EXHIBIT 10.1
AMENDMENT NO. 3 TO THE CREDIT AGREEMENT
Dated as of February 8, 2005
AMENDMENT NO. 3 TO THE CREDIT AGREEMENT (this "Amendment") referred to
below by and between AVADO BRANDS, INC., a Georgia corporation and
debtor-in-possession in the Chapter 11 Cases ("Avado"), on its own behalf and on
behalf of the other Borrowers, the Lenders parties hereto and DDJ CAPITAL
MANAGEMENT, LLC, as Administrative Agent and Collateral Agent for the Lenders.
PRELIMINARY STATEMENTS:
(1) Avado and certain of Avado's Subsidiaries, each of which is a
debtor-in-possession in the Chapter 11 Cases (as defined in the Credit
Agreement), the Lenders, the Administrative Agent, and the Collateral Agent have
entered into the Post-Petition Credit Agreement, dated as of February 11, 2004
(as amended or otherwise modified by the First Amendment, dated as of March 9,
2004, the Letter Amendment, dated as of April 9, 2004, the Waiver, dated as of
August 26, 2004, the Extension of Waiver, dated as of September 10, 2004, and
the Second Amendment, dated as of September 22, 2004, the "Credit Agreement").
Capitalized terms used herein and not otherwise defined in this Amendment have
the same meanings as specified in the Credit Agreement.
(2) The Borrowers, the Agent and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to the Credit Agreement.
(a) Section 2.05 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"Section 2.05. Optional Exit Financing. The Borrowers, the Agents and the
Lenders (or any of them) may agree (which agreement may be withheld in each
parties' sole and absolute discretion) that the Agents and the Lenders (or any
of them) provide exit financing, which exit financing will have such terms as
agreed among the Borrowers, the Agents and the Lenders (or any of them) in good
faith. Without limiting the parties discretion with respect to any such
financing, such exit financing could be, subject to the agreement thereto of the
Borrowers, the Agents and the Lenders, an exit facility with similar terms as
those provided in this Agreement (except that the terms set forth in Sections
VII, VIII, IX, X, XI and XIV, which would be (without limiting the parties
discretion with respect to any other matter) as agreed among the Borrowers, the
Agents, the Lenders), could provide Liens on the assets of the Borrowers
substantially similar to those provided in the Final Order, and could be for a
term of 364 days following the effective date of a consensual plan of
reorganization. For the avoidance of doubt, nothing in this Section 2.05 shall
constitute a commitment by the Agents and the Lenders (or any of them) to
provide financing to the Borrowers other than the Loans. This Section 2.05 shall
not survive, and, if then in effect, shall terminate as of the earlier to occur
of (x) the Loans have been indefeasibly paid in full and the Commitments have
been irrevocably terminated and (y) the Commitment Termination Date.
(b) Section 1.01 of the Credit Agreement is hereby amended as follows:
(i) by deleting the definition of "Borrowing Base" in its entirety and
replacing with the following definition:
"Borrowing Base" means (i) $55,502,904, plus fifty percent (50%) of the
amount by which the Borrowers' actual Cumulative Net Operating Cash Flow is
greater than the amount of "Cumulative Net Operating Cash Flow" as shown on the
Approved Budget, and less fifty percent (50%) of the amount by which the
Borrowers' actual Cumulative Net Operating Cash Flow is less than the amount of
"Cumulative Net Operating Cash Flow" shown on the Approved Budget for the period
commencing on January 3, 2005 through the date of measurement, less (ii) the
amount of any payments authorized by the Borrowers through Automated Clearing
House, Inc. or similar electronic means which have not been paid or funded by a
deposit to the Disbursement Account.
(ii) by deleting the definition of "Commitment Termination Date" in its
entirety and replacing with the following definition:
1
"Commitment Termination Date" means the date that is the earliest to occur
of (i) May 31, 2005; provided, however, if Avado's Plan of Reorganization is
confirmed in the Bankruptcy Court on or before May 31, 2005, then the Commitment
Termination Date shall be extended to June 15, 2005 with no additional fee paid
by the Borrowers, (ii) the effective date of a joint plan of reorganization in
the Chapter 11 Cases for substantially all the Borrowers or the effective date
of a plan of reorganization for Avado, (iii) the date the Commitment is
terminated in connection with an Event of Default pursuant to Section 11.01,
(iv) if no budget has been approved pursuant to Section 7.01(d),the thirtieth
(30th) day following the expiration of the Approved Budget, (v) the date of any
determination to proceed with the sale or liquidation of any of the Borrowers
without the consent of the Lenders other than pursuant to a sale or a plan that
pays the Obligations in full in cash and terminates the Commitment, or (vi) the
date designated by Avado on behalf of the Borrowers in a notice to the
Administrative Agent as the date on which the Borrowers intend to voluntarily
terminate the Commitments pursuant to Section 3.01(a)(ii) and pay the
Obligations in full.
(c) Section 10.01 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"Section 10.01. Cash Flow.
(a) The Borrowers shall have Don Pablo's EBITDA for each measurement period
specified below of not less than the amount specified below with respect to each
such measurement period.
-------------------------------------- --------------------------------------
Measurement Period: Minimum
Don Pablo's EBITDA
-------------------------------------- --------------------------------------
Fiscal month ended August 22, 2004 $1,899,000
-------------------------------------- --------------------------------------
Two fiscal month period ending September 26, 2004 $4,222,000
-------------------------------------- --------------------------------------
Measurement Period consisting of the rolling Minimum
three fiscal month period ending: Don Pablo's EBITDA
-------------------------------------- --------------------------------------
October 24, 2004 $5,758,000
-------------------------------------- --------------------------------------
November 21, 2004 $5,729,000
-------------------------------------- --------------------------------------
January 2, 2005 $6,942,000
-------------------------------------- --------------------------------------
(b) The Borrowers shall have Hops EBITDA for each measurement period
specified below of not less than the amount specified below with respect to each
such measurement period.
--------------------------------------- --------------------------------------
Measurement Period: Maximum
Hops EBITDA Losses
--------------------------------------- --------------------------------------
Fiscal month ending September 26, 2004 $500,000
--------------------------------------- --------------------------------------
Two fiscal month period ending October 24, 2004 $540,000
--------------------------------------- --------------------------------------
Measurement Period consisting of the rolling Maximum
three fiscal month period ending: Hops EBITDA Losses
--------------------------------------- --------------------------------------
November 21, 2004 $630,000
--------------------------------------- --------------------------------------
January 2, 2005 $85,000
--------------------------------------- --------------------------------------
(c) The Borrowers shall have a minimum combined Don Pablo's EBITDA and Hops
EBITDA for each measurement period specified below of not less than the amount
specified below with respect to each such measurement period.
--------------------------------------- --------------------------------------
Measurement Period: Minimum
Don Pablo's and Hop's EBITDA
--------------------------------------- --------------------------------------
Fiscal month ended January 30, 2005 $1,000,000
--------------------------------------- --------------------------------------
Two fiscal month period ending February 27, 2005 $2,739,000
--------------------------------------- --------------------------------------
Measurement Period consisting of the rolling Minimum
three fiscal month period ending: Don Pablo's and Hop's EBITDA
--------------------------------------- --------------------------------------
April 3, 2005 $5,406,000
--------------------------------------- --------------------------------------
May 1, 2005 $6,316,000
--------------------------------------- --------------------------------------
May 29, 2005 $6,932,000
--------------------------------------- --------------------------------------
July 3, 2005 $7,237,000
--------------------------------------- --------------------------------------
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(d) (i) The Borrowers shall have 2004 G&A EBITDA Expense for each
measurement period specified below of not more than the amount specified below
with respect to each such measurement period.
--------------------------------------- --------------------------------------
Measurement Period: Maximum
2004 G&A EBITDA Expense
--------------------------------------- --------------------------------------
Fiscal month ended August 22, 2004 $1,620,000
--------------------------------------- --------------------------------------
Two fiscal month period ending September 26, 2004 $3,597,000
--------------------------------------- --------------------------------------
Measurement Period consisting of the rolling Maximum
three fiscal month period ending: G&A EBITDA Expense
--------------------------------------- --------------------------------------
October 24, 2004 $5,300,000
--------------------------------------- --------------------------------------
November 21, 2004 $5,311,000
--------------------------------------- --------------------------------------
January 2, 2005 $5,600,000
--------------------------------------- --------------------------------------
(ii) The Borrowers shall have 2005 G&A EBITDA Expense for each measurement
period specified below of not more than the amount specified below with respect
to each such measurement period.
--------------------------------------- --------------------------------------
Measurement Period: Maximum
2005 G&A EBITDA Expense
--------------------------------------- --------------------------------------
Fiscal month ended January 30, 2005 $1,660,000
--------------------------------------- --------------------------------------
Two fiscal month period ending February 27, 2005 $3,430,000
--------------------------------------- --------------------------------------
Measurement Period consisting of the rolling Maximum
three fiscal month period ending: G&A EBITDA Expense
--------------------------------------- --------------------------------------
April 3, 2005 $5,617,000
--------------------------------------- --------------------------------------
May 1, 2005 $5,798,000
--------------------------------------- --------------------------------------
May 29, 2005 $5,763,000
--------------------------------------- --------------------------------------
July 3, 2005 $5,579,000
--------------------------------------- --------------------------------------
(d) Section 10.03 of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
"Section 10.03. Repairs and Maintenance/Capital Expenditures.
(a) The Borrowers shall have Repairs and Maintenance/Capital Expenditures
(as defined below) made in ordinary course for each measurement period specified
below of not more than the amount specified below with respect to such
measurement period.
------------------------------------------ ----------------------------------
Measurement Period: Maximum
Repairs and
Maintenance/Capital
Expenditures
------------------------------------------ ----------------------------------
Fiscal month ending September 26, 2004 $875,000
------------------------------------------ ----------------------------------
Two fiscal month period ending October 24, 2004 $1,574,000
------------------------------------------ ----------------------------------
Three fiscal month period ending November 21, 2004 $2,210,000
------------------------------------------ ----------------------------------
Three fiscal month period ending January 5, 2005 $3,147,000
------------------------------------------ ----------------------------------
Fiscal month ended January 30, 2005 $1,648,000
------------------------------------------ ----------------------------------
Two fiscal month period ending February 27, 2005 $3,253,000
------------------------------------------ ----------------------------------
Three fiscal month period ending April 3, 2005 $4,477,000
------------------------------------------ ----------------------------------
Four fiscal month period ending May 1, 2005 $5,538,000
------------------------------------------ ----------------------------------
Five fiscal month period ending May 29, 2005 $6,451,000
------------------------------------------ ----------------------------------
Six fiscal month period ending July 3, 2005 $7,248,000
------------------------------------------ ----------------------------------
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Notwithstanding the foregoing, the Borrowers shall not make or commit to
make, or permit any of their Subsidiaries to make, any Repair and
Maintenance/Capital Expenditure (including, without limitation, any lease) that
is not in the ordinary course of such Borrower's business unless the Borrowers
have received the prior written consent of the Lenders, which consent may be
granted or withheld in the sole discretion of the Lenders, provided that the
Borrowers shall not be obligated to obtain the Lenders consent with respect to
any Repair and Maintenance/Capital Expenditure (or any commitment to make any
Repair and Maintenance/Capital Expenditure) outside the ordinary course of
business if such Repair and Maintenance/Capital Expenditure, together with all
other Repair and Maintenance/Capital Expenditures for (or made with respect to)
a single Restaurant does not exceed $15,000.
(b) Nothing in this Section 10.03 is or shall be deemed to constitute the
consent of any Agent or Lender, to any commitment, agreement or other obligation
to make, or the making of, any Repair and Maintenance/Capital Expenditure, with
respect to any project or program, including, without limitation, Hops City
Grill Re-image #2, Hops City Grill Re-image #3, any remodeling of any
restaurants, or the opening of (or any investment related to opening) new
restaurants for which the Borrowers have not received express written consent
from the Lenders. For the avoidance of doubt, acceptance by the Agents and the
Lenders (or any of them) of any budget or forecast that includes any such Repair
and Maintenance/Capital Expenditure shall not be (and shall not be deemed to be)
the consent of the Lenders for any such Repair and Maintenance/Capital
Expenditure. For the further avoidance of doubt, any Capital Expenditure made in
connection with any damage on account of hurricane or other natural phenomenon
is and shall be subject to the restrictions of this Section 10.03(b) of the
Credit Agreement, as amended hereby.
(c) Repairs and Maintenance/Capital Expenditures made in connection with
any damage on account of hurricanes Charley and Xxxxxxx shall not exceed
$320,000 in the aggregate, which shall be in addition to the amount permitted
under Section 10.03(a). Any Repair and Maintenance/Capital Expenditure made in
connection with any damage on account of other hurricanes or other natural
phenomenon is and shall be subject to the restrictions of Section 10.03(b),
unless the Borrower shall have received express written consent from the Lenders
related to such expenditures."
(d) Section 10.04 of the Credit Agreement is hereby amended to (i) delete
therefrom clause (e) (the definition for "G&A EBITDA Expense") and to add to
such Section 10.04 the following new clauses (e) and (f), which shall read as
follows:
"2004 G&A EBITDA Expense" shall mean the consolidated G&A expenses of the
Borrowers and their Subsidiaries for those expenses (including of the type and
within the category) identified on the "2004 G&A Budget", which budget is
attached as Exhibit A to Amendment No. 2, dated as of September 22, 2004, to
this Agreement. For the avoidance of doubt, "2004 G&A EBITDA Expense" shall be a
reference to the "Avado Consolidated" "Actual / Forecast" figure identified on
such 2004 G&A Budget.
(f) "2005 G&A EBITDA Expense" shall mean the consolidated G&A expenses of
the Borrowers and their Subsidiaries for those expenses (including of the type
and within the category) identified on the "2005 G&A Budget", which budget is
attached as Exhibit B to Amendment No. 3, dated as of [-], 2005, to this
Agreement. For the avoidance of doubt, "2005 G&A EBITDA Expense" shall be a
reference to the "Adjusted EBITDA" figure identified on such 2005 G&A Budget."
(e) Exhibit H to the Credit Agreement is hereby amended and restated in its
entirety to read as set forth on Exhibit C to this Amendment.
SECTION 2. Conditions of Effectiveness. This Amendment shall be effective
upon the first date upon which:
(a) the Administrative Agent shall have received counterparts of this
Amendment executed and delivered by each of the parties hereto
(b) the Borrowers shall have paid to the Administrative Agent for the
ratable accounts of the Lenders, an amendment fee in the amount of $450,000;
(c) the Administrative Agent shall have received the budgets of the
Borrowers and their Subsidiaries identified in Section 3(f) below, in form and
substance acceptable to it for the period ending July 3, 2005;
(d) the representations and warranties of the Borrowers set forth in
Section 3 below shall be true and correct; and
(e) the Bankruptcy Court shall have approved this Amendment.
SECTION 3. Representations and Warranties of the Borrower. The Borrowers
represent and warrant as follows:
4
(a) Representations and Warranties. As of the date hereof and the date on
which this Amendment shall first be effective (except where such representation
and warranty expressly relates to a specific date, in which case, as of such
specified date), after giving effect to this Amendment, each of the
representations and warranties contained in Section 6.01 of the Credit Agreement
and in the other Loan Documents is true and complete in all material respects.
(b) No Defaults. As of the date hereof and the date on which this Amendment
shall first be effective, no Default or Event of Default (other than the Cash
Flow Covenant Default) has occurred and is continuing; after giving effect to
this Amendment, no Default or Event of Default has occurred and is continuing,
nor will any Default or Event of Default result from the effectiveness of this
Amendment or the transactions contemplated hereunder.
(c) No Change in Condition. No Material Adverse Change has occurred since
the date of the Borrowing immediately preceding the date of this Amendment.
(d) No Authorizations, Etc. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for the due execution and delivery by
the Borrowers of this Amendment.
(e) Due Execution, Etc. This Amendment has been duly executed and delivered
by the Borrowers. The other Loan Documents, as modified hereby, are the legal,
valid and binding obligations of the Borrowers, enforceable against each
Borrower in accordance with their respective terms.
(f) Budget. Attached hereto as Exhibit A is a true and correct copy of the
consolidated cash flow budget for the first six months of 2005. All costs and
expenses (including, without limitation, all general and administrative costs
and expenses) of the Borrowers are accurately represented in the financial
information identified in the foregoing sentence and delivered to the Agents and
the Lenders hereunder as Exhibit A hereto. By its signature hereto, the
Administrative Agent hereby confirms that the budget attached hereto as Exhibit
A constitutes an "Approved Budget" under the Credit Agreement.
SECTION 4. Reference to and Effect on the Credit Agreement and the other
Loan Documents.
(a) On and after the effectiveness of this Amendment, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof' or words of like
import referring to the Credit Agreement, and each reference in the Notes and
each of the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof' or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as modified by this Amendment.
(b) The Credit Agreement, the Notes and each of the other Loan Documents,
as specifically modified by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Collateral described in the Loan
Documents does and shall continue to secure the payment of all Obligations of
the Borrowers under the Loan Documents.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender or any Agent under the Credit Agreement or any other Loan
Document, nor constitute a waiver of any provision of the Credit Agreement or
any other Loan Documents other than as expressly set forth herein.
SECTION 5. Costs, Expenses. The Borrowers agree, jointly and several, to
pay on demand all costs and expenses of the Agents and the Lenders in connection
with the preparation, execution, delivery and administration, modification and
amendment of this Amendment (including, without limitation, the reasonable fees
and expenses of counsel for the Agents) in accordance with the terms of Section
14.04 of the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement. Delivery
of an executed counterpart of a signature page to this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Amendment. SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts.
[Signature page(s) follow.]
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AVADO BRANDS, INC., on behalf of itself
and the other Borrowers
By:
------------------------------------------------
Name:
Title:
DDJ CAPITAL MANAGEMENT, LLC, as Administrative Agent
and Collateral Agent
By:
------------------------------------------------
Name:
Title:
LENDERS:
B III-A CAPITAL PARTNERS, L.P.
By: GP III-A, LLC, its General Partner
By: DDJ Capital Management, LLC,
Manager
By:
---------------------------------------------
Name:
Title:
B IV CAPITAL PARTNERS, L.P.
By: GP Capital IV, LLC, its General Partner
By: DDJ Capital Management, LLC,
Manager
By:
---------------------------------------------
Name:
Title:
S-1
GMAM INVESTMENT FUNDS TRUST II - PROMARK ALTERNATIVE
HIGH YIELD BOND FUND
By: DDJ Capital Management, LLC, on behalf of GMAM
Investment Funds Trust II - Promark Alternative
High Yield Bond Fund, in its capacity as
investment manager
By:
---------------------------------------------
Name:
Title:
THE OCTOBER FUND, LIMITED PARTNERSHIP
By: October GP, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By:
---------------------------------------------
Name:
Title:
S-2
Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 8-K, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
