-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rn0dSnvZjw3I5gyjFZe/Bx4G7C4V9WV6dlgVQV4C00SYCnJCa07dIPvnczqX5HGb T0fpbC/ppk/F5B4jbsUxBA== 0000950112-96-002789.txt : 19960814 0000950112-96-002789.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950112-96-002789 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORTONS RESTAURANT GROUP INC CENTRAL INDEX KEY: 0000883981 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133490149 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12692 FILM NUMBER: 96610916 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PK RD STE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5166271515 MAIL ADDRESS: STREET 1: 3333 NEW HYDE PARK ROAD STREET 2: SUITE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 FORMER COMPANY: FORMER CONFORMED NAME: QUANTUM RESTAURANTS GROUP INC DATE OF NAME CHANGE: 19950315 10-Q 1 MORTON'S RESTAURANT GROUP, INC. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period June 30, 1996 ended --------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------- ------------------- Commission file number 1-12692 ----------------------------------------------- MORTON'S RESTAURANT GROUP, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3490149 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation (I.R.S. employer or organization) identification no.) 3333 New Hyde Park Road, Suite 210, New Hyde Park, New York 11042 - -------------------------------------------------------------------------------- (Address of principal executive offices) (zip code) 516-627-1515 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| As of August 5, 1996, the registrant had 6,415,523 Shares of its Common Stock, $.01 par value, issued and outstanding. (1) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES INDEX Part I - Financial Information Page Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 3-4 Consolidated Statements of Income for the three and six month periods ended June 30, 1996 and July 2, 1995 5 Consolidated Statements of Cash Flows for the six month periods ended June 30, 1996 and July 2, 1995 6 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-13 Part II - Other Information Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Stockholders 14 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16 (2) Item 1. Financial Statements MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets (amounts in thousands)
June 30, December 31, 1996 1995 ---- ----- (unaudited) Assets Current assets: Cash and cash equivalents $ 2,045 2,351 Accounts receivable 1,296 2,575 Inventories 3,934 3,465 Landlord construction receivables, prepaid expenses and other current assets 2,505 2,157 Deferred income taxes 1,780 2,280 Assets held for sale 21,602 22,583 ------- ------- Total current assets 33,162 35,411 Property and equipment, at cost: Furniture, fixtures and equipment 11,892 8,304 Leasehold improvements 12,838 7,050 Construction in progress 417 6,618 ------- ------- 25,147 21,972 Less accumulated depreciation and amortization 3,305 2,593 ------- ------- Net property and equipment 21,842 19,379 ------- ------- Intangible assets, net of accumulated amortization of $2,854 at June 30,1996 and $2,654 at December 31, 1995 13,141 13,341 Other assets and deferred expenses, net of accumulated amortization of $3,000 at June 30, 1996 and $1,306 at December 31, 1995 6,128 5,057 ------- ------- $74,273 73,188 ======= =======
(Continued) (3) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Balance Sheets, Continued (amounts in thousands, except share data)
June 30, December 31, 1996 1995 ---- ---- (unaudited) Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 4,606 6,904 Accrued expenses 4,888 4,499 Accrued income taxes 577 538 Current portion of note payable to related party -- 483 Liabilities related to assets held for sale 11,276 13,995 ------- ------- Total current liabilities 21,347 26,419 Bank debt 25,950 23,650 Other liabilities 5,110 4,079 ------- ------- Total liabilities 52,407 54,148 ------- ------- Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value per share. Authorized 3,000,000 shares, no shares issued or outstanding - - Common stock, $.01 par value per share. Authorized 25,000,000 shares, issued and outstanding 6,415,523 shares at June 30, 1996 and 6,367,093 shares at December 31, 1995 64 64 Nonvoting common stock, $.01 par value per share. Authorized 3,000,000 shares, no shares issued or outstanding - - Additional paid-in capital 61,360 61,350 Accumulated deficit (39,558) (42,374) ------ -------- Total stockholders' equity 21,866 19,040 ------- ------- $ 74,273 73,188 ======== =======
See accompanying notes to consolidated financial statements. (4) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Income (amounts in thousands, except per share data)
Three Months Ended Six Months Ended June 30, July 2, June 30, July 2, 1996 1995 1996 1995 ---- ---- ---- ---- (unaudited) (unaudited) Revenues $ 46,476 41,509 95,345 85,551 Food and beverage costs 15,639 13,823 31,910 28,531 Restaurant operating expenses 22,702 20,722 46,237 42,062 Depreciation, amortization and other non-cash charges 1,306 1,478 2,900 3,430 General and administrative expenses 3,544 3,227 7,246 6,618 Marketing and promotional expenses 1,014 743 2,152 1,485 Interest expense, net 574 451 1,144 874 ------- ------- -------- ------- Income before income taxes 1,697 1,065 3,756 2,551 Income tax expense 425 25 940 125 ------- -------- -------- ------- Net income $ 1,272 1,040 2,816 2,426 ======= ======== ======== ======= Income per share $ 0.19 0.16 0.42 0.37 ======= ======== ======== ======= Weighted average shares outstanding 6,807 6,638 6,773 6,635 ======= ======== ======== =======
See accompanying notes to consolidated financial statements. (5) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (amounts in thousands)
Six Months Ended June 30, July 2, 1996 1995 ---- ---- (unaudited) Cash flows from operating activities: Net income $ 2,816 2,426 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation, amortization and other non-cash charges 2,900 3,430 Deferred income taxes 500 - Change in assets and liabilities: Accounts receivable 1,708 (633) Inventories (369) (397) Prepaid expenses and other assets (303) (300) Accounts payable, accrued expenses and other (4,095) (5,418) liabilities Accrued income taxes (39) (362) -------- ------- Net cash provided (used) by operating activities 3,118 (1,254) -------- ------- Cash flows from investing activities: Purchases of property and equipment, net (2,527) (2,292) Payments for start-up costs, licenses and other deferred expenses (2,724) (1,537) --------- -------- Net cash used by investing activities (5,251) (3,829) --------- -------- Cash flows from financing activities: Increase in bank overdraft - 1,544 Principal reduction on bank debt (2,100) (150) Proceeds from bank debt 4,400 4,025 Payments on note payable to related party (483) (508) Net proceeds from issuance of stock 10 - -------- ------- Net cash provided by financing activities 1,827 4,911 -------- ------- Net decrease in cash and cash equivalents (306) (172) Cash and cash equivalents at beginning of period 2,351 4,031 -------- ------- Cash and cash equivalents at end of period $ 2,045 3,859 ======== =======
See accompanying notes to consolidated financial statements. (6) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1996 and July 2, 1995 1) The accompanying unaudited, consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in conformity with generally accepted accounting principles. They should be read in conjunction with the consolidated financial statements of Morton's Restaurant Group, Inc., formerly known as Quantum Restaurant Group, Inc., (the "Company") for the fiscal year ended December 31, 1995, filed by the Company on Form 10-K with the Securities and Exchange Commission on March 29, 1996. The accompanying financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair presentation of its financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year. On May 9, 1996, at the Company's Annual Meeting of Stockholders, the stockholders voted to change the name of the Company from Quantum Restaurant Group, Inc. to Morton's Restaurant Group, Inc. The Company uses a fiscal reporting period ending on the closest Sunday to December 31. The fiscal year consists of 52 weeks and approximately every six or seven years, a 53rd week will be added. 2) For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company paid cash interest and fees, net of amounts capitalized, of approximately $1,004,000 and $890,000, and income taxes of approximately $506,000 and $442,000, for the six months ended June 30, 1996 and July 2, 1995, respectively. During the first six months of 1996, the Company entered into capital lease arrangements of approximately $1,100,000 for restaurant equipment. 3) Effective January 2, 1995, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of " ("Statement 121"). During the second quarter of fiscal 1995, the Company approved a plan for the sale of Peasant Holding Corp. ("Peasant Holding"), the holding company for Mick's Restaurants, Inc., ("Mick's") and The Peasant Restaurants, Inc.("Peasant"). Pursuant to Statement 121, the Company discontinued depreciating fixed assets and amortizing goodwill relating to Mick's and Peasant in April 1995. The amount of such depreciation and amortization for the corresponding first three months of fiscal 1995 approximated $364,000. Coincident with the Company's approval of the plan of sale, the assets held for sale and related liabilities for Mick's and Peasant have been reclassified as "Assets held for sale" and "Liabilities related to assets held for sale" when the Company reports its financial position. The accompanying consolidated balance sheets include the following components: (7)
June 30, December 31, 1996 1995 -------- -------- (amounts in thousands, unaudited) Current assets $ 2,125 $ 2,686 Net property and equipment 13,206 13,851 Unamortized goodwill 8,077 8,077 Other assets 2,906 4,089 Deferred tax assets 2,180 2,180 Write-down of carrying values (6,892) (8,300) -------- -------- Assets held for sale 21,602 22,583 -------- -------- Current liabilities 4,089 3,470 Other liabilities 2,855 3,325 Lease exit costs 4,332 7,200 -------- -------- Liabilities related to assets held for sale 11,276 13,995 -------- -------- Net assets held for sale $ 10,326 $ 8,588 ======== ========
The following represents the combined results of Mick's and Peasant for the periods ended June 30, 1996 and July 2, 1995. Interest expense was not allocated.
Six Months Ended June 30, July 2, 1996 1995 -------- ------ (amounts in thousands, unaudited) Revenues $ 28,451 $ 32,363 Food and beverage costs 8,395 9,466 Restaurant operating expense 17,948 18,938 Depreciation, amortization and other non-cash charges 103 1,846 General and administrative expenses 2,053 2,257 Marketing and promotional expenses 561 464 -------- -------- Loss before income taxes $ (609) $ (608) ======== ========
Management had been actively seeking potential buyers for the sale of all Mick's and Peasant restaurants and in the fourth quarter of fiscal 1995 engaged an investment banking firm to assist with the sale. Although marketing efforts concentrated on selling all of the Mick's and Peasant restaurants, sales materials indicated that a partial sale would be considered. As of July 1996, interest received for the majority of the restaurants indicates that the related net assets at June 30, 1996 are recoverable. No meaningful offers were received for the remaining restaurants (the "Remaining Restaurants"). Cash flow analyses prepared by management for the Remaining Restaurants indicate that it would be less costly to close such restaurants in an orderly fashion in the near future, rather than continue to operate them through the end of their respective lease terms. Accordingly, assets of $8,300,000 related to the Remaining Restaurants were written off and expenses of $7,200,000, representing management's estimate of the expected costs to terminate related leases, were accrued at December 31, 1995. During fiscal 1996, (8) restaurant occupancy expense of approximately $600,000 for the Remaining Restaurants has been charged against the accrual for lease exit costs. During the second quarter of fiscal 1996, three Mick's restaurants and one Peasant restaurant were closed and during July 1996, two more Mick's restaurants were closed. Net assets held for sale at June 30, 1996 consist of net assets of $15,600,000 related to the majority of the restaurants and net liabilities of $5,300,000 related to the Remaining Restaurants. The write-down and related charges for net assets held for sale reflect management's best estimate of the costs expected to be incurred in connection with the disposition of the Remaining Restaurants. As a result of the numerous uncertainties which may impact the actual costs to be incurred by the Company, such costs may differ from the current estimates used by management. 4) The Company is involved in various legal actions. See "Part II - Other Information, Item 1. Legal Proceedings" on page 14 of this Form 10-Q for a discussion of these legal actions. (9) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Revenues increased $5.0 million, or 12.0%, to $46.5 million for the three month period ended June 30, 1996, from $41.5 million during the comparable 1995 period. Of the increase, $4.6 million was attributable to incremental restaurant revenues from eight new restaurants opened after January 1, 1995 and $1.1 million, or 2.8%, was attributable to additional comparable revenues from restaurants open all of both periods. Offsetting these increases was a reduction of $0.7 million from Mick's and Peasant restaurants closed during the period. Average revenues per restaurant open for a full period increased 7.0%. Revenues increased $9.8 million, or 11.4%, to $95.3 million for the six month period ended June 30, 1996, from $85.6 million during the comparable 1995 period. Of the increase, $8.8 million was attributable to incremental restaurant revenues from eight new restaurants opened after January 1, 1995 and $1.7 million, or 2.1%, was attributable to additional comparable revenues from restaurants open all of both periods. Offsetting these increases was a reduction of $0.7 million from Mick's and Peasant restaurants closed during the period. Average revenues per restaurant open for a full period increased 4.8%. In addition, higher revenues for the first six months of fiscal 1996 reflect the impact of price increases of approximately 2% in April, 1995 for Mick's and Peasant Restaurant Groups. The Company operated 71 and 68 restaurants as of June 30, 1996 and July 2, 1995, respectively. Mick's and Peasant restaurants have generated lower than anticipated revenues which are adversely impacting average restaurant revenues and earnings trends. Additionally, as reflected in the table below, the 1996 period was adversely impacted by declines in the comparable restaurant revenues in the Mick's and Peasant groups, offset by increases in the Morton's and Bertolini's groups. The Atlanta market, where 22 of the Company's restaurants are located, has become increasingly competitive and may continue to adversely impact comparable restaurant revenues and operating results. As discussed in Note 3 to the accompanying consolidated financial statements, the Company approved a plan for the sale of the Mick's and Peasant restaurant groups. Operating results for Mick's and Peasant during the period they are being held for sale may continue to be adversely impacted. Percentage changes in comparable restaurant revenues for the three and six month periods ended June 30, 1996 versus July 2, 1995 for restaurants open all of both periods are as follows:
Three Months Six Months Ended June 30, 1996 Ended June 30, 1996 Percentage Change Percentage Change ----------------- ----------------- Morton's 10.5% 10.2% Bertolini's 3.3% 6.1% Mick's -6.9% -9.9% Peasant -13.3% -10.7% Total 2.8% 2.1%
The Company believes that revenues for the first quarter of 1996 were adversely affected by severe winter storms in January 1996. (10) Food and beverage costs increased from $13.8 million for the three month period ended July 2, 1995 to $15.6 million for the three month period ended June 30, 1996 and increased from $28.5 million for the six month period ended July 2, 1995 to $31.9 for the six month period ended June 30, 1996. These costs as a percentage of revenues increased 0.4% and 0.1% for the respective three and six month periods. Restaurant operating expenses which include labor, occupancy and other operating expenses increased from $20.7 million for the three month period ended July 2, 1995 to $22.7 million for the three month period ended June 30, 1996, an increase of $2.0 million. For the six months ended June 30, 1996, these costs increased from $42.1 million during the 1995 period, to $46.2 million for the comparable 1996 period. Those costs as a percentage of revenues decreased 1.1% from 49.9% for the three month period ended July 2, 1995 to 48.8% for the three month period ended June 30, 1996 and decreased 0.7% from 49.2% for the six month period ended July 2, 1995, to 48.5% for the comparable 1996 period. During fiscal 1996, restaurant occupancy expense of approximately $600,000 for the Remaining Restaurants has been charged against the accrual for lease exit costs. The 1996 period increase in costs relates to the added costs of operating eight additional restaurants opened after January 1, 1995. Depreciation, amortization and other non-cash charges decreased from $1.5 million for the three month period ended July 2, 1995 to $1.3 million for the three month period ended June 30, 1996, and decreased from 3.6% of revenues to 2.8%, respectively. For the six months ended June 30, 1996, such costs were $2.9 million verses $3.4 million for the comparable 1995 period. The 1996 six month period decrease is due to the exclusion of 1995 first quarter depreciation and amortization related to Mick's and Peasant of approximately $0.4 million. Such depreciation and amortization was discontinued in the second quarter of 1995 pursuant to Statement 121 (see Note 3). General and administrative expenses for the three month period ended June 30, 1996 were $3.5 million, an increase of $0.3 million as compared with the three month period ended July 2, 1995. For the six months ended June 30, 1996, such costs were $7.2 million versus $6.6 million for the comparable 1995 period. Such costs as a percentage of revenues were 7.6% for the three month period ended June 30, 1996, a decrease of 0.2% from the three month period ended July 2, 1995 and 7.6% of revenues for the six months ended June 30, 1996, a decrease of 0.1% from the six months ended July 2, 1995. The increase in such expense is driven by incremental costs associated with increased restaurant development. Marketing and promotional expenses were $1.0 million, or 2.2% of revenues, for the three month period ended June 30, 1996, compared to $0.7 million, or 1.8% of revenues for the three month period ended July 2, 1995. For the six months ended June 30, 1996, these costs were $2.2 million, or 2.3% of revenues, as compared to $1.5 million, or 1.7% of revenues, for the comparable 1995 period. The increase is driven by incremental costs associated with increased restaurant development. Interest expense, net of interest income, increased to $0.6 million and $1.1 million, respectively for the three and six month periods ended June 30, 1996 from $0.5 million and $0.9 million, respectively for the three and six month periods ended July 2, 1995. The increase is a result of higher outstanding debt balances and higher interest rates. Income tax expense of $940,000 for the six month period ended June 30, 1996 predominantly represents state income taxes as well as Federal income taxes, which were partially offset by the utilization of the Company's net operating loss carryforwards and the establishment of additional deferred tax assets relating to FICA and other tax credits that were generated during fiscal 1996. (11) Liquidity and Capital Resources In the past, the Company has had, and may have in the future, negative working capital balances. The Company does not have significant receivables or inventories and receives trade credit based upon negotiated terms in purchasing food and supplies. Funds available from cash sales not needed immediately to pay for food and supplies or to finance receivables or inventories were used for noncurrent capital expenditures and or payments of long-term debt balances under revolving credit agreements. The Company and The First National Bank of Boston (FNBB) entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 19, 1995, as amended in February, March and June 1996 (collectively the "Credit Agreement"), pursuant to which the Company's then existing credit facility was restructured and amended to, among other things, increase the credit facility from $25,000,000 to $30,000,000, consisting of a $15,000,000 term loan (the "Term Loan") and a $15,000,000 revolving credit facility (the "Revolving Credit Facility") and to extend the final maturity date one year to December 31, 2001. Loans made pursuant to the Credit Agreement bear interest at a rate equal to the lender's base rate (plus applicable margin) or, at the Company's option, the Eurodollar Rate (plus applicable margin). At June 30, 1996, the Company's applicable margin, calculated pursuant to the Credit Agreement, was 0.25% on base rate loans and 2.25% on Eurodollar Rate loans. The Company has no outstanding futures contracts or interest rate hedge agreements. As of June 30, 1996 and December 31, 1995, the Company had outstanding borrowings of $25,950,000 and $23,650,000, respectively, under the Credit Agreement. At June 30, 1996, $444,000 was restricted for letters of credit issued by the lender on behalf of the Company. Unrestricted and undrawn funds available to the Company under the Credit Agreement were $3,606,000. The weighted average interest rate on all bank borrowings on June 30, 1996 was 7.8%. In addition, the Company is obligated to pay fees of 0.25% on unused loan commitments less than $10,000,000, 0.375% on unused loan commitments greater than $10,000,000 and a per annum letter of credit fee (based on the face amount thereof) equal to the applicable margin on the Eurodollar Rate loans. The availability under the Credit Agreement is scheduled to reduce by $800,000 on September 30, 1997 and thereafter principal installments on the Term Loan of $800,000 each will be due at the end of each calendar quarter through December 31, 2001. The Revolving Credit Facility will be payable in full on December 31, 2001. Borrowings under the Credit Agreement are secured by all tangible and intangible assets of the Company. Total amounts of principal payable by the Company under the Credit Agreement during the five years subsequent to June 30, 1996 amount to $0 in 1996, $1,600,000 in 1997, $3,200,000 in 1998, $3,200,000 in 1999, $3,200,000 in 2000 and $14,750,000 in 2001. As stated in Note 3 to the accompanying consolidated financial statements, the Company approved a plan for the sale of Mick's and Peasant. Under the terms of the Company's Credit Agreement, net proceeds from such sale will be required to be used to reduce the Company's outstanding debt. The Credit Agreement contains certain restrictive covenants with respect to the Company that, among other things, create limitations (subject to certain exceptions) on: (i) the incurrence or existence of additional indebtedness or the granting of liens on assets or contingent obligations; (ii) the making of investments in any person; (iii) mergers, dispositions of assets or consolidations; (iv) prepayment of certain other indebtedness; (v) making capital expenditures above specified amounts; and (vi) the ability to make certain fundamental changes or to change materially the present method of conducting the Company's business. The Credit Agreement also requires the Company to satisfy certain financial ratios and tests. As of June 30, 1996, the Company believes it was in compliance with such covenants. (12) During the first six months of fiscal 1996, the Company's net investment in fixed assets, capitalized leases, and related investment costs approximated $6.2 million. The Company estimates that it will expend up to an aggregate of $11.0 million in 1996 to finance pre-opening costs and capital expenditures net of landlord development and rent allowances and net of equipment lease financing for new restaurants and ordinary refurbishment of existing restaurants. The Company has entered into various equipment lease financing agreements with several financial institutions of which approximately $7.1 million in the aggregate has been funded through July 1996 and $7.0 million in the aggregate is available for future fundings. The Company anticipates that funds generated through operations and funds available through equipment lease commitments as well as those available under the Credit Agreement will be sufficient to fund planned expansion and to meet obligations under the Company's notes payable. Forward-Looking Statements Except for the historical information contained in this Form 10-Q, certain statements made herein are forward-looking statements that involve risks and uncertainties and are subject to important factors that could cause actual results to differ materially from these forward-looking statements, including without limitation, the effect of economic and market conditions, the impact of competitive activities, the Company's expansion plans, restaurant profitability levels and other risks detailed in the Company's public reports and SEC filings. (13) MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES Part II - Other Information Item 1. Legal Proceedings The Company is involved in various legal actions incidental to the normal conduct of its business. Management does not believe that the ultimate resolution of these actions will have a material adverse affect on the Company's consolidated financial position, equity, results of operations, liquidity and capital resources. Item 4. Submission of Matters to a Vote of Stockholders The Company's 1996 Annual Meeting of Stockholders was held on May 9, 1996, for the following purposes: (i) to elect three directors to Class 1 of the Board of Directors to serve three-year terms and until their successors are duly elected and qualified, (ii) to consider and act upon a proposal to amend the Company's Certificate of Incorporation to change the name of the Company from Quantum Restaurant Group, Inc. to Morton's Restaurant Group, Inc. (iii) to ratify the re-appointment of KPMG Peat Marwick LLP as the independent auditors of the Company for the fiscal year ending December 29, 1996. Shares were voted on each such matter as follows: Election of Directors
Name Robert Barney ---- For: 5,987,167 Withheld: 136,500 Name Dianne H. Russell ---- For: 5,987,067 Withheld: 136,600 Name Alan A. Teran ---- For: 5,987,117 Withheld: 136,550 Approval of the Amendment to the Company's Certificate of Incorporation For: 6,117,682 Against: 4,985 Abstain: 1,000 Ratification and Approval of KPMG Peat Marwick LLP For: 6,115,567 Against: 5,600 Abstain: 2,500
In addition, David B. Pittaway, William L. Hyde, Jr., and Dr. John J. Connolly will continue to serve as Class 2 directors until the election and qualification of their successors at the 1997 Annual Meeting of Stockholders. Allen J. Bernstein and John K. Castle will continue to serve as Class 3 directors until the election and qualification of their successors at the 1998 Annual Meeting of Stockholders. (14) Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 3.01 (d) Second Amendment to the Amended and Restated Certificate of Incorporation of the Registrant. 4.01 (b) Specimen Certificate representing the Common Stock, par value $.01 per share including Rights Legend and name change to Morton's Restaurant Group, Inc. 4.04 (e) Third Amendment to the Second Amended and Restated Revolving Credit and Term Loan Agreement, dated June 28, 1996 among the Registrant, The Peasant Restaurants, Inc., Morton's of Chicago, Inc. and The First National Bank of Boston, individually and as agent. 27.00 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter for which this report was filed. (15) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MORTON'S RESTAURANT GROUP, INC. ---------------------------------------- (Registrant) Date August 13, 1996 --------------- By: /s/ ALLEN J. BERNSTEIN ---------------------------------------- Allen J. Bernstein Chairman of the Board and Chief Executive Officer Date August 13, 1996 By: /s/ THOMAS J. BALDWIN ---------------- ---------------------------------------- Thomas J. Baldwin Senior Vice President, Finance and Chief Financial Officer (16) EX-3.(01)(D) 2 EXHIBIT 3.01.D State of Delaware Office of the Secretary of State I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "QUANTUM RESTAURANT GROUP, INC.", CHANGING ITS NAME FROM "QUANTUM RESTAURANT GROUP INC.," TO "MORTON'S RESTAURANT GROUP, INC.," FILED IN THIS OFFICE ON THE NINTH DAY OF MAY, A.D. 1996, AT 9 O'CLOCK A.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING. [SEAL] /s/ Edward J. Freel ----------------------------------------- Edward J. Freel, Secretary of State 2174262 8100 AUTHENTICATION: 7940060 960134948 DATE: 05-09-96 SECOND AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF QUANTUM RESTAURANT GROUP, INC. Pursuant to the provisions of Section 242 of the General Corporation Law of the State of Delaware (the "GCL"), Quantum Restaurant Group, Inc. (The "Corporation") hereby certifies as follows: FIRST: The Certificate of Incorporation of the Corporation was filed with the Delaware Secretary of State on October 3, 1988 and an Amended and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on June 3, 1992 (the "Amended and Restated Certificate"). SECOND: The First Amendment to the Amended and Restated Certificate was filed with the Delaware Secretary of State on May 19, 1995. THIRD: The Amended and Restated Certificate of the Corporation, as amended heretofore, is hereby further amended as follows: Article I of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended so that it shall henceforth read in its entirety as follows: "The Name of the Corporation is Morton's Restaurant Group, Inc. (The "Corporation")." FOURTH: The foregoing amendment to the Amended and Restated Certificate was duly adopted in accordance with the provisions of Section 242 of the GCL, the board of directors of the Corporation having duly adopted resolutions at a meeting of the board of directors held on January 30, 1996 setting forth such amendment, declaring its advisability and directing that it be considered by the stockholders of the Corporation entitled to vote thereon, such amendment was duly adopted by a majority of the outstanding shares of Common Stock of the Corporation at an annual meeting of the Stockholders held on May 9, 1996. IN WITNESS WHEREOF, the undersigned has executed this Second Amendment to the Amended and Restated Certificate of Incorporation as of this 9th day of May, 1996. By: /s/ Thomas J. Baldwin ----------------------------------- Name: Thomas J. Baldwin Title: Senior Vice President [SPECIMEN STOCK CERTIFICATE--Front] COMMON STOCK COMMON STOCK PAR VALUE $ 0.01 PAR VALUE $ 0.01 C 19237NUMBER [SEAL] THIS CERTIFICATE IS TRANSFERABLE INCORPORATED UNDER THE IN BOSTON, MASSACHUSETTS LAWS OF THE STATE OF OR NEW YORK, NEW YORK DELAWARE QUANTUM RESTAURANT GROUP, INC. This Certifies that CUSIP 619429 10 3 See reverse for certain definitions [SPECIMEN] Is the owner of [corporate seal] Quantum Restaurant Group, Inc. Corporate Seal 1988 Delaware FULLY PAID AMD NONASSESABLE SHARES OF COMMON STOCK OF Quantum Restaurant Group, Inc., transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. The holder hereof accepts said shares of Common Stock with notice of, and subject to, the provisions of the Corporation's Certificate of Incorporation and By-Laws and all amendments thereto and restatements thereof. This certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. NAME CHANGED TO MORTON'S RESTAURANT GROUP, INC. Dated: COUNTERSIGNED AND REGISTERED: THE FIRST NATIONAL BANK OF BOSTON, TRANSFER AGENT AND REGISTRAR, /s/ Mary Penezic /s/ Agnes Longarzo /s/ Allen J. Bernstein - --------------------- ------------------- ---------------------- AUTHORIZED OFFICER SECRETARY PRESIDENT [SPECIMEN STOCK CERTIFICATE--Back] QUANTUM RESTAURANT GROUP, INC. THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT -- Custodian -------------------- (Cust) (Minor) TEN ENT -- as tenants by the under Uniform Gifts entireties to Minors Act JT TEN -- as joint tenants with right ----------------- of survivorship and not as (State) tenants in common Additional abbreviations may also be used though not in the above list. For value received, __________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - --------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Please print or typewrite name and address of assignee - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ---------------------------------------------- Attorney to transfer the said shares on the books of the within named Corporation with full power of substitution in the premises. Dated ----------------------- ------------------------------------------------- NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. IMPORTANT: SIGNATURE(S) MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL STOCK EXCHANGE OR BY A COMMERCIAL BANK OR TRUST COMPANY. Signature Guaranteed: --------------------- This certificate also evidences Rights that entitle the holder hereof to certain rights as set forth in a Rights Agreement between the Company and The First National Bank of Boston, as Rights Agent, dated as of December 15, 1994 (the "Rights Agreement"), the terms of which are incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or beneficially owned by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. EX-4.(04)(E) 3 EXHIBIT 4.04(E) THIRD AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT This THIRD AMENDMENT (this "Amendment"), dated as of June 28, 1996, by and among MORTON'S RESTAURANT GROUP, INC., a Delaware corporation (formerly known as Quantum Restaurant Group, Inc.) having its principal place of business at Suite 210, 3333 New Hyde Park Road, New Hyde Park, New York 11042 (referred to below and in the Credit Agreement, as defined below, as "Quantum"), THE PEASANT RESTAURANTS, a Delaware corporation having its principal place of business at 489 Peachtree Street, N. E., Atlanta, Georgia 30308 ("Peasant"), MORTON'S OF CHICAGO, Inc. an Illinois corporation with its principal place of business at 350 West Hubbard Street, Chicago, Illinois 60610 ("Morton's") (Quantum, Peasant and Morton's are referred to herein collectively as the "Borrowers", and each, individually, as a "Borrower"), THE FIRST NATIONAL BANK OF BOSTON, as Agent (the "Agent") for the lenders (as defined in the Credit Agreement referred to below), and THE FIRST NATIONAL BANK OF BOSTON ("FNBB") in its individual capacity as a Lender, amends (a) the Second Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 19, 1995, as amended by the First Amendment dated as of February 14, 1996 (the "First Amendment"), the Second Amendment dated as of March 5, 1996 (the "Second Amendment"), a letter agreement dated as of May 2, 1996 (the "Supplemental Agreement"), and as the same may be further amended, modified, or supplemented from time to time (the "Credit Agreement"), by and among the Borrowers, the Agent, and the Lenders, and (b) the Supplemental Agreement. Capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement. WHEREAS, the Borrowers have requested the Lenders agree to extend the maturity of the credit facilities provided for in the Credit Agreement, and to amend certain over provisions of the Credit Agreement and the Supplemental Agreement; and WHEREAS, the Agent and the Lenders, subject to the terms and provisions hereof, have agreed to so amend the Credit Agreement and the Supplemental Agreement; NOW THEREFORE, the parties hereto hereby agree as follows: ss.1. Amendments to Credit Agreement and Supplemental Agreement. Subject to the satisfaction of the conditions precedent set forth in ss. 3 hereof, the Credit Agreement and the Supplemental Agreement are hereby amended as follows: ss.1.1. New Definitions. Section 1 of the Credit Agreement is hereby amended by adding the following new definitions to Section 1 in the appropriate places in the alphabetical sequence: "Available Net Cash Proceeds. As to any particular transaction consisting of a Permitted Disposition, 50% of the Net Cash Proceeds thereof (excluding the first $1,605,000 of the total Net Cash Proceeds, determined on an aggregate cumulative basis, received from and after January 1, 1996 with respect to all such Permitted Dispositions), but, in any event, for purposes hereof, the total Available Net Cash Proceeds shall not be more than $5,000,000 on an aggregate, cumulative basis with respect to all such Permitted Dispositions." -2- "CNL. CNL Financial I, Inc., a Florida corporation." "CNL Collateral. See the definition of CNL Liens in this ss.1. "CNL Indebtedness. Indebtedness of Morton's and certain of its Subsidiaries (Morton's of Chicago/Atlanta, Inc. and Morton's of Chicago/Denver, Inc.) to CNL, not exceeding $2,500,000 in total principal amount, in respect of a term loan made by CNL to Morton's, maturing ten (1O) years after such loan is made, with equal monthly amortization of principal and bearing interest at a rate per annum not exceeding the annual interest rate provided for in the commitment letter dated June 6, 1996 from CNL to Quantum (a copy of which has been provided to the Agent by Quantum), and otherwise upon terms and pursuant to documentation in form and substance satisfactory to the Majority Lenders. "CNL Liens. Liens and security interests in favor of CNL, with respect only to the assets of those two certain existing Morton's Restaurants located at 1710 Wynkoop Street, Denver, Colorado and 303 Peachtree Street N.E., Atlanta, Georgia, respectively (the "CNL Collateral"), securing only the CNL Indebtedness." "Net Cash Proceeds. With respect to any sale, lease, transfer or other disposition of any asset or the sale of any capital stock or any warrants, rights or options to acquire capital stock, by any Person, the excess of (i) the gross cash proceeds received by such Person from the sale or disposition of any such asset (including such capital stock, warrants, rights or options) of such Person plus, as and when received, all cash payments received subsequent to such sale or disposition representing (A) any deferred purchase price therefor or (B) any cash proceeds from the sale or other disposition of any cash equivalents (or any deferred purchase price obligations) received therefor over (ii) the sum of (A) a reasonable reserve for any liabilities payable incident to such sale or disposition, (B) the reasonable direct costs and expenses incurred by such Person in connection with such sale or disposition (including, without limitation, reasonable brokerage fees and commissions), (C) all payments actually made on any Indebtedness (other than the Obligations) or other obligations which are secured by any assets subject to such sale or disposition which are required to be repaid out of the proceeds from such transaction and (D) actual tax payments made or to be made in connection therewith". "Permitted Disposition(s). Proposed Dispositions which are permitted by ss. 10.12 hereof (or otherwise effected pursuant to transactions expressly approved in writing by the requisite Lenders hereunder)." "Proposed Disposition(s). The sale or other disposition of some or all of the assets or capital stock (except that, in the case of the sale or disposition of the capital stock of any particular Person, all of the issued and outstanding capital stock of such Person must be sold or otherwise disposed of pursuant to such sale or disposition) of Peasant Holdings, Peasant, the Peasant Subsidiaries, Mick's and/or the Mick's Subsidiaries." "Revolving Credit Share. At any time of determination, the fraction whose numerator is the then applicable Revolving Credit Commitment Amount and whose denominator is the Total Exposure." -3- "Term Loan Share. At any time of determination, the fraction whose numerator is the then applicable outstanding principal of the Term Loans and whose denominator is the Total Exposure." "Total Exposure. At any time of determination, the sum of the then outstanding principal of the Term Loans plus the then applicable Revolving Credit Commitment Amount." ss.1.2. Changes in Certain Definitions. (a) The definition of Excluded Non-Cash Charges in Section 1 of the Credit Agreement (as added by the First Amendment to the Credit Agreement) is hereby amended to read as follows: "Excluded Non-Cash Charges. For any period, the non-cash expenses and noncash accounting charges incurred by the Companies in connection with the Permitted Dispositions, all as determined in accordance with generally accepted accounting principles." (b) The definition of Final Maturity Date in Section 1 of the Credit Agreement is hereby amended to read as follows: "Final Maturity Date: December 31, 2001." (c) References to "Quantum" in the Credit Agreement and the other Loan Documents shall be deemed to be references to Morton's Restaurant Group, Inc., a Delaware corporation which, prior to May 9, 1996, was formerly known as Quantum Restaurant Group, Inc. ss.1.3. Mandatory Reductions. Section 2.1(b) of the Credit Agreement is hereby amended by adding the following new paragraph (iii): "(iii) Mandatory Reductions. The Revolving Credit Commitment Amount shall be automatically and immediately reduced from time to time by the Revolving Credit Share of the Available Net Cash Proceeds (if any) received by the Companies in respect of each Permitted Disposition (but only to the extent that the aggregate, cumulative Available Net Cash Proceeds do not exceed $5,000,000), in each case allocated pro rata among the Lenders in accordance with their respective Commitment Percentages (the "Mandatory Reductions"). No such reduction of the Revolving Credit Commitment Amount shall be subject to reinstatement." ss.1.4. Term Loan Principal Payments. (a) Section 2.6(c) of the Credit Agreement is hereby amended to read as follows: "(c) Repayments of Principal of Term Loan. (i) Scheduled Payments. The Borrowers jointly and severally promise to pay to the Agent for the ratable accounts of the Lenders the principal of the Term Loan in quarterly installments of $800,000 per installment, each due and payable on the last day of each calendar quarter of each calendar year, commencing September 30, 1997, and -4- with a final payment due and payable on the Final Maturity Date in an amount equal to the then unpaid principal balance of the Term Loan. (ii) Mandatory prepayments. The Borrowers jointly and severally shall be obligated to make prepayments in respect of the principal of the Term Loan immediately at the time of each Permitted Disposition in an amount equal to the Term Loan Share of the Available Net Cash Proceeds (if any) received by the Companies in respect of such Permitted Disposition (but only to the extent that the aggregate, cumulative Available Net Cash Proceeds do not exceed $5,000,000), in each case payable to the Agent for application in respect of the Term Loan to the ratable accounts of the Lenders (the "Mandatory Prepayments"). Prior to the earlier to occur of (A) the aggregate cumulative amount of principal repaid or prepaid in respect of the Term Loan being equal to at least $1,600,000, or (B) December 31, 1997, the Mandatory Prepayments shall be applied against the scheduled unpaid installments of principal due in respect of the Term Loan in the direct order of their maturity; otherwise, any and all Mandatory Prepayments made hereunder shall be applied against the scheduled unpaid installments of principal due in respect of the Term Loan in the inverse order of their maturity. No such Mandatory Prepayments with respect to the Term Loan may be reborrowed." (b) Section 2.6(d) of the Credit Agreement is hereby amended by deleting the third and fourth sentence thereof and inserting in their places the following: "Prior to the earlier to occur of (A) the aggregate amount of principal repaid or prepaid in respect of the Term Loan being equal to at least $1,600,000, or (B) December 31, 1997, prepayments hereunder shall be applied against the scheduled unpaid installments of principal due in respect of the Term Loan in the direct order of their maturity; otherwise, any and all prepayments made hereunder shall be applied against the scheduled unpaid installments of principal due in respect of the Term Loan in the inverse order of their maturity. No such amount repaid or prepaid with respect to the Term Loan may be reborrowed." ss.1.5. Asset Disposition Reporting Requirements. Section 9.4 of the Credit Agreement is hereby amended by re-designating paragraph (h) thereof as paragraph (i) thereof, and inserting the following new paragraph (h) into ss.9.4 between paragraph (g) and paragraph (i): "(h) as soon as practicable but, in any event, concurrently with the consummation of each Permitted Disposition, copies of the material definitive contracts, agreements and instruments evidencing or relating to such Permitted Disposition and a computation in reasonable detail of the Net Cash Proceeds, Available Net Cash Proceeds, Mandatory Reductions (if any) of the Revolving Credit Commitment Amount, and Mandatory Prepayment (if any) of the Term Loan arising from or otherwise relating to such Permitted Disposition." ss.1.6. Indebtedness. Section 10.1 of the Credit Agreement is hereby amended by deleting the word "and" from the end of ss.10.1(k), changing the period at the end of ss.10.1(l) to a semi-colon, inserting the word "and" immediately after such new semi-colon, and adding the following new ss. 10.1(1): -5- "(m) the CNL Indebtedness." ss.1.7. Liens. Section iO.4 of the Credit Agreement is hereby amended by deleting the word "and" from the end of ss.10.4(g), changing the period at the end of ss.10.4(h) to a semi-colon, inserting the word "and" immediately after such new semi-colon, and adding the following new ss.10.4(i) immediately after ss.10.4(h): "(i) the CNL Liens." ss.1.8. Asset Dispositions. Section 10.12 of the Credit Agreement is hereby amended by adding the following at the end of ss. 10.12, immediately before the period: "; provided, however, so long as no Default or Event of Default is continuing, none would result from (or exist after giving effect to) the applicable Proposed Disposition and in connection therewith the Companies timely then comply with the applicable provisions of ss.ss.2.1(b), 2.6(c), and 9.4(h) hereof, the Companies may effect one or more Proposed Dispositions on arms-length terms for fair market value received in consideration thereof." ss.1.9. Consents, Etc. Clause (g) of Section 21 of the Credit Agreement is hereby amended by adding the following at the end of the final parenthetical expression at the end of clause (g), immediately prior to the end of such final parenthetical expression and inserted within the parentheses: "; and except for (i) the release of the CNL Collateral as provided in ss.24 hereof as in effect immediately after the effectiveness of the Third Amendment, dated as of June 28, 1996 (the "Third Amendment") to this Credit Agreement, and (ii) certain (A) dispositions of Collateral (whether assets or capital stock) and (B) in the case only of the applicable disposition of all of the capital stock of any applicable Person, releases of the Obligations only of such applicable disposed Person and its Subsidiaries, in each case (whether under clause (A) or clause (B) or both) in transactions that are permitted by ss.10.12 hereof as in effect immediately after the effectiveness of the Third Amendment." ss.1.10. Notices. Section 18(d) of the Credit Agreement is hereby amended to read as follows: "(d) if to FNBB, or the Agent, at its Head Office, at 100 Federal Street, Boston, Massachusetts 02110, Attention: Robert W. MacElhiney, or such other address for notice as FNBB, or the Agent, as the case may be, shall last have furnished in writing to the Person giving the notice;" ss.1.11. Procedures For Releases of Collateral. Section 24 of the Credit Agreement is hereby amended by adding the following new paragraphs at the end of ss.24: "In the event of the Permitted Disposition of the assets or the capital stock of applicable Persons pursuant to, and in accordance with ss.10.12 hereof, the Agent shall (and shall be authorized and permitted, on behalf of the Lenders, to) release only its -6- security interests and liens on, as the case may be, such disposed assets or capital stock, and to release the Obligations only as to such applicable disposed Person and its Subsidiaries (and the security interests and liens on the assets of such disposed Person and its Subsidiaries securing such Obligations) in the case of any such Permitted Disposition of all of the capital stock of such applicable disposed Person, all upon the written request and at the expense of the Borrowers, in each case without impairing or otherwise affecting any of Obligations as to any other Person (including the joint and several liabilities of any and all other Borrowers and any and all other Guarantors in respect of all of the Obligations, whether initially incurred by any such released Person or its Subsidiaries or otherwise) or the security interests and liens of the Agent with respect to the remaining Collateral in any manner whatsoever. Upon (and as conditions precedent to) each such release, pursuant to the foregoing provisions, of the applicable Collateral and, as the case may be, the Obligations as to each such applicable disposed Person and its Subsidiaries, then each of this Agreement and the other Loan Documents shall be, effective as of the effective date of such release, amended to delete each reference to the applicable disposed Collateral and, as the case may be, the applicable disposed Person and its Subsidiaries, whether as Borrowers or as Guarantors or otherwise, and to make such other related conforming changes in connection therewith, all as shall be necessary and appropriate in the good faith judgment of the Agent to effectuate the intention and purposes of this Agreement and the other Loan Documents, pursuant to amendment documents in form and substance mutually satisfactory to the Agent and the Borrowers." "In the event of (and concurrently with) the incurrence of the CNL Indebtedness and the related CNL Liens, and provided that at such time no Default or Event of Default is continuing and none would result from (or exist after giving effect to) such CNL Indebtedness and such CNL Liens, the Agent shall (and shall be authorized and permitted, on behalf of the Lenders, to) release, on a single occasion only, solely its security interests and liens on such portion of the CNL Collateral as shall then actually be subject to the CNL Liens, all upon the written request and at the expense of the Borrowers, in each case without impairing or otherwise affecting the security interests and liens of the Agent with respect to the remaining Collateral in any manner whatsoever. In the event any such released portion of the Collateral is at any time thereafter no longer subject to such CNL Liens, the Companies shall immediately so notify the Agent in writing and grant to the Agent (for the benefit of itself and the Lenders), as collateral security for the Obligations, a first priority perfected security interest in all such former CNL Collateral pursuant to the terms of the Security Documents." ss.1.12. Closing of Certain Restaurants. The Second Amendment to the Credit Agreement made certain adjustments to the financial covenants contained in the Credit Agreement, and the related definitions, in order to reflect the closing of a certain Peasant Restaurant located in Washington, D.C. (as referred to in the definition of Specified Restaurant Closing Expenses added by the Second Amendment to Section 1 of the Credit Agreement). The Supplemental Agreement made certain further adjustments to such financial covenants contained in the Credit Agreement in connection win the closing of certain other restaurants. In connection with the planned closing of the Mick's 19th Street Grille restaurant located in Washington, D.C., the Supplemental Agreement is hereby amended by (a) increasing the figure set forth in the second paragraph of the Supplemental Agreement by $300,000 so that such figure -7- (as so amended) shall be "$1,455,000" rather than "$1,155,000" and (b) adding the following restaurant location to the list attached to the Supplemental Agreement as Schedule 1 thereto: "7. The Mick's 19th Street Grille restaurant located at 19th Street in Washington, D.C." ss.2. Representations and Warranties. The Borrowers hereby represent and warrant to the Agent and the Lenders as follows: (a) Representations and Warranties in Credit Agreement. Except as specified in writing by the Borrowers to the Agent with respect to the subject matter of this Amendment prior to the execution and delivery hereof by the Agent and the Lenders, the representations and warranties of the Borrowers contained in the Credit Agreement were true and correct in all material respects when made and continue to be true and correct in all material respects on the date hereof, except, in each case to the extent of changes resulting from transactions contemplated or permitted by the Loan Documents and this Amendment and changes occurring in the ordinary course of business which singly or in the aggregate are not materially adverse, and to the extent that such representations and warranties relate expressly to an earlier date. (b) Authority, No Conflicts, Enforceability of Obligations, Etc. Each of the Borrowers hereby confirms that the representations and warranties of the Borrowers contained in ss.ss.6.1, 6.3 and 6.4 of the Credit Agreement are true and correct on and as of the date hereof as if made on the date hereof, treating this Amendment, the Credit Agreement as amended hereby, and the other Loan Documents as amended hereby, as "Loan Documents" for the purposes of making said representations and warranties. ss.3. Conditions to Effectiveness. The effectiveness of this Amendment shall be subject to the delivery to the Agent and the Lenders by (or on behalf of) each of the Borrowers or the Guarantors, as the case may be, contemporaneously with the execution hereof, of each of the following, each in form and substance satisfactory to the Agent and the Lenders: (a) this Amendment signed by each of the Borrowers, the Guarantors, the Agent, and the Lenders; (b) the Amended and Restated Fee Letter of even date herewith, signed by each of the Borrowers, the Guarantors, the Agent, and the Lenders; (c) the amendment fee provided for in such Amended and Restated Fee Letter as being due and payable in connection herewith; (d) certificates of an appropriate officer of each of the Borrowers, dated as of the date hereof, as to (i) the corporate actions taken by each of the Borrowers authorizing the execution, delivery, and performance hereof, and (ii) the names, titles, incumbency, and specimen signatures of the officers of each of the Borrowers authorized to sign this Amendment on behalf of each of the Borrowers; -8- (e) a favorable written legal opinion addressed to the Agent and the Lenders, dated as of the date hereof, from Schulte, Roth & Zabel, special counsel to the Borrowers, with respect to such matters as the Agent or the Lenders may reasonably request; (f) such evidence as the Agent may reasonably request such that the Agent shall be satisfied that the representations and warranties contained in ss.2 hereof are true and correct on and as of date hereof, and (g) such other certificates, documents, or instruments with respect to this Amendment, as the Agent or the Lenders may reasonably request. ss.4. No Other Amendments or Waivers; Execution in Counterparts. Except as otherwise expressly provided by this Amendment, all of the terms, conditions and provisions of the Credit Agreement, the Supplemental Agreement, and the other Loan Documents shall remain in full force and effect. Each of the Borrowers confirms and agrees that the Obligations of the Borrowers to the Lenders under the Loan Documents, as amended and supplemented hereby, are secured by, guarantied under, and entitled to the benefits, of the Security Documents. The Borrowers, the Guarantors, the Agent and the Lenders hereby acknowledge and agree that all references to the Credit Agreement, the Supplemental Agreement, and the Obligations thereunder contained in any of the Loan Documents shall be references to the Credit Agreement, the Supplemental Agreement, and the Obligations, as amended hereby and as the same may be amended, modified, supplemented, or restated from time to time. The Security Documents and the perfected first priority security interest of the Lenders thereunder shall continue in full force and effect, and the collateral security and guaranties provided for in the Security Documents shall not be impaired by this Amendment. This Amendment may be executed in any number of counterparts, but all such counterparts shall together constitute but one instrument. In making proof of this Amendment it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought. ss.5. Governing Law. This Amendment shall be construed according to and governed by the internal laws of the Commonwealth of Massachusetts without reference to principles of conflicts of law. [Remainder of Page Intentionally Left Blank] -9- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized. The Borrowers: MORTON'S RESTAURANT GROUP, INC THE PEASANT RESTAURANTS, INC. MORTON'S OF CHICAGO, INC. By: /s/ Thomas J. Baldwin ---------------------------------- Name: Thomas J. Baldwin -------------------------------- Title: SVP Finance & CFO ------------------------------- THE FIRST NATIONAL BANK OF BOSTON, for itself and as Agent By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- Consented and agreed to, by each of THE GUARANTORS (as defined in the Credit Agreement) By: /s/ Thomas J. Baldwin ---------------------------------- Name: Thomas J. Baldwin -------------------------------- Title: SVP Finance & CFO ------------------------------- for each of the Guarantors -9- IN WITNESS WHEREOF, the parties thereto have caused this Amendment to be executed by their respective officers thereunto duly authorized. The Borrowers: MORTON'S RESTAURANT GROUP, INC THE PEASANT RESTAURANTS, INC. MORTON'S OF CHICAGO, INC. By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- THE FIRST NATIONAL BANK OF BOSTON, for itself and as Agent By: /s/ Rod Guinn ---------------------------------- Name: Rod Guinn -------------------------------- Title: Director ------------------------------- Consented and agreed to, by each of THE GUARANTORS (as defined in the Credit Agreement) By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- for each of the Guarantors EX-27 4
5 This schedule contains summary financial information extracted from Form 10-Q for the period ended June 30, 1996 1,000 6-MOS Dec-29-1996 Jan-01-1996 Jun-30-1996 2,045 0 1,296 0 3,934 33,162 25,147 3,305 74,273 21,347 25,950 0 0 64 21,802 74,273 95,345 95,345 31,910 81,047 9,398 0 1,144 3,756 940 2,816 0 0 0 2,816 0.42 0.42 Current assets include $21,602 of Assets Held for Sale Current liabilities include $11,276 of Liabilities Related to Assets Held for Sale.
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