EXHIBIT 10.2
FIRST AMENDMENT TO POST-PETITION CREDIT AGREEMENT
This First Amendment (the "First Amendment") dated as of March 9, 2004 is
to the Post-Petition Credit Agreement dated as of February 11, 2004 (the "Credit
Agreement") by and between AVADO BRANDS, INC., a Georgia corporation and
debtor-in-possession in the Chapter 11 Cases ("Avado"), and certain of Avado's
Subsidiaries identified in the signature pages of the Credit Agreement, each of
which is a debtor-in-possession in the Chapter 11 Cases (Avado and such
Subsidiaries are referred hereinafter each individually as a "Borrower", and
collectively, jointly and severally, as the "Borrowers"), each of the lenders
identified in the signature pages of the Credit Agreement (such lenders, each
individually, a "Lender" and collectively, the "Lenders"), and DDJ CAPITAL
MANAGEMENT, LLC ("DDJ"), as administrative agent for the Lenders (in such
capacity, together with its successors an assigns, if any, the "Administrative
Agent"), and as collateral agent for the Lenders (in such capacity, together
with its successors and assigns, if any, the "Collateral Agent").
Borrowers, Lenders, and DDJ hereby agree as follows:
1. Section 1.01 Definitions.
(a) The definition of "Borrowing Base" is amended in its entirety to read
as follows:
"Borrowing Base" means (i) the amount shown on the Approved Budget as
"Total Borrowing Needs", plus fifty percent (50%) of the amount by which the
Borrowers' actual Cumulative Net Operating Cash Flow is greater than the amount
of "Cumulative Net Operating Cash Flow" shown on the Approved Budget, and less
fifty percent (50%) of the amount by which the Borrowers' actual Cumulative Net
Operating Cash Flow is less than the amount of "Cumulative Net Operating Cash
Flow" shown on the Approved Budget for the period commencing on the Petition
Date through the date of measurement, less (ii) the amount of any payments
authorized by the Borrowers through Automated Clearing House, Inc. or similar
electronic means which have not been paid or funded by a deposit to the
Disbursement Account.
(b) A revised form of Borrowing Base Certificate in the form attached is
substituted as Exhibit C to the Credit Agreement.
(c) The definition of Permitted Indebtedness is amended to renumber clause
(xii) as clause (xiii), to delete the last reference to "this clause (xii)" and
to replace such reference with "this clause (xiii)", to delete the last
reference to "(xi)" and to replace such reference with "(xii)" and to insert a
new clause (xii) in its appropriate order to read as follows:
"; (xii) reimbursement and other obligations owed to an issuing bank of any
Approved Letter of Credit".
(d) The definition of "Permitted Liens" is amended to add at the end of
such definitions:
" (xiv) any Lien on funds on deposit with any insurance carrier to secure
the obligations of the Borrowers and their Subsidiaries to such insurance
carrier."
2. Section 6.01(gg) Security Interests. Section 6.01(gg) is hereby amended
to insert", Deposit or Securities Accounts used to cash collateralize any
Approved Letter of Credit and Deposit or Securities Accounts containing funds
deposited with any insurance carrier to secure the obligations of the Borrowers
and their Subsidiaries to such insurance carrier" immediately after the phrase
"$150,000, at any time".
3. Section 7.02 Borrowing Base Certificate. Section 7.02 is amended in its
entirety to read as follows:
"The Borrowers shall provide the Administrative Agent with a Borrowing Base
Certificate, certified as being true and correct by the Authorized Officer of
Avado, with each Notice of Borrowing, as provided in Section 2.01, but not less
frequently than weekly by 12:00 noon on Wednesday of each week, and more
frequently if requested by the Administrative Agent. Each Borrowing Base
Certificate shall be prepared as set forth in Section 2.01(b)."
4. Section 8.13 (ii) Further Assurances. Section 8.13(ii) is hereby amended
to insert", Deposit or Securities Accounts used to cash collateralize any
Approved Letter of Credit and Deposit or Securities Accounts containing funds
deposited with any insurance carrier to secure the obligations of the Borrowers
and their Subsidiaries to such insurance carrier" immediately after the phrase,
"$150,000 at any time".
5. Section 9.05 Investments. Section 9.05 is hereby amended by restating
clause (ii) in its entirety to read as follows:
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"(ii) Permitted Investments; provided, however, that, except for (A) funds
deposited in a Securities Account or a Deposit Account to cash collateralize an
Approved Letter of Credit or (B) the deposit of funds with any insurance carrier
to secure the obligations of the Borrowers and their Subsidiaries to such
insurance carrier, Borrowers and their Subsidiaries shall not have Permitted
Investments in Securities Accounts or Deposit Accounts in excess of $200,000 in
the aggregate for such accounts outstanding at any time unless a Control
Agreement has been executed and delivered with respect to such Securities
Accounts or Deposit Accounts."
6. Section 9.15. Securities Accounts. Section 9.15 is hereby amended to
insert "(other than (i) a Securities Account opened for the purpose of
cash-collateralizing an Approved Letter of Credit, (ii) a Securities Account
containing funds on deposit with any insurance carrier to secure the obligations
of the Borrowers and their Subsidiaries to such insurance carrier or (iii) a
Securities Account, when aggregated with all other Securities Accounts and
Deposit Accounts (other than those Securities Accounts or Deposit Accounts which
cash-collateralize an Approved Letter of Credit or which contain funds on
deposit with any insurance carrier to secure the obligations of the Borrowers
and their Subsidiaries to such insurance carrier) for which there is no Control
Agreement contains funds not in excess of $200,000)" immediately after
"Securities Account" in the second line thereof.
7. Section 11.01(k) Loan Documents. Section 11.01(k) is hereby amended to
insert, "Deposit or Securities Accounts used to cash collateralize any Approved
Letter of Credit and Deposit or Securities Accounts containing funds deposited
with any insurance carrier to secure the obligations of the Borrowers and their
Subsidiaries to such insurance carrier" immediately after the phrase, "$150,000
at any time".
8. Section 12.01 Collection of Accounts Receivable; Management of
Collateral.
Subsection (a) is amended in its entirety to read as follows:
"Avado has established and at all times shall maintain concentration
accounts (the "Concentration Accounts") at the Concentration Account Bank and
shall promptly deposit, and shall cause each of the Borrowers and their
Subsidiaries promptly to deposit, all Collections received by the Borrowers or
any of their Subsidiaries from any source, and in any event no later than the
second Business Day after the date of receipt thereof (excluding cash retained
at locations in accordance with customary practice) into regional bank accounts.
Promptly, and in any event no later than the second Business Day after deposit,
Avado shall transfer all collected funds in the regional bank accounts to
divisional Concentration Accounts and on the following Business Day to the
master Concentration Account. The Concentration Accounts shall at all times be
subject to Control Agreements reasonably acceptable to the Administrative Agent
("Concentration Account Agreements"). The current Concentration Accounts are
identified on Schedule 1.01(v).
Avado has established and at all times shall maintain a Disbursement
Account which will be used to disburse funds for all Borrowers and to receive
proceeds of Loans. The Disbursement Account shall at all times be subject to a
Control Agreement reasonably acceptable to the Administrative Agent. The current
Disbursement Account is identified on Schedule 1.01(a).
The Concentration Account Agreements, the Control Agreement with respect to
the Disbursement Account and the arrangements contemplated by this subsection
12.01(a) may not be changed without the consent of the Administrative Agent.
Until the Administrative Agent has advised the Borrowers to the contrary
upon the occurrence and during the continuance of an Event of Default, the
Borrowers and their Subsidiaries may and will enforce, collect and receive all
amounts owing on the Account Receivables for the benefit of, and on behalf of,
the Collateral Agent and the Lenders. All Collections (including checks, drafts,
notes, money orders, acceptances, cash and other evidences of Indebtedness)
received directly by the Borrowers or any of their Subsidiaries from any Account
Debtor or any other source (exclusive of the Lenders), whether as proceeds from
Accounts Receivable, or as proceeds of any other Collateral, or otherwise, shall
be received and held by the applicable party in trust for the Lenders and
deposited by such party in original form and no later than the next Business Day
after receipt thereof into the Concentration Accounts. The Borrowers shall not,
nor shall it permit any of their Subsidiaries to, commingle such Collections
with the proceeds of any Loan. All Collections of each Subsidiary of the
Borrowers deposited into the Concentration Accounts by such Subsidiary shall be
deemed first to be a repayment of all outstanding Intercompany Advances made by
any Borrower to such Subsidiary, until paid in full, with all such remaining
Collections being deemed to be an Intercompany Advance made by such Subsidiary
to the Borrower who (directly or indirectly through one or more intermediaries)
owns the Capital Stock of such Subsidiary.
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Until the Administrative Agent has provided written notice to the Borrowers
to the contrary upon the occurrence and during the continuance of an Event of
Default, Avado may transfer funds from the master Concentration Account to the
Disbursement Account and shall transfer all collected funds on deposit in the
master Concentration Account to the Disbursement Account on a daily basis. At
the end of each Business Day, Avado shall cause any collected funds in excess of
$500,000 (calculated as of 2:00 New York City time) in the aggregate in the
Disbursement Account and Concentration Accounts to be transferred by wire
transfer or Automated Clearing House Inc. payment to the Administrative Agent to
be credited to the Loan Account. In the event Avado believes that $500,000 plus
the collected funds expected on the next Business Day will not be sufficient to
cover items to be presented against the Disbursement Account on the next
Business Day, Avado may provide notice to the Administrative Agent and retain
such additional amounts in the Disbursement Account as Avado deems appropriate
to cover the items expected to be presented on the next Business Day.
Avado covenants and agrees to maintain a minimum balance of collected funds
in the Disbursement Account at the end of each Business Day sufficient (after
adjustment for all collected funds expected to be credited to the Disbursement
Account on the next Business Day) to pay all checks issued by the Borrowers
through the end of the prior Business Day which have not been paid."
Subsection (b) is amended by deleting the sentence
"All funds received in the Concentration Account in excess of $250,000
(calculated as of 2:00 p.m. New York City time) and after the payment (or
accrual therefor of disbursements made that day) shall be sent at the end of
each Business Day by wire transfer or Automated Clearing House Inc. payment to
the Administrative Agent to be credited to the Loan Account for application to
reduce the then principal balance of the Loans, conditional upon final payment
to the Administrative Agent."
9. AIG Deposit Avado, with the consent of the Administrative Agent, has
provided a cash deposit of $4,250,000 to AIG Risk Management ("AIG") in
connection with the issuance of a ▇▇▇▇▇▇▇'▇ compensation and liability insurance
policy effective February 16, 2004. Upon the earlier of (i) September 4, 2004,
or (ii) the effective date of a plan of reorganization for Avado, Avado shall
replace such deposit with an Approved Letter of Credit. The Loan to fund the
deposit with AIG shall not be treated as a Loan to cash collateralize an
Approved Letter of Credit.
10. Effectiveness. This First Amendment shall be effective upon execution
by the parties and entry of a Final Order.
11. Miscellaneous.
a) This First Amendment represents the entire agreement among the parties
hereto relating to this First Amendment, and supersedes all prior understandings
and agreements among the parties relating to the subject matter of this First
Amendment.
b) This First Amendment 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 one and the same agreement. Delivery of an executed counterpart of a
signature page to this First Amendment by telecopier shall be effective as
delivery of a manually executed counterpart of this First Amendment.
c) This First Amendment shall be governed by, and construed in accordance
with the laws of the Commonwealth of Massachusetts, and to the extent
applicable, the Bankruptcy Code and shall be considered an integral part of the
Credit Agreement governed by all of its terms, except as specifically modified
herein.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
the Post-Petition Credit Agreement 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:
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Name:
Title:
DDJ CAPITAL MANAGEMENT, LLC, as Administrative
Agent and Collateral Agent
By:
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
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