EXECUTION COPY
SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT
This SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT
(hereinafter, the "Amendment") is entered into as of November 7,
2005 among Ryan's Restaurant Group, Inc. (formerly known as
Ryan's Family Steak Houses, Inc.), a South Carolina corporation
(the "Company") and the Purchasers.
WHEREAS, the Company issued and sold One Hundred Million
Dollars ($100,000,000) in aggregate principal amount of its 4.65%
Senior Notes due July 25, 2013 (as they may be amended, restated
or otherwise modified from time to time, the "Notes") pursuant to
that certain Note Purchase Agreement dated as of July 25, 2003,
as amended by the First Amendment to Note Purchase Agreement
dated as of December 20, 2004, between the Company and the
purchasers identified on Schedule A thereto (as amended, modified
or supplemented from time to time to the date hereof, the "Note
Agreement"; capitalized terms used and not otherwise defined
herein shall have the same meaning as ascribed to such terms in
the Note Agreement).
WHEREAS, the register for the registration and transfer of
the Notes indicates that the Persons named in Annex 1 hereto are
currently the holders of the entire outstanding principal amount
of the Notes.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Amendments. The Note Agreement is hereby amended in
the following respects:
(a) Section 10.4 of the Note Agreement is hereby
amended and restated in its entirety to read as follows:
"10.4 Fixed Charge Coverage Ratio.
The Company shall not permit the Fixed Charge Coverage
Ratio, as of the last day of each fiscal quarter of the
Company to be less than (i) 1.55:1.00 for each fiscal
quarter period ending on or before September 27, 2006
(including, without limitation, for the fiscal quarter
period ended September 28, 2005), (ii) 1.60:1.00 for each
fiscal quarter period ending after September 27, 2006 and on
or before January 3, 2007, (iii) 1.65:1.00 for each fiscal
quarter period ending after January 3, 2007 and on or before
April 4, 2007, (iv) 1.75:1.00 for each fiscal quarter period
ending after April 4, 2007 and on or before July 4, 2007,
and (v) 2.25:1.00 for each fiscal quarter thereafter;
provided, however, that if scheduled principal payments are
due and payable with respect to both the Notes and the 2000
Senior Notes during the four fiscal quarter period of the
Company included in any calculation of the Fixed Charge
Coverage Ratio for a fiscal quarter period ending after July
4, 2007, the minimum Fixed Charge Coverage Ratio required by
this clause (v) of Section 10.4 as of the last day of such
four fiscal quarter period shall be 2.00:1.00. "
(b) Section 10.5 of the Note Agreement is hereby
amended and restated in its entirety to read as follows:
"10.5. Restricted Payments and Restricted
Investments.
(a) The Company will not, and will not permit any
of its Subsidiaries to, declare, make or incur any
liability to declare or make any Restricted Payment or
any Restricted Investment except that (i) any
Subsidiary may declare and make Restricted Payments to
its parent and (ii) the Company may make Restricted
Payments and Restricted Investments if, immediately
prior, and immediately after giving effect, to the
making of such Restricted Payment or Restricted
Investment, no Default or Event of Default would exist
and, with respect to Restricted Payments, immediately
after giving effect to such action, the aggregate
amount of such Restricted Payments of the Company and
its Subsidiaries declared or made during any fiscal
year would not exceed $15,000,000 minus the amount of
the aggregate Unused Restricted Payment Allowance
allocated to the Carryforward Capital Expenditure
Basket as provided in subsection (b) below, provided,
however, if the Company is in compliance with the Fixed
Charge Coverage Ratio for the fiscal quarter ended
October 3, 2007 set forth in Section 10.4, the
aggregate amount of such Restricted Payments of the
Company and its Subsidiaries declared or made during
the period commencing with the first day of fiscal year
2008 and ending on the date such Restricted Payment is
declared or made, inclusive, shall not exceed the sum
of:
(1) $25,000,000, plus
(2) 50% of Net Income for each quarter in
such period (or minus 100% of Net Income for such
period if Net Income for such period is a loss),
plus
(3) the aggregate amount of net proceeds
arising from sales of the Company's Capital Stock
during such period, plus
(4) the Carryforward Restricted Payment
Basket, minus
(5) the amount of the aggregate Unused
Restricted Payment Allowance allocated to the
Carryforward Capital Expenditure Basket as
provided in subsection (b) below.
(b) Within 90 days after the end of each fiscal
year of the Company, commencing with 90 days after the
end of fiscal year 2006, after or with delivery of the
audited annual financial statements in respect of the
immediately preceding fiscal year of the Company, the
Company shall notify the holders of Notes of (i) the
Unused Restricted Payment Allowance for such
immediately preceding fiscal year and (ii) whether or
not the Company will allocate any portion of such
Unused Restricted Payment Allowance to the Carryforward
Capital Expenditure Basket, whereupon the Carryforward
Capital Expenditure Basket shall be immediately
increased by the amounts allocated thereto.
Notwithstanding the foregoing, the Carryforward Capital
Expenditure Basket may not be increased in any fiscal
year by more than $10,000,000."
(c) Section 10.13 of the Note Agreement is hereby
amended and restated in its entirety to read as follows:
"10.13. Capital Expenditures.
(a) The Company will not permit Capital
Expenditures (A) in fiscal year 2005 to exceed the sum
of (i) $94,000,000 plus the amount of net cash proceeds
received in such fiscal year from the sale of stores in
accordance with Section 10.9 plus (ii) the Carryforward
Capital Expenditure Basket, plus (iii) the amount of
insurance proceeds received in such fiscal year for
losses, damages or casualties related to Hurricane
Xxxxxxx or Hurricane Xxxx and (B) in any fiscal year,
commencing with the fiscal year ending January 3, 2007,
to exceed the sum of (i) $36,000,000 (the "Initial
Capital Expenditure Basket") plus (ii) the amount of
net cash proceeds received in such fiscal year from the
sale of stores in accordance with Section 10.9 plus
(iii) the Carryforward Capital Expenditure Basket,
provided, however, that such sum amount for a fiscal
year may be increased by the amount of insurance
proceeds received in such fiscal year for losses,
damages or casualties related to Hurricanes Xxxxxxx or
Xxxx, provided further that if the Company is in
compliance with the Fixed Charge Coverage Ratio for the
fiscal quarter ended October 3, 2007 set forth in
Section 10.4, commencing with fiscal year 2008 the
Initial Capital Expenditure Basket for purposes of
calculating the sum amount hereinabove shall be as
follows:
Fiscal year Amount
2008 $106,000,000
2009 $110,000,000
2010 $114,000,000
2011 $119,000,000
2012 $124,000,000
2013 $129,000,000
(b) If the Company is in compliance with the
Fixed Charge Coverage Ratio for the fiscal quarter
ended October 3, 2007 set forth in Section 10.4, within
90 days after the end of each fiscal year of the
Company, commencing with 90 days after the end of
fiscal year 2007, after or with delivery of the audited
annual financial statements in respect of the
immediately preceding fiscal year of the Company, the
Company shall notify the holders of Notes of (i) the
Unused Capital Expenditure Allowance for such
immediately preceding fiscal year and (ii) the
Company's allocation of such Unused Capital Expenditure
Allowance in whole or in part to the Carryforward
Capital Expenditure Basket and/or the Carryforward
Restricted Payment Basket, whereupon the Carryforward
Capital Expenditure Basket and Carryforward Restricted
Payment Basket shall be immediately increased by the
amounts allocated thereto. If the Company fails to
deliver such notice to the holders of Notes in the time
required, the Unused Capital Expenditure Allowance
shall be allocated first to the Carryforward Restricted
Payment Basket and then to the Carryforward Capital
Expenditure Basket. Notwithstanding the foregoing, (x)
the Carryforward Capital Expenditure Basket may not be
increased in any fiscal year by more than $10,000,000,
and (y) if the Company is in compliance with the Fixed
Charge Coverage Ratio for the fiscal quarter ended
October 3, 2007 set forth in Section 10.4, (i) the
Carryforward Restricted Payment Basket, if any, may not
be increased in any fiscal year by more than
$25,000,000, and (ii) no increase in the Carryforward
Restricted Payment Basket shall be permitted if the
aggregate amount of Capital Expenditures made in the
immediately preceding fiscal year was less than
$40,000,000."
(d) Schedule B of the Note Agreement is hereby amended
as follows:
(i) by amending and restating in its entirety the
definition of "EBITDA" as follows:
"EBITDA" means, for any period with respect
to the Obligors and their Subsidiaries on a
consolidated basis, an amount equal to the sum of
(a) Net Income for such period (excluding the
effect of non-cash losses or any extraordinary or
other non-recurring gains) plus (b) an amount
which, in the determination of Net Income for such
period has been deducted for (i) Interest Expense
for such period, (ii) total Federal, state,
foreign or other income taxes for such period and
(iii) all depreciation and amortization for such
period plus (c) costs and charges incurred during
such period associated with the settlement of the
wage and hour lawsuit in the Middle District Court
of Tennessee in the aggregate amount of up to
$12,000,000 to the extent accrued during such
period, all as determined in accordance with GAAP.
(ii) by amending and restating in its entirety the
definition of "EBITR" as follows:
"EBITR" means, for any period with respect to
the Obligors and their Subsidiaries on a
consolidated basis, an amount equal to the sum of
(a) Net Income for such period (excluding the
effect of any non-cash losses or extraordinary or
other non-recurring gains) plus (b) an amount
which, in the determination of Net Income for such
period, has been deducted for (i) Interest Expense
for such period, (ii) total Federal, state,
foreign or other income taxes for such period and
(iii) Rent Expense for such period plus (c) costs
and charges incurred during such period associated
with the settlement of the wage and hour lawsuit
in the Middle District Court of Tennessee in the
aggregate amount of up to $12,000,000 to the
extent accrued during such period.
(iii) by amending and restating in its
entirety the definition of "Carryforward Capital
Expenditure Basket" as follows:
"Carryforward Capital Expenditure Basket"
means the aggregate, if any, of (i) the Unused
Restricted Payment Allowance allocated by the
Company pursuant to Section 10.5(b) for Capital
Expenditures in future fiscal years and (ii) if
the Company is in compliance with the Fixed Charge
Coverage Ratio for the fiscal quarter ended
October 3, 2007 set forth in Section 10.4,
commencing with fiscal year 2007, the Unused
Capital Expenditure Allowance allocated by the
Company pursuant to Section 10.13(b) for Capital
Expenditures in future fiscal years;
notwithstanding the foregoing, the Carryforward
Capital Expenditure Basket may not be increased in
any fiscal year by more than $10,000,000.
(iv) by amending and restating in its entirety the
definition of "Carryforward Restricted Payment Basket"
as follows:
"Carryforward Restricted Payment Basket"
means the portion, if any, of all Unused Capital
Expenditure Allowance allocated by the Company
pursuant to Section 10.13(b) for permitted
Restricted Payments in future fiscal years.
(v) by amending and restating in its entirety the
definition of "Unused Capital Expenditure Allowance"
as follows:
"Unused Capital Expenditure Allowance" means,
for any fiscal year, commencing with fiscal year
ending January 2, 2008, the amount by which the
Initial Capital Expenditure Basket for such fiscal
year exceeds the aggregate amount of Capital
Expenditures actually made by the Company and its
Subsidiaries during such fiscal year.
2. Conditions Precedent. The effectiveness of this
Amendment is conditioned on:
(a) Receipt by the Required Holders of duly executed
counterparts of this Amendment from the Required Holders and
the Company;
(b) Delivery to the Required Holders of the consent
and reaffirmation attached hereto, duly executed by each
Subsidiary Guarantor;
(c) Receipt by the Required Holders of resolutions of
the Company and each Subsidiary Guarantor approving and
adopting the Amendment and authorizing execution and
delivery thereof, certified by a secretary or assistant
secretary of such Person to be true and correct and in force
and effect as of the date hereof;
(d) Receipt by the Required Holders of a favorable
legal opinion from counsel to the Credit Parties; and
(e) Delivery to the Required Holders of a duly
executed copy of a similar amendment to the Credit Documents
and the 2000 Note Agreements (each as defined by the Note
Agreement as amended hereby), certified by a Responsible
Officer as true and complete, together with such other
documents, instruments, approvals or opinions as the
Required Holders may reasonably request, each in form and
substance reasonably satisfactory to the Required Holders.
3. Representations and Warranties. To induce you to enter
into this Amendment and to consent to the Amendment, the Company
represents and warrants as follows:
(a) The execution, delivery and performance by the
Company of this Amendment (i) are within such Person's power
and authority; (ii) have been duly authorized by all
necessary corporate action; (iii) are not in contravention
of any provision of such Person's certificate of
incorporation agreement or other organizational documents;
(iv) do not violate any law or regulation, or any order or
decree of any governmental authority; (v) do not violate,
contravene or conflict with contractual provisions of, or
cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other
agreement or instrument to which it is a party or by which
it may be bound, the violation of which would have or be
reasonably expected to have a Material Adverse Effect; (vi)
do not result in the creation or imposition of any Lien upon
any of the property of the Company or any of its
Subsidiaries; and (vii) do not require the consent or
approval of any governmental authority or any other person;
(b) This Amendment has been duly executed and
delivered for the benefit of or on behalf of the Company and
constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms except as the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors' rights and remedies in
general;
(c) There are no pending or threatened actions, suits
or proceedings affecting the Company or any of its
Subsidiaries or the properties of the Company or any of its
Subsidiaries before any court, governmental agency or
arbitrator, that would reasonably be expected, if adversely
determined, to have a Material Adverse Effect or to affect
the legality, validity or enforceability of the Note
Agreement, as amended by this Amendment; and
(d) After giving effect to this Amendment, the
representations and warranties of the Company contained in
the Note Agreement and in the other Financing Documents are
true and correct in all material respects, except that
disclosure schedules have not been updated from those
previously provided to the holders of the Notes, and no
Default or Event of Default under the Note Agreement has
occurred and is continuing as of the date hereof or would be
caused hereby.
4. Acknowledgment of Perfection of Security Interest. The
Company hereby acknowledges that, as of the date hereof, the
security interests and liens granted to the holders of Notes
under the Note Agreement and the other Financing Documents are in
full force and effect, are properly perfected and are enforceable
in accordance with the terms of the Note Agreement and the other
Financing Documents.
5. Reference to and Effect on the Note Agreement.
(a) Defined terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms
in the Note Agreement.
(b) Except as expressly provided in this Amendment,
the Note Agreement shall remain unchanged and in full force
and effect, except that each reference in the Note
Agreement, and in any agreements, certificates and notices
simultaneously herewith or hereafter executed under or
pursuant to the Note Agreement, as amended hereby, to the
"Note Agreement", "this Agreement", "hereof", "herein" and
similar terms referring to the Note Agreement, shall be
deemed to refer to the Note Agreement as amended by this
Amendment.
(c) The execution, deliver and effectiveness of this
Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any
holder of a Note under the Note Agreement or the Notes, nor
constitute a waiver of any provision of any of the
foregoing.
6. Costs and Expenses. The Company agrees to pay on
demand all costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) incurred by the
Purchasers or any other permitted holder of a Note in connection
with this Amendment and the transactions contemplated hereby.
The Company further agrees to pay on demand all costs and
expense, if any, incurred by the Purchasers or any other
permitted holder of a Note in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of
this Amendment, including, without limitation, fees and expenses
of counsel in connection with the enforcement of rights under
this paragraph 6.
7. No Default or Claims. To induce the Purchasers to
enter into this Amendment, the Company hereby acknowledges and
agrees that, as of the date hereof, and after giving effect to
the terms hereof, there exists (i) no Default or Event of
Default, (ii) no right of offset, recoupment, defense,
counterclaim, claim or objection in favor of the Company arising
out of or with respect to any of the Notes or other obligations
of the Company owed to any holder of a Note, and (iii) each
Purchaser has acted in good faith and has conducted its
relationships with the Company in a commercially reasonable
manner in connection with the negotiations, execution and
delivery of this Amendment and in all respects in connection with
the Note Agreement, the Company hereby waiving and releasing any
such claims to the contrary that may exist as of the date of this
Amendment.
8. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be an original but
all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies hereof, each signed
by less than all, but together signed by all, of the parties
hereto.
9. Governing Law. This Amendment shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice-
of-law principles of the law of such state that would require the
application of the laws of a jurisdiction other than New York.
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is signature page.]
CONSENT AND REAFFIRMATION OF GUARANTORS
The undersigned, as guarantors, in favor of the parties to
the Note Agreement referred to in the foregoing Amendment, hereby
consent to such Amendment and hereby confirm and agree that each
of the Subsidiary Guarantee (and each Guaranty provided therein)
is, and shall continue to be, in full force and effect and is
hereby confirmed and ratified in all respects except that, upon
the effectiveness of, and on and after the date of, said
Amendment, all references in the Subsidiary Guarantee and the
Amended and Restated Pledge Agreement to the Note Agreement,
"thereunder", "thereof", or words of like import referring to the
Note Agreement shall mean the Note Agreement as amended by said
Amendment.
The undersigned, as pledgors, in favor of the parties to the
Note Agreement, hereby acknowledge that, as of the date hereof,
the security interests and liens granted to the holders of Notes
under the Note Agreement and the other Financing Documents are in
full force and effect, are properly perfected and are enforceable
in accordance with the terms of the Note Agreement and the other
Financing Documents.
IN WITNESS WHEREOF, the undersigned have executed this
Consent as of the day and year first set forth above.
Annex 1
CURRENT HOLDERS AND PRINCIPAL AMOUNTS
Name of Current Holder Aggregate Principal
Amount
of Notes Held
The Prudential Insurance Company of $12,550,000
America
Pruco Life Insurance Company of New $1,598,000
Jersey
Pruco Life Insurance Company $6,144,000
Baystate Investments, LLC $9,900,000
General Electric Capital Assurance $13,300,000
Company
RGA Reinsurance Company $7,650,000
USG Annuity & Life Company $6,600,000
The Prudential Insurance Company of $34,715,000
America
Gibralter Life Insurance Co., Ltd. $7,543,000
