SEVENTH AMENDMENT TO PARTICIPATION AGREEMENT
THIS SEVENTH AMENDMENT TO PARTICIPATION AGREEMENT (hereinafter, as it may
be modified, amended or supplemented from time to time, called this
"Amendment"), made and entered into as of April 2, 2001, among (i) AVADO BRANDS,
INC. formerly known as Apple South, Inc., a corporation organized and existing
under the laws of Georgia (herein, together with its successors and assigns
permitted hereunder, called the "Lessee"), (ii) FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association ("First Security"), not in its
individual capacity except as expressly provided herein, but solely as Owner
Trustee under Apple South Trust No. 97-1 (herein in such capacity, together with
its successors and assigns permitted hereunder, called the "Owner Trustee"),
(iii) STI CREDIT CORPORATION, a Nevada corporation, as assignee of SunTrust
Bank, formerly known as SunTrust Bank, Atlanta, in its capacity as the holder of
the beneficial interest in the trust estate established under Apple South Trust
No. 97-1 (in such capacity as of the date hereof, the "Holder", and together
with its successors and assigns permitted hereunder, called the "Holders"), (iv)
the financial institutions now parties to the Participation Agreement (as
defined below) as Lenders (each herein in such capacity, together with its
successors and assigns permitted hereunder, called a "Lender" and collectively,
the "Lenders"), and (v) SUNTRUST BANK, formerly known as SunTrust Bank, Atlanta,
a banking corporation organized and existing under the laws of Georgia,
("SunTrust"), as collateral agent and administrative agent for the Lenders and
the Holders (in such capacity, the "Administrative Agent").
W I T N E S S E T H
WHEREAS, the Lessee, the Owner Trustee, the Holder, the Lenders and the
Administrative Agent are parties to that certain Participation Agreement, dated
as of September 24, 1997, as amended by the First Amendment to the Participation
Agreement, dated as of March 27, 1998, as amended by the Second Amendment to the
Participation Agreement, dated as of August 14, 1998, as amended by the Third
Amendment to the Participation Agreement, dated as of November 13, 1998, as
amended by the Fourth Amendment to the Participation Agreement, dated as of
February 22, 1999, as amended by the Fifth Amendment to Participation Agreement,
dated as of August 24, 1999, and as amended by the Sixth Amendment to
Participation Agreement dated as of December 22, 2000 (as so amended, the
"Participation Agreement");
WHEREAS, the Owner Trustee and the Lessee are parties to that certain
Master Equipment Lease Agreement, dated as of September 24, 1997, as amended by
the First Amendment to Lease Agreement, dated as of March 27, 1998, as amended
by the Second Amendment to Lease Agreement, dated as of May __, 1999, and as
amended by the Third Amendment to Lease Agreement, dated as of December 22, 2000
(as so amended, the "Lease Agreement");
WHEREAS, the Lessee, the Owner Trustee, the Holder, the Lenders and the
Administrative Agent have agreed to amend the Participation Agreement in certain
respects and to waive certain covenant defaults, as described more particularly
below.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged, the
Lessee, the Owner Trustee, the Holder, the Lenders and the Administrative Agent
agree as follows:
A. DEFINITIONS
Unless the context otherwise requires, all capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in Appendix A
to the Participation Agreement for all purposes of this Amendment. The General
Provisions of Appendix A to the Participation Agreement are hereby incorporated
by reference herein.
B. AMENDMENTS
1. Amendment to Existing Section 5.4: Section 5.4 of the Participation
Agreement (Adjusted Total Debt/Adjusted Total Capital Ratio) is hereby amended
by deleting Section 5.4 in its entirety and substituting in its place the
following revised Section 5.4:
5.4 Adjusted Total Debt/Adjusted Total Capital Ratio.
The Adjusted Total Debt/Adjusted Total Capital Ratio will not exceed: (i)
.78:1 as of the end of the Fiscal Quarter ending closest to December 31, 2000;
and (ii) .80:1, as of the end of each Fiscal Quarter subsequent thereto.
2. Amendment to Existing Section 5.5: Section 5.5 of the Participation
Agreement (Fixed Charge Coverage Ratio) is hereby amended by deleting Section
5.5 in its entirety and substituting in its place the following revised Section
5.5:
5.5 Fixed Charge Coverage Ratio.
Lessee's Fixed Charge Coverage Ratio, measured on a rolling four (4) Fiscal
Quarters' basis, as of the end of each Fiscal Quarter, commencing with the
Fiscal Quarter ending closest to December 31, 2000, shall be not less than the
ratio prescribed below for each Fiscal Quarter prescribed below corresponding
thereto:
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Fiscal Quarter Ending: Ratio
--------------------- -----
December 31, 2000 1.10:1
April 4, 2001 1.05:1
July 1, 2001 1.05:1
September 30, 2001 1.20:1
December 31, 2001 1.40:1
3. Amendment to Existing Section 5.6: Section 5.6 of the Participation
Agreement (Total Debt/EBITDA Ratio) is hereby amended by deleting Section 5.6 in
its entirety and substituting in its place the following revised Section 5.6:
5.6 Total Debt/EBITDA Ratio.
The ratio which (i) the Adjusted Total Debt of the Lessee and its
Consolidated Subsidiaries at the end of any Fiscal Quarter, commencing with the
Fiscal Quarter ended closest to December 31, 2000, bears to (ii) the EBITDAR of
the Lessee and its Consolidated Subsidiaries, measured on a rolling four (4)
Fiscal Quarters' basis as of the end of such Fiscal Quarter, shall be not more
than the ratio prescribed below as of the end of each Fiscal Quarter
corresponding thereto:
Fiscal Quarter Ending: Ratio
--------------------- -----
December 31, 2000 6.30:1
April 4, 2001 6.65:1
July 1, 2001 7.05:1
September 30, 2001 6.35:1
December 31, 2001 5.35:1
In computing EBITDAR in respect of the foregoing ratio, the ratio set forth
in Section 5.7 below and the minimum amount of EBITDAR set forth in Section 5.7A
below, (a) any asset or stock dispositions by the Lessee consisting of the sale
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of a business line, segment or other group of related restaurants occurring
within a Fiscal Quarter shall be accounted for by reducing EBITDAR by the
individual EBITDAR attributable to each store within such group for such Fiscal
Quarter and the three (3) preceding Fiscal Quarters or, in the event that any
such restaurant had negative individual EBITDAR for such periods, by increasing
EBITDAR by the amount of such negative EBITDAR; and (b) any asset or stock
acquisitions by the Lessee, to the extent otherwise then permitted to occur
hereunder (and without implying such permission), consisting of the purchase of
a business, line, segment or other group of related restaurants occurring within
a Fiscal Quarter shall be accounted for by increasing EBITDAR by the individual
EBITDAR attributable to each store within such group for such Fiscal Quarter and
for the three (3) preceding Fiscal Quarters or, in the event that any such store
had negative individual EBITDAR for such periods, by decreasing EBITDAR by the
amount of such negative EBITDAR; in each instance, on an historical basis, in a
manner which the Lessee shall determine, but subject to prior review with, and
approval by, the Administrative Agent.
4. Amendment to Existing Section 5.7: Section 5.7 of the Participation
Agreement (Total Senior Debt/EBITDA Ratio) is hereby amended by deleting Section
5.7 in its entirety and substituting in its place the following revised Section
5.7:
5.7 Total Senior Debt/EBITDA Ratio.
The ratio which (i) the Total Senior Debt of the Lessee and its
Consolidated Subsidiaries at the end of any Fiscal Quarter, commencing with the
Fiscal Quarter ended closest to December 31, 2000, bears to (ii) EBITDA of the
Lessee and its Consolidated Subsidiaries, measured on a rolling four (4) Fiscal
Quarters' basis as of the end of such Fiscal Quarter (adjusted, however, for
EBITDA in the same manner as reflected in Section 5.6 for EBITDAR), shall be not
more than the amounts prescribed below for each Fiscal Quarter prescribed below
corresponding thereto:
Fiscal Quarter Ending: Ratio
--------------------- -----
December 31, 2000 4.00:1
April 4, 2001 4.35:1
July 1, 2001 4.85:1
September 30, 2001 4.00:1
December 31, 2001 4.00:1
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5. Amendment to Existing Section 5.7A:Section 5.7A of the Participation
Agreement (Minimum EBITDA) is hereby amended by deleting Section 5.7A in its
entirety and substituting in its place the following revised Section 5.7A:
5.7A Minimum EBITDA.
EBITDA of the Lessee and its Consolidated Subsidiaries for each of the
following Fiscal Quarters shall be at least that amount prescribed opposite such
Fiscal Quarter:
Fiscal Quarter Ending: EBITDA
--------------------- ------
December 31, 2000 $3,100,000
April 4, 2001 $14,300,000
July 1, 2001 $18,800,000
September 30, 2001 $16,900,000
December 31, 2001 $16,800,000
and thereafter
6. Amendment to Existing Section 5.8: Section 5.8 of the Participation
Agreement (Negative Pledge) is hereby amended by deleting Section 5.8 in its
entirety and substituting in its place the following revised Section 5.8:
5.8 Negative Pledge.
The Lessee will not, nor will the Lessee permit any Subsidiary to, create,
assume or suffer to exist any Lien on any asset now owned or hereafter acquired
by it, except: (i) the Xxxxxx Liens, (ii) Liens on the Hops Marks to the extent
necessary to reflect and permit the licensing thereof to the SPV under the Hops
Marks License, (iii) those Liens, if any, described on Schedule 5.8, concerning
existing Debt of the Lessee, to be set forth and described more particularly
therein, together with any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any such Lien, provided that such
Debt is not secured by any additional assets, and the amount of such Debt
secured by any such Lien is not increased; (iv) Liens incidental to the conduct
of its business or the ownership of its Properties which (A) do not secure Debt
and (B) do not in the aggregate materially detract from the value of its
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Properties or materially impair the use thereof or the operation of its
business, including, without limitation, easements, rights of way, restrictive
covenants, zoning and other similar restrictions on real property; (v)
materialmen's, mechanics', warehousemen's, carriers', landlords' and other
similar statutory Liens which secure Debt or other obligations that are not past
due, or, if past due are being contested in good faith by the Lessee or the
appropriate Subsidiary by appropriate proceedings; (vi) Liens for taxes not
delinquent or taxes being contested in good faith and by appropriate
proceedings; (vii) pledges or deposits in connection with worker's compensation,
unemployment insurance and other social security legislation; (viii) deposits to
secure performance of bids, trade contracts, leases, statutory obligations (to
the extent not excepted elsewhere herein); (ix) grants of security and rights of
setoff in deposit accounts, securities and other properties held at banks or
financial institutions to secure the payment or reimbursement under overdraft,
letter of credit, acceptance and other credit facilities; (x) rights of setoff,
banker's liens and other similar rights arising solely by operation of law; (xi)
Purchase Money Liens, provided that the Purchase Money Debt secured thereby is
permitted under Section 5.20(viii); (xii) rights of lessors under Capital
Leases, provided that the Debt secured thereby is permitted under Section
5.20(viii); and (xiii) rights of lessors in respect of Properties leased to the
Lessee or its Subsidiaries under operating leases, to the extent permitted under
Section 5.34.
7. Amendment to Existing Section 5.11:Section 5.11 of the Participation
Agreement (Consolidations, Mergers and Sales of Assets) is hereby amended by
deleting Section 5.11 in its entirety and substituting in its place the
following revised Section 5.11:
5.11 Consolidations, Mergers and Sales of Assets.
The Lessee will not, nor will it permit any Subsidiary to, consolidate or
merge with or into, or engage in any Asset Sale, or discontinue or eliminate any
business line or segment, provided, however, that any Subsidiaries of the Lessee
may (i) merge or consolidate with each other or with the Lessee (so long as the
Lessee is the corporation surviving such merger), or (ii) sell assets to each
other or to the Lessee; and, provided, further, that the Lessee may consummate
Asset Sales so long as, unless otherwise approved in writing by the Required
Lenders, each of the following conditions is met: (i) the Asset Sales are to
Persons other than Affiliates, (ii) the Asset Sales are made for cash only,
(iii) the Net Cash Proceeds from all such Asset Sales are applied in the manner
provided in Section 2.9.2 of the Credit Agreement, and for no other purpose,
(iv) no Default has occurred which is then continuing or otherwise would result
from such sale occurring, and (v) either (A) if the Asset Sale concerns
Collateral in excess of One Hundred Thousand Dollars ($100,000) in market value
or net book value (whichever is greater), the prior written consent of the
Required Lenders shall be required as with condition to such Asset Sale or, (B)
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if the Asset Sale concerns Collateral in excess of One Million Dollars
($1,000,000) in market value or net book value (whichever is greater), the prior
written consent of all Lenders shall be required as a condition to such Asset
Sale. The term "Asset Sales," as used herein, shall extend to and include,
without limitation, sale-leaseback transactions. Notwithstanding, however, the
preceding terms of this Section 5.11, so long as no Default or Event of Default
shall have occurred, no consent of the Lenders shall be required for any Asset
Sale otherwise made in conformity with the preceding terms of this Section 5.11
(but for the provision concerning consents) if, but only if, such Asset Sale
concerns the Properties listed on Schedule 5.11 and the Net Cash Proceeds
derived therefrom are not less than ninety percent (90%) of the targeted amount
prescribed below opposite each such listed Property (the foregoing herein
called, for each such Property, "Minimum Net Cash Proceeds"; and the
Administrative Agent may, without the consent of any Bank, release the Liens of
the Administrative Agent on any such properties made subject to any Asset Sale
permitted hereunder, provided that such Minimum Net Cash Proceeds are received
as prescribed hereinabove prior thereto and applied as prescribed in Section
2.9.2 of the Credit Agreement.
8. Amendment to Existing Section 5.13:Section 5.13 of the Participation
Agreement (Compliance with Laws; Payment of Taxes) is hereby amended by adding
the following proviso at the end of such section:
In respect of the foregoing, the Lessee acknowledges that the
Administrative Agent may or, at the request of the Lenders, the Administrative
Agent shall conduct (or cause to be conducted by one or more representatives,
including certified public accountants) a periodic audit of the Lessee's and its
Subsidiaries' payment of all property taxes, sales and use taxes, payroll taxes,
and income taxes as and when due and payable to federal, state or local
governmental authorities, all at the Lessee's expense.
9. Amendment to Existing Section 5.19(b): Section 5.19(b) of the
Participation Agreement (Capital Expenditures) is hereby amended by deleting
Section 5.19(b) in its entirety and substituting in its place the following
revised Section 5.19(b):
(b) Capital Expenditures. Make Capital Expenditures in the ordinary course
of business; provided, however, commencing with the Fiscal Year ending closest
to December 31, 2000, Capital Expenditures shall be limited in amount as
follows: (i) for the Fiscal Year ending closest to December 31, 2000,
$54,000,000; (ii) for the Fiscal Year ending closest to December 31, 2001,
$23,000,000; provided, however, that, within the Fiscal Year ending closest to
December 31, 2001, in addition to the aforesaid overall, annual limitation (A)
Capital Expenditures shall not exceed, in any event (1) $7,000,000 for the
Fiscal Quarter ending April 4, 2001, (2) $13,000,000, on a cumulative basis, for
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the two (2) Fiscal Quarters' period ending July 1, 2001, and (3) $20,000,000, on
a cumulative basis, for the three (3) Fiscal Quarters' period ending September
30, 2001, and (B) no such Capital Expenditures in excess of $3,000,000 may be
made in any one Fiscal Quarter in such Fiscal Year unless and until the
Administrative Agent has received financial statements from the Lessee
confirming its continuing compliance with all Financial Covenants including this
clause (ii) as of and for the preceding Fiscal Quarter; and (iii) for the
interim period from the first day of the Fiscal Year beginning closest to
January 1, 2002 through the Termination Date, $2,000,000. In addition to the
foregoing, in each Fiscal Year subsequent to the Fiscal Year ending closest to
December 31, 2000, Capital Expenditures shall not be made for the purchase of
land or buildings or real estate interests other than fixtures and leasehold
improvements on land and buildings in which the Lessee acquired an interest
prior to the beginning of such Fiscal Year except that, so long as no Default
exists, the Lessee may acquire a leasehold interest in real property located
within, or adjacent to, Fanueil Hall, Boston, Massachusetts for the purpose of
constructing a XxXxxxxxx & Xxxxxxx'x restaurant thereon, provided, however,
that: (i) the Lessee must use its reasonable best efforts to consummate a
sale-leaseback arrangement in respect of such location in conjunction with its
purchase (or within a reasonable time thereof) which, as part thereof, will
include the payment of sufficient funds to the Lessee to reimburse itself for
all monies then spent to date by the Lessee in regard thereto (with such monies
to be applied by Lessee, as and when received, in the same manner as Asset
Recoveries, as provided in Sections 2.7.3 and 2.9.2 of the Credit Agreement);
(ii) the Lessee must use its reasonable best efforts to obtain the consent of
the eventual lessor (and any sublessor) of such location to permit the Lessee to
execute a leasehold mortgage favoring the Administrative Agent, for the benefit
of the Lenders, in respect thereof; and (iii) total Capital Expenditures in
respect of this location for the period from inception through May 31, 2001
shall not exceed, in any event, $1,000,000 (and all such expenditures shall be
counted against the maximum "per quarter" and "annual" limitations on Capital
Expenditures set forth hereinabove).
10. Amendment to Existing Section 5.19(c): Section 5.19(c) of the
Participation Agreement (Franchise Fees) is hereby amended by deleting Section
5.19(c) in its entirety and substituting in its place the following revised
Section 5.19(c):
(c) INTENTIONALLY OMITTED
11. Amendment to Existing Section 5.19(e): Section 5.19(e) of the
Participation Agreement (Bank Accounts) is hereby amended by adding "in
furtherance of any Cash Management Services Contracts" after the words "its
business" and before the words "and make endorsements".
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12. Amendment to Existing Section 5.19(i): Section 5.19(i) of the
Participation Agreement (Special Life Insurance Program) is hereby amended by
deleting Section 5.19(i) in its entirety and substituting in its place the
following revised Section 5.19(i):
(i) INTENTIONALLY OMITTED
13. Amendment to Existing Section 5.19(j): Section 5.19(j) of the
Participation Agreement (Restaurant Concepts) is hereby amended by deleting
Section 5.19(j) in its entirety and substituting in its place the following
revised Section 5.19(j):
(j) INTENTIONALLY OMITTED
14. Amendment to Existing Section 5.19(k): Section 5.19(k) of the
Participation Agreement (Other Advances) is hereby amended by deleting Section
5.19(k) in its entirety and substituting in its place the following revised
Section 5.19(k):
(k) Advances to Affiliates. Continue to hold Debt evidencing loans and
advances to Affiliates made prior to the Seventh Amendment Date, to the extent
disclosed on Schedule 5.19K, provided that (i) all promissory notes and other
instruments evidencing such Debts, together with any security therefor, shall
have been pledged and set over to the Administrative Agent pursuant to the
Security Agreement as of the Seventh Amendment Date, and (ii) all such loans and
advances shall have been repaid in full on or prior to the Termination Date, and
(iii) no new loans and advances to Affiliates may be made on or subsequent to
the Seventh Amendment Date.
15. Amendment to Existing Section 5.19:The last paragraph of Section
5.19(l) of the Participation Agreement is hereby amended by deleting such
paragraph in its entirety and substituting in its place the following revised
paragraph:
In the event that, and to the extent that, as of the Seventh Amendment
Date, any of the terms or conditions set forth in this Section 5.19 (or in
Section 5.20 or Section 5.21 below) shall operate to restrict the ability of any
Consolidated Subsidiary to (i) pay dividends or make distributions permitted
under applicable law on any capital stock of such Subsidiary owned by the Lessee
or any other Consolidated Subsidiary, (ii) pay any indebtedness or other
obligation owed to the Lessee or any other Consolidated Subsidiary, (iii) make
loans or advances to the Lessee or any other Consolidated Subsidiary, or (iv)
transfer any of its property or assets to Lessee or any other Consolidated
Subsidiary (the "Subsidiary Activities"), and the imposition of such restriction
on any such Subsidiary Activities pursuant hereto is expressly prohibited under,
or constitutes an event of default under, the terms of the Senior Notes
Indenture, then, notwithstanding the foregoing, such Subsidiary Activities shall
be permitted.
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16. Amendment to Existing Section 5.20.Section 5.20 of the Participation
Agreement (Debt) is hereby amended by deleting Section 5.20 in its entirety and
substituting in its place the following revised Section 5.20:
5.20 Debt.
The Lessee will not incur, assume or suffer to exist any Debt or obligation
under any Guarantee (or permit any Subsidiary to do so), except for: (i) Debt
for Borrowed Money existing on the date of this Agreement and disclosed on
Schedule 5.20; (ii) Debt and Guarantees incurred pursuant to this Agreement or
the other Loan Documents; (iii) trade payables and contractual obligations to
suppliers and customers incurred in the ordinary course of business; (iv)
accrued pension fund and other employee benefit plan obligations and liabilities
(provided, however, that such Debt does not result in the existence of any Event
of Default or Default under any other provision of this Agreement); (v) deferred
taxes; (vi) Debt resulting from endorsements of negotiable instruments received
in the ordinary course of its business; (vii) Debt arising under or in
connection with any Wachovia Cash Management Service Contract; (viii)
Capitalized Lease Obligations, to the extent otherwise then permitted to be
incurred under Section 5.19(b), and Purchase Money Debt, so long as the
aggregate amount of Capitalized Lease Obligations and Purchase Money Debt does
not exceed, at any one time, fifteen percent (15%) of Tangible Net Worth; (ix)
the Subordinated Debt; (x) the Senior Notes; (xi) the Xxxxxx Obligations; and
(xii) the SPV Master Lease Guaranty. Without limitation of the foregoing,
subsequent to the Seventh Amendment Date, neither the Lessee nor any of its
Subsidiaries shall enter into, assume or incur liability under, (i) any Interest
Swap Contract, except the Xxxxxx Swap Contract, or (iii) any Cash Management
Service Contract, except the Wachovia Cash Management Service Contract.
17. Amendment to Existing Section 5.21. Section 5.21 of the Participation
Agreement (Dividends and Distributions) is hereby amended by deleting Section
5.21 in its entirety and substituting in its place the following revised Section
5.21:
5.21 Dividends and Distributions.
The Lessee will not, nor will the Lessee permit any Subsidiary to, (i) pay
any cash dividend; (ii) make any capital distribution; (iii) redeem, repurchase
or retire for cash any Capital Stock provided, however, that, notwithstanding
the foregoing, each Subsidiary pay dividends and may make other distributions on
any Capital Stock of such Subsidiary which is owned by the Lessee or another
Consolidated Subsidiary which is a Subsidiary Xxxxxxxxx.
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00. Amendment to Existing Section 5.23: Section 5.23 of the Participation
Agreement (Subsidiary Guaranties) is hereby amended by deleting Section 5.23 in
its entirety and substituting in its place the following revised Section 5.23:
5.25 Subsidiaries.
The Lessee will not, and will not permit any Subsidiary to, create or
acquire any Subsidiary subsequent to the Seventh Amendment Date.
19. Amendment to Existing Section 5.24: Section 5.24 of the Participation
Agreement (Stock Purchases, Etc.) is hereby amended by deleting Section 5.24 in
its entirety and substituting in its place the following revised Section 5.24:
5.24 Stock Purchases, Etc.
The Lessee will not, and will not permit any Consolidated Subsidiary of the
Lessee, to purchase any Capital Stock of the Lessee, whether in a "spot"
transaction, pursuant to an Equity Forward Contract or otherwise; nor will the
Lessee issue any Redeemable Preferred Stock subsequent to the Seventh Amendment
Date; nor will the Lessee create any new class of, or issue any new voting
Capital Stock, or warrants to acquire new voting Capital Common Stock,
subsequent to the Seventh Amendment Date (except pursuant to Section 2.6.6 of
the Credit Agreement).
20. Amendment to Existing Section 5: Section 5 of the Participation
Agreement is hereby further amended by adding the following new Sections 5.33,
5.34, 5.35, 5.36, and 5.37:
5.33 Financial Products.
The Lessee will not, and will not permit any Subsidiary to enter into, or
assume obligations under, (i) any Equity Forward Contracts; or (ii) any Interest
Swap Contracts, except the Xxxxxx Contract; nor will the Lessee modify or amend
any material term, covenant or condition of the Xxxxxx Contract.
5.34 Operating Leases.
The Lessee will not, and will not permit any Subsidiary, to enter into any
lease (including any Synthetic Lease, but excluding any renewals of existing
leases and any Capital Leases), other than: (i) the SPV Master Lease and (ii)
those leases existing on the Seventh Amendment Date and, if annual rentals
thereunder exceed One Hundred Fifty Thousand Dollars ($150,000), listed on
Schedule 5.34; and (iv) other leases of machinery and equipment entered into
subsequent to the Seventh Amendment Date, provided that the aggregate rentals
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thereunder, determined on a per Fiscal Year basis, do not exceed One Million
Dollars ($1,000,000).
5.35 Real Property.
The Lessee will not, and will not permit any Subsidiary, to acquire
ownership of any real property, or any interest in real property, such as, but
not limited to, a ground lease, a building on such real property, an estate for
years or a long-term (or short-term) lease.
5.36 Accounts Payable.
Effective beginning with the Fiscal Quarter ending closest to June 30,
2001, the Lessee will not, and will not permit its Subsidiaries, to have either:
(i) more than fifty percent (50%) of its and their total accounts payable be
more than forty-five (45) days past due date for payment; or (ii) more than
twenty percent (20%) of its and their total accounts payable be more than sixty
(60) days past due for payment.
5.37 Sales Tax.
Effective beginning with the Fiscal Quarter ending closest to June 30,
2001, the Lessee will not, and will not permit its Subsidiaries, to have its and
their total sales taxes (including late charges, penalties and interest) exceed
at any time Eight Million Dollars ($8,000,000).
21. Amendment to Appendix A: Appendix A of the Participation Agreement is
amended by adding the following definitions to Appendix A in the proper
alphabetical order:
"Asset Recovery" means any collections, returns of capital or other
recoveries made by the Lessee or any of its Subsidiaries in respect of any
Investments of the types described in clauses (iii), (v), (vi) and (viii) of
Section 5.19.
"Cash Management Services Contract" means any agreement between the Lessee
or any of its Subsidiaries and any financial institution for the provision of
services to the Lessee or such Subsidiary by such financial institution for the
retrieval, depositing, payment, transmission, collection or concentration of
cash, credit card receipts, checks, drafts or other payment items.
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"Hops" shall mean Hops Grill & Bar, Inc. a Florida corporation and
wholly-owned Subsidiary of the Lessee.
"Hops Marks" shall mean any trade names, trademarks, service marks and
other commercial symbols and applications related to the operation of "Hops
Restaurant Bar & Brewery" restaurants on the realty which is the subject of the
Sale-Leaseback Agreement.
"Hops Marks License" shall mean the License Agreement, dated of even date
with the Sale-Leaseback Agreement, between the Lessee, as licensor, and the SPV,
as licensee, concerning the licensing of the Hops Marks to the SPV; together
with all schedules and Exhibits thereto; and any modifications or amendments
thereof.
"Interest Swap Contract" means, generally, any "swap," "cap," "collar" or
any similar arrangement made between the Lessee (or any Subsidiary) and a
financial institution with respect to variable interest rates payable by the
Lessee (or such Subsidiary) on its Debts. The term "Interest Swap Contracts"
shall extend to and include all derivative contracts.
"Xxxxxx" means Xxxxxx Guaranty Trust Company of New York, its successors
and assigns.
"Xxxxxx Obligations" means all debts, liabilities and obligations of the
Lessee to Xxxxxx arising under or in respect of the Xxxxxx Swap Contract.
"Xxxxxx Swap Contract" means the Master Agreement, dated June 3, 1996, made
between Xxxxxx and the Lessee, evidencing their Interest Swap Contract; as it
may be amended or modified from time to time.
"Seventh Amendment Effective Date" shall mean, April 1, 2001.
"SPV" shall mean Pubs Property, LLC, a Delaware limited liability company
which is not Affiliated with the Lessee.
"SPV Master Lease" shall mean the Master Lease Agreement, dated on or about
October 13, 2000, between the SPV, as lessor, and Hops, as lessee, made pursuant
to the Sale-Leaseback Agreement; together with all schedules and exhibits
thereto, and any modifications and amendments thereof.
"SPV Master Lease Guaranty" shall mean the Guaranty Agreement, dated on or
about the Sale-Leaseback Date, made by the Lessee to and in favor of the SPV,
concerning the guaranty by the Lessee of the payment obligations of Hops to the
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SPV arising under the SPV Master Lease; together with all schedules and Exhibits
thereto, and any modifications and amendments thereof.
"Wachovia Cash Management Services Contract" means any Cash Management
Services Contract between Wachovia and the Lessee or one or more of its
Subsidiaries existing on or subsequent to the Seventh Amendment Date.
22. Amendment to Appendix A: Appendix A of the Participation Agreement is
amended by deleting the definitions of "Asset Sale", "Capital Expenditure",
"Capital Stock", "Change of Control", "EBITDA", "EBITDAR", "Fixed Charge
Coverage Ratio", "Net Cash Proceeds", "Purchase Money Liens", "Subordinated
Debt", "Tangible Net Worth" and "Total Debt" in their entirety and replacing
such definitions in Appendix A in the proper alphabetical order with the
following definitions:
"Asset Sale" shall mean the sale, lease, transfer or other disposition by
the Lessee or any of its Subsidiaries of any of its or their respective
Properties subsequent to the Seventh Amendment Date, excluding, however,
therefrom inventory sold or used equipment traded-in, in each case, in the
ordinary course of business. The term "Asset Sale" shall also include, without
limitation, the involuntary disposition of Properties by eminent domain,
condemnation and casualty loss.
"Capital Expenditures" means any expenditure (whether payable in cash or
other property or accrued as a liability) by a Person for, or in respect of,
assets which, in accordance with GAAP, would be classified on the balance sheet
of such Person as property, plant or equipment at such date. The term "Capital
Expenditures" includes, without limitation, Capitalized Lease Obligations.
"Capital Stock" means, for the Lessee or any of its Subsidiaries, (i) if a
corporation, its nonredeemable capital stock, whether common or preferred; (ii)
if a partnership (including limited partnerships), any partnership interests
therein; and (iii) if a limited liability company, any membership interests
therein.
"Change of Control" shall mean that (i) Xxx X. XxXxxx, Xx. shall cease to
own and control, beneficially and with power to vote, at least twenty-five
percent (25%) of the outstanding shares of the voting Capital Stock of the
Lessee; or (ii) any Person (other than Xxx X. XxXxxx, Xx.) or two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of twenty percent (20%) or more of the
outstanding shares of the voting Capital Stock of the Lessee; or (iii) as of any
date, a majority of the Board of Directors of the Lessee consists of individuals
who were not either (A) directors of the Lessee as of the corresponding date of
the previous year, (B) selected or nominated to become directors by a Board of
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Directors of the Lessee of which a majority consisted of individuals described
in clause (A), or (C) selected or nominated to become directors by the Board of
Directors of the Lessee of which a majority consisted of individuals described
in clause (A) and individuals described in clause (B).
"EBITDA" shall mean, for any fiscal period of the Lessee and its
Consolidated Subsidiaries, that amount equal to the sum, determined in
accordance with GAAP, of the Consolidated Net Income of the Lessee and its
Consolidated Subsidiaries for such period (considered without regard to (i) any
extraordinary gains or losses, (ii) any gains or losses arising from the sale of
assets, and (iii) any gains or losses arising from any activities outside the
normal course of Lessee's business operations as conducted on the Seventh
Amendment Date); plus, without duplication, and to the extent deducted from
revenue in determining Consolidated Net Income, depreciation and amortization
expense and any other non-cash charges for such period, interest expense for
such period, and taxes for such period.
"EBITDAR" shall mean, for any fiscal period of the Lessee and its
Consolidated Subsidiaries, that amount equal to the sum of EBITDA for such
period plus operating lease payments of Lessee and its Consolidated Subsidiaries
required to be made for such period.
"Fixed Charge Coverage Ratio" shall mean, for any fiscal period of the
Lessee, the ratio which (A) the sum of (i) EBITDAR for such period plus (ii) the
sum (without duplication) of (a) any cash dividends paid in respect of
Redeemable Preferred Stock during such period, plus (b) any payments made or
accrued during such period (howsoever denominated or construed) in respect of
any TECONS in such period, regardless of maturity or the timing of any
redemption or repurchase rights granted in regard thereto (the foregoing herein
called "TECONS Payments"), bears to (B) the sum (without duplication), for the
same such period, of: (i) any cash dividends paid in respect to Redeemable
Preferred Stock, plus (ii) that portion of any TECONS Payments actually paid in
cash; plus (iii) operating lease payments which were owed by the Lessee and its
Consolidated Subsidiaries for the same such period; plus (iv) interest expense;
plus (v) all payments made (including payments made in settlement of existing
obligations or claims) under, or in respect of, any Interest Swap Contracts,
whether now or hereafter existing; in each case, for the Lessee and its
Consolidated Subsidiaries for the same such period; all as determined under
GAAP.
"Net Cash Proceeds" shall mean, the total cash proceeds received by the
Lessee or any of its Subsidiaries from any Asset Sale or Asset Recovery, less
(i) provisions for all taxes actually paid or payable as a result thereof, (ii)
any direct costs incurred by Lessee or any Subsidiary associated therewith, and
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(iii) in the case of an Asset Sale, any payments made to repay any indebtedness
or other obligation outstanding at the time of Asset Sale that is secured by a
Purchase Money Lien on the Property or assets sold.
Purchase Money Liens" means Liens securing the payment of Purchase Money
Debt, so long as such Lien are limited solely to not more than the Property so
acquired, secure only the Purchase Money Debt so incurred in connection with
such acquisition, and are terminated upon payment in full of such Purchase Money
Debt.
"Subordinated Debt" shall mean Debt of the Lessee evidenced by, and limited
to, the Subordinated Notes.
"Tangible Net Worth" shall mean the difference at any time between (i) the
sum of (A) Stockholders' Equity of the Lessee and its Consolidated Subsidiaries
at such time plus (B) the TECONS and (ii) the sum of all those assets of the
Lessee and its Consolidated Subsidiaries at such time constituting (A) goodwill,
patents, copyrights, trademarks, trade names and other intangible assets, as
determined under GAAP, plus (B) write-ups of any assets occurring subsequent to
the Fiscal Year ending closest to December 31, 2000, plus (C) unamortized debt
discount and expense, as determined under GAAP, plus (D) deferred charges, as
determined under GAAP, plus (E) any indebtedness owing to such Person by any
Affiliate of such Person.
"Total Debt" shall mean that portion of the Debt of the Lessee and its
Consolidated Subsidiaries at any date equal to the sum (without duplication) of:
(i) all Debt for Borrowed Money at such date; plus (ii) all Capitalized Lease
Obligations outstanding at such date; plus (iii) all Debts, liabilities and
obligations which are Guaranteed by the Lessee or any Consolidated Subsidiary as
of such date; plus (iv) all Debts, liabilities or obligations at such date to
any seller incurred to pay the deferred price of property or services having a
deferred purchase price of One Million Dollars ($1,000,000) or more, excepting,
in any event, trade accounts payable arising in the ordinary course of business
and purchase options prior to their exercise; plus (v) all Debts, liabilities
and obligations outstanding at such date in respect of any Synthetic Leases;
plus (vi) all Debts, liabilities and obligations arising under any Equity
Forward Contracts, pending settlement; plus (vii) all Debts, liabilities and
obligations arising under any Interest Swap Contracts; provided, however, that
notwithstanding the foregoing, in making the foregoing calculation there shall
be excluded from clause (iii) above, concerning, Debts, liabilities and
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obligations which are Guaranteed, any Guarantee by the Lessee or any Subsidiary
given in respect of any of the former Applebee's locations owned or operated by
the Lessee or any such Subsidiary.
23. Amendment to Schedules: Schedules 5.8 and 5.19K of the Participation
Agreement are amended by deleting Schedules 5.9 and 5.19K in their entirety and
replacing such schedules with the attached Schedules 5.9 and 5.19K. In addition,
the Participation Agreement is further amended by adding Schedules 5.11, 5.20
and 5.34 attached hereto.
C. WAIVERS AND CONSENTS
Lessee has notified the Owner Trustee, the Holder, the Lenders and the
Administrative Agent that the Administrative Agent under the Credit Agreement
default to exist (the "Credit Agreement Default"), based on the Lessee's failure
to comply with certain financial covenants set forth therein incorporated by
reference therein pursuant to Sections 5.4, 5.5, 5.6, 5.7 and 5.7A thereof (the
"Credit Agreement Covenants"). The existence and continuation of the Credit
Agreement Default constitutes a Lease Event of Default under the Lease Agreement
pursuant to Section 14(i) thereof (the "Cross-Default"). The Holder and the
Lenders have agreed as an accommodation to Lessee to waive the Cross-Default,
and do hereby waive the Cross-Default.
D. POST CLOSING COVENANT
The Lessee agrees to deliver to the Administrative Agent no later than
April 16, 2001, a list of Equipment for the Hop's location in Louisville, KY,
Store #38, the Hop's location in Indianapolis, IN, Store #51, the Xxx Xxxxxx
location in Xxxx, XX #000, and the Canyon Cafe location in Nashville, TN, Store
#16 (the "Closed Store Equipment List"). The Closed Store Equipment List shall
detail (i) all of the Units that have been moved out of each such location, (ii)
the value of each Unit (iii) the address for the new location where each such
Unit is currently located and (iv) the Lease Schedule on which each such Unit
originally listed. The Lessee acknowledges and agrees that the failure of the
Lessee to deliver the Closed Store Equipment List by April 16, 2001, shall
constitute an Event of Default under the Participation Agreement or the Lease
Agreement, as the case may be.
E. MISCELLANEOUS
1. Upon the Administrative Agent's receipt of executed signature pages from
all parties to this Amendment, all amendments and waivers to the Participation
Agreement and the Lease Agreement made herein shall become effective as of March
31, 1999, unless expressly stated to become effective as of any other date.
Pursuant to Section 10.1 (a) of the Trust Agreement, the Holder authorizes and
request that the Owner Trustee execute this Amendment.
2. Except as expressly set forth herein, this Amendment shall be deemed not
to waive or modify any provision of the Participation Agreement or the other
Operative Agreements, and all terms of the Participation Agreement, as amended
17
hereby, and all other Operative Agreements shall be and remain in full force and
effect and shall constitute a legal, valid, binding and enforceable obligations
of the Lessee. All references to the Participation Agreement shall hereinafter
be references to the Participation Agreement as amended by this Amendment. To
the extent any terms and conditions in any of the Operative Agreements shall
contradict or be in conflict with any terms or conditions of the Participation
Agreement, after giving effect to this Amendment, such terms and conditions are
hereby deemed modified and amended accordingly to reflect the terms and
conditions of the Participation Agreement as modified and amended hereby. It is
not intended by the parties that this Amendment constitute, and this Amendment
shall not constitute, a novation or accord and satisfaction.
3. To induce the Owner Trustee, the Holder, the Lenders and the
Administrative Agent to enter into this Amendment (A) Lessee hereby represents
and warrants that the representations and warranties set forth in Section 3.2 of
the Participation Agreement as amended hereby are true and correct, (B) Lessee
hereby restates, ratifies and reaffirms each and every term and condition set
forth in the Participation Agreement, as amended hereby, and in the Operative
Agreements as amended hereby, and in the Operative Agreements, effective as of
the date hereof; and (C) Lessee hereby certifies that no Lease Event of Default
has occurred and is continuing.
4. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA AND ALL APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
5. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
6. This Amendment shall be binding on, and shall inure to the benefit of,
the successors and assigns of the parties hereto.
7. In the event that any part of this Agreement shall be found to be
illegal or in violation of public policy, or for any reason unenforceable at
law, such finding shall not invalidate any other part thereof.
8. TIME IS OF THE ESSENCE UNDER THIS AGREEMENT.
9. The parties agree that their signatures by telecopy or facsimile shall
be effective and binding upon them as though executed in ink on paper but that
the parties shall exchange original ink signatures promptly following any such
delivery by telecopy or facsimile.
10. Lessee agrees to pay all costs and expenses of Administrative Agent
incurred in connection with the preparation, execution, delivery and enforcement
18
of this Amendment and all other Operative Agreements executed in connection
herewith, including the reasonable fees and out-of-pocket expenses of
Administrative Agent's counsel.
11. This Amendment shall constitute an Operative Agreement for all purposes
of the Participation Agreement and shall be governed accordingly.
[Signatures appear on next page]
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IN WITNESS WHEREOF, the Lessee, the Owner Trustee, the Holder, each Lender
and the Administrative Agent have set their hands as of the day and year first
above written.
"LESSEE"
AVADO BRANDS, INC. formerly known as
Apple South, Inc.
By:_________________________________
Name:
Title:
Attest:_____________________________
Name:
Title:
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"OWNER TRUSTEE"
FIRST SECURITY BANK, N.A.
By:_________________________________
Name:____________________________
Title:_____________________________
21
"HOLDER"
STI CREDIT CORPORATION
By:_________________________________
Name:____________________________
Title:_____________________________
22
"LENDERS"
SUNTRUST BANK, formerly known as
SunTrust Bank, Atlanta, as the
Administrative Agent and
as a Lender
By:_________________________________
Name:____________________________
Title:_____________________________
23
FLEET CAPITAL CORP., as successor in
interest to BancBoston Leasing, Inc.
By:_________________________________
Name:____________________________
Title:_____________________________
24
SOUTHTRUST BANK, N.A.
By:_________________________________
Name:____________________________
Title:_____________________________
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 10-Q, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
