Item 1.01
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ENTRY INTO A DEFINITIVE MATERIAL AGREEMENT
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Senior Credit Facility
Seventh Amendment and Waiver
On January 31, 2017, Ruby Tuesday,
Inc. (the “Company”) entered into a seventh amendment and waiver (the “Seventh Amendment and Waiver”)
relating to its previously-disclosed four-year revolving credit agreement with Bank of America, N.A., as Administrative Agent;
Wells Fargo, National Association; and Regions Bank (the “Senior Credit Facility”). The description of the Senior
Credit Facility set forth under Item 1.01 in the Company’s Current Report on Form 8-K dated December 3, 2013 (the “2013
8-K”) is incorporated by reference herein.
The Company previously entered
into a waiver with the Administrative Agent and the lenders on December 31, 2016 pursuant to which the Administrative Agent and
the lenders under the Senior Credit Facility granted the Company a limited waiver relating to the covenant requiring the Company
to maintain a consolidated fixed charge coverage ratio of not less than 1.65:1.00. As of November 29, 2016, the Company was not
in compliance with this covenant (such non-compliance, the “Senior Credit Facility Event of Default”). The description
of such waiver set forth under Item 1.01 in the Company’s Current Report on Form 8-K dated January 3, 2017 is incorporated
by reference herein.
Under the Seventh Amendment and
Waiver, the Administrative Agent and the lenders under the Senior Credit Facility have granted the Company a permanent waiver
relating to the Senior Credit Facility Event of Default. There are no assurances that the lenders under the Senior Credit Facility
will waive any future covenant violations of, or agree to any amendments to, the Senior Credit Facility.
Among other things, the Seventh
Amendment and Waiver amends the termination date of the Senior Credit Facility from December 3, 2017 to June 2, 2017, increases
the flexibility of the financial covenants under the Senior Credit Facility for the fiscal quarter ending February 28, 2017 (including
reducing the minimum consolidated fixed charge coverage ratio from 1.65:1:00 to 1:25:1:00 and raising the maximum adjusted total
debt to EBITDAR ratio from 4.30:1:00 to 4.65:1.00), restricts the ability of the Company to make certain acquisitions, dispositions,
investments, capital expenditures and guarantees of indebtedness, requires certain additional monthly financial reporting by the
Company to the Administrative Agent, and reduces the amount the Company may borrow pursuant to the revolving loan commitment under
the Senior Credit Facility from $50.0 million (including a $25.0 million sublimit for standby letters of credit), to $30 million
(including a $15 million sublimit for standby letters of credit).
The Seventh Amendment and Waiver
is effective as of January 31, 2017. As of January 31, 2017, the Company has no amounts drawn under the revolving loan commitment
under the Senior Credit Facility,
and has $11.1 million drawn under standby letters of credit under the Senior Credit Facility.
The Company plans to replace the Senior Credit Facility with collateralized
debt, subject to market conditions.
Mortgage Loan Modification
and Waiver
On January 31, 2017, the Company
entered into a loan modification amendment and waiver (the “Mortgage Loan Modification and Waiver”) relating to certain
of its mortgage loan obligations (the “Loan Documents”) with First Tennessee Bank, N.A., as lender (“First
Tennessee”). The Company previously entered into a waiver with First Tennessee on December 31, 2016, pursuant to which
First Tennessee granted the Company a limited waiver relating to compliance with the covenant in the Loan Documents requiring
the Company to maintain a minimum consolidated fixed charge coverage ratio of not less than 1.65:1.00. As of November 29, 2016,
the Company was not in compliance with this covenant (such non-compliance, the “Loan Documents Event of Default”).
The description of such waiver set forth under Item 1.01 in the Company’s Current Report on Form 8-K dated January 3, 2017
is incorporated by reference herein.
Under the Mortgage Loan Modification
and Waiver, First Tennessee has granted the Company a permanent waiver relating to the Loan Documents Event of Default. There
are no assurances that the lenders under the Loan Documents will waive any future covenant violations of, or agree to any amendments
to, the Loan Documents.
Among other things, the Mortgage
Loan Modification and Waiver increases the flexibility of the financial covenants under the Loan Documents for the fiscal quarter
ending February 28, 2017 and thereafter (including reducing the minimum consolidated fixed charge coverage ratio from 1.65:1:00
to 1:25:1:00 and raising the maximum adjusted total debt to EBITDAR ratio from 4.30:1:00 to 4.65:1.00), restricts the ability
of the Company to make certain capital expenditures, and requires certain additional monthly financial reporting by the Company
to First Tennessee.
As of January 31, 2017, the Company
had $7.8 million in mortgage loan obligations outstanding.
The foregoing descriptions of
the Seventh Amendment and Waiver and the Mortgage Loan Modification and Waiver are summaries only, and are qualified in their
entirety by reference to the complete text of the Seventh Amendment and Waiver and the Mortgage Loan Modification and Waiver,
copies of which are attached as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and incorporated herein
by reference.