THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (this "Amendment") is made and
entered into as of February 26, 1999 between Avado Brands, Inc. (formerly known
as Apple South, Inc.) (the "Borrower") and First Union National Bank (the
"Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender have made and entered into that
certain Credit Agreement, dated as of May 8, 1998, as amended (as further
amended, modified, supplemented, or restated from time to time, the "Credit
Agreement"; capitalized terms used herein and not otherwise defined shall have
the meanings assigned thereto in the Credit Agreement);
WHEREAS, pursuant to the Credit Agreement, the Lender has extended to the
Borrower a revolving loan facility in the principal amount of up to $30,000,000;
WHEREAS, the Borrower wishes to extend the termination date of the
revolving loan facility and to amend certain provisions of the Credit Agreement,
as set forth herein;
WHEREAS, the Lender is willing to agree to the foregoing on the terms as
set forth herein;
NOW THEREFORE, for and in consideration of the foregoing and for ten
dollars ($10.00) and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
Existing Definitions
Capitalized terms not otherwise defined herein shall have the meaning or
meanings ascribed to them in the Credit Agreement.
ARTICLE 2
Amendments to Credit Agreement
Section 2.1 The definitions of "Note," "Stockholder's Equity," and "Total
Funded Debt" in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to read in its entirety as follows:
"Note" shall mean the renewal promissory note, dated as of February 26,
1999, from the Borrower to the Bank in the original principal amount of
$30,000,000, together with all amendments, consolidations, modifications,
renewals, and supplements thereto, which note evidences all of the Revolving
Loans.
"Stockholders' Equity" means, at any time, the stockholders' equity of the
Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Borrower and its consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Shareholders' Equity generally would include, but not be limited to (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, and (D) employee stock ownership plan debt Guarantees. In
determining "Stockholders' Equity," however, the amount of any Equity Forward
Contracts, pending settlement, shall be excluded therefrom.
"Total Funded Debt" shall mean that portion of the total liabilities of the
Borrower and its Consolidated Subsidiaries at any date equal to the sum (without
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duplication) of: (i) all indebtedness for borrowed money at such date
(including, for this purpose, indebtedness in respect of any outstanding
bankers' acceptances); plus (ii) all Capitalized Lease Obligations outstanding
at such date; plus (iii) all debts, liabilities and obligations which are
Guaranteed by the Borrower 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, excluding
therefrom, however, any debts, liabilities or obligations under the DR Holdings
Lease up to a maximum thereof of Twenty-Eight Million Dollars ($28,000,000.00),
it being understood and agreed that, subject to such limitation, no debts,
liabilities or obligations (including any constituting Guaranteed Obligations)
under the DR Holding Lease shall be included in the definition of Total Funded
Debt. In determining "Total Funded Debt," however, the amount of any Equity
Forward Contracts, pending settlement, shall be excluded therefrom.
Section 2.2 The definition of "Equity Forward Contract" is hereby added to
Section 1.1 of the Credit Agreement to read in its entirety as follows:
"Equity Forward Contract" shall mean any contract, whether now or hereafter
existing, whereby the Borrower or any of its Consolidated Subsidiaries agrees,
directly or indirectly, to purchase Capital Stock of the Borrower on any future
date at a fixed price.
Section 2.3 The reference in Section 2.7.1(i) of the Credit Agreement to
"March 1, 1999" is hereby amended to read "May 1, 1999" and all references in
the Loan Documents to the "Termination Date" shall be deemed to be references to
May 1, 1999.
Section 2.4 Section 5.4 of the Credit Agreement is hereby amended in its
entirety (effective as of January 3, 1999) to read in its entirety as follows:
SECTION 5.4. Minimum Stockholders' Equity.
Stockholders' Equity will at no time be less than the sum of (i)
$210,000,000, beginning with the last day of the Fiscal Quarter ended closest to
January 4, 1999.
Section 2.5 Section 5.18(xi) of the Credit Agreement is hereby amended in
its entirety to read in its entirety as follows:
(xi) Other Restaurant Concepts. Make investments in other restaurant
concepts, besides "Applebee's," so long as the total amount of all such
investments made subsequent to the Closing Date does not exceed Twelve Million
Five Hundred Thousand Dollars ($12,500,000).
Section 2.6 Section 5.18(xiii) of the Credit Agreement is hereby amended in
its entirety to read in its entirety as follows:
(xiii) Other Advances. Make loans or advances to Affiliates, shareholders,
directors, officers or employees, in addition to those described in clauses (i)
through (xii) hereinabove, in an aggregate amount, as to all such loans and
advances at any one time outstanding to all such Persons, not to exceed Twelve
Million Dollars ($12,000,000), so long as, and provided that, (A) no Event of
Default then exists and (B) each such loan or advance is repaid, in full, not
later than two (2) years from the date of its disbursement.
Section 2.7 The following new Sections 5.23 and 5.24 are hereby added to
the Credit Agreement to read in their entirety as follows:
5.23 Stock Purchases, Etc. The Borrower will not, and will not permit any
Consolidated Subsidiary of the Borrower, to purchase any Capital Stock of the
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Borrower, whether in a "spot" transaction, pursuant to an Equity Forward
Contract or otherwise, except in respect of shares of Capital Stock which are
subject to Equity Forward Contracts pending settlements as of December 31, 1998;
nor will Borrower enter into, or permit any Consolidated Subsidiary to enter
into, any Equity Forward Contract or amend or modify any Equity Forward Contract
in effect on December 31, 1998 so as to increase the amount of, or price of, any
shares of Capital Stock which are subject to Equity Forward Contracts pending
settlement as of December 31, 1998.
5.24 Prepayment of Senior Debt. The Borrower will not prepay, and will not
permit any Consolidated Subsidiary to prepay, the principal amount of any of the
Borrower's Senior Notes.
ARTICLE 3
Conditions to Effectiveness
Section 3.1 Effective Date. The amendments to the Credit Agreement set
forth in this Amendment shall become effective as of the date first written
above, other than Section 2.4, which shall be effective as of January 3, 1999
(the "Effective Date"), after all the conditions set forth in Sections 3.2
through 3.5 shall have been satisfied.
Section 3.2 Execution of this Amendment. This Amendment shall have been
executed and delivered by the Borrower.
Section 3.3 Amendment of Liquidity Agreement and Master Lease Agreement.
Borrower shall have entered into amendments to the Liquidity Agreement and
Master Lease Agreement effecting substantially the same changes as are effected
to the Credit Agreement by Article 2 hereof, true and correct copies of which
shall have been provided to the Lender, and which shall be satisfactory in form,
scope and substance to Lender.
Section 3.4 Wachovia Credit Agreement Reduction. Borrower shall have
provided to Lender evidence that the balance of the Wachovia Credit Agreement
has been reduced to $1.00 and that Borrower is entitled to no further borrowings
thereunder.
Section 3.5 Compliance with Warranties No Default
(a) As of the Effective Date, the representations and warranties set forth
in the Credit Agreement, as amended by this Amendment, and the representations
and warranties set forth in each of the Loan Documents shall be true and correct
in all material respects;
(b) As of the Effective Date, no Default or Event of Default shall have
occurred and be continuing;
(c) Lender shall have received from the Borrower a certificate, dated the
Effective Date, certifying matters set forth in subsections (a) and (b) of this
Section 3.5.
ARTICLE 4
Miscellaneous
Section 4.1 Entire Agreement. This Amendment, together with the Loan
Documents, reflects the entire understanding of the parties with respect to the
subject matter contained herein, and, other than the Loan Documents, supersedes
any prior agreements, whether written or oral.
Section 4.2 Cross References. References in this Amendment to any article
or section are, unless otherwise specified, to such article or section of this
Amendment.
Section 4.3 No Cure or Waiver. This Amendment is not intended to be, and
shall not be deemed or construed to be, a satisfaction, novation or release of
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the Credit Agreement or any of the other Loan Documents.
Section 4.4 Governing Law. This Amendment shall be construed and enforced
in accordance with and governed by all of the provisions of the Uniform
Commercial Code of Georgia and by the other internal laws (as opposed to
conflicts of law provisions) of the State of Georgia.
Section 4.5 Costs. Borrower shall pay all costs and expenses of Lender in
connection with the preparation, negotiation and documentation of this Amendment
and any other documents executed in connection herewith, including all fees and
expenses of Lender's counsel. Borrower authorizes Lender to pay any such costs
as a Revolving Loan advance if not paid reasonably promptly by Borrower upon
receipt of an invoice therefor (notwithstanding any limitation on the minimum
size of any such advance).
Section 4.6 Captions. Titles or captions of articles and sections hereof
are for convenience only and neither limit nor amplify the provisions hereof.
Section 4.7 No Other Changes. Except as expressly amended hereby, all
representations, warranties, terms, covenants and conditions of the Credit
Agreement and the other Loan Documents shall remain unamended and unwaived and
shall continue in full force and effect.
Section 4.8 Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
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WITNESS the hand and seal of each of the undersigned as of the date first
written above.
"Borrower"
AVADO BRANDS, INC. (formerly known as APPLE SOUTH, INC.)
By:
Its authorized officer
Attest:
Its authorized officer
[SEAL]
"Lender"
FIRST UNION NATIONAL BANK
By:
Its authorized officer
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