EXHIBIT 10.4
WAIVER TO THE CREDIT AGREEMENT
Dated as of August 26, 2004
WAIVER TO THE CREDIT AGREEMENT referred to below by and between AVADO
BRANDS, INC., a Georgia corporation and debtor-in-possession in the Chapter 11
Cases ("Avado"), on its own behalf and on behalf of the other Borrowers, the
Lenders parties hereto and DDJ CAPITAL MANAGEMENT, LLC, as Administrative Agent
and Collateral Agent for the Lenders.
PRELIMINARY STATEMENTS:
(1) Avado and certain of Avado's Subsidiaries, each of which is a
debtor-in-possession in the Chapter 11 Cases (as defined in the Credit
Agreement), the Lenders, the Administrative Agent, and the Collateral Agent have
entered into the Post-Petition Credit Agreement dated as of February 11, 2004
(as amended by the First Amendment, dated as of March 9, 2004 and the Letter
Amendment, dated as of April 9, 2004, the "Credit Agreement"). Capitalized terms
used herein and not otherwise defined in this Waiver have the same meanings as
specified in the Credit Agreement.
(2) The Lenders are, on the terms and conditions stated below, willing to
grant the request of the Borrowers to waive the Event of Default under Section
11.01(e) of the Credit Agreement with respect to the Borrowers' breach of
Section 10.01 of the Credit Agreement for the measurement period ending July 25,
2004 (the "Cash Flow Covenant Default") for a period expiring at 5:00 p.m. (EST)
on September 10, 2004 (such period, the "Waiver Period") and the Lenders, the
Administrative Agent and the Collateral Agent have agreed to waive the Cash Flow
Covenant Default for the duration of the Waiver Period as hereinafter set forth.
SECTION 1. Waiver of Existing Defaults. The Cash Flow Covenant Default is
hereby waived as of the date hereof for the duration of the Waiver Period. The
waiver granted in this Section 1 is made in reliance upon, and subject to the
representations and warranties of the Borrowers in Section 3 below being
accurate. Such waiver shall automatically terminate and expire upon the
expiration of the Waiver Period, and, absent other action, the Cash Flow
Covenant Default shall then exist. The Lenders and the Agents expressly reserve
any and all rights and remedies they have or may have under the Loan Documents,
at law or equity, or otherwise with respect to any other Default, Event of
Default or other default under the Loan Documents, and with respect to the Cash
Flow Covenant Default upon the expiration of the Waiver Period.
SECTION 2. Conditions of Effectiveness. This Waiver shall be effective upon
its execution and delivery by the parties hereto.
SECTION 3. Representations and Warranties of the Borrower. The Borrowers
represent and warrant as follows:
(a) Representations and Warranties. As of the date hereof and the date on
which this Waiver shall first be effective (except where such representation and
warranty expressly relates to a specific date, in which case, as of such
specified date), after giving effect to this Waiver, each of the representations
and warranties contained in Section 6.01 of the Credit Agreement and in the
other Loan Documents is true and complete in all material respects.
(b) No Defaults. As of the date hereof and the date on which this Waiver
shall first be effective, no Default (other than the Cash Flow Covenant Default)
has occurred and is continuing; after giving effect to this Waiver, no Default
has occurred and is continuing, nor will any Default result from the
effectiveness of this Waiver or the transactions contemplated hereunder.
(c) No Change in Condition. No Material Adverse Change has occurred since
the date of the Borrowing immediately preceding the date of this Waiver.
(d) No Authorizations, Etc. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or any other third party is required for the due execution and delivery by
the Borrowers of this Waiver.
(e) Due Execution, Etc. This Waiver has been duly executed and delivered by
the Borrowers. The other Loan Documents, as modified hereby, are the legal,
valid and binding obligations of the Borrowers, enforceable against each
Borrower in accordance with their respective terms.
SECTION 4. Reference to and Effect on the Credit Agreement and the other
Loan Documents.
(a) On and after the effectiveness of this Waiver, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof' or words of like
import referring to the Credit Agreement, and each reference in the Notes and
each of the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof' or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as modified by this Waiver.
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(b) The Credit Agreement, the Notes and each of the other Loan Documents,
as specifically modified by this Waiver, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Collateral described in the Loan
Documents does and shall continue to secure the payment of all Obligations of
the Borrowers under the Loan Documents.
(c) The execution, delivery and effectiveness of this Waiver shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender or any Agent under the Credit Agreement or any other Loan
Document, nor constitute a waiver of any provision of the Credit Agreement or
any other Loan Documents other than as expressly set forth herein, and, for the
avoidance of doubt upon the expiration of the Waiver Period, the waiver made
hereunder shall expire.
SECTION 5. Costs, Expenses. The Borrowers agree, jointly and several, to
pay on demand all costs and expenses of the Agents and the Lenders in connection
with the preparation, execution, delivery and administration, modification and
amendment of this Waiver (including, without limitation, the reasonable fees and
expenses of counsel for the Agents) in accordance with the terms of Section
14.04 of the Credit Agreement.
SECTION 6. Execution in Counterparts. This Waiver may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same agreement. Delivery
of an executed counterpart of a signature page to this Waiver by telecopier
shall be effective as delivery of a manually executed counterpart of this
Waiver.
SECTION 7. Governing Law. This Waiver shall be governed by, and construed
in accordance with, the laws of The Commonwealth of Massachusetts.
[Signature page(s) follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AVADO BRANDS, INC., on behalf of itself
and the other Borrowers
By:
------------------------------------------------
Name:
Title:
DDJ CAPITAL MANAGEMENT, LLC, as Administrative Agent
and Collateral Agent
By:
------------------------------------------------
Name:
Title:
LENDERS:
B III-A CAPITAL PARTNERS, L.P.
By: GP III-A, LLC, its General Partner
By: DDJ Capital Management, LLC,
Manager
By: _______________________
Name:
Title:
B IV CAPITAL PARTNERS, L.P.
By: GP Capital IV, LLC, its General Partner
By: DDJ Capital Management, LLC,
Manager
By: _______________________
Name:
Title:
S-1
GMAM INVESTMENT FUNDS TRUST II - PROMARK ALTERNATIVE
HIGH YIELD BOND FUND
By: DDJ Capital Management, LLC, on behalf of GMAM
Investment Funds
Trust II - Promark Alternative High Yield Bond
Fund, in its capacity as investment manager
By: _______________________
Name:
Title:
THE OCTOBER FUND, LIMITED PARTNERSHIP
By: October GP, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By: _______________________
Name:
Title:
S-2