open
in 1997. In addition, the Company plans to spend $500,000 during the remainder
of 1997 and 1998 to renovate and replace equipment in existing restaurants.
Management believes that the net proceeds of this offering, together with
available cash reserves, cash provided from operations and borrowing capacity,
will be sufficient to fund the Company's expansion plans through 1998. Should
the Company's actual results of operations fall short of, or its rate of
expansion significantly exceed, its plans, or should its costs or capital
expenditures exceed expectations, the Company may need to seek additional
financing in the future. In negotiating such financing, there can be no
assurance that the Company will be able to raise additional capital on terms
satisfactory to the Company.
In order to provide any additional funds necessary to pursue the Company's
growth strategy, the Company may incur, from time to time, additional short and
long-term bank indebtedness and may issue, in public or private transactions,
its equity and debt securities, the availability and terms of which will depend
upon market and other conditions. There can be no assurance that such additional
financing will be available on terms acceptable to the Company.
19
<PAGE> 21
BUSINESS
GENERAL
Logan's Roadhouse operates 22 Company-owned Logan's Roadhouse restaurants
and franchises two Logan's Roadhouse restaurants, all of which feature steaks,
ribs, chicken and seafood dishes in a distinctive atmosphere reminiscent of an
American roadhouse. The Logan's Roadhouse concept is designed to appeal to a
broad range of customers by offering generous portions of moderately-priced,
high quality food in a very casual, relaxed dining environment that is lively
and entertaining. The restaurants are open seven days a week for lunch and
dinner and offer full bar service. The Logan's Roadhouse menu is designed to
appeal to a wide variety of tastes, emphasizing extra-aged, hand-cut USDA choice
steaks and signature dishes such as fried green tomatoes, baked sweet potatoes
and made-from-scratch yeast rolls.
The first Logan's Roadhouse restaurant opened in 1991 in Lexington,
Kentucky and was acquired by the Company in 1992. See "History and
Reorganization." Since then, the Company has opened 21 additional Logan's
Roadhouse restaurants in Alabama, Georgia, Indiana, Kentucky, Tennessee and West
Virginia and franchised two Logan's Roadhouse restaurants in Oklahoma. In 1996,
the average sales per restaurant open for a full year were approximately $3.6
million.
THE LOGAN'S ROADHOUSE CONCEPT
The Logan's Roadhouse concept is designed to appeal to a broad range of
customers by offering a wide variety of items in a very casual, relaxed dining
atmosphere that is lively and entertaining. The key elements of the Logan's
Roadhouse concept include the following:
Atmosphere. The lively, country "honky-tonk" atmosphere of Logan's
Roadhouse restaurants seeks to appeal to families, couples, single adults and
business persons. The Company's spacious restaurants are constructed of
rough-hewn cedar siding in combination with bands of corrugated metal outlined
in double-striped, red neon. The interiors are decorated with hand-painted
murals depicting typical scenes from American roadhouses of the 1940s and 1950s,
concrete and wooden planked floors and neon signs and feature Wurlitzer(TM)
jukeboxes playing contemporary country hits. The restaurants also feature a
display cooking grill and an old-fashioned meat counter displaying steaks, ribs,
seafood and salads, and include a spacious, comfortable bar area with a
large-screen television. While dining or waiting for a table, guests may eat
roasted in-shell peanuts and toss the shells on the floor, and watch as cooks
prepare steaks and other entrees on gas-fired mesquite grills.
Menu and Pricing. The Company's restaurants offer a wide variety of items
designed to appeal to a broad range of consumer tastes. Specialty appetizers
include Logan's Fried Green Tomatoes, Hot Wings Roadhouse Style, Baby Back Rib
Basket and Roadhouse Nachos. The Company's dinner menu features an assortment of
specially seasoned, choice USDA steaks, including 6 and 9 oz. Filets, 6, 9 and
12 oz. Sirloins, 12 and 16 oz. Rib-Eyes, a 12 oz. New York Strip, a 16 oz.
T-Bone, and a 22 oz. Porterhouse, which are all extra-aged, cut by hand on the
premises and prepared over an open gas-fired mesquite grill. Guests also may
choose from baby back ribs, fresh seafood, mesquite grilled shrimp, grilled and
barbecue chicken and an assortment of hamburgers, salads and sandwiches. All
dinner entrees include dinner salad, made-from-scratch yeast rolls and a choice
of brown sugar and cinnamon sweet potato, baked potato, fries or rice pilaf at
no additional cost. The Company's express lunch menu provides specially priced
items guaranteed to be served in less than 15 minutes, including a variety of
hamburgers, salads and sandwiches. All lunch salads are served with
made-from-scratch yeast rolls, and all lunch sandwiches are served with
homestyle potato chips at no additional cost. Prices range from $3.95 to $7.50
for lunch items and from $7.50 to $16.95 for dinner entrees. The average check
per customer, including beverages, was $8.72 for lunch and $11.91 for dinner in
the first quarter ended April 20, 1997.
20
<PAGE> 22
OPERATING STRATEGY
The Company's operating strategy is to differentiate its restaurants by:
Providing a Unique, Lively Dining Atmosphere. Management believes
that the Company's restaurants are unique and provide a relaxed, enjoyable,
lively atmosphere for customers. All employees are encouraged to interact
with customers in a respectful, friendly manner which encourages customers
to relax and enjoy their experience. Management believes that many of the
features of the Company's restaurants, such as the display cooking grill
and fresh deli meat cases which are prominently displayed in the customer
waiting areas, demonstrate the freshness and quality of the menu items to
customers.
Maintaining a High Price-to-Value Relationship. While management
believes that the food quality and service at the Company's restaurants is
comparable or superior to that of other casual dining restaurants, the
Logan's Roadhouse menu offers more dishes at lower price points than many
of its competitors. This broadens the Company's target market to include
value-driven customers as well as traditional casual dining customers.
Management believes that this pricing approach creates a high price-
to-value perception, increases customer volume and generates more frequent
repeat visits.
Offering a Diverse Menu. Although extra-aged, hand-cut choice USDA
steaks are a featured house specialty, the Company's menu is designed to
have broad appeal by featuring mesquite grilled chicken, ribs and fresh
seafood, as well as a wide selection of salads, sandwiches and appetizers.
Most of the entree items, including the steaks, chicken and seafood, and
all salads are prepared using fresh ingredients. Management believes that
offering a diverse menu appeals to a broader segment of the population and
encourages customers to visit the Company's restaurants more often.
Hiring and Retaining Quality Employees. By providing extensive
training, employee development and attractive compensation, the Company
encourages a sense of personal commitment from its employees. The Company
has a cash bonus program tied to established performance goals on a
restaurant-by-restaurant basis for each restaurant's management team
pursuant to which restaurant managers typically earn bonuses equal to
approximately 25% of their total cash compensation. Management believes
that the Company attracts qualified managers by providing a better overall
quality of life characterized by a five-day work schedule involving fewer
hours than are typically required in the restaurant industry. Management
believes its restaurant policies have resulted in a low rate of
management-level employee turnover. See "Restaurant Operations."
GROWTH STRATEGY
The following are the key elements of the Company's growth strategy:
Opening Restaurants in Target Markets. The Company targets mid-sized
metropolitan markets of approximately 500,000 or more in population
primarily in the Southeast and Midwest that management believes include
significant opportunities for potential customers because of the
population, income levels, presence of shopping and entertainment centers,
offices and colleges and universities. The Company also targets smaller
markets of approximately 175,000 or more in population where the appeal of
the Company's concept, together with fewer competing casual dining
restaurants, provides an attractive opportunity for the Company. Management
believes that its target markets are less competitive than major
metropolitan markets on the basis of both site acquisition and number of
casual dining restaurant options. Because the market selection criteria of
the Company is within the discretion of management, such selection criteria
may be altered if necessary to effectuate the Company's growth strategy.
Selecting and Developing High Quality Restaurant Sites. Management
devotes significant time and resources to analyzing each prospective site,
considering local market demographics, population density, average
household income levels and site specific characteristics such as
visibility, accessibility, traffic counts and parking. The Company also
considers existing local competition and, to the extent such information is
available, the revenues of other comparably priced restaurants operating in
the market. The Company's Chief Executive Officer, Edwin W. Moats, Jr., and
Vice President of Development, Ralph W. McCracken, together with other
members of management, work actively with real estate brokers in target
21
<PAGE> 23
markets to select high quality sites and maintain and regularly update a
broad database of possible sites. Typically, management requires four to
eight months to locate, approve and close on a restaurant site and four to
five additional months to obtain necessary permits, construct, equip and
open a restaurant.
Utilizing the Company's Prototype Restaurant. Management has designed
the prototype Logan's Roadhouse restaurant to be larger than many casual
dining restaurants as part of its strategy to provide a relaxed atmosphere
and maximize sales volumes. Of the 22 Company-owned Logan's Roadhouse
restaurants, 17 are prototypes, and the remaining five operate in renovated
buildings which are generally comparable in seating capacity to the
prototype restaurants. The prototype Logan's Roadhouse restaurants operate
in new, freestanding buildings, with approximately 7,800 square feet of
space situated on an approximately 1.7 acre site, with seating for
approximately 290 guests, including 45 bar seats, and parking for 150
automobiles.
Seeking Remodeling Opportunities. In addition to developing prototype
restaurants, the Company plans to consider developing additional Logan's
Roadhouse restaurants in existing buildings. Management believes that its
ability to remodel an existing facility into a Logan's Roadhouse permits
greater accessibility to quality sites in more developed markets. The
conversion and remodeling of an existing restaurant building into a Logan's
Roadhouse restaurant generally takes three to four months, depending on the
nature and extent of such renovation.
RESTAURANT OPERATIONS
Management and Employees. The Company has six area supervisors who are
responsible for supervising the Company's restaurants and the continuing
development of a restaurant's management team. Through regular visits to the
restaurants, the area supervisors ensure that the Company's concept, strategy
and standards of quality are being adhered to in all aspects of restaurant
operations. Each of the Company's restaurants has one general manager, one
kitchen manager and four assistant managers. The general manager of each
restaurant has primary responsibility for the day-to-day operations of the
entire restaurant and is responsible for maintaining the standards of quality
and performance established by the Company. Management believes that guests
benefit from the attentive service and high quality food which results from
having six managers in every restaurant. The Company generally seeks as managers
for each Logan's Roadhouse restaurant two non-management employees promoted into
management positions who fully understand the Logan's Roadhouse concept and four
managers with high levels of previous management experience.
The Company seeks to attract and retain high caliber managers and hourly
employees by providing them with attractive financial incentives and flexible
working schedules. Financial incentives provided to attract high caliber
managers include competitive salaries, bonuses and stock options based on
position, seniority and performance criteria. Also, management believes that the
Company attracts qualified managers by providing a better overall quality of
life characterized by a five-day work schedule involving fewer hours than are
typically required in the restaurant industry. The average number of hourly
employees in each of the Logan's Roadhouse restaurants is approximately 100.
Management believes the Company attracts high quality hourly employees by
providing a casual, high energy and entertaining atmosphere in which to work.
Training and Development. The Company requires its restaurant managers to
have significant experience in the full-service restaurant industry. In
addition, the Company has developed a comprehensive ten week training course
which all managers are required to complete. The program emphasizes the
Company's operating strategy, procedures and standards and is conducted at a
Logan's Roadhouse restaurant.
The general managers, together with the area supervisor, are responsible
for selecting the hourly employees for each new restaurant. Prior to the opening
of each new restaurant, the Company's director of human resources and training
assembles a team of experienced employees to train and educate the new
employees. The training period for new employees lasts approximately two weeks
and includes one week of general training prior to opening and one week of
on-the-job supervision at the new Logan's Roadhouse restaurant. Ongoing employee
training remains the responsibility of the restaurant general manager under the
supervision of an area supervisor.
22
<PAGE> 24
Customer Satisfaction. The Company is committed to providing its customers
prompt, friendly, efficient service, keeping table-to-server ratios low and
staffing each restaurant with an experienced management team to ensure attentive
customer service and consistent food quality. Through the use of customer
surveys, management receives valuable feedback from customers and through prompt
responses demonstrates a continuing interest in customer satisfaction.
Advertising and Marketing. The Company employs an advertising and
marketing strategy designed to establish and maintain a high level of name
recognition and to attract new customers. The Company uses television and radio
advertising in selected markets and print and radio advertising in certain
smaller markets. The Company's goal is to develop a sufficient number of
restaurants in certain markets to permit the continued cost-efficient use of
radio and outdoor advertising. The Company currently budgets approximately 2.0%
of its annual sales on advertising and public relations. The Company also
engages in a variety of promotional activities, such as contributing time, money
and complementary meals to charitable, civic and cultural programs, in order to
increase public awareness of the Company's restaurants.
Restaurant Reporting. The Company closely monitors sales, costs of food
and beverage and labor at each of its restaurants. Weekly restaurant operating
results are used by management to detect trends at each location, and negative
trends are promptly remedied where possible. Financial controls are maintained
through management of an accounting and management information system that is
implemented at the restaurant level. Administrative and management staff prepare
daily reports of sales, labor and customer counts. On a weekly basis, condensed
profit and loss statements are compiled by the Company's accounting department
that provide to management detailed analysis of sales and product and labor
costs, with a comparison to budgets and prior period performance.
Purchasing. The Company strives to obtain consistent quality items at
competitive prices from reliable sources. The Company tests various new products
in an effort to obtain the highest quality products possible and to be
responsive to changing customer tastes. In order to maximize operating
efficiencies and to provide the freshest ingredients for its food products,
purchasing decisions are made by corporate management. The Company entered into
a contract with its current supplier of food products and supplies in 1995. To
date, the Company has not experienced any significant delays in receiving its
food and beverage inventories, restaurant supplies or equipment.
HISTORY AND REORGANIZATION
The first Logan's Roadhouse restaurant was opened in 1991 in Lexington,
Kentucky, and in 1992 the Predecessor was formed as a general partnership to
acquire the original restaurant. The general partners of the Predecessor were
O'Charley's Inc., a publicly held company operating casual dining restaurants
under a different concept than that of the Company, which held a 20% interest,
and Logan's Management Group, Inc., a Tennessee corporation which was merged
into the Company immediately prior to the IPO ("LMG"), which held an 80%
interest. The shareholders of LMG were Edwin W. Moats, Jr., the Chairman of the
Board, President and Chief Executive Officer of the Company, and Charles F.
McWhorter, Jr. and David K. Wachtel, Jr., each a Franchisee and principal
shareholder of the Company.
On March 30, 1995, Logan's Roadhouse, Inc. was formed, and immediately
prior to the IPO, the Company acquired the partnership interests of the
Predecessor pursuant to an Exchange Agreement, dated July 25, 1995 (the
"Exchange Agreement"), pursuant to which the partners in the Predecessor
contributed to the Company all of their respective interests in the Predecessor
in exchange for shares of Common Stock. In addition, the Company entered into
restrictive covenant agreements and a registration rights agreement with certain
parties to the Exchange Agreement.
23
<PAGE> 25
PROPERTIES
The Company currently operates 22 restaurants, all of which are
freestanding facilities. The following table sets forth certain information with
respect to the Company's existing Logan's Roadhouse restaurants and restaurants
under construction:
<TABLE>
<CAPTION>
SEATING RESTAURANT SIZE PROTOTYPE OWNED
OPENING DATE LOCATION CAPACITY (APPROX. SQ. FT.) OR RENOVATED OR LEASED
- ------------ -------- -------- ----------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
August 1991 Lexington, KY 257 6,800 Renovated Leased
August 1992 Nashville, TN 272 7,100 Renovated Leased
(Hickory Hollow)
July 1993 Nashville, TN 290 7,350 Renovated Leased
(Rivergate)
May 1994 Clarksville, TN 292 7,800 Prototype Owned
July 1994 Jackson, TN 292 7,800 Prototype Owned
January 1995 Murfreesboro, TN 292 7,800 Prototype Owned
May 1995 Brentwood/Franklin, 292 7,800 Prototype Owned
TN (Cool Springs)
June 1995 Paducah, KY 286 8,300 Renovated Leased
November 1995 Chattanooga, TN 292 7,800 Prototype Owned
January 1996 Clarksville, IN 292 7,800 Prototype Owned
June 1996 Johnson City, TN 292 7,800 Prototype Owned
June 1996 Florence, AL 292 7,800 Prototype Owned
August 1996 Columbus, GA 299 8,400 Renovated Owned
October 1996 Knoxville, TN 292 7,800 Prototype Leased
December 1996 Barboursville, WV 292 7,800 Prototype Leased
January 1997 Evansville, IN 292 7,800 Prototype Leased
February 1997 Tuscaloosa, AL 292 7,800 Prototype Owned
February 1997 Memphis, TN 292 7,800 Prototype Owned
April 1997 Athens, GA 292 7,800 Prototype Owned
April 1997 Macon, GA 292 7,800 Prototype Owned
June 1997 Louisville, KY 292 7,800 Prototype Leased
June 1997 Cookeville, TN 292 7,800 Prototype Owned
August 1997 Nashville, TN 292 7,800 Prototype Leased
(Projected) (Elliston Place)
</TABLE>
The cost of developing the Company's prototype Logan's Roadhouse restaurant
is estimated to range from $2.0 million to $2.6 million, including $900,000 for
building costs, $400,000 for equipment costs and $175,000 for preopening costs.
Land acquisition costs, including site preparation, are the most variable
development costs and are estimated to range between $500,000 and $1.1 million.
The cost of development for a new restaurant will not include land acquisition
costs if the property is leased rather than purchased. Although the Company
plans to focus its growth and expansion strategy on purchasing real property on
which to develop its restaurants, the Company will continue to lease properties
in certain locations. Management believes the Company's restaurant facilities
are adequately covered by insurance.
The Company's executive offices are located in approximately 6,700 square
feet of space in Nashville, Tennessee, under a lease expiring in 1999.
Management believes that the rent payable for this space does not exceed the
fair market value of comparable properties. Management is in the process of
securing additional leased office space and believes it will be able to do so on
acceptable terms.
24
<PAGE> 26
FRANCHISING
In connection with the franchising of Logan's Roadhouse restaurants in
select market areas not in the Company's immediate expansion plans for owned
restaurants, the Company entered into Area Development Agreements (each, a
"Development Agreement") and Franchise Agreements (each, a "Franchise
Agreement") with each of L.W. Group and CMAC in January 1996 and March 1997,
respectively. L.W. Group's Development Agreement provides for it to develop a
specified number of Logan's Roadhouse restaurants in certain counties of
Arkansas, Oklahoma and Texas. CMAC's Development Agreement provides for it to
develop a specified number of Logan's Roadhouse restaurants in the states of
North Carolina and South Carolina, as well as Augusta, Georgia. L.W. Group
currently operates two Logan's Roadhouse restaurants in Edmond, Oklahoma and
Oklahoma City, Oklahoma. CMAC plans to open its first franchised restaurant in
Greenville, South Carolina in August 1997.
Each Development Agreement requires the Franchisees to locate sites for and
develop a specified number of Logan's Roadhouse restaurants within specified
geographic areas. Under the terms of each Development Agreement, the Franchisees
are required to open a specified number of restaurants during scheduled
intervals, and management of the Company has the right to approve each
restaurant site. Each Franchisee is required to enter into individual franchise
agreements for each Logan's Roadhouse restaurant it develops. Each Development
Agreement prohibits the Franchisees and their principals from owning, operating
or assisting other restaurants with menus or methods of operation similar to
those of Logan's Roadhouse restaurants that are located within the geographic
area covered by the Development Agreement. The initial terms of the Development
Agreements with L.W. Group and CMAC expire on December 31, 2000 and March 31,
2002, respectively, subject to automatic renewal for an additional five years
following such initial term, provided the Franchisees have satisfied the
development schedule specified in their respective Development Agreements. The
Company has the right to purchase all of the outstanding stock of L.W. Group and
CMAC beginning in January 2001 and April 2002, respectively, upon the occurrence
of specified events on the terms and conditions as set forth in their respective
Development Agreements. The Franchisees could lose their exclusive development
rights under their respective Development Agreements if they fail to meet the
performance and other requirements specified in the Development Agreements or
the Franchise Agreements.
Each Franchise Agreement grants to the Franchisees the right to operate a
Logan's Roadhouse restaurant in a specified location for a period of 20 years,
with two additional five-year renewal options. The Franchise Agreement licenses
the right to use the Company's trademarks and service marks with respect to this
specific restaurant site, subject to appropriate oversight by the Company. In
developing a Logan's Roadhouse restaurant, the Franchisees are required to
comply with the Company's general construction specifications, designs, color
schemes, signs and equipment, formulas for preparation of food and beverage
products, operations and financial control methods, and management training
plans.
The Company is obligated to provide a three week training program for a fee
ranging from $45,000 to $55,000 per restaurant during which certain of the
Franchisees' personnel are educated and instructed at the Franchisees'
restaurant in all aspects of the Company's system of operations. The course
begins approximately one week prior to the opening of the Franchisees'
restaurant and ends approximately two weeks after such opening. Pursuant to the
terms of the Franchise Agreement, additional training by the Company's training
crew may be conducted at the Franchisees' restaurant upon request. The
Franchisees are responsible for all expenses incurred by its personnel while in
training, including travel and living expenses.
Each Franchise Agreement prohibits the Franchisee from transferring
ownership of the franchise without the prior approval of the Company, and
provides the Company a right of first refusal to purchase the franchise on the
same terms and conditions as any proposed transfer by the Franchisee. For a
period of 24 months following the date of termination or expiration of the
Franchise Agreement, the Franchisees and certain of their principals may not
compete with the Company within a 50-mile radius of any existing or planned
Company or franchised restaurant, subject to certain exceptions. Additionally,
the Franchisees may not solicit any previously serviced accounts, groups or
clientele for or on behalf of any casual dining restaurant for one year
following the termination or expiration of the Franchise Agreement.
25
<PAGE> 27
The Franchise Agreements require the Franchisees to pay an initial $30,000
franchise fee and a monthly royalty fee of 3.0% of gross sales. The Company
currently requires L.W. Group to contribute 0.5% of gross sales to the Company's
general advertising account and may require the Franchisees to contribute up to
1.0%. In addition, the Company may require the Franchisees to expend on an
annual basis up to 3.0% of gross sales for local promotional activities, subject
to the approval of the Company. In 1996, L.W. Group paid the Company $60,000 for
the initial franchise fees in connection with the two restaurants opened in
Oklahoma and total royalty fees of approximately $65,000.
Management is considering other future franchising opportunities in areas
which are not in the Company's immediate expansion plans for owned restaurants,
and has had preliminary discussions with third parties that could result in the
franchising of additional Logan's Roadhouse restaurants on similar terms as the
Company's agreements with its Franchisees.
COMPETITION
Competition in the restaurant industry is intense. Logan's Roadhouse
restaurants compete with mid-priced, full-service, casual dining restaurants
primarily on the basis of quality, atmosphere, location and value. Moreover,
other restaurants operate with concepts that compete for the same casual dining
customers as the Company, with the number of casual dining restaurants
emphasizing steaks substantially increasing in recent years. The Company also
competes with other restaurants and retail establishments for quality sites.
Many of the Company's competitors are well established and have
substantially greater financial, marketing and other resources than the Company.
Regional and national restaurant companies recently have expanded their
operations in the current and anticipated market areas of the Company. There can
be no assurance that the expansion of these well-financed chains in these market
areas will not adversely affect the Company's profitability.
EMPLOYEES
As of June 1, 1997, the Company employed approximately 2,300 people, of
whom 25 are executive and administrative personnel, 145 are restaurant
management personnel and the remainder are hourly restaurant personnel. Many of
the Company's hourly restaurant employees work part-time. None of the Company's
employees are covered by a collective bargaining agreement. The Company
considers its employee relations to be good.
SERVICE MARKS
Logan's Roadhouse is registered as a federal service mark on the Principal
Register of the United States Patent and Trademark Office. The Company regards
its service mark as having significant value and being an important factor in
the development and marketing of its restaurants. The Company's policy is to
pursue registration of its service marks and trademarks whenever possible and to
oppose vigorously any infringement of its service marks and trademarks.
GOVERNMENT REGULATION
The Company is subject to a variety of federal, state and local laws. Each
of the Company's restaurants is subject to permitting, licensing and regulation
by a number of government authorities, including alcoholic beverage control,
health, safety, sanitation, building and fire agencies in the state or
municipality in which the restaurant is located. Difficulties in obtaining or
failure to obtain required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area.
Approximately 12% of the Company's net restaurant sales were attributable
to the sale of alcoholic beverages in 1996. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Alcoholic beverage
control regulations require each of the Company's restaurants to apply to a
state authority and, in certain locations, county or municipal authorities for a
license or permit to sell alcoholic beverages on the premises. Typically,
licenses must be renewed annually and may be revoked or suspended for cause at
any time. Alcoholic beverage control regulations relate to numerous aspects of
restaurant operations,
26
<PAGE> 28
including minimum age of patrons and employees, hours of operation, advertising,
wholesale purchasing, inventory control and handling, storage and dispensing of
alcoholic beverages.
The failure of a restaurant to obtain or retain liquor or food service
licenses would have a material adverse effect on the restaurant's operations. To
reduce this risk, each Company restaurant is operated in accordance with
procedures intended to assure compliance with applicable codes and regulations.
The Company is subject in certain states to "dram shop" statutes, which
generally provide a person injured by an intoxicated person the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the
intoxicated person. The Company carries liquor liability coverage as part of its
existing $1.0 million comprehensive general liability insurance, as well as
excess liability coverage of $20.0 million per occurrence, with no deductible.
The Company's restaurant operations are also subject to federal and state
laws governing such matters as the minimum hourly wage, unemployment tax rates,
sales tax and similar matters, over which the Company has no control.
Significant numbers of the Company's service, food preparation and other
personnel are paid at rates related to the federal minimum wage, and increases
in the minimum wage could increase the Company's labor costs.
The development and construction of additional restaurants also are subject
to compliance with applicable zoning, land use and environmental laws and
regulations.
LITIGATION
On July, 19, 1996, Robert Olmstead filed a lawsuit in the United States
Bankruptcy Court, Eastern District of Kentucky, Lexington Division, naming as
defendants Bluegrass Steaks, Inc., a Kentucky corporation ("Bluegrass"), David
K. Wachtel, Jr., Logan's Partnership and the Company. Mr. Olmstead was a
creditor of Bluegrass when Bluegrass sold substantially all of its assets to
Logan's Partnership in August 1992. Mr. Olmstead claims that as a result of the
sale of assets, he has suffered damages which he believes total $7,450,000. The
Company believes the claims against the Company have no merit, will vigorously
defend itself and that it is fully indemnified against such claims. At this
time, the Company believes that the lawsuit will not have a material adverse
effect on the Company's financial position or results of operations.
On February 11, and May 28, 1997, respectively, Kenneth F. Payne and Joseph
H. Cook filed lawsuits against the Company in the United States District Court
for the Middle District of Tennessee, Nashville Division. Messrs. Payne and Cook
each claim that the Company terminated his employment because he refused to
participate in, or remain silent about, and reported certain improper or
inappropriate activities allegedly engaged in by the Company in violation of the
Fair Labor Standards Act and the Tennessee Whistle Blower Statute. The Company
denies their allegations and contends that their respective terminations were
based upon legitimate business reasons and that it has not engaged in any
improper activities. In addition, Charles Keith Olivier filed a class action
lawsuit against the Company on May 28, 1997 in the United States District Court
for the Middle District of Tennessee, Nashville Division. Mr. Olivier claims on
behalf of himself and all others similarly situated that the Company engaged in
certain improper activities in violation of the Fair Labor Standards Act and the
Tennessee Whistle Blower Statute. The Company believes it has meritorious
defenses against such claims and will vigorously defend itself. At this time,
the Company believes that the lawsuits will not have a material adverse effect
on the Company's financial position or results of operations.
The Company's forward-looking statements relating to the above-described
litigation reflect management's best judgment based on the status of the
litigation to date and facts currently known to the Company and, as a result,
involve a number of risks and uncertainties, including the possible disclosure
of new facts and information adverse to the Company in the discovery process and
the inherent uncertainties associated with litigation.
Except as set forth above, the Company is not currently involved in any
litigation nor, to management's knowledge, is any litigation threatened against
the Company, except for routine litigation arising in the ordinary course of
business. In the judgment of management of the Company, no material adverse
effect on the Company's financial position or results of operations would result
if any such litigation were not resolved in the Company's favor.
27
<PAGE> 29
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Edwin W. Moats, Jr................ 49 Chairman of the Board, President and Chief
Executive Officer
Ralph W. McCracken................ 48 Vice President of Development
David J. McDaniel................. 54 Vice President of Finance, Chief Financial Officer,
Secretary, Treasurer and Director
George S. Waltman................. 47 Vice President of Operations and Director
Gary T. Baker(1).................. 51 Director
Jerry O. Bradley(2)............... 57 Director
B. Tom Collins(2)................. 55 Director
Thomas E. Ervin(2)................ 62 Director
Ted H. Welch(1)................... 63 Director
</TABLE>
- ---------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
The Company's Board of Directors is divided into three classes of as equal
size as possible. The Company's Board of Directors currently consists of eight
members. At each annual meeting of shareholders, directors constituting one
class are elected for a three year term. The terms of Messrs. Moats, Collins and
Welch will expire at the 1998 Annual Meeting of Shareholders, the terms of
Messrs. McDaniel, Bradley and Baker will expire at the 1999 Annual Meeting of
Shareholders and the terms of Messrs. Waltman and Ervin will expire at the 2000
Annual Meeting of Shareholders.
Edwin W. Moats, Jr. has served as Chairman of the Board, President and
Chief Executive Officer of the Company since its inception in March 1995. From
July 1992 to July 1995, Mr. Moats served as Managing Partner of the Predecessor
and President and Chief Executive Officer of LMG. Prior to co-founding the
Predecessor in 1992, Mr. Moats served as a consultant to Bluegrass Steaks, Inc.,
a Tennessee corporation ("Bluegrass") owned by David K. Wachtel, Jr., a
principal shareholder of the Company and Franchisee, which owned and operated
the first Logan's Roadhouse restaurant in Lexington, Kentucky. From 1991 to
1995, Mr. Moats provided consulting services to Tri-M Management Company, an
owner and operator of full service, casual dining restaurants. Since 1977, he
has been an owner and partner of The Haury & Moats Company, a franchisee of six
Captain D's Seafood Restaurants in Alabama and Louisiana.
Ralph W. McCracken has served as Vice President of Development of the
Company since January 1996. Mr. McCracken founded Tri-M Management Company, an
owner and operator of full service, casual dining restaurants, and served as its
President, Chief Executive Officer and as a director from 1981 until joining the
Company.
David J. McDaniel has served as Vice President of Finance, Chief Financial
Officer, Secretary and Treasurer of the Company since its inception in March
1995 and as a director of the Company since May 1995. From November 1994 to July
1995, Mr. McDaniel served as Chief Financial Officer of the Predecessor. From
1980 to November 1994, he served as Senior Vice President, Secretary and
Treasurer of Southern Hospitality Corporation, an operator of fast food and full
service restaurants.
George S. Waltman has served as Vice President of Operations since its
inception in March 1995 and as a director of the Company since May 1995. From
November 1992 to July 1995, he served in various capacities with the
Predecessor, including restaurant manager, supervisor and director of
operations. From March 1990 to November 1991, Mr. Waltman served as Chairman,
President and Chief Executive Officer of Benjamin's Steak and Seafood
Restaurants.
28
<PAGE> 30
Gary T. Baker has served as a director of the Company since May 1995. Mr.
Baker has served as Chairman of the Board of Peterbilt of Nashville, Inc. since
1985 and as its Secretary since 1995. Mr. Baker has served as Chairman of the
Board and President of GT Investment Corp., a real estate investment company,
since 1986.
Jerry O. Bradley has served as a director of the Company since May 1995.
Mr. Bradley has served as President of Opryland Music Group, Inc., a music
publishing business and an indirect wholly-owned subsidiary of Gaylord
Entertainment Company, and as Vice President of Opryland USA, Inc., an indirect
wholly-owned subsidiary of Gaylord Entertainment Company, since 1986.
B. Tom Collins has served as a director of the Company since May 1995. From
October 1992 to July 1995, Mr. Collins served on the management committee of the
Predecessor. Mr. Collins has owned and operated Tom Collins Music, Inc., an
independent music publishing company, since 1982.
Thomas E. Ervin has served as a director of the Company since May 1995 and
is currently retired. Mr. Ervin was previously employed by H&C Communications,
Inc., a Nashville CBS television affiliate, and was serving as President when
the company was acquired by Landmark Communications, Inc. in 1991. Mr. Ervin
serves on the advisory board of directors of NationsBank of Tennessee, N.A.
Ted H. Welch has served as a director of the Company since May 1995. Mr.
Welch has been a self-employed real estate investor since 1975. Since 1993, Mr.
Welch has served as President and Chief Executive Officer of Eagle
Communications, Inc., a publisher of periodicals. Mr. Welch also serves as a
director of National Health Investors, Inc. and First American Corporation.
The Board of Directors of the Company has a Compensation Committee and an
Audit Committee. The Compensation Committee, comprised of three non-employee
directors, is responsible for establishing salaries, bonuses and other
compensation for the Company's executive officers and administering stock option
and other employee benefit plans of the Company. The Audit Committee, which is
comprised of two non-employee directors, recommends the annual appointment of
the Company's auditors and reviews the scope of audit and non-audit assignments
and related fees, accounting principles used by the Company in financial
reporting, internal auditing procedures, and the adequacy of the Company's
internal control procedures with the Company's auditors.
29
<PAGE> 31
PRINCIPAL AND SELLING SHAREHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 1, 1997 and as adjusted to reflect the
sale of the Common Stock offered hereby of (i) each director and executive
officer of the Company, (ii) the Selling Shareholder, (iii) each person who is
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock and (iv) all directors and executive officers
as a group. Except as otherwise indicated, the persons or entities listed below
have sole voting and investment power with respect to all shares shown
beneficially owned by them, except to the extent such power is shared by a
spouse under applicable law.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT OWNED PERCENT OWNED
OWNED PRIOR TO BEFORE THE AFTER THE
NAME OFFERING(1) OFFERING OFFERING(1)
- ---- ------------------- ------------- -------------
<S> <C> <C> <C>
Edwin W. Moats, Jr.(2)(3)................. 382,512 6.4% 5.5%
Ralph W. McCracken(4)..................... 9,750 * *
David J. McDaniel(5)...................... 29,250 * *
George S. Waltman(6)...................... 28,350 * *
Gary T. Baker(7).......................... 9,000 * *
Jerry O. Bradley(8)....................... 10,500 * *
B. Tom Collins(9)......................... 12,900 * *
Thomas E. Ervin(10)....................... 16,200 * *
Ted H. Welch(11).......................... 12,000 * *
David K. Wachtel, Jr.(12)................. 469,701 7.8 6.7
Charles F. McWhorter, Jr.(13)............. 450,537 7.5 6.4
Pilgrim Baxter & Associates(14)........... 544,350 9.0 7.8
Oberweis Asset Management, Inc.(15)....... 401,150 6.7 5.7
All directors and executive officers as a
group (nine persons)(16)................ 510,462 8.5 7.3
</TABLE>
- ---------------
* Less than 1%.
(1) Includes shares of Common Stock subject to options which may be exercised
within 60 days of June 1, 1997. Such shares are deemed to be outstanding
for the purposes of computing the percentage ownership of the individual
holding such shares, but are not deemed outstanding for purposes of
computing the percentage of any other person shown in the table.
(2) Includes 3,000 shares beneficially owned by Mr. Moats's sons. Mr. Moats
disclaims beneficial ownership of such shares. Also includes options to
purchase 48,750 shares of Common Stock. Mr. Moats's address is 565 Marriott
Drive, Suite 490, Nashville, Tennessee 37214.
(3) Mr. Moats has agreed to sell up to 50,000 shares pursuant to the
Underwriters' over-allotment option. See "Underwriting."
(4) Includes options to purchase 9,375 shares of Common Stock. Mr. McCracken's
address is 565 Marriott Drive, Suite 490, Nashville, Tennessee 37214.
(5) Includes options to purchase 23,250 shares of Common Stock. Mr. McDaniel's
address is 565 Marriott Drive, Suite 490, Nashville, Tennessee 37214.
(6) Includes options to purchase 27,750 shares of Common Stock. Mr. Waltman's
address is 565 Marriott Drive, Suite 490, Nashville, Tennessee 37214.
(7) Includes options to purchase 9,000 shares of Common Stock. Mr. Baker's
address is Baker, Campbell & Parsons, 303 Church Street, Suite 300,
Nashville, Tennessee 37201-1713.
(8) Includes options to purchase 9,000 shares of Common Stock. Mr. Bradley's
address is 65 Music Square West, Nashville, Tennessee 37203.
(9) Includes options to purchase 9,000 shares of Common Stock. Mr. Collins's
address is 25 Music Square West, Nashville, Tennessee 37203.
(10) Includes options to purchase 9,000 shares of Common Stock. Mr. Ervin's
address is 401 Bowling Avenue, Unit 48, Nashville, Tennessee 37205.
(11) Includes options to purchase 9,000 shares of Common Stock. Mr. Welch's
address is 611 Commerce Street, Suite 2920, Nashville, Tennessee 37203.
(12) Mr. Wachtel's address is 640 Spence Lane, Suite 123, Nashville, Tennessee
37217.
(13) Mr. McWhorter's address is 1201 Knox Valley Drive, Brentwood, Tennessee
37027.
(14) Pilgrim Baxter & Associates, a registered investment advisor ("Pilgrim"),
has shared voting power as to 544,350 shares. Pilgrim's address is 1255
Drummers Lane, Suite 300, Wayne, Pennsylvania 19087. Information is derived
from SEC filings.
(15) Oberweis Asset Management, Inc., a registered investment advisor
("Oberweis"), has shared voting and dispositive power as to 401,150 shares.
Oberweis's address is 951 Ice Cream Drive, Suite 200, North Aurora,
Illinois 60542. Information is derived from SEC filings.
(16) Includes options to purchase 154,125 shares of Common Stock.
30
<PAGE> 32
UNDERWRITING
Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below have agreed, severally, to
purchase from the Company the number of shares of Common Stock set forth below
opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------- ---------
<S> <C>
J.C. Bradford & Co..........................................
Equitable Securities Corporation............................
---------
Total............................................. 1,000,000
=========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions contained therein, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company has been advised that the Underwriters propose initially to
offer the shares of Common Stock to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $ per share. The Underwriters may allow and
such dealers may reallow a concession not in excess of $ per share to certain
other dealers. After the initial public offering, the public offering price and
such concessions may be changed.
The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.
The Company and the Selling Shareholder have granted to the Underwriters an
option, exercisable not later than 30 days from the date of this Prospectus, to
purchase up to 100,000 and 50,000 additional shares of Common Stock,
respectively, to cover over-allotments. To the extent that the Underwriters
exercise this option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof which the number of shares of
Common Stock to be purchased by it shown in the table above bears to the total,
and the Company and the Selling Shareholder will be obligated, pursuant to the
option, to sell such shares to the Underwriters. In the event the Underwriters
exercise the option for less than 150,000 shares, the Underwriters will purchase
the 50,000 shares being offered by the Selling Shareholder prior to purchasing
any shares from the Company. The Underwriters may exercise such option only to
cover over-allotments made in connection with the sale of the shares of Common
Stock offered hereby. If purchased, the Underwriters will sell such additional
shares on the same terms as those on which the 1,000,000 shares are being
offered.
In connection with this offering, certain Underwriters may engage in
passive market making transactions in the Common Stock on the Nasdaq National
Market immediately prior to the commencement of sales in the offering in
accordance with Rule 103 of Regulation M. Passive market making consists of
displaying bids on the Nasdaq National Market limited by the bid prices of
independent market makers and making purchases limited by such prices and
effected in response to order flow. Net purchases by a passive market maker on
each day are limited to a specified percentage of the passive market maker's
average daily trading volume in the Common Stock during a specified period and
must be discontinued when such limit is reached. Passive market making may
stabilize the market price of the Common Stock at a level above that which might
otherwise prevail and, if commenced, may be discontinued at any time.
Subject to applicable limitations, the Underwriters, in connection with the
offering, may place bids for or make purchases of the Common Stock in the open
market or otherwise, for long or short account, or cover short positions
incurred, to stabilize, maintain or otherwise affect the price of the Common
Stock, which may be higher than the price that might otherwise prevail in the
open market. There can be no assurance that the price of the Common Stock will
be stabilized, or that stabilizing, if commenced, will not be discontinued at
any time. Subject to applicable limitations, the Underwriters may also place
bids or make purchases on behalf of the underwriting syndicate to reduce a short
position created in connection with the offering.
The Company, the Selling Shareholder and all executive officers and
directors of the Company have agreed that they will not, without the prior
written consent of the Underwriters, issue, sell, transfer, assign or
31
<PAGE> 33
otherwise dispose of any shares of Common Stock or options owned by them prior
to the expiration of 90 days from the date of this Prospectus.
The Underwriting Agreement provides that the Company and the Selling
Shareholder will indemnify the Underwriters and controlling persons, if any,
against certain liabilities, including liabilities under the Securities Act, or
will contribute to payments which the Underwriters or any such controlling
persons may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Waller Lansden Dortch & Davis, A Professional Limited Liability
Company, Nashville, Tennessee. Certain legal matters related to this offering
will be passed upon for the Underwriters by Bass, Berry & Sims PLC, Nashville,
Tennessee.
EXPERTS
The financial statements of the Company and the Predecessor as of December
31, 1995 and December 29, 1996, and for each of the years in the three-year
period ended December 29, 1996 have been incorporated by reference herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-3, including
amendments thereto, relating to the Common Stock offered hereby with the
Commission. This Prospectus, which is part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. Statements contained in this Prospectus as
to the contents of any contracts or other documents referred to are not
necessarily complete and in each instance reference is made to a copy of such
contract or other document filed as an exhibit to the Registration Statement.
For further information with respect to the Company and the Common Stock offered
hereby, reference is made to such Registration Statement, exhibits and
schedules. A copy of the Registration Statement, including the exhibits and
schedules thereto, may be inspected by anyone without charge at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of the Registration Statement and
the exhibits and schedules thereto can be obtained from the Public Reference
Section of the Commission upon payment of prescribed fees. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The address of that site is http://www.sec.gov.
The Company is subject to the informational and periodic reporting
requirements of the Exchange Act, and in accordance therewith, files periodic
reports, proxy statements and other information with the Commission. Such
periodic reports, proxy statements and other information are available for
inspection and copying at the public reference facilities and other regional
offices referred to above, and copies of such materials may be obtained from the
Public Reference Section of the Commission at prescribed rates. The Common Stock
is listed on the Nasdaq National Market, and such periodic reports, proxy
statements and other information can also be inspected at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006. The Company intends to
furnish its shareholders with annual reports containing audited financial
statements and quarterly reports for the first three fiscal quarters of each
fiscal year containing unaudited interim financial information.
32
<PAGE> 34
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents or portions of documents filed by the Company with
the Commission pursuant to the Exchange Act are incorporated herein by
reference:
(1) The Company's Annual Report on Form 10-KSB for the year ended
December 29, 1996.
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
April 20, 1997.
(3) The description of the Common Stock contained in the Company's
Registration Statement under the Exchange Act on Form 8-A filed on July 11,
1995.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of Common Stock hereunder shall be
deemed to be incorporated by reference in this Prospectus and to be part hereof
from the filing date of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is incorporated or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Subject to the foregoing, all information appearing in this Prospectus is
qualified in its entirety by the information appearing in the documents
incorporated herein by reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON WRITTEN OR ORAL
REQUEST, AT NO CHARGE, FROM THE COMPANY. REQUESTS SHOULD BE DIRECTED TO THE
COMPANY, 565 MARRIOTT DRIVE, SUITE 490, NASHVILLE, TENNESSEE 37214, ATTENTION:
DAVID J. MCDANIEL, CHIEF FINANCIAL OFFICER.
Omitted Graphic and Image Material
The following graphic and image material is omitted from the form of
prospectus filed electronically:
A picture of a bucket of peanuts and the Company's logo, and a copy
of the Logan's Roadhouse menu.
33
<PAGE> 35
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Price Range of Common Stock........... 10
Use of Proceeds....................... 10
Capitalization........................ 11
Selected Financial Data............... 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 13
Business.............................. 20
Management............................ 28
Principal and Selling Shareholders.... 30
Underwriting.......................... 31
Legal Matters......................... 32
Experts............................... 32
Available Information................. 32
Incorporation of Certain Information
by Reference........................ 33
</TABLE>
======================================================
======================================================
1,000,000 SHARES
[LOGAN'S ROADHOUSE LOGO]
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
J.C. BRADFORD & CO.
EQUITABLE SECURITIES CORPORATION
July , 1997
======================================================
<PAGE> 36
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC Fee..................................................... $ 8,451
NASD Fee.................................................... 3,289
Nasdaq National Market Fee.................................. 17,500
State Qualification Expenses (including legal fees)......... 2,500*
Printing Expenses........................................... 95,000*
Legal Fees and Expenses..................................... 80,000*
Auditors' Fees and Expenses................................. 40,000*
Transfer Agent and Registrar Fees........................... 3,260*
--------
Total............................................. $250,000*
========
</TABLE>
- ---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The TBCA provides that a corporation may indemnify any of its directors
against liability incurred in connection with a proceeding if (i) the director
acted in good faith, (ii) in the case of conduct in his or her official capacity
with the corporation, the director reasonably believed such conduct was in the
corporation's best interest, (iii) in all other cases, the director reasonably
believed that his or her conduct was not opposed to the best interest of the
corporation, and (iv) in connection with any criminal proceeding, the director
had no reasonable cause to believe that his or her conduct was unlawful. In
actions brought by or in the right of the corporation, however, the TBCA
provides that no indemnification may be made if the director was adjudged to be
liable to the corporation. In cases where the director is wholly successful, on
the merits or otherwise, in the defense of any proceeding instigated because of
his or her status as a director of a corporation, the TBCA mandates that the
corporation indemnify the director against reasonable expenses incurred in the
proceeding. The TBCA also provides that in connection with any proceeding
charging improper benefit to a director, no indemnification may be made if such
director is adjudged liable on the basis that personal benefit was improperly
received. Notwithstanding the foregoing, the TBCA provides that a court of
competent jurisdiction, upon application, may order that a director be
indemnified for reasonable expense if, in consideration of all relevant
circumstances, the court determines that such individual is fairly and
reasonably entitled to indemnification, whether or not the standard of conduct
set forth above was met.
(b) Paragraph 8 of the Registrant's Charter and Article 8 of the
Registrant's Bylaws provide as follows:
(i) The Company shall indemnify, and upon request shall advance
expenses to, in the manner and to the full extent permitted by law, any
officer or director (or the estate of any such person) who was or is a
party to, or is threatened to be made a party to, any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise, by reason of the fact that such
person is or was a director or officer of the Company, or is or was serving
at the request of the Company as a director, officer, partner, trustee or
employee of another corporation, partnership, joint venture, trust or other
enterprise (an "indemnitee"). The Company may, to the full extent permitted
by law, purchase and maintain insurance on behalf of any such person
against any liability which may be asserted against him or her. To the full
extent permitted by law, the indemnification and advances provided for
herein shall include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement. The indemnification provided herein shall
not be deemed to limit the right of the Company to indemnify any other
person for any such expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement to the full extent permitted by law, both as
to action in his official capacity and as to action in another capacity
while holding such office. Notwithstanding the foregoing, the Company shall
not indemnify any such indemnitee (1) in any proceeding by the Company
against such
II-1
<PAGE> 37
indemnitee; or (2) if a judgment or other final adjudication adverse to the
indemnitee establishes his liability for (A) any breach of the duty of
loyalty to the Company or its shareholders, (B) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation
of law, or (C) unlawful distributions under Section 48-18-304 of the Act.
(ii) The rights to indemnification and advancement of expenses set
forth in Article 8(i) above are intended to be greater than those which are
otherwise provided for in the Act, are contractual between the Company and
the person being indemnified, his heirs, executors and administrators, and,
with respect to Article 8(i), are mandatory, notwithstanding a person's
failure to meet the standard of conduct required for permissive
indemnification under the Act, as amended from time to time. The rights to
indemnification and advancement of expenses set forth in Article 8(i) above
are nonexclusive of other similar rights which may be granted by law, the
Charter, the Bylaws, a resolution of the board of directors or shareholders
of the Company, or an agreement with the Company, which means of
indemnification and advancement of expenses are hereby specifically
authorized.
(iii) Any repeal or modification of the provisions of this Article 8,
either directly or by the adoption of an inconsistent provision of the
Charter or the Bylaws, shall not adversely affect any right or protection
set forth herein existing in favor of a particular individual at the time
of such repeal or modification. In addition, if an amendment to the Act
limits or restricts in any way the indemnification rights permitted by law
as of the date hereof, such amendment shall apply only to the extent
mandated by law and only to activities of persons subject to
indemnification under this Article 8 which occur subsequent to the
effective date of such amendment.
(c) The Underwriting Agreement (set forth in Exhibit 1 hereto) provides for
the indemnification by the Underwriters of the Selling Shareholders, the
Company, each of the Company's directors, each of the Company's officers who
signs this Registration Statement and each person who controls the Company
within the meaning of the Securities Act of 1933, as amended, solely with
respect to information provided by the Underwriters for inclusion in this
Registration Statement.
(d) The Company has obtained insurance which provides general coverage for
its directors and executive officers in amounts of $3,000,000 per claim and
$3,000,000 for annual aggregate claims. In addition, the Company has obtained
insurance coverage for its directors and executive officers in amounts of
$5,000,000 per claim and $5,000,000 for annual aggregate claims with respect to
the IPO.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
1 -- Form of Underwriting Agreement
*2 -- Exchange Agreement, dated May 30, 1995, by and among
O'Charley's, each of the shareholders of LMG and the
Registrant
*4.1 -- Section 8 of the Amended and Restated Charter of the
Registrant
*4.2 -- Specimen of Common Stock certificate
5 -- Opinion of Waller Lansden Dortch & Davis, A Professional
Limited Liability Company
23.1 -- Consent of KPMG Peat Marwick LLP
23.2 -- Consent of Waller Lansden Dortch & Davis, A Professional
Limited Liability Company (included in Exhibit 5)
24 -- Power of Attorney (included on page II-4)
</TABLE>
- ---------------
* Incorporated by reference to the Registrant's Registration Statement on Form
SB-2 (Registration No. 33-92976-A).
II-2
<PAGE> 38
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Nashville, State of Tennessee, on June 26, 1997.
LOGAN'S ROADHOUSE, INC.
By: /s/ EDWIN W. MOATS, JR.
------------------------------------
Edwin W. Moats, Jr.
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edwin W. Moats, Jr., and David J. McDaniel, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution for him in his name, place and stead, in any and all capacities, to
sign any amendments to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE(S) DATE
---- -------- ----
<C> <S> <C>
/s/ EDWIN W. MOATS, JR. Chairman of the Board, June 26, 1997
- ----------------------------------------------------- President and Chief
Edwin W. Moats, Jr. Executive Officer
(principal executive
officer)
/s/ DAVID J. MCDANIEL Vice President -- Finance, June 26, 1997
- ----------------------------------------------------- Chief Financial Officer
David J. McDaniel (principal financial and
accounting officer),
Secretary, Treasurer and
Director
/s/ GEORGE S. WALTMAN Vice President -- Operations June 26, 1997
- ----------------------------------------------------- and Director
George S. Waltman
/s/ TED H. WELCH Director June 26, 1997
- -----------------------------------------------------
Ted H. Welch
/s/ B. TOM COLLINS Director June 26, 1997
- -----------------------------------------------------
B. Tom Collins
/s/ THOMAS E. ERVIN Director June 26, 1997
- -----------------------------------------------------
Thomas E. Ervin
/s/ JERRY O. BRADLEY Director June 26, 1997
- -----------------------------------------------------
Jerry O. Bradley
Director
- -----------------------------------------------------
Gary T. Baker
</TABLE>
II-4
<PAGE> 1
EXHIBIT 1
LOGAN'S ROADHOUSE, INC.
1,000,000 SHARES
OF
COMMON STOCK
UNDERWRITING AGREEMENT
July ___, 1997
J. C. BRADFORD & CO., L.L.C.
EQUITABLE SECURITIES CORPORATION
c/o J. C. Bradford & Co., L.L.C.
J. C. Bradford Financial Center
330 Commerce Street
Nashville, Tennessee 37201
Ladies and Gentlemen:
Logan's Roadhouse, Inc., a Tennessee corporation (the "Company"), proposes
to sell to the underwriters named in Schedule I hereto (the "Underwriters"),
1,000,000 shares (the "Firm Shares") of common stock, $.01 par value (the
"Common Stock"), of the Company. Such shares of Common Stock are to be sold to
the Underwriters, acting severally and not jointly, in such amounts as are set
forth in Schedule I hereto opposite the name of such Underwriter. The Company
and Edwin W. Moats, Jr. (the "Selling Shareholder") propose to grant to the
Underwriters an option to purchase up to 100,000 and 50,000 additional shares
of Common Stock, respectively, as provided for in Section 3 of this Agreement
for the purpose of covering over-allotments (the "Option Shares"). The Firm
Shares and the Option Shares purchased pursuant to this Agreement are herein
called the "Shares." Unless otherwise indicated, references to the "Company"
herein shall include Logan's Management Group, Inc. and Logan's Partnership.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) The Company meets the requirements for use of, and has filed
with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Securities Act"), a
registration statement on Form S-3
<PAGE> 2
(Registration No. 333-_________), including the related preliminary
prospectus relating to the Shares, and may have filed one or more
amendments thereto. Copies of such registration statement and any
amendments, including any post-effective amendments, and all forms of
the related prospectuses contained therein and any supplements
thereto, have been delivered to you. Such registration statement,
including the prospectus, Part II, all financial schedules and
exhibits thereto, and all information deemed to be a part of such
Registration Statement pursuant to Rule 430A under the Securities
Act, as amended at the time when it shall become effective, is herein
referred to as the "Registration Statement," and the prospectus
included as part of the Registration Statement on file with the
Commission that discloses all the information that was omitted from
the prospectus on the effective date pursuant to Rule 430A of the
Rules and Regulations (as defined below) and in the form filed
pursuant to Rule 424(b) under the Securities Act is herein referred
to as the "Final Prospectus." The prospectus included as part of the
Registration Statement on the date when the Registration Statement
became effective is referred to herein as the "Effective Prospectus."
Any prospectus included in the Registration Statement and in any
amendment thereto prior to the effective date of the Registration
Statement is referred to herein as a "Preliminary Prospectus." For
purposes of this Agreement, "Rules and Regulations" mean the rules
and regulations promulgated by the Commission under either the
Securities Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as applicable.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof, complied with the
requirements of the Securities Act and the Rules and Regulations, and
did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing does
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that
the only information so provided is the information included in the
last paragraph on the cover page and in the first, third and fourth
paragraphs and the last sentence of the fifth paragraph under the
caption "Underwriting" in the Preliminary, Effective and Final
Prospectus). When the Registration Statement becomes effective and
at all times subsequent thereto up to and including the First Closing
Date (as hereinafter defined), (i) the Registration Statement, the
Effective Prospectus and Final Prospectus and any amendments or
supplements thereto will contain all statements which are required to
be stated therein in accordance with the Securities Act and the Rules
and Regulations and will comply with the requirements of the
Securities Act and the Rules and Regulations, and (ii) neither the
Registration Statement, the Effective Prospectus nor the Final
Prospectus nor any amendment or supplement thereto will include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they are
made, not misleading; except that the foregoing does
2
<PAGE> 3
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that
the only information so provided is the information included in the
last paragraph on the cover page and in the first, third and fourth
paragraphs and the last sentence of the fifth paragraph under the
caption "Underwriting" in the Final Prospectus).
(c) The documents that are incorporated by reference in any
Preliminary, Effective and Final Prospectus or from which information
is so incorporated by reference, when they become effective or were
filed with the Commission, as the case may be, complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and the Rules and Regulations, and any
documents so filed prior to the termination of this offering and
incorporated by reference subsequent to the effective date of the
Registration Statement, shall, when they are filed with the
Commission, conform in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and the Rules
and Regulations.
(d) The Company is duly incorporated and/or validly existing
and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own its properties and
conduct its business as now conducted and is duly qualified or
authorized to do business and is in good standing in all
jurisdictions wherein the nature of its business or the character of
property owned or leased may require it to be qualified or authorized
to do business. The Company holds all licenses, consents and
approvals, and has satisfied all eligibility and other similar
requirements imposed by federal and state regulatory bodies,
administrative agencies or other governmental bodies, agencies or
officials, in each case as required for the conduct of the business
in which it is engaged and is contemplated to be engaged in the
Effective Prospectus and the Final Prospectus, except where the
failure to do so would not have a material adverse effect on the
Company.
(e) The Company has no subsidiaries and is not a partner or joint
venturer in any partnership or joint venture. As used herein, the
term "subsidiary" includes any corporation, joint venture or
partnership in which the Company or any subsidiary of the Company has
an ownership interest.
(f) The capitalization of the Company as of April 20, 1997 is as
set forth under the caption "Capitalization" in the Effective
Prospectus and the Final Prospectus, and the Company's capital stock
conforms to the description thereof contained or incorporated by
reference in the Effective Prospectus and the Final Prospectus. All
the issued shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable.
None of the issued shares of capital stock of the Company have been
issued in violation of any preemptive or similar rights. The Shares
to be sold by the Company hereunder have been duly and validly
authorized and, upon issuance and delivery and payment therefor in
the manner herein described, will be validly issued, fully
3
<PAGE> 4
paid and nonassessable. There are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
transfer of, any shares of Common Stock pursuant to the Company's
charter, bylaws or other governing documents or any agreement or
other instrument to which the Company is a party or by which it may
be bound except as described in the Effective Prospectus and the
Final Prospectus. Except as described in the Effective Prospectus
and Final Prospectus, neither the filing of the Registration
Statement nor the offer or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have been
waived or satisfied, for or relating to the registration of any
shares of Common Stock or any other securities of the Company. The
Underwriters will receive good and marketable title to the Shares to
be issued and delivered hereunder, free and clear of all liens,
encumbrances, claims, security interests, restrictions, shareholders'
agreements and voting trusts whatsoever.
(g) All offers and sales by the Company of the Company's
securities prior to the date hereof were at all relevant times duly
registered or the subject of an available exemption from the
registration requirements of the Securities Act and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue
Sky laws.
(h) The Company has full legal right, power and authority to
enter into this Agreement and to sell and deliver the Shares to
be sold by it to the Underwriters as provided herein, and this
Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except
as enforceability may be limited by applicable equitable principles,
or by bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect affecting the enforcement of
creditors' rights. No consent, approval, authorization or order of
any court or governmental agency or body or third party is required
for the performance of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
except such as have been obtained and such as may be required by the
National Association of Securities Dealers, Inc. ("NASD") or under
the Securities Act or state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters.
The issue and sale of the Shares by the Company, the Company's
performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in a breach or
violation of, or conflict with, any of the terms and provisions of,
or constitute a default by the Company under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company is a party or to which the Company or
any of its properties is subject, the charter or bylaws of the
Company or any statute or any judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to
the Company or any of its properties.
4
<PAGE> 5
(i) The combined financial statements and the related notes of
the Company, included or incorporated by reference in the
Registration Statement, the Effective Prospectus and the Final
Prospectus present fairly the financial position, results of
operations and changes in financial position and cash flow of the
Company at the dates and for the periods to which they relate and
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
indicated. The other financial statements and schedules included or
incorporated by reference in or as schedules to the Registration
Statement conform to the requirements of the Securities Act, the
Exchange Act and the Rules and Regulations and present fairly the
information presented therein for the periods shown. The financial
and statistical data set forth in the Effective Prospectus and the
Final Prospectus under the captions "Prospectus Summary," "Use of
Proceeds," "Price Range of Common Stock," "Capitalization," "Selected
Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and "Principal and Selling
Shareholders" fairly presents the information set forth therein on
the basis stated in the Effective Prospectus and the Final
Prospectus. KPMG Peat Marwick LLP, whose reports appear in the
Effective Prospectus and the Final Prospectus, are independent
accountants as required by the Securities Act and the Rules and
Regulations.
(j) Subsequent to December 29, 1996, the Company has not
sustained any material loss or interference with its business
or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, which is
not disclosed in the Effective Prospectus and the Final Prospectus;
and subsequent to the respective dates as of which information is
given in the Registration Statement, the Effective Prospectus and the
Final Prospectus, (i) the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into any
transactions not in the ordinary course of business, and (ii) there
has not been any change in the capital stock, long-term debt,
obligations under capital leases or short-term borrowings of the
Company, or any issuance of options, warrants or rights to purchase
interests or the capital stock of the Company, or any adverse change,
or any development involving a prospective adverse change, in the
general affairs, management, business, prospects, financial position,
net worth or results of operations of the Company, except in each
case as described in the Effective Prospectus and the Final
Prospectus.
(k) Except as described in the Effective Prospectus and the Final
Prospectus, there is not pending, or to the knowledge of the Company
threatened, any action, suit, proceeding, inquiry or investigation,
to which the Company or its officers or directors is a party, or to
which the property of the Company is subject, before or brought by
any court or governmental agency or body, wherein an unfavorable
decision, ruling or finding could prevent or materially hinder the
consummation of this Agreement or result in a material adverse change
in the business condition (financial or other), prospects, financial
position, net worth or results of operations of the Company.
5
<PAGE> 6
(l) There are no contracts or other documents required by the
Securities Act or by the Rules and Regulations to be described in the
Registration Statement, the Effective Prospectus or the Final
Prospectus or to be filed as exhibits to the Registration Statement
which have not been described or incorporated by reference or filed
as required.
(m) Except as described in the Effective Prospectus and the Final
Prospectus, the Company has good and marketable title to all real and
material personal property owned by it, free and clear of all liens,
charges, encumbrances or defects except those reflected in the
financial statements hereinabove described or which are not material
in amount. The real and personal property and buildings referred to
in the Effective Prospectus and the Final Prospectus which are leased
from others by the Company are held under valid, subsisting and,
assuming due execution and delivery by parties to such leases other
than the Company, enforceable leases, except as enforceability may be
limited by applicable equitable principles or by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting the enforcement of creditors' rights. The
Company owns or leases all such properties as are necessary to its
operations as now conducted.
(n) The Company's system of internal accounting controls taken
as a whole is sufficient to meet the broad objectives of internal
accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that
would be material in relation to the Company's financial statements;
and, except as disclosed in the Effective Prospectus and the Final
Prospectus, none of the Company nor any employee or agent of the
Company has made any payment of funds or received or retained any
funds in violation of any law, rule or regulation.
(o) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof
and has paid all taxes shown as due therefrom to the extent such
taxes have become due and are not being contested in good faith; and
there is no tax deficiency that has been, nor does the Company have
knowledge of any tax deficiency which is likely to be, asserted
against the Company, which if determined adversely could materially
and adversely affect the earnings, assets, affairs, business
prospects or condition (financial or other) of the Company.
(p) The Company operates its business in conformity in all
material respects with all applicable statutes, common laws,
ordinances, decrees, orders, rules and regulations of governmental
bodies. The Company has all licenses, approvals or consents to
operate its businesses in all locations in which such businesses are
currently being operated, and the Company is not aware of any
existing or imminent matter which may materially adversely impact its
operations or business prospects other than as specifically disclosed
in the Effective Prospectus and the Final Prospectus.
6
<PAGE> 7
(q) The Company has filed with the applicable regulatory
authorities all statements, reports, information or forms required by
all applicable laws, regulations or orders, including all franchising
laws, except where such failure to file would not have a material
adverse effect on the Company; all such filings or submissions were
in compliance with applicable laws when filed, and no deficiencies
have been asserted by any regulatory commission, agency or authority
with respect to such filings or submissions. The Company has
maintained in full force and effect all licenses, registrations or
permits necessary or proper for the conduct of its business, and the
Company has not received any notification that any revocation or
limitation thereof is threatened or pending, and, except as disclosed
in the Effective Prospectus and the Final Prospectus, there is not to
the knowledge of the Company pending any change under any law,
regulation, license or permit which could materially adversely affect
the business, operations, property or business prospects of the
Company. The Company has not received any notice of violation of or
been threatened with a charge of violating and is not under
investigation with respect to a possible violation of any provision
of any law, regulation or order.
(r) No labor dispute or disturbance exists or to the knowledge of
the Company is imminent with any of the employees of the Company or
otherwise which could be expected to materially adversely affect the
condition (financial or otherwise), results of operations,
properties, affairs, management, business affairs or business
prospects of the Company.
(s) The Company owns the licenses, copyrights, trademarks,
service marks and trade names (other than those displayed in
the Company's restaurants as advertisements by a third party of such
third party's products) currently employed by it in connection with
the businesses now operated by it, and the Company has not received
any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, alone or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company.
(t) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which it is engaged;
and the Company has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a comparable cost.
(u) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940.
7
<PAGE> 8
(v) Neither the Company nor any of the directors, officers,
employees or agents of the Company has taken and will not take,
directly or indirectly, any action designed to cause or result in, or
which has constituted or which might be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
(w) The Shares have been approved for designation on the Nasdaq
National Market upon notice of issuance.
Any certificate signed by an officer of the Company and delivered to you
or to counsel for the Underwriters in connection with the Closing Date (as
hereinafter defined) shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
2. Representations and Warranties of the Selling Shareholder. The Selling
Shareholder represents and warrants to each Underwriter and agrees as follows
that:
(a) The Selling Shareholder at the Option Closing Date (defined
herein) will have valid and marketable title to the Shares set forth
in Schedule II to be sold by the Selling Shareholder, free and clear
of any liens, encumbrances, equities and claims (other than as
imposed by the Securities Act, state securities laws, the
Registration Rights Agreement by and among the Company, David K.
Wachtel, Jr., Charles F. McWhorter, Jr. , Edwin W. Moats, Jr.
("Moats") and O'Charley's Inc., a Tennessee corporation, or this
Agreement), and full right, power and authority to effect the sale
and delivery of such Shares; and upon the delivery of and payment for
the Shares to be sold by the Selling Shareholder pursuant to this
Agreement, valid and marketable title thereto, free and clear of any
liens, encumbrances, equities and claims, will be transferred to the
Underwriters.
(b) The Selling Shareholder has duly executed and delivered the
Custody Agreement and Power of Attorney in the form previously
delivered to the Underwriters, appointing Moats and David J.
McDaniel, and each of them as the Selling Shareholder's
attorney-in-fact (the "Attorney-in-Fact") and Waller Lansden Dortch &
Davis, A Professional Limited Liability Company, as custodian (the
"Custodian"). The Attorney-in-Fact is authorized to perform this
Agreement on behalf of the Selling Shareholder, to deliver the Shares
to be sold by the Selling Shareholder hereunder, to accept payment
therefor and otherwise to act on behalf of such Selling Shareholder
in connection with this Agreement. Certificates, in suitable form
for transfer by delivery or accompanied by duly executed instruments
of transfer or assignment in blank, representing the Shares to be
sold by the Selling Shareholder hereunder have been deposited with
the Custodian pursuant to the Custody Agreement for the purpose of
delivery pursuant to this Agreement. The Selling Shareholder agrees
that the shares of Common Stock represented by the certificates on
deposit with the Custodian are subject to the interest of the
Underwriters hereunder, that the arrangements made for such custody
and the appointment of the Attorney-in-Fact are to that extent
irrevocable, and that the obligations of the Selling Shareholder
hereunder
8
<PAGE> 9
shall not be terminated except as provided in this Agreement and the
Custody Agreement. If the Selling Shareholder should die or become
incapacitated or if any other event should occur, before the delivery
of the Shares of the Selling Shareholder hereunder, the certificates
for such Shares deposited with the Custodian shall be delivered by
the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.
(c) The Selling Shareholder, individually or acting through his
duly authorized Attorney-in-Fact, has duly executed and
delivered this Agreement and the Custody Agreement and Power of
Attorney; this Agreement constitutes a legal, valid and binding
obligation of the Selling Shareholder; all authorizations and
consents necessary for the execution and delivery of this Agreement
and the Custody Agreement and Power of Attorney on behalf of the
Selling Shareholder and for the sale and delivery of the Shares to be
sold by the Selling Shareholder hereunder has been given, except as
may be required by the Securities Act or state securities laws; and
the Selling Shareholder has the legal capacity and full right, power
and authority to execute this Agreement and the Custody Agreement and
Power of Attorney.
(d) The performance of this Agreement and the Custody Agreement
and Power of Attorney and the consummation of the transactions
contemplated hereby and thereby by the Selling Shareholder will not
result in a breach or violation of, or conflict with, any of the
terms or provisions of, or constitute a default by the Selling
Shareholder under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or
other agreement or instrument to which the Selling Shareholder or any
of his or its properties is bound, any statute, or any judgment,
decree, order, rule or regulation of any court or governmental agency
or body applicable to the Selling Shareholder or any of his
properties; provided, however, with respect to violations of statutes
and rules and regulations regarding federal or state securities laws,
nothing contained in this Section 2(d) shall be deemed to modify the
representations set forth in Section 2(f) below.
(e) The Selling Shareholder has not distributed nor will
distribute any prospectus or other offering material in connection
with the offer and sale of the Shares other than any Preliminary
Prospectus filed with the Commission or the Final Prospectus or other
material permitted by the Securities Act.
(f) To the knowledge of the Selling Shareholder, the
representations and warranties of the Company contained in
Section 1 of this Agreement are true and correct; the Selling
Shareholder has reviewed and is familiar with the Registration
Statement as originally filed with the Commission and the Preliminary
Prospectus. To the knowledge of the Selling Shareholder, the
Preliminary Prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the
9
<PAGE> 10
statements therein, in the light of the circumstances under which
they were made, not misleading; the Selling Shareholder is not
prompted to sell the Shares to be sold by the Selling Shareholder by
any information concerning the Company that is not set forth in the
Preliminary Prospectus, the Effective Prospectus, or the Final
Prospectus.
(g) At the time the Registration Statement becomes effective (i)
such parts of the Registration Statement and any amendments and
supplements thereto as specifically refer to the Selling Shareholder
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) such parts of the
Effective Prospectus and Final Prospectus as specifically refer to
the Selling Shareholder will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(h) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory body, administrative
or other governmental body is necessary in connection with the
execution and delivery of this Agreement by the Selling Shareholder,
and the consummation by the Selling Shareholder of the transactions
herein contemplated (other than as required by the Securities Act,
state securities laws and the NASD).
(i) Any certificates signed by or on behalf of the Selling
Shareholder as such and delivered to the Underwriters or to counsel
for the Underwriters shall be deemed a representation and warranty by
the Selling Shareholder to each Underwriter as to the matters covered
thereby.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, the Selling Shareholder agrees to deliver to the
Underwriters prior to or at the Option Closing Date (as hereinafter
defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified
by Treasury Department regulations in lieu thereof).
(k) The Selling Shareholder has not taken, and will not take,
directly or indirectly, any action designed to cause or result in, or
which might constitute or be expected to constitute, stabilization or
manipulation of the price of the Common Stock.
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<PAGE> 11
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to the
Underwriters, and each of the Underwriters, severally and not
jointly, agrees to purchase at a purchase price of $______ per share,
the number of Firm Shares set forth opposite such Underwriter's name
in Schedule I hereto.
(b) The Company and the Selling Shareholder hereby grant to the
Underwriters an option to purchase, solely for the purpose of
covering over-allotments in the sale of Firm Shares, all or any
portion of the Option Shares, consisting of 100,000 shares by the
Company and 50,000 shares by the Selling Shareholder, at the purchase
price per share set forth above. The option granted hereby may be
exercised as to all or any part of the Option Shares at any time
within 30 days after the date of the Final Prospectus. The
Underwriters shall not be under any obligation to purchase any Option
Shares prior to the exercise of such option. The option granted
hereby may be exercised by the Underwriters by giving written notice
to the Company and the Selling Shareholder setting forth the number
of Option Shares to be purchased and the date and time for delivery
of and payment for such Option Shares and stating that the Option
Shares referred to therein are to be used for the purpose of covering
over-allotments in connection with the distribution and sale of the
Firm Shares. If such notice is given prior to the First Closing Date
(as defined herein), the date set forth therein for such delivery and
payment shall not be earlier than two full business days thereafter
or the First Closing Date, whichever occurs later. If such notice is
given on or after the First Closing Date, the date set forth therein
for such delivery and payment shall not be earlier than three full
business days thereafter. In either event, the date so set forth
shall not be more than four full business days after the date of such
notice. The date and time set forth in such notice is herein called
the "Option Closing Date." Upon exercise of the option, the Company
and the Selling Shareholder shall become obligated to sell to the
Underwriters, and, subject to the terms and conditions herein set
forth, the Underwriters shall become obligated to purchase, for the
account of each Underwriter, from the Company and the Selling
Shareholder, severally and not jointly, the number of Option Shares
specified in such notice. In the event the Underwriters elect to
purchase less than the full amount of the Option Shares, the
Underwriters shall purchase the first 50,000 Option Shares from the
Selling Shareholder.
(c) Certificates in definitive form for the Firm Shares which
each Underwriter has agreed to purchase hereunder shall be
delivered by or on behalf of the Company to the Underwriters for the
account of such Underwriters against payment by such Underwriters or
on their behalf of the purchase price therefor by certified or
official bank check or checks in next day funds to the order of the
Company, at the offices of J. C. Bradford & Co., L.L.C. ("Bradford"),
330 Commerce Street, Nashville, Tennessee 37201, or at such other
place as may be agreed upon by Bradford and the Company, at 10:00
A.M., Nashville time, on the third full business day after this
Agreement becomes effective, or,
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<PAGE> 12
at the election of the Underwriters, on the fourth full business day
after this Agreement becomes effective, if it becomes effective after
4:30 P.M. Eastern time, or at such other time not later than the
seventh full business day thereafter as the Underwriters and the
Company may determine, such time of delivery against payment being
herein referred to as the "First Closing Date." The First Closing
Date and the Option Closing Date are herein individually referred to
as the "Closing Date" and collectively referred to as the "Closing
Dates." Certificates in definitive form for the Option Shares which
each Underwriter shall have agreed to purchase hereunder shall be
similarly delivered by or on behalf of the Company and the Selling
Shareholder on the Option Closing Date. The certificates in
definitive form for the Shares to be delivered will be in good
delivery form and in such denominations and registered in such names
as Bradford may request not less than 48 hours prior to the First
Closing Date or the Option Closing Date, as the case may be. Such
certificates will be made available for checking and packaging at a
location in New York, New York as may be designated by Bradford, at
least 24 hours prior to the First Closing Date or the Option Closing
Date, as the case may be. It is understood that Bradford may (but
shall not be obligated to) make payment on behalf of any Underwriter
or Underwriters for the Shares to be purchased by such Underwriter or
Underwriters. No such payment shall relieve such Underwriter or
Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. After the Registration Statement becomes
effective, the Underwriters propose to offer for sale to the public the Firm
Shares and any Option Shares which may be sold at the price and upon the terms
set forth in the Final Prospectus.
5. Covenants of the Company and the Selling Shareholder.
(a) The Company covenants and agrees with each of the Underwriters
that:
(i) The Company shall comply with the provisions of and make
all requisite filings with the Commission pursuant to Rules 424
and 430A of the Rules and Regulations and shall notify the
Underwriters promptly (in writing, if requested) of all such
filings. The Company shall notify the Underwriters promptly of
any request by the Commission for any amendment of or
supplement to the Registration Statement, the Effective
Prospectus or the Final Prospectus or for additional
information; the Company shall prepare and file with the
Commission, promptly upon the Underwriters' request, any
amendments of or supplements to the Registration Statement, the
Effective Prospectus or the Final Prospectus which, in the
Underwriters' opinion, may be necessary or advisable in
connection with the distribution of the Shares; and the Company
shall not file any amendment of or supplement to the
Registration Statement, the Effective Prospectus or the Final
Prospectus which is not approved by the Underwriters after
reasonable notice thereof. The Company shall advise the
Underwriters promptly of the issuance by the Commission or any
jurisdiction or other regulatory body of
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<PAGE> 13
any stop order or other order suspending the effectiveness of
the Registration Statement, suspending or preventing the use of
any Preliminary Prospectus, the Effective Prospectus or the
Final Prospectus or suspending the qualification of the Shares
for offering or sale in any jurisdiction, or of the institution
of any proceedings for any such purpose; and the Company shall
use its best efforts to prevent the issuance of any stop order
or other such order and, should a stop order or other such
order be issued, to obtain as soon as possible the lifting
thereof.
(ii) The Company will take or cause to be taken all
necessary action and furnish to whomever the Underwriters
direct such information as may be reasonably required in
qualifying the Shares for offer and sale under the securities
or Blue Sky laws of such jurisdictions as the Underwriters may
designate and will continue such qualifications in effect for
as long as may be reasonably necessary to complete the
distribution of the Shares.
(iii) Within the time during which a Final Prospectus
relating to the Shares is required to be delivered
under the Securities Act, the Company shall comply with all
requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the
continuance of sales of or dealings in the Shares as
contemplated by the provisions hereof and the Final Prospectus.
If during such period any event occurs as a result of which the
Final Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend the Registration
Statement or supplement the Final Prospectus to comply with the
Securities Act, the Company shall promptly notify the
Underwriters and shall amend the Registration Statement or
supplement the Final Prospectus (at the expense of the Company)
so as to correct such statement or omission or effect such
compliance.
(iv) The Company will furnish without charge to the
Underwriters and make available to the Underwriters copies of
the Registration Statement (four of which shall be signed and
shall be accompanied by all exhibits, including any which are
incorporated by reference, which have not previously been
furnished), each Preliminary Prospectus, the Effective
Prospectus and the Final Prospectus, and all amendments and
supplements thereto, including any prospectus or supplement
prepared after the effective date of the Registration
Statement, in each case as soon as available and in such
quantities as the Underwriters may reasonably request.
(vi) The Company will (A) deliver to the Underwriters at
such office or offices as the Underwriters may designate as
many copies of the Preliminary
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<PAGE> 14
Prospectus and Final Prospectus as the Underwriters may
reasonably request, and (B) for a period of not more than nine
months after the Registration Statement becomes effective, send
to the Underwriters as many additional copies of the Final
Prospectus and any supplement thereto as the Underwriters may
reasonably request.
(vi) The Company shall make generally available to
its security holders, in the manner contemplated by Rule 158(b)
under the Securities Act as promptly as practicable and in any
event no later than 45 days after the end of its fiscal quarter
in which the first anniversary of the effective date of the
Registration Statement occurs, an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act covering
a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement.
(vii) The Company will apply the net proceeds from
the sale of the Shares to be sold by it as set forth under the
caption "Use of Proceeds" in the Final Prospectus.
(viii) During a period of five years from the
effective date of the Registration Statement or such longer
period as the Underwriters may reasonably request, the Company
will furnish to the Underwriters copies of all reports and
other communications (financial or other) furnished by the
Company to its shareholders and, as soon as available, copies
of any reports or financial statements furnished or filed by
the Company to or with the Commission or any national
securities exchange on which any class of securities of the
Company may be listed.
(ix) The Company will, from time to time, after the
effective date of the Registration Statement file with the
Commission such reports as are required by the Securities Act,
the Exchange Act and the Rules and Regulations, and shall also
file with state securities commissions in states where the
Shares have been sold by the Underwriters (as the Underwriters
shall have advised the Company in writing) such reports as are
required to be filed by the securities acts and the regulations
of those states.
(x) Except pursuant to this Agreement or with the
Underwriters' written consent, for a period of 90 days from the
effective date of the Final Prospectus the Company will not,
and the Company has provided agreements executed by each of its
executive officers and directors providing that for a period of
90 days from the date of the Final Prospectus, such person or
entity will not, offer for sale, sell (other than pursuant to
the exercise of options granted pursuant to existing employee
benefit plans and agreements and existing stock options or
pursuant to bona fide gift transactions provided the donee is
subject to and agrees to be bound by such agreement), grant any
options (other than pursuant to existing
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<PAGE> 15
employee benefit plans and agreements), rights or
warrants with respect to any shares of Common Stock, securities
convertible into Common Stock or any other capital stock of the
Company, or otherwise dispose of, directly or indirectly, any
shares of Common Stock or such other securities or capital
stock.
(xi) If at any time during the 25 day period after the
Registration Statement is declared effective, any rumor,
publication or event relating to or affecting the Company shall
occur as a result of which, in the Underwriters' opinion, the
market price for the Shares has been or is likely to be
materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment
of the Final Prospectus), the Company will, after written
notice from the Underwriters advising it as to the effect set
forth above, prepare, consult with the Underwriters concerning
the substance of and, subject to the Rules and Regulations,
disseminate a press release or other public statement,
reasonably satisfactory to the Underwriters, responding to or
commenting on such rumor, publication or event.
(xii) Neither the Company nor any of its officers,
directors or affiliates will take, directly or indirectly, any
action designed to cause or result in, or which might
constitute or be expected to constitute, stabilization or
manipulation of the price of the Common Stock.
(xiii) The Company will either conduct its business
and operations as described in the Final Prospectus or, if the
Company makes any material change to its business or operations
as so conducted, promptly disclose such change generally to its
security holders.
(b) The Selling Shareholder covenants and agrees with the
Underwriters that:
(i) For a period of 90 days from the effective date
of the Registration Statement, the Selling Shareholder will
not, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of any shares of
Common Stock, other than to the Underwriters pursuant to this
Agreement or pursuant to bona fide gift transactions provided
the donee is subject to and agrees to be bound by such
agreement, without the prior written consent of the
Underwriters.
(ii) The Selling Shareholder will not take, directly
or indirectly, any action designed to cause or result in, or
which might constitute or be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
6. Expenses. The Company and the Selling Shareholder agree with
the Underwriters that (a) whether or not the transactions contemplated by this
15
<PAGE> 16
Agreement are consummated or this Agreement becomes effective or is terminated,
the Company will pay all fees and expenses incident to the performance of the
obligations of the Company and the Selling Shareholder hereunder, including,
but not limited to, (i) the Commission's registration fee, (ii) the expenses of
printing (or reproduction) and distributing the Registration Statement
(including all amendments and exhibits thereto), each Preliminary Prospectus,
the Effective Prospectus, the Final Prospectus, any amendments or supplements
thereto, and this Agreement and other underwriting documents, including
Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters and Selected Dealer Agreements, (iii)
fees and expenses of accountants and counsel for the Company, (iv) expenses of
qualification of the Shares under state Blue Sky and securities laws, including
the fees and disbursements of counsel to the Underwriters in connection
therewith, (v) filing fees paid or incurred by the Underwriters in connection
with filings with the NASD, (vi) expenses of listing the additional shares of
Common Stock on the Nasdaq National Market, (vii) all travel, lodging and
reasonable living expenses incurred by the Company in connection with
marketing, dealer and other meetings attended by the Company and the
Underwriters in marketing the Shares, (viii) the costs and charges of the
Company's transfer agent and registrar and the cost of preparing the
certificates for the Shares, and (ix) all other costs and expenses incident to
the performance of their obligations hereunder not otherwise provided for in
this Section; and (b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, incurred by the Underwriters in connection with
investigating, preparing to market and marketing the Shares and proposing to
purchase and purchasing the Shares under this Agreement, will be borne and paid
by the Company if the sale of the Shares provided for herein is not consummated
(i) by reason of the termination of this Agreement by the Company pursuant to
Section 14(a)(i), or (ii) by reason of the termination of this Agreement by the
Underwriters pursuant to Section 14(b)(ii) or because of any failure or refusal
on the part of the Company or the Selling Shareholder to comply with the terms
or fulfill any of the conditions of this Agreement.
The provisions of this section shall not affect any agreement that the
Company and the Selling Shareholder may have for the sharing of such costs and
expenses; provided, however, the Underwriters may deem the Company to be the
primary obligor with respect to all costs, fees, and expenses to be paid by the
Company and the Selling Shareholder.
7. Conditions of the Underwriters' Obligations. The respective
obligations of the Underwriters to purchase and pay for the Firm Shares shall
be subject, in their discretion, to the accuracy of the representations and
warranties of the Company and the Selling Shareholder herein as of the date
hereof and as of the Closing Date as if made on and as of the Closing Date, to
the accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Shareholder of all of their covenants and agreements hereunder and to the
following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective not later than 5:30
P.M., Washington, D.C. time, on the day following the date of this
Agreement, or such later time and date as shall have been
16
<PAGE> 17
consented to by the Underwriters and all filings required by
Rule 424 and Rule 430A of the Rules and Regulations shall have been
made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose
shall have been instituted or threatened or, to the knowledge of the
Company or the Underwriters, shall be contemplated by the Commission;
any request of the Commission for additional information (to be
included in the Registration Statement or the Final Prospectus or
otherwise) shall have been complied with to the Underwriter's
satisfaction; and the NASD, upon review of the terms of the public
offering of the Shares, shall not have objected to such offering, such
terms or the Underwriters' participation in the same.
(b) No Underwriter shall have advised the Company that the
Registration Statement, Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or any supplement
thereto, contains an untrue statement of fact which, in the
Underwriters' reasonable judgment, is material, or omits to state a
fact which, in the Underwriters' reasonable judgment, is material and
is required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and the Company shall not have cured such untrue statement
of fact or omission.
(c) The Underwriters shall have received an opinion, dated
the Closing Date, from Waller Lansden Dortch & Davis, A Professional
Limited Liability Company, counsel for the Company, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State
of Tennessee, with corporate power and authority to own its
properties and conduct its business as now conducted, and is
duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions where the failure to so
qualify would have a material adverse effect upon the Company.
To the best of such counsel's knowledge, the Company holds all
material licenses, certificates, permits, franchises and
authorizations from governmental authorities necessary for the
conduct of its business in all locations in which such business
is currently being conducted.
(ii) As of the dates specified therein, the Company
had authorized and issued capital stock as set forth under the
caption "Capitalization" in the Final Prospectus. All of the
outstanding shares of Common Stock (including the shares to be
sold by the Selling Shareholder) have been duly authorized and
are validly issued, fully paid and nonassessable, and the
Shares to be sold by the Company have been duly authorized, and
upon issuance thereof and payment therefor as provided herein,
will be validly issued, fully paid and nonassessable; none of
the issued shares have been issued in violation of or subject
to any preemptive rights provided for by law or by the
Company's charter. There are no preemptive rights
17
<PAGE> 18
or other rights to subscribe for or to purchase, or any
restriction upon the transfer of, the Shares pursuant to the
Company's charter, bylaws or other governing documents or any
agreement or other instrument to which the Company is a party
or by which it may be bound except as described in the
Effective Prospectus and Final Prospectus. Except as described
in the Effective Prospectus and Final Prospectus, neither the
filing of the Registration Statement nor the offer or sale of
the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied,
for or relating to the registration of any shares of Common
Stock or any other securities of the Company. The Underwriters
will receive good and marketable title to the Shares to be
issued and delivered by the Company pursuant to this Agreement,
free and clear of all liens, encumbrances, claims, security
interests, restrictions, shareholders agreements and voting
trusts whatsoever. The capital stock of the Company and the
Shares conform in all material respects to the description
thereof contained in the Final Prospectus. All offers and
sales of the Company's securities prior to the date hereof were
at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly
registered or the subject of an exemption from the registration
requirements of applicable state securities or Blue Sky laws.
(iii) No consent, approval, authorization or order of
any court or governmental agency or body or third party is
required for the performance of this Agreement by the Company
or the Selling Shareholder or the consummation by the Company
or the Selling Shareholder of the transactions contemplated
hereby, except such as have been obtained under the Securities
Act and such as may be required by the NASD and under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters, as to which
such counsel need not express an opinion. The performance of
this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby will not
conflict with or result in a breach or violation by the Company
of any of the terms or provisions of, or constitute a default
by the Company under, any material indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument
known to such counsel to which the Company is a party or to
which the Company or its properties is subject, the charter or
bylaws of the Company, any statute, or any judgment, decree,
order, rule or regulation of any court or governmental agency
or body known to such counsel to be applicable to the Company
or any of its properties.
(iv) The sale of the Shares to be sold by the
Selling Shareholder hereunder and the compliance by the Selling
Shareholder with all of the provisions of this Agreement, the
Custody Agreement and the Power of Attorney and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute
18
<PAGE> 19
a default under any material indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known
to such counsel to which the Selling Shareholder is a party or
by which the Selling Shareholder is bound or to which any of
the property or assets of the Selling Shareholder is subject,
or any statute, order, rule or regulation of any court or
governmental agency or body known to such counsel to be
applicable to the Selling Shareholder or the property of the
Selling Shareholder.
(v) The Company has full legal right, power and
authority to enter into this Agreement and to issue, sell and
deliver the Shares to be sold by it to the Underwriters as
provided herein. The Selling Shareholder has full right, power
and authority to sell, transfer and deliver such Shares
pursuant to this Agreement. By delivery of a certificate or
certificates therefor, the Selling Shareholder will transfer to
the Underwriters, who have purchased such shares pursuant to
this Agreement without notice of any defect in the title for
purposes of the Uniform Commercial Code, valid and marketable
title to such shares, free and clear of any pledge, lien,
security interest, charge, claim, equity, or encumbrance of any
kind.
(vi) This Agreement has been duly authorized,
executed and delivered by the Company and the Selling
Shareholder and constitutes the valid and legally binding
obligation of the Company and the Selling Shareholder
enforceable against each of the Company and the Selling
Shareholder in accordance with its terms, except as
enforceability may be limited by applicable equitable
principles (including public policy considerations as expressed
by the Commission) or by bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect
affecting the enforcement of creditors' rights.
(vii) The Custody Agreement and Power of Attorney have
been duly executed and delivered by or on behalf of the Selling
Shareholder and constitute valid and binding agreements of the
Selling Shareholder in accordance with their terms, except as
enforceability may be limited by applicable equitable
principles (including public policy considerations as expressed
by the Commission) or by bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect
affecting the enforcement of creditors' rights.
(viii) Except as described in the Final Prospectus,
there is not pending or, to the knowledge of such counsel,
threatened any action, suit, proceeding, inquiry or
investigation, to which the Company is a party, or to which the
property of the Company is subject, before or brought by any
court or governmental agency or body, which, if determined
adversely to the Company could result in any material adverse
change in the business, financial position, net worth or
results of
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<PAGE> 20
operations, or could materially adversely affect the
properties or assets, of the Company.
(ix) No default exists, and no event has occurred
which with notice or after the lapse of time to cure or both,
would constitute a default, in the due performance and
observance of any term, covenant or condition of the charter or
bylaws of the Company, or to the best of such counsel's
knowledge, of any material indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which
the Company is a party or to which its properties are subject.
(x) To such counsel's knowledge, the Company is not
in violation of any law, ordinance, administrative or
governmental rule or regulation of Tennessee or the United
States applicable to the Company or any decree of any court or
governmental agency or body having jurisdiction over the
Company which would have a material adverse effect on the
Company. To such counsel's knowledge, the Company has complied
in all material respects with the applicable laws, rules, and
regulations relating to franchising in all jurisdictions where
the conduct of the Company's business requires such compliance,
except where such failure to comply would not have a material
adverse effect on the Company.
(xi) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(xii) The Registration Statement and all
post-effective amendments thereto have become effective under
the Securities Act, and, to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are threatened, pending or contemplated
by the Commission. All filings required by Rule 424 and Rule
430A of the Rules and Regulations have been made; the
Registration Statement, the Effective Prospectus and Final
Prospectus, and any amendments or supplements thereto, and the
documents incorporated by reference therein, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Securities Act
and the Rules and Regulations (except that such counsel need
express no opinion as to financial statements, schedules and
other financial or statistical information included therein);
the descriptions in the Registration Statement, the Effective
Prospectus and the Final Prospectus of statutes, regulations,
legal and governmental proceedings, and contracts and other
documents are accurate in all material respects and present
fairly in all material respects the information required to be
stated therein; and such counsel does not know of any pending
or threatened legal or governmental proceedings, statutes or
regulations required to be described in the
20
<PAGE> 21
Final Prospectus which are not described as required
nor of any contracts or documents of a character required to
be described in the Registration Statement or the Final
Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that no facts have come to the attention of
such counsel that cause them to believe that the Registration Statement, the
Effective Prospectus and the Final Prospectus or any amendment or supplement
thereto contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made
(except that such counsel need express no view as to financial statements,
schedules and other financial or statistical information included therein).
(d) The Underwriters shall have received an opinion or
opinions, dated the Closing Date, of Bass, Berry & Sims PLC, counsel
for the Underwriters, with respect to the Registration Statement and
the Final Prospectus, and such other related matters as the
Underwriters may require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.
(e) The Underwriters shall have received from KPMG Peat
Marwick LLP, a letter dated the date hereof and, at the Closing Date, a
second letter dated the Closing Date, in form and substance
satisfactory to the Underwriters, stating that they are independent
public accountants with respect to the Company within the meaning of
the Securities Act and the applicable Rules and Regulations, and to the
effect that:
(i) In their opinion, the financial statements
examined by them and incorporated by reference in the
Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act and the published Rules and Regulations and are
presented in accordance with generally accepted accounting
principles and they have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of any interim consolidated financial
statements, selected financial data and/or condensed financial
statements derived from audited financial statements of the
Company;
(ii) The unaudited selected financial information
included in the Preliminary Prospectus and the Final Prospectus
under the captions "PROSPECTUS SUMMARY" and "SELECTED FINANCIAL
DATA" for the years ended December 26, 1993, December 25, 1994,
December 31, 1995, and December 29, 1996, and for the quarters
ended April 21, 1995 and April 20, 1997, agrees with the
corresponding amounts in the audited or unaudited financial
21
<PAGE> 22
statements included or incorporated by reference in the Final
Prospectus or previously reported on by them;
(iii) On the basis of a reading of the latest
available interim financial statements (unaudited) of the
Company, a reading of the minute books of the Company,
inquiries of officials of the Company responsible for financial
and accounting matters and other specified procedures, all of
which have been agreed to by the Underwriters, nothing came to
their attention that caused them to believe that:
(A) The amounts included in the Preliminary
Prospectus and the Final Prospectus under the captions
"Prospectus Summary" and "Selected Financial Data" for
the fiscal years ended December 26, 1993, December 25,
1994, December 31, 1995, and December 29, 1996, do not
agree with the corresponding amounts in the audited or
unaudited financial statements included or incorporated
by reference in the Final Prospectus previously
reported on by them;
(B) at a specified date not more than five
days prior to the date of delivery of such respective
letter, there was any change in the capital stock,
decline in shareholders' equity or increase in
long-term debt and capital lease obligations of the
Company, in each case as compared with amounts shown in
the latest balance sheets included in the Final
Prospectus, except in each case for changes, decreases
or increases which the Final Prospectus discloses have
occurred or may occur or which are described in such
letters; and
(C) for the period from the closing date of
the latest statements of earnings included in the
Effective Prospectus and the Final Prospectus to a
specified date not more than five days prior to the
date of delivery of such respective letter, there were
any decreases in net restaurant sales, net earnings,
pro forma net earnings, and pro forma net earnings per
share of the Company, in each case as compared with the
corresponding period of the preceding year, except in
each case for decreases which the Final Prospectus
discloses have occurred or may occur or which are
described in such letter.
(iv) They have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information specified by you
which are derived from the general accounting records of the
Company, which appear in the Effective Prospectus and the Final
Prospectus and have compared such amounts, percentages and
financial information with the accounting records of the
Company or to analyses and
22
<PAGE> 23
schedules prepared by the Company from its detailed accounting
records and found such amounts, percentages and financial
information to be in agreement with such records.
In the event that the letters to be delivered referred to above set forth
any such changes, decreases or increases, it shall be a further condition
to the obligations of the Underwriters that the Underwriters shall have
determined, after discussions with officers of the Company responsible for
financial and accounting matters and with KPMG Peat Marwick LLP, that such
changes, decreases or increases as are set forth in such letters do not reflect
a material adverse change in the shareholders' equity or long-term debt and
capital lease obligations of the Company as compared with the amounts shown in
the latest balance sheets of the Company included in the Final Prospectus, or a
material adverse change in net restaurant sales, net earnings or pro forma net
earnings of the Company, in each case as compared with the corresponding period
of the prior year.
(f) There shall have been furnished to the Underwriters a
certificate, dated the Closing Date and addressed to you, signed by the Chief
Executive Officer and by the Chief Financial Officer of the Company to the
effect that:
(i) the representations and warranties of the
Company in Section 1 of this Agreement are true and correct, as
if made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior
to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings
for that purpose have been initiated or are pending, or to
their knowledge, threatened under the Securities Act;
(iii) all filings required by Rule 424 and Rule 430A
of the Rules and Regulations have been made;
(iv) they have carefully examined the Registration
Statement, the Effective Prospectus and the Final Prospectus,
and any amendments or supplements thereto, and such documents
do not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances under which they were made; and
(v) since the effective date of the Registration
Statement, there has occurred no event required to be set forth
in an amendment or supplement to the Registration Statement,
the Effective Prospectus or the Final Prospectus which has not
been so set forth.
23
<PAGE> 24
(g) The representations and warranties of the Selling
Shareholder shall be true and correct as of the Closing Date, and the
Selling Shareholder shall deliver to the Underwriters a certificate to
that effect, dated the Closing Date, signed by the Selling Shareholder
or his duly appointed Attorney-in-Fact.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Final
Prospectus, and except as stated therein, the Company has not sustained
any material loss or interference with its business or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any court or
governmental action, order or decree, or become a party to or the
subject of any litigation which is material to the Company taken as a
whole, nor shall there have been any material adverse change, or any
development involving a prospective material adverse change, in the
business, properties, key personnel, capitalization, net worth, results
of operations or condition (financial or other) of the Company taken as
a whole, which loss, interference, litigation or change, in the
Underwriters' reasonable judgment shall render it inadvisable to
commence or continue the offering of the Shares at the offering price
to the public set forth on the cover page of the Prospectus or to
proceed with the delivery of the Shares.
(i) The shares shall be listed on the Nasdaq
National Market.
All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory to the Underwriters and their counsel. The Company
shall furnish to the Underwriters such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Underwriters
shall reasonably request.
The respective obligations of the Underwriters to purchase and pay for
the Option Shares shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Shares, except that all references to
the "Closing Date" shall be deemed to refer to the Option Closing Date, if it
shall be a date other than the Closing Date.
8. Condition of the Company's and the Selling Shareholder's
Obligations. The obligations hereunder of the Company and the Selling
Shareholder are subject to the condition set forth in Section 7(a) hereof.
24
<PAGE> 25
9. Indemnification and Contribution.
(a) The Company and the Selling Shareholder, jointly and
severally, agree to indemnify and hold harmless each Underwriter, and
each person, if any, who controls any Underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based in whole or in part upon (i) any inaccuracy
in the representations and warranties of the Company contained herein,
(ii) any failure of the Company to perform its obligations hereunder or
under law or (iii) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or Final Prospectus,
or any amendment or supplement thereto, or in any Blue Sky Application
or other written information furnished by the Company or the Selling
Shareholder filed in any state or other jurisdiction in order to
qualify any or all of the Shares under the securities laws thereof,
complete copies of which have been provided to the Company (a "Blue Sky
Application"), or arise out of or are based upon the omission or
alleged omission to state in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or Final Prospectus or
any amendment or supplement thereto or any Blue Sky Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that neither the Company nor the Selling Shareholder will be
liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Preliminary Prospectus, the
Effective Prospectus or Final Prospectus or such amendment or such
supplement or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the
only information so provided is the information included in the last
paragraph on the cover page and in the first, third and fourth
paragraphs and the last sentence of the fifth paragraph under the
caption "Underwriting" in any Preliminary Prospectus and the Final
Prospectus and the Effective Prospectus, and the information provided
by or relating to the Underwriters set forth in the Blue Sky
Applications). In no event, however, shall the liability of any
Selling Shareholder for indemnification under this Section 9(a) exceed
the lesser of (i) that proportion of the total of such losses, claims,
damages or liabilities indemnified against equal to the proportion of
the total Shares sold hereunder which is being sold by the Selling
Shareholder or (ii) the proceeds received by the Selling Shareholder
from the Underwriters hereunder. This indemnity agreement will be in
addition to any liability which the Company or the Selling Shareholder
may otherwise have.
25
<PAGE> 26
(b) Each Underwriter will indemnify and hold harmless the
Selling Shareholder and the Company, each of its directors, each of its
officers who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the Securities Act
against any losses, claims, damages or liabilities to which the Company
or any such director, officer or controlling person may become subject,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final Prospectus, or any
amendment or supplement thereto, or any Blue Sky Application, or arise
out of or are based upon the omission or the alleged omission to state
in the Registration Statement, any Preliminary Prospectus, the
Effective Prospectus or Final Prospectus or any amendment or supplement
thereto or any Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
specifically for use therein (it being understood that the only
information so provided is the information included in the last
paragraph on the cover page and in the first, third and fourth
paragraphs and the last sentence of the fifth paragraph under the
caption "Underwriting" in any Preliminary Prospectus and in the
Effective Prospectus and the Final Prospectus, and the information
provided by or relating to the Underwriters set forth in the Blue Sky
Applications);
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action, including
governmental proceedings, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 9 notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party
otherwise than under this Section 9. In case any such action is
brought against any indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified
party; and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section 9 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation except that the indemnified
party shall have the right to employ separate counsel if, the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying party or parties or
counsel selected by the indemnifying party to conduct such defense and
the indemnified party in the conduct of its defense of such action and
in that event the reasonable fees and expenses of one separate counsel
shall be paid by the indemnifying party.
26
<PAGE> 27
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in the
preceding part of this Section 9 is for any reason held to be
unavailable to the Underwriters, the Company or the Selling Shareholder
or is insufficient to hold harmless an indemnified party, then the
Company and the Selling Shareholder shall contribute to the damages
paid by the Underwriters, and the Underwriters shall contribute to the
damages paid by the Company and the Selling Shareholder; provided,
however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, there shall be considered the
relative benefits received by each party from the offering of the
Shares (taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate under the
circumstances. The Company, the Selling Shareholder and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even
if the Underwriters were treated as one entity for such purpose). No
Underwriter or person controlling such Underwriter shall be obligated
to make contribution hereunder which in the aggregate exceeds the
underwriting discount applicable to the Shares purchased by such
Underwriter under this Agreement, less the aggregate amount of any
damages which such Underwriter and its controlling persons have
otherwise been required to pay in respect of the same or any similar
claim, and the Selling Shareholder shall not be obligated to contribute
an amount in excess of the aggregate amount for which the Selling
Shareholder is obligated to provide indemnity pursuant to Section 9(a)
above. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and
not joint. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the
Company.
(e) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any
indemnified party is a party or is (or would be, if a claim were to be
made against such indemnified party) entitled to indemnity hereunder,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
10. Default of Underwriters. If either Underwriter defaults in its
obligation to purchase Shares hereunder and if the total number of Shares which
such defaulting Underwriter agreed but
27
<PAGE> 28
failed to purchase is ten percent or less of the total number of Shares
to be sold hereunder, the non-defaulting Underwriter shall be obligated
severally to purchase, the Shares which such defaulting Underwriter agreed but
failed to purchase. If either Underwriter so defaults and the total number of
Shares with respect to which such default or defaults occur is more than ten
percent of the total number of Shares to be sold hereunder, and arrangements
satisfactory to the other Underwriter, the Company and the Selling Shareholder
for the purchase of such Shares by other persons (who may include the
non-defaulting Underwriter) are not made within 36 hours after such default,
this Agreement, insofar as it relates to the sale of the Shares, will terminate
without liability on the part of the non-defaulting Underwriter or the Company
except for (i) the provisions of Section 9 hereof, and (ii) the expenses to be
paid or reimbursed by the Company and the Selling Shareholder pursuant to
Section 6. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10. Nothing herein
shall relieve a defaulting Underwriter from liability for its default.
11. Default by the Selling Shareholder. If the Selling Shareholder
shall fail to sell and deliver the number of Option Shares that the Selling
Shareholder is obligated to sell, the Underwriters may, at their option, by
notice to the Company, either (a) require the Company to sell and deliver such
number of shares of Common Stock as to which the Selling Shareholder has
defaulted, or (b) elect to purchase the Firm Shares and the Option Shares that
the Company has agreed to sell pursuant to this Agreement.
In the event of a default under this Section that does not result in
the termination of this Agreement, either the Underwriters or the Company shall
have the right to postpone the First Closing Date or Option Closing Date for a
period not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
No action taken pursuant to this Section shall relieve the Company or the
Selling Shareholder from liability, if any, in respect of such default.
12. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Selling
Shareholder, the Company, its officers and the Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Underwriter or any controlling person, (b) any termination of
this Agreement and (c) delivery of and payment for the Shares.
13. Effective Date. This Agreement shall become effective at
whichever of the following times shall first occur: (i) at 11:30 A.M.,
Washington, D.C. time, on the next full business day following the date on
which the Registration Statement becomes effective or (ii) at such time after
the Registration Statement has become effective as the Underwriters shall
release the Firm Shares for sale to the public; provided, however, that the
provisions of Sections 6, 9, 12 and 13 hereof shall at all times be effective.
For purposes of this Section 13, the Firm Shares shall be deemed to have been
so released upon the release by the Underwriters for publication,
28
<PAGE> 29
at any time after the Registration Statement has become effective, of
any newspaper advertisement relating to the Firm Shares or upon the release by
the Underwriters of telegrams offering the Firm Shares for sale to securities
dealers, whichever may occur first.
14. Termination.
(a) The Company's obligations under this Agreement may be
terminated by the Company by notice to the Underwriters (i) at any time
before it becomes effective in accordance with Section 13 hereof, or
(ii) in the event that the condition set forth in Section 8 shall not
have been satisfied at or prior to the First Closing Date.
(b) This Agreement may be terminated by the Underwriters by
notice to the Company (i) at any time before it becomes effective in
accordance with Section 13 hereof; (ii) in the event that at or prior
to the First Closing Date the Company or the Selling Shareholder shall
have failed, refused or been unable to perform any agreement on the
part of the Company or the Selling Shareholder to be performed
hereunder or any other condition to the obligations of the Underwriters
hereunder is not fulfilled; (iii) if at or prior to the Closing Date
trading in securities on the New York Stock Exchange, the American
Stock Exchange or the over-the-counter market shall have been suspended
or materially limited or minimum or maximum prices shall have been
established on either of such exchanges or such market, or a banking
moratorium shall have been declared by Federal or state authorities;
(iv) if at or prior to the Closing Date trading in securities of the
Company shall have been suspended; or (v) if there shall have been such
a material adverse change in general economic, political or financial
conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in your
reasonable judgment, makes it inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on
the cover page of the Prospectus or to proceed with the delivery of the
Shares.
(c) Termination of this Agreement pursuant to this Section
14 shall be without liability of any party to any other party other
than as provided in Sections 6 and 9 hereof.
15. Notices. All communications hereunder shall be in writing and,
if sent to the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to J.C. Bradford & Co., L.L.C., J.C. Bradford Financial
Center, 330 Commerce Street, Nashville, Tennessee 37201, Attention: Kip R.
Caffey, and to Equitable Securities Corporation, 511 Union Street, Suite 800,
Nashville, Tennessee 37219, Attention: Roger T. Briggs, if sent to the Company
or the Selling Shareholder shall be mailed, delivered or telegraphed and
confirmed in writing to the Company at 565 Marriott Drive, Suite 490,
Nashville, Tennessee 37214, Attention: Edwin W. Moats, Jr.
16. Miscellaneous. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company and the Selling Shareholder
and their respective successors and
29
<PAGE> 30
legal representatives. Nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Company and the Selling Shareholder and
the Underwriters and for the benefit of no other person except that (a) the
representations and warranties of the Company and the Selling Shareholder
contained in this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the
Securities Act, and (b) the indemnities by the Underwriters shall also be for
the benefit of the directors of the Company, officers of the Company who have
signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Securities Act. No purchaser
of Shares from any Underwriter will be deemed a successor because of such
purchase. The validity and interpretation of this Agreement shall be governed
by the laws of the State of Tennessee. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of
our agreement, please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Company, the Selling Shareholder and each of the
Underwriters.
30
<PAGE> 31
Very truly yours,
LOGAN'S ROADHOUSE, INC.
By:
------------------------
Title:
---------------------
Confirmed and accepted as of the
date first above written.
UNDERWRITERS:
J. C. BRADFORD & CO., L.L.C.
By:
-----------------------------
Title:
------------------
EQUITABLE SECURITIES CORPORATION
By:
-----------------------------
Title:
------------------
SELLING SHAREHOLDER:
----------------------
Edwin W. Moats, Jr.
31
<PAGE> 32
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
Number of Firm Shares
Underwriter to Be Purchased
- ----------- ---------------
<S> <C>
J.C. Bradford & Co., L.L.C. ..........................
---------------
Equitable Securities Corporation .....................
TOTAL
===============
</TABLE>
32
<PAGE> 33
SCHEDULE II
Selling Shareholder
<TABLE>
<CAPTION>
Number of Firm Number of Option
Shares To Be Shares To Be
Name Sold Sold
- ---- ---- ----
<S> <C> <C>
Edwin W. Moats, Jr. ................ -- 50,000
</TABLE>
33
<PAGE> 1
Exhibit 5
[WALLER LANSDEN DORTCH & DAVIS LETTERHEAD]
June 27, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Logan's Roadhouse, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel to Logan's Roadhouse, Inc., a Tennessee
corporation (the "Registrant"), in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed
with the Securities and Exchange Commission registering up to 1,150,000 shares
of Common Stock, $.01 par value per share (the "Common Stock"), of the
Registrant to be sold by the Registrant and a selling shareholder to J.C.
Bradford & Co. and Equitable Securities Corporation (the "Underwriters"),
pursuant to the Underwriting Agreement between the Registrant, the selling
shareholder and the Underwriters, a form of which was filed as Exhibit 1 to
the Registration Statement (the "Underwriting Agreement").
In connection with this opinion, we have examined and relied upon
such records, documents and other instruments as in our judgment are necessary
and appropriate in order to express the opinions hereinafter set forth and
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the shares of
Common Stock being sold by the Registrant will be, when issued and delivered in
the manner and on the terms described in the Registration Statement and the
Underwriting Agreement (after the Registration Statement is declared
effective), and the shares of Common Stock being sold by the selling
shareholder are, duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the reference to us under the
caption "Legal Matters" in the prospectus included in the Registration
Statement.
Very truly yours,
/s/ Waller Lansden Dortch & Davis,
A Professional Limited Liability Company
<PAGE> 1
Exhibit 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
Logan's Roadhouse, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading, "Experts," in the prospectus.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
June 27, 1997
