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EXHIBIT 10 (c)
SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT
THIS SECOND AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this "Second
Amendment") is made and entered into as of this 4th day of November, 1999 by
and among RARE HOSPITALITY INTERNATIONAL, INC., a corporation organized under
the laws of Georgia (the "Borrower"), the Lenders who are or may become a
party to the Credit Agreement referred to below, FIRST UNION NATIONAL, as
Administrative Agent for the Lenders (the "Administrative Agent) and
BANKBOSTON, N.A. and FLEET NATIONAL BANK, as Co-Agents (collectively, the
"Co-Agents").
Statement of Purpose
The Lenders agreed to extend certain extensions of credit to the
Borrower pursuant to the Amended and Restated Credit Agreement dated as of
August 26, 1998 by and among the Borrower, the Lenders, the Administrative
Agent and the Co-Agents (as amended by the First Amendment to Credit Agreement
dated as of December 31, 1999 and as further amended or supplemented from time
to time, the "Credit Agreement").
The parties now desire to amend the Credit Agreement in certain
respects and waive certain provisions of the Credit Agreement, all on the terms
and conditions set forth below.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Effect of Amendments and Waivers. Except as expressly amended
hereby, the Credit Agreement and Loan Documents shall be and remain in full
force and effect. The waivers granted herein are specific and limited and shall
not constitute an amendment of the Credit Agreement or the Loan Documents or a
modification, acceptance or waiver of any other provision of or default under
the Credit Agreement, the Loan Documents or any other document or instrument
entered into in connection therewith or a future modification, acceptance or
waiver of the provisions set forth therein (except to the extent necessary to
give effect to the specific waivers and agreements set forth herein).
2. Capitalized Terms. All capitalized undefined terms used in
this Second Amendment shall have the meanings assigned thereto in the Credit
Agreement.
3. Modification of Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) The defined terms "Fixed Charges" and "Revolving Credit
Termination Date" set forth in Section 1.1 of the Credit Agreement are each
hereby deleted in their entirety and the following definition shall be
substituted in lieu thereof:
"'Fixed Charges' means, with respect to the Borrower and its
Subsidiaries as of the last day of any fiscal quarter, the sum of the
following: (a) Interest Expense calculated for the period of four (4)
fiscal quarters ending on such date, plus (b) Rental Expense
calculated for the period of four (4) fiscal quarters ending on such
date, plus (c) the difference (if positive) between (i) the average
daily aggregate Revolving Credit Loans outstanding during the calendar
month preceding such date minus (ii) the Aggregate Commitment, as
reduced by any mandatory reductions pursuant to Section 2.6(c), on the
last day of the fiscal quarter immediately following such date, all
determined on a Consolidated basis in accordance with GAAP."
"'Revolving Credit Termination Date' means the
earliest of the dates referred to in Section 2.7."
(b) The defined terms "Term-Out Amount", "Term-Out Maturity
Date", and "Term-Out Period" set forth in Section 1.1 of the Credit Agreement
are each hereby deleted in their entirety.
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(c) The following defined terms shall be inserted into Section
1.1 in the correct alphabetical order:
"'Conversion Date' shall have the meaning assigned thereto in
Section 2.6(c)."
"'Second Amendment' means the Second Amendment and Waiver to
the Credit Agreement dated as of November __, 1999 by and among the
Borrower, the Lenders and the Administrative Agent and the Co-Agents."
(d) Section 2.4(a) of the Credit Agreement is hereby deleted in
its entirety and the following Section 2.4(a) shall be substituted in lieu
thereof:
"(a) Repayment on Termination Date. The Borrower shall
repay the outstanding principal amount of (i) all Revolving Credit
Loans in full on the Revolving Credit Termination Date and (ii) all
Swingline Loans in accordance with Section 2.2(b), together, in each
case, with all accrued but unpaid interest thereon."
(e) Section 2.6 of the Credit Agreement is hereby deleted in its
entirety and the following Section 2.6 shall be substituted in lieu thereof:
"SECTION 2.6 Permanent Reduction of the Aggregate Commitment.
(a) Voluntary Reduction. The Borrower shall have the
right at any time and from time to time, upon at least five (5)
Business Days prior written notice to the Administrative Agent, to
permanently reduce, without premium or penalty, (i) the entire
Aggregate Commitment at any time or (ii) portions of the Aggregate
Commitment, from time to time, in an aggregate principal amount not
less than $3,000,000 or any whole multiple of $1,000,000 in excess
thereof.
(b) Mandatory Permanent Reduction. The Aggregate
Commitment shall be permanently reduced by the following amounts: (i)
100% of the Net Cash Proceeds received by the Borrower or any of its
Subsidiaries from any issuance of Funded Debt (other than Funded Debt
permitted pursuant to Section 10.1), (ii) 100% of the Net Cash
Proceeds received by the Borrower or any of its Subsidiaries in
connection with any sale of assets (including its equity ownership in
any Person) not permitted pursuant to Section 10.6 (a) through (e)
unless, so long as no Default or Event of Default has occurred and is
continuing, such Net Cash Proceeds are reinvested in similar assets
(or otherwise in a manner acceptable to the Administrative Agent, in
its sole discretion) within 270 days after receipt of such Net Cash
Proceeds; provided, that this clause (ii) shall not apply with respect
to up to $10,000,000 of the aggregate Net Cash Proceeds received by
the Borrower and its Subsidiaries prior to the Conversion Date and
(iii) 100% of the Net Cash Proceeds received by the Borrower or any of
its Subsidiaries under any policy of insurance of such Person or in
connection with any condemnation proceeding involving property of such
Person, unless, so long as no Default or Event of Default has occurred
and is continuing, such Net Cash Proceeds are utilized by the Borrower
or such Subsidiary within one hundred eighty (180) days of receipt of
such Net Cash Proceeds to replace or repair any of its assets damaged
in connection with the related claim or proceeding.
(c) Regular Quarterly Reductions. Commencing with the
last day of the fiscal quarter ending June 30, 2003 (the "Conversion
Date") and continuing through the Revolving Credit Termination Date,
the Aggregate Commitment shall be reduced on the last day of each
fiscal quarter in equal quarterly reduction amounts (the "Reduction
Amounts") equal to the amount required to reduce the Aggregate
Commitment to $50,000,000 as of September 30, 2004; provided, that
each of the Reduction Amounts remaining after any reduction pursuant
to Section 2.6(b) shall be adjusted on a pro rata basis in connection
with such reduction.
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(d) Repayments. Each permanent reduction permitted or
required pursuant to this Section 2.6 shall be accompanied by a
payment of principal sufficient to reduce the aggregate outstanding
Extensions of Credit of the Lenders after such reduction to the
Aggregate Commitment as so reduced and if the Aggregate Commitment as
so reduced is less than the aggregate amount of all outstanding
Letters of Credit, the Borrower shall be required to deposit in a cash
collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of
Credit. Any reduction of the Aggregate Commitment to zero shall be
accompanied by payment of all outstanding Obligations (and furnishing
of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and shall result in the termination of the
Commitments and Credit Facility. Such cash collateral shall be applied
in accordance with Section 11.2(b). If the reduction of the Aggregate
Commitment requires the repayment of any LIBOR Rate Loan, such
repayment shall be accompanied by any amount required to be paid
pursuant to Section 4.9 hereof."
(f) Section 2.7 of the Credit Agreement is hereby deleted in its
entirety and the following Section 2.7 shall be substituted in lieu thereof:
SECTION 2.7 Termination of Credit Facility. The Credit
Facility shall terminate on the earliest of (a) September 30, 2004,
(b) the date of permanent reduction of the Aggregate Commitment in
whole pursuant to Section 2.6 and (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section
11.2(a).
(g) The initial clause of Section 2.8 of the Credit Agreement is
hereby deleted in its entirety and the following shall be substituted in lieu
thereof:
"SECTION 2.8 Increase in Aggregate Commitment. So long as no Default
or Event of Default shall have occurred and be continuing, at any time prior to
the Conversion Date,"
(h) Section 4.1(b)(iv) of the Credit Agreement is hereby deleted
in its entirety and the following Section 4.1(b)(iv) shall be substituted in
lieu thereof:
"(iv) no Interest Period shall extend beyond the Revolving
Credit Termination Date; and"
(i) Section 4.1(c)(ii) of the Credit Agreement is hereby deleted
in its entirety and the following Section 4.1(c)(ii) shall be substituted in
lieu thereof:
"(ii) upon the initial Adjustment Date and at all times
thereafter, be determined by reference to the Adjusted Leverage Ratio
in accordance with the following charts:
Adjusted Applicable Margin Per Annum
Leverage Prior to April 1, 2003
Level Ratio LIBOR Rate Base Rate
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1 Greater than or equal to 3.0 to 1.00 2.000% 0.750%
2 Less than 3.0 to 1.0 but greater than
or equal to 2.50 to 1.0 1.875% 0.625%
3 Less than 2.5 to 1.0 but greater than
or equal to 2.0 to 1.0 1.750% 0.500%
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4 Less than 2.0 to 1.0 but greater than
or equal to 1.50 to 1.0 1.625% 0.375%
5 Less than 1.50 to 1.0 but greater than
or equal to 1.0 to 1.0 1.500% 0.250%
6 Less than 1.0 to 1.0 1.250% 0.000%
Adjusted Applicable Margin Per Annum
Leverage Prior to April 1, 2003
Level Ratio LIBOR Rate Base Rate
----- ----- ----------------------------
1 Greater than or equal to 3.0 to 1.00 2.500% 1.250%
2 Less than 3.0 to 1.0 but greater than
or equal to 2.50 to 1.0 2.375% 1.125%
3 Less than 2.5 to 1.0 but greater than
or equal to 2.0 to 1.0 2.250% 1.000%
4 Less than 2.0 to 1.0 but greater than
or equal to 1.50 to 1.0 2.125% 0.875%
5 Less than 1.50 to 1.0 but greater than
or equal to 1.0 to 1.0 2.000% 0.750%
6 Less than 1.0 to 1.0 1.750% 0.500%
Adjustments, if any, in the Applicable Margin shall be made
by the Administrative Agent on the tenth (10th) Business Day (the
"Adjustment Date") after receipt by the Administrative Agent of
financial statements for the Borrower and its Subsidiaries delivered
under Section 7.1(a) or (b), as applicable, and the accompanying
Officer's Compliance Certificate setting forth the Adjusted Leverage
Ratio of the Borrower and its Subsidiaries as of the most recent
fiscal quarter end. The Administrative Agent agrees to give the
Borrower and the Lenders notice of any adjustment in the Applicable
Margin within two (2) Business Days of such adjustment; provided, that
the Administrative Agent's failure to give such notice shall not
result in any liability to the Administrative Agent or in any way
affect the validity of any such adjustment. In the event the Borrower
fails to deliver such financial statements and certificate within the
time required by
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Sections 7.1(a) and 7.2 hereof, the Applicable Margin shall be the
highest Applicable Margin set forth above until the delivery of such
financial statements and certificate unless at such time the
outstanding principal balance of the Loans are bearing interest at the
"default rate" set forth in Section 4.1(d) below in which case the
Applicable Margin shall not be increased pursuant to this sentence."
(j) Section 9.4 of the Credit Agreement is hereby deleted in its
entirety and the following Section 9.4 shall be substituted in lieu thereof:
SECTION 9.4 Capital Expenditures. Permit Capital Expenditures plus the
aggregate investments permitted by Sections 10.4(d) and (f) made by
the Borrower and its Subsidiaries after the Closing Date (excluding
any investment to the extent funded with the capital stock of the
Borrower) to be greater than the following amounts in the aggregate
during the following Fiscal Years:
Fiscal Year Capital Expenditures
----------- --------------------
1998 (including only the
portion thereof remaining
after the Closing Date) $ 35,000,000
1999 $ 75,000,000
2000 $ 90,000,000
2001 $100,000,000
2002 $ 80,000,000
2003 and thereafter $ 80,000,000
provided, that (a) investments in any single restaurant unit owned by
a Non-Controlled Joint Venture shall not exceed $1,500,000, (b)
investments in Non-Controlled Joint Ventures shall not exceed
$22,500,000 in the aggregate on any date of determination and (c) in
no event shall more than forty percent (40%) of aggregate Capital
Expenditures permitted in any Fiscal Year be used for Capital
Expenditures with respect to The Capital Grille and Bugaboo Creek
Steak House restaurants, on a combined basis. For the purposes of this
Section 9.4 "Non-Controlled Joint Venture" shall mean a joint venture
in which the Borrower and its Subsidiaries do not own more than fifty
percent (50%) of the outstanding capital stock or other ownership
interests having ordinary voting power to elect a majority of the
board of directors or other managers of such Person.
(k) Section 10.1(d) of the Credit Agreement is hereby amended by
deleting the number "$20,000,000" set forth therein and substituting therefore
the number "$40,000,000".
(l) Section 10.7(d) of the Credit Agreement is hereby deleted in
its entirety and the following Section 10.7(d) shall be substituted in lieu
thereof:
"(d) the Borrower may purchase, redeem, retire or
otherwise acquire shares of its capital stock in an aggregate amount
not to exceed $10,000,000 for the period from and including the date
of the Second Amendment through and including the Revolving Credit
Termination Date (plus, up to $10,000,000 of the Net Cash Proceeds
received by the Borrower or any of its Subsidiaries prior to the
Conversion Date from any sale of assets permitted pursuant to Section
10.6(f) above); and"
4. Waivers of Credit Agreement. The Borrower and its
Subsidiaries intend to enter into a corporate restructuring (the "Corporate
Restructuring") pursuant to which, among other things, (a) certain assets will
be transferred to Bugaboo Creek Steakhouse, Inc. ("Bugaboo"), (b) the entities
owning substantially all of the operations of The Capital Grille restaurants
will be merged into The Capital Grille of Charlotte, Inc., which entity will
change its name to Capital Grille Holdings, Inc. ("Capital Grille Holdings"),
(c) the entities owning substantially all of the operations of Bugaboo Creek
Steak House restaurants will be merged into Bugaboo Creek of Newark, Inc.,
which entity will change its name to Bugaboo Creek Holdings, Inc. ("Bugaboo
Creek Holdings") (d) the operations of Old Grist Mill and Hemenways restaurants
will each be consolidated into separate holding companies named Grist Mill
Holdings, Inc. ("Grist Mill Holdings") and Xxxxxxxx Holdings, Inc. ("Xxxxxxxx
Holdings"), respectively, and (e) Bugaboo will enter into transactions
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with certain Affiliates to manage the operations of restaurants they own. The
Administrative Agent and the Lenders hereby agree to waive the provisions of
Sections 10.4, 10.5, 10.6 and 10.8 solely to permit the Corporate
Restructuring; provided, that (i) each of the Borrower and Bugaboo shall
survive the Corporate Restructuring; provided, that Bugaboo shall be permitted
to change its name to Rare Hospitality Management, Inc., (ii) each of Capital
Grille Holdings, Bugaboo Creek Holdings, Grist Mill Holdings and Xxxxxxxx
Holdings shall be Wholly-Owned Subsidiaries of Bugaboo, (iii) neither the
Borrower nor Bugaboo shall make any sale or transfer of assets in connection
with the Corporate Restructuring except for a sale or transfer of assets to
their respective Wholly-Owned Subsidiaries, (iv) neither the Borrower nor
Bugaboo shall make any investments in connection with the Corporate
Restructuring except investments in their respective Wholly-Owned Subsidiaries
and (v) the Borrower and Bugaboo shall provide such documents reasonably
requested by the Administrative Agent reflecting the name change of Bugaboo to
Rare Hospitality Management, Inc., including without limitation, new stock
certificates and stock powers pledged pursuant to the Pledge Agreement.
5. Representations and Warranties/No Default. By its execution
hereof, the Borrower hereby certifies that (giving effect to this Second
Amendment) each of the representations and warranties set forth in the Credit
Agreement and the other Loan Documents is true and correct in all material
respects as of the date hereof as if fully set forth herein, except to the
extent that such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date), and that
as of the date hereof no Default or Event of Default has occurred and is
continuing.
6. Fees. The Borrower shall pay (a) to each of the Lenders party
to this Second Amendment an amendment fee in an amount equal to the product of
(i) .10% multiplied by (ii) the commitment of such Lender under the Credit
Agreement and (b) to the Administrative Agent, the fees set forth in a separate
fee letter of even date herewith.
7. Expenses. The Borrower shall pay all reasonable out-of-pocket
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Second Amendment, including without limitation,
the reasonable fees and disbursements of counsel for the Administrative Agent.
8. Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of North Carolina.
9. Counterparts. This Second Amendment may be executed in
separate counterparts, each of which when executed and delivered is an original
but all of which taken together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the date and year first above written.
[CORPORATE SEAL] RARE HOSPITALITY INTERNATIONAL,
INC.
By:
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Name:
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Title:
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FIRST UNION NATIONAL BANK,
as Administrative Agent, Lender, Swingline Lender
and Issuing Lender
By:
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Name:
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Title:
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BANKBOSTON, N.A., as Co-Agent and as Lender
By:
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Name:
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Title:
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FLEET NATIONAL BANK, as Co-Agent and as
Lender
By:
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Name:
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Title:
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SOUTHTRUST BANK, N.A., as Lender
By:
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Name:
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Title:
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THE FUJI BANK, LIMITED, as Lender
By:
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Name:
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Title:
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AMSOUTH BANK, as Lender
By:
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Name:
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Title:
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WACHOVIA BANK, N.A., as Lender
By:
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Name:
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Title:
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