FIRST AMENDMENT
RYAN'S RESTAURANT GROUP, INC.
FIRST AMENDMENT
TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT dated as of
November 7, 2005 (the "Amendment") is entered into among Ryan's
Restaurant Group, Inc., a South Carolina corporation (the
"Parent"), Fire Mountain Restaurants, Inc., a Delaware
corporation ("Fire Mountain"; together with the Parent,
individually a "Borrower" and collectively the "Borrowers"), the
Guarantors, the Lenders party hereto and Bank of America, N.A.,
as Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent"). All capitalized terms used herein and
not otherwise defined herein shall have the meanings given to
such terms in the Credit Agreement (as defined below).
RECITALS
WHEREAS, the Borrowers, the Guarantors, the Lenders and the
Administrative Agent entered into that certain Amended and
Restated Credit Agreement dated as of December 20, 2004 (as
amended or modified from time to time, the "Credit Agreement");
WHEREAS, the Borrowers have requested that the Lenders amend
the Credit Agreement as set forth below subject to the terms and
conditions specified in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Reaffirmation. The Credit Parties acknowledge and
confirm (a) that the Collateral Agent, on behalf of the Lenders,
has a valid and enforceable first priority security interest in
the Collateral, (b) that the Borrowers' obligations to repay the
outstanding principal amount of the Loans and reimburse the
Issuing Lender for any drawing on a Letter of Credit are
unconditional and not subject to any offsets, defenses or
counterclaims, (c) that the Administrative Agent and the Lenders
have performed fully all of their respective obligations under
the Credit Agreement and the other Credit Documents, and (d) by
entering into this Amendment, the Lenders do not waive or release
any term or condition of the Credit Agreement or any of the other
Credit Documents or any of their rights or remedies under such
Credit Documents or applicable law or any of the obligations of
the Credit Parties thereunder.
2. Amendments. The Credit Agreement is hereby amended as
follows:
(a) Any reference to "Applicable Percentage" in the
following sections of the Credit Agreement is hereby
replaced with the words "Revolving Loan Commitment
Percentage": the definition of "L/C Advance" in Section
1.1, Section 2.2(b)(ii), Section 2.2(c)(i), Section
2.2(c)(ii), Section 2.2(c)(iv), Section 2.2(d)(i), Section
2.2(d)(ii) and Section 11.6(c).
(b) The following sentence is hereby added at the end
of the definition of "Applicable Percentage" in Section 1.1
of the Credit Agreement and shall read as follows:
Notwithstanding the foregoing, (a) from the First
Amendment Effective Date through and including March
29, 2006, the Applicable Percentage (i) for Eurodollar
Loans and Letter of Credit Fees, shall be 1.50%, (ii)
for Base Rate Loans, shall be 0.50% and (iii) for
Unused Fees, shall be 0.275%; and (b) from March 30 ,
2006 until the first Calculation Date subsequent to
July 4, 2007, the Applicable Percentage (i) for
Eurodollar Loans and Letter of Credit Fees, shall be
1.25%, (ii) for Base Rate Loans, shall be 0.25% and
(iii) for Unused Fees, shall be 0.225%; provided,
however if the Parent delivers an officer's certificate
in accordance with the provisions of Section 7.1(c)
demonstrating that the Fixed Charge Coverage Ratio as
of the end of any fiscal quarter ending during the
period from March 30, 2006 through and including July
4, 2007 is greater than or equal to 2.25 to 1.0, the
Applicable Percentages shall be determined and adjusted
on the applicable Calculation Date in accordance with
the terms of the preceding paragraph; provided,
further, however that if the Parent fails to provide
the officer's certificate required by Section 7.1(c) on
or before the date required by such Section 7.1(c) for
any four fiscal quarter period ending during the period
from March 30, 2006 through July 4, 2007 demonstrating
that the Fixed Charge Coverage Ratio for the applicable
period is greater than or equal to 2.25 to 1.0, the
Applicable Percentages from such date shall be the
percentages identified in subsections (b)(i), (b)(ii)
and (b)(iii) above.
(c) The definition of "Carryforward Capital
Expenditure Basket" in Section 1.1 of the Credit Agreement
is hereby amended to read as follows:
"Carryforward Capital Expenditure Basket" means
the aggregate, if any, of (i) the Unused Restricted
Payment Allowance allocated by the Parent pursuant to
Section 8.8(b) for Capital Expenditures in future
fiscal years and (ii) if in compliance with the Fixed
Charge Coverage Ratio for the fiscal quarter ended
October 3, 2007 set forth in Section 7.2(b), commencing
with fiscal year 2007, the Unused Capital Expenditure
Allowance allocated by the Parent pursuant to Section
8.13(b) for Capital Expenditures in future fiscal
years. Notwithstanding the foregoing, the Carryforward
Capital Expenditures Basket may not be increased in any
fiscal year by more than $10,000,000.
(d) The definition of "EBITDA" in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
"EBITDA" means, for any period with respect to the
Credit Parties and their Subsidiaries on a consolidated
basis, an amount equal to the sum of (a) Net Income for
such period (excluding the effect of any extraordinary
or other non-recurring gains or non-cash losses) plus
(b) an amount which, in the determination of Net Income
for such period has been deducted for (i) Interest
Expense for such period, (ii) total Federal, state,
foreign or other income taxes for such period and (iii)
all depreciation and amortization for such period plus
(c) costs and charges incurred during such period
associated with the settlement of the wage and hour
lawsuit in the Middle District Court of Tennessee in
the aggregate amount of up to $12 million to the extent
accrued during such period, all as determined in
accordance with GAAP.
(e) The definition of "EBITR" in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
"EBITR" means, for any period with respect to the
Credit Parties and their Subsidiaries on a consolidated
basis, an amount equal to the sum of (a) Net Income for
such period (excluding the effect of any extraordinary
or other non-recurring gains or non-cash losses) plus
(b) an amount which, in determination of Net Income for
such period has been deducted for (i) Interest Expense
for such period, (ii) total Federal, state, foreign or
other income taxes for such period and (iii) Rent
Expense for such period plus (c) costs and charges
incurred during such period associated with the
settlement of the wage and hour lawsuit in the Middle
District Court of Tennessee in the aggregate amount of
up to $12 million to the extent accrued during such
period, all as determined in accordance with GAAP.
(f) The definition of "Unused Capital Expenditure
Allowance" in Section 1.1 of the Credit Agreement is hereby
amended to read as follows:
"Unused Capital Expenditure Allowance" means, for
any fiscal year, commencing with the fiscal year ending
January 2, 2008, the amount by which the Initial
Capital Expenditure Basket for such fiscal year exceeds
the aggregate amount of Capital Expenditures actually
made by the Parent and its Subsidiaries during such
fiscal year.
(g) The definition of "Unused Restricted Payment
Allowance" in Section 1.1 of the Credit Agreement is hereby
amended to read as follows:
"Unused Restricted Payment Allowance" means, for
any fiscal year, commencing with the fiscal year ending
January 3, 2007, the amount by which the amount of
share repurchases the Parent was permitted to make as
of the end of such fiscal year in accordance with
Section 8.8 exceeds the amount of actual share
repurchases made by the Parent as of the end of such
fiscal year.
(h) The following definition is hereby added to
Section 1.1 of the Credit Agreement and shall read as
follows:
"First Amendment Effective Date" means November 7,
2005.
(i) Section 7.2(b) of the Credit Agreement is hereby
amended to read as follows:
(b) Fixed Charge Coverage Ratio. The Fixed
Charge Coverage Ratio, as of the last day of each
fiscal quarter of the Parent, shall be greater than or
equal to (i) for any fiscal quarter ending on or before
September 27, 2006 (including, without limitation, the
fiscal quarter period ending September 28, 2005) 1.55
to 1.0, (ii) for the fiscal quarter ending after
September 27, 2006 and on or before January 3, 2007,
1.60 to 1.0, (iii) for the fiscal quarter ending after
January 3, 2007 and on or before April 4, 2007, 1.65 to
1.0, (iv) for the fiscal quarter ending after April 4,
2007 and on or before July 4, 2007, 1.75 to 1.0 and (v)
for any fiscal quarter ending after July 4, 2007, 2.25
to 1.0; provided, however, that if scheduled principal
payments are due and payable with respect to both the
Senior Notes and the 2003 Senior Notes during the four
fiscal quarter period of the Parent included in any
calculation of the Fixed Charge Coverage Ratio after
July 4, 2007, the Fixed Charge Coverage Ratio for any
such period shall be greater than or equal to 2.00 to
1.00.
(j) Section 8.8 of the Credit Agreement is hereby
amended to read as follows:
(a) No Credit Party will, nor will it permit its
Subsidiaries to, directly or indirectly, (i) declare or
pay any dividends or make any other distribution
(whether in cash, securities or other payments) upon
any shares of its Capital Stock of any class (other
than dividends payable solely in Capital Stock);
provided that, any Subsidiary of the Parent may pay
dividends to its parent or (ii) purchase, redeem, make
a sinking fund or similar payment or otherwise acquire
or retire or make any provisions for redemption,
acquisition or retirement of any shares of its Capital
Stock of any class or any warrants or options to
purchase any such shares; provided, that, so long as at
the time of any such repurchase and after giving effect
thereto, no Default or Event of Default shall exist or
be continuing, the Parent may repurchase shares of its
Capital Stock pursuant to the Share Repurchase Program
so long as, immediately after giving effect to any such
repurchase, the aggregate amount of such repurchases
declared or made during any fiscal year shall not
exceed the sum of $15,000,000 minus the amount of the
aggregate Unused Restricted Payment Allowance allocated
to the Carryforward Capital Expenditure Basket as
provided in subparagraph (b) below; provided, however,
that if the Parent is in compliance with the Fixed
Charge Coverage Ratio for the fiscal quarter ended
October 3, 2007 set forth in Section 7.2(b), the
aggregate amount of such Restricted Payments of the
Parent declared or made during the period commencing
with fiscal year 2008 and ending the date such
Restricted Payment is declared or made, inclusive,
shall not exceed the sum of (1) $25,000,000 increased
on a cumulative basis as of the end of each fiscal
quarter of the Borrower commencing with fiscal year
2008 plus (2) an amount equal to 50% of Net Income for
such period (or minus 100% of Net Income for such
period if Net Income for such period if a loss) plus
(3) the Carryforward Restricted Payment Basket minus
(4) the amount of the aggregate Unused Restricted
Payment Allowance allocated to the Carryforward Capital
Expenditure Basket as provided in subparagraph (b)
below.
(b) Within 90 days after the end of each fiscal
year of the Parent, commencing with 90 days after the
end of fiscal year 2006, after or with the delivery of
the audited annual financial statements in respect of
the immediately preceding fiscal year of the Parent
pursuant to Section 7.1(a), the Parent shall notify the
Administrative Agent of (i) the Unused Restricted
Payment Allowance for such immediately preceding fiscal
year and (ii) whether or not the Parent will allocate
any portion of such Unused Restricted Payment Allowance
to the Carryforward Capital Expenditure Basket,
whereupon the Carryforward Capital Expenditure Basket
shall be immediately increased by the amounts allocated
thereto. Notwithstanding the foregoing, the
Carryforward Capital Expenditure Basket may not be
increased in any fiscal year by more than $10,000,000.
(k) Section 8.13 of the Credit Agreement is hereby
amended and restated to read as follows:
(a) (i) The Credit Parties will not permit
Capital Expenditure in any fiscal year to exceed the
sum of (A) $94,000,000 plus (B) the amount of net cash
proceeds received in each such fiscal year from the
sale of stores in accordance with Section 8.5(e) plus
(C) the Carryforward Capital Expenditure Basket plus
(D) the amount of insurance proceeds received in such
fiscal year for losses, damages or casualties related
to Hurricane ▇▇▇▇▇▇▇ or Hurricane ▇▇▇▇
(ii) The Credit Parties will not permit
Capital Expenditures in any fiscal year commencing
with the fiscal year ending January 3, 2007, to
exceed the sum of (A) $36,000,000 (the "Initial
Capital Expenditure Basket") plus (B) the amount
of net cash proceeds received in each such fiscal
year from the sale of stores in accordance with
Section 8.5(e) plus (C) the Carryforward Capital
Expenditure Basket; provided, however, that such
sum amount for a fiscal year may be increased by
the amount of insurance proceeds received in such
fiscal year for losses, damages or casualties
related to Hurricanes ▇▇▇▇▇▇▇ or ▇▇▇▇; provided
further that if the Parent is in compliance with
the Fixed Charge Coverage Ratio for the fiscal
quarter ended October 3, 2007 set forth in Section
7.2(b), commencing with fiscal year 2008 the
Initial Capital Expenditure Basket for purposes of
calculating the sum amount hereinabove shall be as
follows:
Fiscal Year Amount
2008 $106,000,000
2009 $110,000,000
(b) If the Parent is in compliance with the Fixed
Charge Coverage Ratio for the fiscal quarter ended
October 3, 2007 set forth in Section 7.2(b), within 90
days after the end of each fiscal year of the Parent,
commencing with 90 days after the end of fiscal year
2007, after or with the delivery of the audited annual
financial statements in respect of the immediately
preceding fiscal year of the Parent pursuant to Section
7.1(a), the Parent shall notify the Administrative
Agent of (i) the Unused Capital Expenditure Allowance
for such immediately preceding fiscal year and (ii) the
Parent's allocation of such Unused Capital Expenditure
Allowance in whole or in part to the Carryforward
Capital Expenditure Basket and/or the Carryforward
Restricted Payment Basket, whereupon the Carryforward
Capital Expenditure Basket and/or the Carryforward
Restricted Payment Basket shall be immediately
increased by the amounts allocated thereto. If the
Parent fails to deliver such timely notice to the
Administrative Agent, the Unused Capital Expenditure
Allowance shall be allocated first to the Carryforward
Restricted Payment Basket and then to the Carryforward
Capital Expenditure Basket. Notwithstanding the
foregoing, (A) the Carryforward Capital Expenditure
Basket may not be increased in any fiscal year by more
than $10,000,000 and (B) if the Parent is in compliance
with the Fixed Charge Coverage Ratio for the fiscal
quarter ended October 3, 2007 set forth in Section
7.2(b), (1) the Carryforward Restricted Payment Basket,
if any, may not be increased in any fiscal year by more
than $25,000,000, and (2) no increase in the
Carryforward Restricted Payment Basket shall be
permitted if the aggregate amount of the Capital
Expenditures made in the immediately preceding fiscal
year was less than $40,000,000.
3. Conditions Precedent. This Amendment shall be
effective as of the date hereof when all of the conditions set
forth below have been satisfied:
(a) The Administrative Agent shall have received
counterparts of this Amendment, duly executed by the
Borrowers, the Guarantors and the Required Lenders;
(b) The Administrative Agent shall have received
copies of resolutions of each Loan Party approving and
adopting the Amendment and authorizing execution and
delivery thereof, certified by a secretary or assistant
secretary of such Loan Party to be true and correct and in
force and effect as of the date hereof;
(c) The Administrative Agent shall have received a
favorable legal opinion from counsel to the Credit Parties;
(d) Receipt by the Administrative Agent of a copy,
certified by a Responsible Officer of the Parent as true and
complete, of (i) the amendment to the Note Purchase
Agreements and (ii) the amendment to the 2003 Note Purchase
Agreement, such amendments to be reasonably satisfactory in
form and substance to the Administrative Agent; and
(e) The Administrative Agent shall have received for
the account of each Lender approving the Amendment an
amendment fee equal to 10 basis points (0.10%) on the
Commitment of each such Lender.
4. Miscellaneous.
(a) Except as herein specifically agreed, the Credit
Agreement, and the obligations of the Credit Parties
thereunder and under the other Credit Documents, are hereby
ratified and confirmed and shall remain in full force and
effect according to their terms.
(b) Each Guarantor (a) acknowledges and consents to
all of the terms and conditions of this Amendment,
(b) affirms all of its obligations under the Credit
Documents and (c) agrees that this Amendment and all
documents executed in connection herewith do not operate to
reduce or discharge its obligations under the Credit
Agreement or the other Credit Documents.
(c) The Borrowers and each Guarantor hereby represent
and warrant as follows:
(i) Each Credit Party has taken all necessary
action to authorize the execution, delivery and
performance of this Amendment.
(ii) This Amendment has been duly executed and
delivered by the Credit Parties and constitutes the
legal, valid and binding obligations of each of the
Credit Parties, enforceable in accordance with its
terms, except as such enforceability may be subject to
(A) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws
affecting creditors' rights generally and (B) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or
in equity).
(iii) No consent, approval, authorization or
order of, or filing, registration or qualification
with, any court or governmental authority or third
party is required in connection with the execution,
delivery or performance by any Credit Party of this
Amendment.
(d) The Credit Parties represent and warrant to the
Lenders that (i) the representations and warranties of the
Credit Parties set forth in Section 6 of the Credit
Agreement and in each other Credit Document are true and
correct in all material respects as of the date hereof with
the same effect as if made on and as of the date hereof,
except to the extent such representations and warranties
expressly relate to an earlier date and (ii) no event has
occurred and is continuing which constitutes a Default or an
Event of Default.
(e) This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered
shall be an original, but all of which shall constitute one
and the same instrument. Delivery of an executed
counterpart of this Amendment by telecopy shall be effective
as an original and shall constitute a representation that an
executed original shall be delivered.
(f) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF SOUTH
CAROLINA.